UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File Number 1-9997
KOGER EQUITY, INC.
(Exact name of Registrant as specified in its Charter)
FLORIDA
(State or other jurisdiction of incorporation or organization)
59-2898045
(I.R.S. Employer Identification No.)
3986 Boulevard Center Drive, Suite 101
Jacksonville, Florida 32207
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 904/398-3403
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
Common Stock, Par Value $.01 American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _________
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ( 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. __________
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at March 1, 1994, was approximately $129,779,000.
The number of shares of Registrant's Common Stock outstanding on March 1,
1994, was 17,597,177.
Documents Incorporated by Reference
The Company's Proxy Statement to be filed pursuant to Regulation 14A under
the Securities Act of 1934 for the Annual Meeting of Shareholders to be
held on May 10, 1994, is incorporated by reference in Part III of this report.
<PAGE>
TABLE OF CONTENTS
ITEM NO. DESCRIPTION PAGE NO.
PART I
1. BUSINESS . . . . . . . . . . . . . . . . . . . . . 1
2. PROPERTIES . . . . . . . . . . . . . . . . . . . . 3
3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . 12
4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS. . . . . . . . . . . . . 13
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS . . . . . . . . . 14
6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . 15
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS . . . . . . . . . . . . . . . . . . 16
8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA. . . . . . . . . . . . . . . . 26
9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. . . . . . . . . . . . . . . 55
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT . . . . . . . . . . . . . . . . 55
11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . 56
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT . . . . . . . . . . . . . . 56
13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS. . . . . . . . . . . . . . . 56
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K . . . . . . . . . . . . . 57
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 63
<PAGE>
PART I
Item 1. BUSINESS
General
Koger Equity, Inc. is engaged in acquiring and holding commercial
office buildings for the production of income (Koger Equity, Inc. and its
two wholly owned subsidiaries is hereafter referred to as the "Company").
As of December 31, 1993, the Company owned 219 commercial properties
in 16 metropolitan areas in the Southeast and Southwest. A total of 126
buildings were acquired from Koger Properties, Inc. ("KPI") or its
subsidiaries through 1990. As the result of the merger of KPI with and into
the Company (the "Merger") on December 21, 1993, the Company acquired an
additional 93 buildings. In addition, the Company provides property
management services for third parties, including the 20 buildings owned by
Centoff Realty Company, Inc., a subsidiary of Morgan Guaranty Trust Company
of New York, and 92 office buildings owned by The Koger Partnership, Ltd.
("TKPL"). The Company provides these services through its wholly owned
subsidiaries, Southeast Properties Holding Corporation, Inc. ("Southeast")
and Koger Real Estate Services, Inc. ("KRES"). The Company is currently
self-administered and self-managed.
The Company operates in a manner so as to qualify as a real estate
investment trust under the provisions of the Internal Revenue Code of 1986,
as amended (a "REIT"). As a REIT, the Company will not, with certain limited
exceptions, be taxed at the corporate level on taxable income distributed
to its shareholders on a current basis. Accordingly, the Company distributes
at least 95 percent of its annual real estate investment trust taxable income
to its shareholders. Since the Company intends to pay dividends equal to or
in excess of 95 percent of its annual real estate investment trust taxable
income and meets other qualifying criteria for a real estate investment
trust, no federal income tax provision has been recorded. To be eligible to
be a REIT, a corporation must meet five substantive tests: (a) at least 95
percent of its gross income must be derived from certain passive sources;
(b) at least 75 percent of its gross income must be derived from certain
real estate sources; (c) less than 30 percent of its gross income must be
derived from the sale or other disposition of certain items, including
certain real property held for less than four years; (d) at the close of
each calendar quarter, it must meet certain tests designed to ensure that
its assets are adequately diversified; and (e) each year, it must distribute
at least 95 percent of its REIT taxable income. Management fee revenue does
not qualify as passive income for purposes of determining whether the Company
has met the REIT requirement that at least 95 percent of the Company's gross
income is derived from passive sources. Accordingly, in the event the
Company derives income in excess of five percent from management and other
"non-passive" activities, the Company would no longer qualify as a REIT for
federal income tax purposes and would be required to pay federal income taxes.
No single tenant occupies 10 percent or more of the net rentable area
of the Company's buildings or contributes 10 percent or more of the Company's
rental revenues. Some of the Company's principal tenants are the State of
Florida, U. S. Government, Blue Cross/Blue Shield, Lumbermans Mutual Casualty
Company, Travelers Insurance Company, State of Texas, Aetna, FDIC, USAA
Federal Savings Bank and Bell South. Governmental tenants (including the
State of Florida and the United States Government), which account for 22
percent of the Company's leased space, may be subject to budget reductions
in times of recession and governmental austerity. There can be no assurance
that governmental appropriations for rents may not be reduced. Additionally,
with the current economic conditions related to the rental of office space,
certain of the private sector tenants which have contributed to the Company's
rent stream may reduce their current demands or curtail their need for
additional office space.
Merger of KPI and the Company; Resolution of KPI Chapter 11 Case
On September 25, 1991, KPI filed a petition under Chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the Middle District of Florida (the "Bankruptcy Court").
The Company was the single largest creditor of KPI in the KPI Chapter 11
Case (indebtedness to the Company of approximately $116 million). On
April 30, 1993, the Company and KPI jointly proposed a plan of reorganization
of KPI (the "Plan") which provided for the merger of KPI with and into the
Company in exchange for the issuance of shares of the Company's common stock
(the "Shares") to certain creditors of KPI and the issuance of warrants to
purchase Shares (the "Warrants") to shareholders of KPI and holders of
certain securities laws claims against KPI and the settlement of the
Company's claim against KPI. On August 11, 1993, the shareholders of the
Company approved the Merger and the issuance of the Shares and Warrants
pursuant thereto.
On December 8, 1993, the Plan was confirmed by the Bankruptcy Court
and the Merger became effective on December 21, 1993. Pursuant to the
Merger, 6,158,977 Shares, or approximately 35 percent of the Shares
outstanding after the Merger, and Warrants to purchase an aggregate of
644,000 Shares (3.5 percent of currently outstanding shares on a fully
diluted basis) were issued under the Plan and Merger. The Warrants are to
be exercisable until June 30, 1999 at $8.00 per share and are subject to
redemption at the option of the Company at prices ranging from $1.92 to
$5.24 per Warrant.
With the Merger, the Company succeeded to substantially all of the
assets of KPI, free and clear of all liens, claims and encumbrances, except
(i) encumbrances relating to certain secured indebtedness of KPI (aggregating
$182.6 million) which was restructured under the Plan and (ii) an option and
right of first refusal held by TKPL on certain developed buildings and
parcels of undeveloped land, which are located in TKPL office centers. KPI
assets acquired by the Company in the Merger included 93 buildings containing
3,848,130 net rentable square feet together with approximately 295 acres of
unimproved land suitable for development, and 1,781,419 Shares held by KPI.
As a result of the Merger, the Company assumed all of the leasing and other
management responsibilities for its properties including those acquired in
the Merger. In addition, KPI transferred all of its debt and equity
interests in TKPL to Southeast, which became the managing general partner
of TKPL.
Competition
The Company competes in the leasing of office space with a
considerable number of other realty concerns, both local and national, some
of which have greater resources than the Company. Through its ownership of
suburban office parks, the Company seeks to attract tenants by offering
office space convenient to residential areas and away from the congestion
and attendant traffic problems of the downtown business districts. In recent
years both local and national concerns have built competing office parks and
single buildings in suburban areas in which the Company's centers are
located. In addition, the Company competes for tenants with large high-rise
office buildings generally located in the downtown business districts of
these cities. Although competition from other lessors of office space varies
from city to city, the Company has been able to attain and maintain what it
considers satisfactory occupancy levels at satisfactory rental rates.
However, higher vacancy levels in metropolitan areas in which the Company's
properties are located have had an adverse affect on the Company's ability
to increase its rental rates while maintaining satisfactory occupancy levels.
Investment Policies
The Company is not currently engaged in the acquisition of additional
properties and does not contemplate acquiring any material additional
properties for the foreseeable future.
The investment policies of the Company may be changed by the Company's
directors at any time without notice to or a vote of security holders. The
Company has no current policy which limits the percentage of its assets which
may be invested in any one type of investment or the geographic areas in
which the Company may acquire properties. The Company, however, intends
to continue to operate so as to qualify for tax treatment as a REIT.
Although it has no current plans to do so, the Company may in the future
invest in other types of office buildings, apartment buildings, shopping
centers, and other properties. It also may invest in the securities
(including mortgages) of companies primarily engaged in real estate
activities, although the Company does not intend to become an investment
company regulated under the Investment Company Act of 1940.
For the year ended December 31, 1993, all of the Company's rental
revenues were derived from the buildings purchased from KPI or buildings
acquired pursuant to the Merger. All of the Company's 1993 interest revenues
were derived from temporary cash investments.
Employees
Prior to the Merger, the Company had seven full-time employees.
Through that date the Company paid Koger Management, Inc. ("KMI"), a wholly
owned subsidiary of KPI, five percent of gross rental income for property
management and leasing services. Salaries for property management and
leasing services were paid by KMI. With the consummation of the Merger, the
Company became fully self-managed. In connection with its current real
estate operations and property management agreements, the Company has a
combined financial, administrative, leasing, and center maintenance staff of
242 employees. A resident general manager is responsible for the leasing
and operations of all buildings in a center or city. The Company has
approximately 100 employees who perform maintenance activities.
Item 2. PROPERTIES
General
At December 31, 1993, the Company owned 219 office buildings located
in 21 Koger Centers in the 16 metropolitan areas of Jacksonville, Miami,
Orlando, St. Petersburg, and Tallahassee, Florida; Atlanta, Georgia;
Greenville, South Carolina; Charlotte, Greensboro and Raleigh, North
Carolina; Memphis, Tennessee; Austin, El Paso, and San Antonio, Texas;
Tulsa, Oklahoma; and Norfolk, Virginia. These centers have been developed
in campus-like settings with extensive Landscaping and ample tenant parking.
The buildings are generally one to five-story structures of contemporary
design and constructed of masonry, concrete and steel, with facings of brick,
concrete and glass. Each building contains lobby and lounge areas and is
centrally air-conditioned. All multi-story buildings contain elevators.
The centers are generally located with easy access, via expressways, to the
central business district and to shopping and residential areas in the
respective communities. The properties are well maintained and adequately
covered by insurance.
Leases on these properties vary between net leases (where the tenant
pays some operating expenses, such as utilities, insurance and repairs) and
gross leases (where the Company pays all such items). Most leases are on a
gross basis and are for terms varying from three to five years. In some
instances, such as when a tenant rents the entire building, leases are for
terms of up to 20 years. At December 31, 1993, the Company's buildings were
on average 88 percent leased and the average effective annual rent per net
rentable square foot was $13.26. The buildings are occupied by numerous
tenants, many of whom lease relatively small amounts of space, conducting a
broad range of commercial activities.
New leases and renewals of existing leases are negotiated at the
current market rate at date of execution. The Company endeavors to require
escalation provisions in all of its gross leases. As of December 31, 1993,
approximately 38 percent of the annualized gross rental revenues was derived
from existing leases containing rental escalation provisions based upon
changes in the Consumer Price Index (some of which contain maximum rates of
increase); approximately 56 percent was derived from leases containing
escalation provisions based upon real estate tax and operating expense
increases; and approximately 6 percent was derived from leases without
escalation provisions. Some of the Company's leases contain options which
allow the lessee to renew for varying periods, generally at the same rental
rate and subject, in most instances, to Consumer Price Index escalation
provisions.
The Company owns approximately 295 acres of unimproved land suitable
for development located in the metropolitan areas of Birmingham, Alabama;
Jacksonville, Miami, Orlando and St. Petersburg, Florida; Atlanta, Georgia;
Columbia and Greenville, South Carolina; Charlotte, Greensboro, and Raleigh,
North Carolina; Memphis, Tennessee; Austin and San Antonio, Texas; Tulsa,
Oklahoma; and Norfolk and Richmond, Virginia. A portion of this land has
been partially or wholly developed with streets and/or utilities.
Title to Property
No examinations of title to real properties have been made for the
purpose of this report. However, the Company obtained title insurance on all
of its properties acquired prior to the Merger at the time of their purchases.
Although no additional title insurance was obtained related to the properties
acquired from KPI pursuant to the Merger, the Company succeeded to KPI's
existing title policies on the properties acquired in the Merger. The
Company believes that all of the real estate described herein as owned by the
Company is owned in fee simple without encumbrances except for the leases and
mortgages described in this report and other encumbrances which do not
substantially interfere with the use of the properties or have a material
adverse effect upon their values.
Property Location and Other Information
The following table sets forth information relating to the properties
owned by the Company as of December 31, 1993.
Land
Number Net Improved Unimproved
of Rentable with Bldgs Land
Center Buildings Sq.Ft. (In Acres) (In Acres)
Atlanta Chamblee 22 947,920 76.2 2.5
Atlanta Gwinnett 31.0
Austin 12 370,860 29.6 1.8
Birmingham 30.0
Charlotte Carmel 1 109,600 7.6 27.0
Charlotte East 11 468,820 39.9 3.9
Columbia Spring Valley 1.0
El Paso 14 251,930 19.6
Greensboro South 13 610,470 46.0
Greensboro Wendover 18.5
Greenville 8 290,560 24.7 4.5
Jacksonville Baymeadows 4 467,860 34.6 13.3
Jacksonville Central 32 677,680 48.4 0.4
Memphis Germantown 3 258,400 18.4 16.2
Memphis Kirby Gate 23.0
Miami 1 96,800 5.6 8.1
Norfolk West 1 59,680 4.0 16.0
Orlando Central 22 565,220 46.0
Orlando University 2 159,600 11.6 15.5
Raleigh Crossroads 1 77,500 9.1 28.0
Richmond South 23.0
San Antonio 26 788,670 63.5 11.0
St. Petersburg 15 519,320 64.4 7.2
Tallahassee Apalachee Pkwy 14 408,500 33.7
Tallahassee Capital Circle 4 300,700 23.3
Tulsa North 2 103,520 9.1 13.4
Tulsa South 11 372,760 26.9
219 7,906,370 642.2 295.3
<PAGE>
Occupancy
The following table sets forth, with respect to the Company's centers
at December 31, 1993, the number of buildings, number of leases, net rentable
square feet, weighted average leased rate, and the average effective annual
rent per net rentable square foot.
<TABLE>
<CAPTION>
Avg. Effective
Net Weighted Annual Rent
Number Number Rentable Average Per
Of Of Square Leased Net Rentable
Center Buildings Leases Feet Rate (1) Sq. Ft. (2)
<S> <C> <C> <C> <C> <C>
Atlanta Chamblee 22 194 947,920 83% $14.65
Austin 12 180 370,860 95% 11.90
Charlotte Carmel 1 14 109,600 99% 15.25
Charlotte East 11 168 468,820 76% 12.90
El Paso 14 195 251,930 93% 12.40
Greensboro South 13 186 610,470 94% 13.10
Greenville 8 143 290,560 80% 13.05
Jacksonville Baymeadows 4 32 467,860 100% 14.50
Jacksonville Central 32 265 677,680 68% 12.00
Memphis Germantown 3 59 258,400 99% 16.60
Miami 1 19 96,800 94% 18.45
Norfolk West 1 16 59,680 79% 16.40
Orlando Central 22 178 565,220 87% 13.25
Orlando University 2 39 159,600 88% 15.95
Raleigh Crossroads 1 8 77,500 100% 15.40
San Antonio 26 302 788,670 89% 10.35
St. Petersburg 15 163 519,320 80% 12.65
Tallahassee Apalachee Pkwy 14 95 408,500 93% 14.75
Tallahassee Capital Circle 4 9 300,700 100% 16.70
Tulsa North 2 29 103,520 83% 9.75
Tulsa South 11 155 372,760 81% 9.05
Total 219 2,449 7,906,370
Weighted Average 88% $13.26
<FN>
(1) The percent leased rates have been calculated by dividing total net
rentable square feet leased in an office building by net rentable square
feet in such building, which excludes public or common areas.
(2) Rental rates are computed by dividing annual gross rental revenues for a
center by the net rentable square feet applicable to such gross rental
revenues. Annual rental is rounded to the nearest $.05.
</TABLE>
<PAGE>
Lease Expirations on the Company's Properties
The following schedule sets forth for each of the Company's centers (i)
the number of tenants whose leases will expire in calendar years 1994 through
2002, (ii) the total area in square feet covered by such leases, (iii) the
current annual rental represented by such leases, and (iv) the percentage of
gross annual rental for such center contributed by such leases. This
information is based on the buildings owned by the Company on December 31,
1993 and on the terms of leases in effect as of December 31, 1993, on the
basis of then existing base rentals, and without regard to the exercise of
options to renew. This table does not include tenants in possession where
leases were in process of execution but were not delivered to the Company at
December 31, 1993. Leases representing 23.0 percent, 28.5 percent and 16.2
percent of the Company's annual rentals at December 31, 1993 are due to
expire in 1994, 1995, and 1996, respectively.
<TABLE>
<CAPTION>
Leases in Effect December 31, 1993, Expiring During the Calendar Years
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
ATLANTA CHAMBLEE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Tenants 94 28 36 11 11 7 2 2 3
Number of Sq. Ft. 144,581 95,405 134,927 61,881 122,350 63,287 32,964 39,490 89,667
Annual Rental $ 1,994,078 1,350,561 2,086,746 792,403 1,721,141 916,029 647,733 518,790 1,482,679
% Gross Annual Rent 17.4% 11.7% 18.1% 6.9% 15.0% 8.0% 5.6% 0.0% 4.5% 12.8%
AUSTIN
Number of Tenants 74 45 51 5 5
Number of Sq. Ft. 132,088 108,219 86,398 18,150 8,031
Annual Rental $ 1,459,616 1,260,206 1,164,096 216,395 102,932
% Gross Annual Rent 34.7% 30.0% 27.7% 5.1% 2.5% 0.0% 0.0% 0.0% 0.0% 0.0%
CHARLOTTE EAST
Number of Tenants 97 34 23 10 4
Number of Sq. Ft. 171,569 89,341 54,816 15,901 24,130
Annual Rental $ 2,181,362 1,277,254 679,557 191,073 261,779
% Gross Annual Rent 47.5% 27.8% 14.8% 4.2% 5.7% 0.0% 0.0% 0.0% 0.0% 0.0%
CHARLOTTE CARMEL
Number of Tenants 2 2 3 6 1
Number of Sq. Ft. 2,402 6,530 59,570 38,849 1,054
Annual Rental $ 42,624 99,643 795,544 693,965 21,065
% Gross Annual Rent 2.6% 6.0% 0.0% 48.1% 42.0% 0.0% 1.3% 0.0% 0.0% 0.0%
EL PASO
Number of Tenants 86 35 56 9 8 1
Number of Sq. Ft. 73,786 51,167 73,967 15,018 16,190 4,726
Annual Rental $ 872,837 634,700 882,557 211,250 210,192 99,840
% Gross Annual Rent 30.0% 21.8% 30.3% 7.3% 7.2% 0.0% 3.4% 0.0% 0.0% 0.0%
GREENSBORO SOUTH
Number of Tenants 84 36 40 11 10 1 2 1 1
Number of Sq. Ft. 75,772 81,943 97,720 114,592 139,446 720 15,254 17,366 30,521
Annual Rental $ 1,051,701 1,185,330 1,293,010 1,620,547 1,640,152 9,000 125,128 199,564 378,328
% Gross Annual Rent 14.0% 15.8% 17.2% 21.6% 21.9% 0.1% 1.7% 2.7% 5.0% 0.0%
GREENVILLE
Number of Tenants 88 21 20 7 5 2
Number of Sq. Ft. 123,401 46,102 24,712 14,949 11,486 11,938
Annual Rental $ 1,564,713 631,657 313,113 197,418 140,700 190,797
% Gross Annual Rent 51.5% 20.8% 10.3% 6.5% 4.6% 0.0% 0.0% 0.0% 0.0% 6.3%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Leases in Effect December 31, 1993, Expiring During the Calendar Years
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
JACKSONVILLE BAYMEADOWS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Tenants 2 14 5 5 5 1
Number of Sq. Ft. 4,924 381,641 24,063 5,825 23,226 23,900
Annual Rental $ 88,288 5,416,024 382,688 77,552 361,160 378,160
% Gross Annual Rent 1.3% 80.8% 5.7% 1.2% 5.4% 0.0% 5.6% 0.0% 0.0% 0.0%
JACKSONVILLE CENTRAL
Number of Tenants 107 53 48 20 27 6 4
Number of Sq. Ft. 113,296 12,045 99,577 58,316 91,340 43,308 23,406
Annual Rental $ 1,416,345 1,591,111 1,198,288 673,000 1,021,688 507,725 279,181
% Gross Annual Rent 21.2% 23.8% 17.9% 10.1% 15.3% 7.6% 0.0% 0.0% 0.0% 4.1%
MEMPHIS GERMANTOWN
Number of Tenants 17 11 17 9 5
Number of Sq. Ft. 98,490 15,521 75,795 49,042 16,597
Annual Rental $ 1,667,886 255,451 1,230,007 830,815 265,037
% Gross Annual Rent 39.3% 6.0% 28.9% 19.6% 6.2% 0.0% 0.0% 0.0% 0.0% 0.0%
MIAMI
Number of Tenants 3 9 5 1 1
Number of Sq. Ft. 24,399 46,803 11,391 823 7,746
Annual Rental $ 414,073 894,356 212,346 14,643 145,380
% Gross Annual Rent 24.6% 53.2% 12.6% 0.9% 0.0% 8.7% 0.0% 0.0% 0.0% 0.0%
NORFOLK WEST
Number of Tenants 7 4 2 2 1
Number of Sq. Ft. 23,432 11,492 2,615 4,822 5,030
Annual Rental $ 386,842 214,592 36,419 70,868 69,414
% Gross Annual Rent 49.7% 27.6% 4.7% 0.0% 9.1% 0.0% 0.0% 0.0% 0.0% 8.9%
ORLANDO CENTRAL
Number of Tenants 75 38 35 17 9 2 1 1
Number of Sq. Ft. 165,999 80,046 81,103 104,064 40,395 2,494 12,606 7,053
Annual Rental $ 2,217,442 1,123,425 1,040,580 1,341,690 505,724 33,647 170,522 92,535
% Gross Annual Rent 33.9% 17.2% 15.9% 20.6% 7.7% 0.5% 2.6% 0.0% 0.0% 1.6%
ORLANDO UNIVERSITY
Number of Tenants 13 6 9 6 3 1 1
Number of Sq. Ft. 19,569 34,040 20,130 24,768 12,230 26,876 3,171
Annual Rental $ 337,501 579,566 303,112 340,276 218,491 407,550 60,439
% Gross Annual Rent 15.0% 25.8% 13.5% 15.1% 9.7% 18.1% 0.0% 0.0% 0.0% 2.8%
RALEIGH CROSSROADS
Number of Tenants 4 1 2 1
Number of Sq. Ft. 3,859 1,525 43,794 28,252
Annual Rental $ 59,218 23,646 670,073 437,681
% Gross Annual Rent 5.0% 2.0% 56.3% 0.0% 0.0% 0.0% 36.7% 0.0% 0.0% 0.0%
SAN ANTONIO
Number of Tenants 142 72 47 14 21 4 2
Number of Sq. Ft. 175,399 227,267 89,323 39,399 136,164 15,655 17,918
Annual Rental $ 1,827,234 2,350,340 934,613 412,692 1,349,864 170,014 203,893
% Gross Annual Rent 25.2% 32.4% 12.9% 5.7% 18.6% 2.3% 0.0% 0.0% 0.0% 2.9%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Leases in Effect December 31, 1993, Expiring During the Calendar Years
1994 1995 1996 1997 1998 1999 2000 2001 2002 OTHER
ST. PETERSBURG
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Tenants 58 34 34 16 16 3 1 1
Number of Sq. Ft. 102,601 73,673 51,748 96,210 56,946 21,532 8,182 7,160
Annual Rental $ 1,370,142 1,069,677 685,490 905,626 735,732 273,865 110,387 127,278
% Gross Annual Rent 25.9% 20.3% 13.0% 17.2% 13.9% 5.2% 2.1% 0.0% 0.0% 2.4%
TALLAHASSEE APALACHEE PKWY
Number of Tenants 44 21 12 8 8 1 1
Number of Sq. Ft. 96,095 123,470 28,136 64,720 57,484 9,452 2,346
Annual Rental $ 1,383,573 1,910,093 373,370 987,100 796,661 140,042 31,392
% Gross Annual Rent 24.6% 34.0% 6.6% 17.6% 14.2% 2.5% 0.0% 0.0% 0.5% 0.0%
TALLAHASSEE CAPITAL CIRCLE
Number of Tenants 7 2
Number of Sq. Ft. 219,700 81,000
Annual Rental $ 3,623,111 1,401,150
% Gross Annual Rent 0.0% 72.1% 0.0% 27.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
TULSA NORTH
Number of Tenants 12 5 8 4
Number of Sq. Ft. 21,207 6,644 45,885 12,547
Annual Rental $ 188,667 61,080 451,284 140,879
% Gross Annual Rent 22.4% 7.3% 53.6% 0.0% 16.7% 0.0% 0.0% 0.0% 0.0% 0.0%
TULSA SOUTH
Number of Tenants 94 31 25 3 1 1
Number of Sq. Ft. 71,045 82,974 111,937 6,806 6,051 22,643
Annual Rental $ 664,616 716,593 1,004,964 64,706 50,580 229,165
% Gross Annual Rent 24.4% 26.2% 36.8% 2.4% 1.9% 8.3% 0.0% 0.0% 0.0% 0.0%
TOTAL OFFICE BUILDINGS
Number of Tenants 1,103 507 475 157 150 27 10 1 4 15
Number of Sq. Ft. 1,643,914 1,795,548 1,158,037 831,034 818,284 213,713 126,938 17,366 72,357 165,343
Annual Rental $ 21,188,758 26,268,416 14,942,313 11,073,880 10,287,545 2,832,417 1,990,516 199,564 928,510 2,506,216
% Gross Annual Rent 23.0% 28.5% 16.2% 12.0% 11.2% 3.1% 2.2% 0.2% 1.0% 2.6%
</TABLE>
<PAGE>
Fixed Rate Indebtedness on the Company's Properties
The following table shows indebtedness (dollars in thousands)
encumbering each of the Company's properties which have fixed interest rates
as of December 31, 1993.
Weighted
Mortgage Average
Loan Interest
Center Balance Rate
Atlanta Chamblee $ 34,101 8.12%
Atlanta Gwinnett 79 8.50%
Austin 3,453 9.55%
Birmingham 32 8.50%
Charlotte Carmel 9,443 6.69%
Charlotte East 14,702 8.22%
El Paso 1,674 9.15%
Greensboro South 23,953 8.74%
Greenville 7,296 6.40%
Jacksonville Baymeadows 35,773 6.67%
Jacksonville Central 13,521 6.75%
Memphis Germantown 13,554 8.57%
Memphis Kirby Gate 68 8.50%
Miami 8,061 6.68%
Norfolk West 4,028 9.97%
Orlando Central 18,625 8.20%
Orlando University 9,845 6.56%
Raleigh Crossroads 4,857 9.96%
San Antonio 7,407 8.14%
St. Petersburg 20,701 7.82%
Tallahassee Apalachee Pkwy 15,837 6.69%
Tallahassee Capital Circle 21,068 8.02%
Tulsa North 9 8.50%
Tulsa South 4,455 9.95%
Total $272,542 8.12%
For additional information concerning certain interest rate reset
provisions and reset dates for these loans see Note 5, "Loan and Mortgages
Payable" of the Notes to Consolidated Financial Statements.
<PAGE>
Indebtedness with Variable Interest Rates
In addition to the above mortgage indebtedness, at December 31, 1993,
the Company had $58,861,000 of loans outstanding with variable interest
rates which are collateralized by mortgages on certain operating properties.
These loans bear interest at rates based upon such institutions' prime rates.
Information with respect to these loans is as follows (dollars in thousands):
<TABLE>
<CAPTION>
Approximate Approximate
Balance Weighted Avg. Maximum Average Wtg Avg Int
Year Ended at End Int Rate at Amount Amount Rate During
December 31 of Period End of Period Outstanding Outstanding the Period(1)
<C> <C> <C> <C> <C> <C>
1993 $58,861 6.6% $ 98,262 $ 95,110 6.2%
1992 98,262 6.0% 99,379 98,918 6.2%
1991 99,379 6.2% 101,163 96,481 7.9%
<FN>
(1) The approximate weighted average interest rates during the periods
were computed by dividing the interest costs for the year by the
average balance outstanding during the year.
</TABLE>
As of December 31, 1993, $27,625,000 of this indebtedness represents a
bank loan which bears interest at prime plus 1/2 percent and matures on
December 21, 1998, with an optional two year extension. Monthly payments
include interest and fixed payments of principal which increase annually.
This loan is collateralized by properties with a carrying value of
approximately $49,888,000 at December 31, 1993.
As of December 31, 1993, $10,278,000 of this indebtedness represents
junior bank mortgage debt which was assumed from KPI pursuant to the Merger.
This junior bank mortgage debt matures in December, 2000 and accrues interest
at the prime rate of the respective lender. Accrued interest on this debt
must be paid no later than December, 1998 and monthly interest payments are
required beginning in January, 1999. The accrued interest on this debt is
forgiven if the debt is paid in full prior to December, 1996. The junior
bank mortgage debt is secured by properties that also serve as collateral
for certain fixed rate senior bank mortgage debt assumed from KPI pursuant
to the Merger.
As of December 31, 1993, $20,958,000 of this indebtedness represents
the outstanding balance of other mortgage debt assumed from KPI pursuant to
the Merger. This debt bears interest at the respective institution's prime
rate plus one percent with a minimum rate of 6.62 percent and a maximum rate
of 10 percent. Interest only payments are due on a monthly basis and these
loans mature in June, 2001. These loans are collateralized by properties
with a carrying value of approximately $24,850,000 at December 31, 1993.
Management Agreement
Prior to the Merger, KMI was responsible for the leasing, operation,
maintenance and management of each of the Company's properties. The
management fee was five percent of the gross rental receipts collected on
the property managed for the Company by KMI. For the years ended December
31, 1993, 1992, and 1991, the Company incurred management fee expense to KMI
of $2,184,000, $2,314,000, and $2,281,000, respectively. With the Merger,
the Company assumed all of the leasing and other management responsibilities
for its properties including those acquired in the Merger.
Item 3. LEGAL PROCEEDINGS
An action in the U. S. District Court, Middle District of Florida (the
"District Court") was filed on October 11, 1990, by Gerald and Althea Best
and Jerome Wilem, shareholders of the Company, against KPI, the Company, two
subsidiaries of KPI (Koger Advisors, Inc. and KMI), Messrs. Allen R. Ransom
(a former director of the Company), Ira M. Koger (a former director of the
Company), S. D. Stoneburner, and W.F.E. Kienast (a former director of the
Company), alleging that various press releases, shareholder reports, and/or
securities filings failed to disclose and/or misrepresented the Company's
business policies and seeking damages therefore (the "Securities Action").
William L. Coalson, a shareholder of the Company, was subsequently added as
an additional plaintiff. The Company believes that the claims asserted in
the Securities Action are without merit and intends to vigorously contest
the Securities Action.
A derivative action in the District Court was commenced on October 29,
1990, by Howard Greenwald and Albert and Phyllis Schlesinger, shareholders
of the Company, against the Company, KPI, all of the then current directors
of the Company, including: Ira M. Koger, James B. Holderman, Allen R. Ransom,
Wallace F. E. Kienast, S. D. Stoneburner, Yank D. Coble, Jr., G. Christian
Lantzsch, A. Paul Funkhouser and Stephen D. Lobrano, alleging breach of
fiduciary duty by favoring KPI over the interest of the Company and failing
to disclose or intentionally misleading the public as to the Company's cash
flow, dividend and financing policies and status, and seeking damages
therefor (the "Derivative Action"). During the course of the Derivative
Action, the plaintiffs therein further alleged Mr. Lobrano was liable to the
Company for certain alleged acts of legal malpractice. The Company's Board
of Directors' Independent Litigation Committee, which was composed of outside
independent members of the Company's Board of Directors, completed an
extensive investigation of the facts and circumstances surrounding the
Derivative Action, including the allegations against Mr. Lobrano. It was
the conclusion of this committee that the ultimate best interest of the
Company and its shareholders would not be served in prosecuting this
litigation. Subsequently, the Company moved that the Derivative Action be
dismissed under the provisions of Florida law. Thereafter, the plaintiffs
filed a Second Amended and Supplemental Complaint which realleged the
original cause of action ("Count I"); and realleged the cause of action
against Stephen D. Lobrano ("Count II"); and a new cause of action against
the members of the Special Litigation Committee for alleged violation of
fiduciary duties in conducting its investigation ("Count III"). During
1993, the Company filed further motions seeking dismissal of the Second
Amended and Supplemental Complaint. On January 27, 1994, the United States
Magistrate issued his Report and Recommendation concerning the Derivative
Action, which recommended that (1) Count I should be dismissed pursuant to
the Special Litigation Committee Report, (2) Count III against the Special
Litigation Committee members should be dismissed, and (3) Count II should
not be dismissed. Both plaintiffs and the Company have filed objections to
portions of this Report and Recommendation, which is now pending before the
District Court.
Pursuant to Florida Statutes Section 607.0850, the Indemnification
Committee of the Company's Board of Directors has made an initial
determination that certain officers and directors and former officers and
directors of the Company who are defendants in each of the Securities Action
and the Derivative Action are entitled to the advancement of expenses in
defending these actions. This Committee will not make a final determination
on indemnification of these defendants until a final resolution of these
actions. The Committee has agreed to indemnify these defendants to the
extent permitted by law. Should it be determined that any defendant was not
entitled to indemnification, such defendant will be obligated to reimburse
the Company for any expenses it has incurred or reimbursed in the defense of
that defendant. In accordance with Florida law, each of the present and
former directors and officers, who are defendants in the suits described
above, have so agreed to reimburse the Company. Through December 31, 1993,
the Company had paid in attorneys' fees and expenses incurred on behalf of
itself, certain directors and officers and former directors and officers in
connection with the Securities Action and the Derivative Action $351,865.
On March 23, 1993, the Securities and Exchange Commission ("the
Commission") entered an Order directing a private investigation with respect
to KPI's accounting practices, including the accuracy of financial
information included in certain reports filed with the Commission, possible
insider trading in KPI's stock, and possible misleading statements concerning
the financial condition of KPI and its ability to pay dividends to its
shareholders. Prior to March 23, 1993, the Commission had been engaged in
a confidential investigation without a formal order. As a result of the
Merger of KPI with and into the Company, the Company has assumed
responsibility for responding to the requests and subpoenas of the Commission
staff in connection with this private investigation. Although the staff of
the Commission had subpoenaed KPI documents and former employees of KPI, who
are presently employees of the Company, for testimony, on February 8, 1994,
the Commission staff advised the Company, through its counsel, that the
scheduled depositions of former KPI employees and the review of documents of
KPI had been suspended. The Company has received no communication from the
Commission staff since the above notice of suspension. Based on the
information currently available to the Company, it is unable to determine
whether or not the private investigation will lead to formal legal
proceedings or administrative actions or whether or not such legal
proceedings or administrative actions will involve the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is listed on the American Stock Exchange.
The high and low closing sales prices for the periods indicated were:
Years
1993 1992 1991
Quarter High Low High Low High Low
March 31 $9 3/8 $4 3/8 $6 1/4 $4 1/8 $11 3/8 $7 1/2
June 30 8 1/2 7 1/8 5 5/8 4 5/8 11 8 1/2
September 30 9 7 1/8 5 5/8 4 3/4 9 3/4 4
December 31 9 1/4 7 3/4 5 1/4 3 1/2 6 3 1/4
The Company intends that the dividend payout in the last quarter of
each year will generally be adjusted to reflect the distribution of at least
95 percent of the Company's real estate investment trust taxable income as
required by the Federal income tax laws for qualification as a real estate
investment trust. Set forth below are the dividends per share for the three
years ended December 31, 1993.
Years
Quarter 1993 1992 1991
March 31 -- -- $.325
June 30 -- -- .325
September 30 -- -- .120
December 31 -- -- --
The terms of the Company's secured debt subjects the Company to certain
dividend limitations which, however, will not restrict the Company from
paying the dividends required to maintain its qualification as a REIT. In
the event that the Company no longer qualifies as a REIT, additional dividend
limitations would be imposed by the terms of such debt. In addition, two of
the Company's bank lenders have required that until the Company has raised
an aggregate of $50 million of equity the following limitations on dividends
will be applied: (a) in 1996 and 1997, $11 million unless imposition of the
limit would cause loss of REIT status and (b) in 1998 and 1999, $11 million
regardless of impact on REIT status.
On March 1, 1994, there were approximately 1,344 shareholders of record
and the closing price of the Company's stock on the American Stock Exchange
was $7.375.
<PAGE>
Item 6. SELECTED FINANCIAL DATA
The following selected financial data sets forth certain financial
information of the Company as of or for the five periods ended December 31,
1993.
<TABLE>
<CAPTION>
(In thousands except per share data)
Income Information 1993* 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Rental revenues $46,108 $45,957 $45,393 $ 28,882 $ 17,561
Interest revenues 206 231 7,099 13,840 12,911
Total operating revenues 46,406 46,188 52,492 42,722 30,472
Property operating expenses 20,691 19,380 18,541 10,764 6,252
Mortgage and loan interest 11,471 11,530 13,065 4,860 0
Depreciation and amortization 8,958 8,089 7,484 4,417 2,548
Net income (loss) 2,452 933 (5,949) 21,204 20,479
Earnings (loss) per common share .18 .07 (.43) 1.48 1.68
Dividends per share - - .77 1.675 1.80
Weighted average shares outstanding 13,352 13,220 13,750 14,309 12,198
Balance Sheet Information
Operating properties (before depreciation) $566,770 $311,286 $308,293 $304,690 $167,204
Undeveloped land 40,036 0 0 0 0
Loans to Koger Properties, Inc.
foreclosed in-substance 0 94,889 99,484 0 0
Loans to Koger Properties, Inc.:
Term loans 0 0 0 88,025 100,475
Land Mortgage 0 0 0 28,254 0
Total assets 615,089 396,841 399,241 417,878 265,684
Debt 330,625 155,362 158,805 150,952 0
Shareholders' equity 275,450 235,514 234,581 261,412 264,291
<FN>
* On December 21, 1993, KPI was merged with and into the Company. See
Notes to Consolidated Financial Statements for additional information with
respect to the Merger.
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the selected
financial data and the consolidated financial statements appearing elsewhere
in this report. Historical results and percentage relationships in the
Consolidated Financial Statements, including trends which might appear,
should not be taken as indicative of future operations or financial position.
The Company has prepared and is responsible for the accompanying
consolidated financial statements and related consolidated financial
information included in this report. These consolidated financial statements
were prepared in accordance with generally accepted accounting principles and
include amounts determined using management's best judgments and estimates of
the expected effects of events and transactions that are being accounted for
currently.
The Company's independent auditors, Deloitte & Touche, have audited the
accompanying consolidated financial statements. The objective of their
audit, conducted in accordance with generally accepted auditing standards,
was to express an opinion on the fairness of presentation, in all material
respects, of the Company's consolidated financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. They evaluated the Company's internal control structure to the
extent considered necessary by them to determine the audit procedures
required to support their report on the consolidated financial statements
and not to provide assurance on such structure.
The Company maintains accounting and other control systems which
management believes provide reasonable assurance that assets are safeguarded
and that the books and records reflect the authorized transactions of the
Company, although there are inherent limitations in any internal control
structure, as well as cost versus benefit considerations. The Audit
Committee of the Company's Board of Directors, which is composed exclusively
of directors who are not officers of the Company, directs matters relating
to audit functions, annually appoints the auditors, reviews the auditors'
independence, reviews the scope and results of the annual audit, and
periodically reviews the adequacy of the Company's internal control
structure.
RECENT DEVELOPMENTS
Merger of KPI and the Company; Resolution of KPI Chapter 11 Case. On
September 25, 1991, KPI filed a petition under the Bankruptcy Code in the
Bankruptcy Court. The Company was the single largest creditor of KPI in the
KPI Chapter 11 Case (indebtedness to the Company of approximately $116
million). On April 30, 1993, the Company and KPI jointly proposed the Plan
which provided, among other things, for the merger of KPI with and into the
Company in exchange for the issuance of the Shares and Warrants and the
assumption of the restructured KPI indebtedness.
On December 8, 1993, the Plan was confirmed by the Bankruptcy Court and
the Merger became effective on December 21, 1993. Pursuant to the Merger,
6,158,977 Shares, or approximately 35 percent of the Shares outstanding after
the Merger, and Warrants to purchase an aggregate of 644,000 Shares (3.5
percent of currently outstanding shares on a fully diluted basis) were issued
under the Plan and Merger. The Warrants are to be exercisable until June 30,
1999 at $8.00 per share and are subject to redemption at the option of the
Company at prices ranging from $1.92 to $5.24 per Warrant.
With the Merger, the Company succeeded to substantially all of the
assets of KPI, free and clear of all liens, claims and encumbrances, except
(i) encumbrances relating to certain secured indebtedness of KPI (aggregating
$182.6 million) which was restructured under the Plan and (ii) an option and
a right of first refusal held by TKPL on certain developed buildings and
parcels of undeveloped land, which are located in TKPL office centers. KPI
assets acquired by the Company in the Merger included 93 buildings containing
3,848,130 net rentable square feet together with approximately 295 acres of
unimproved land suitable for development, and 1,781,419 Shares held by KPI.
As a result of the Merger, the Company assumed all of the leasing and other
management responsibilities for its properties including those acquired in
the Merger. The Company also acquired in connection with the Merger all of
the debt and equity interest in TKPL previously owned by KPI. Under the
provisions of the TKPL plan of reorganization, recovery of any value to
the Company in respect of the foregoing debt and equity interests in TKPL
is dependent upon the refinancing of the indebtedness restructured under the
TKPL plan (approximately $149.7 million as of December 31, 1993) or sales of
TKPL assets at prices sufficient to retire this indebtedness. The TKPL plan
sets forth benchmarks for the accomplishment of retirement of certain of this
indebtedness within four, five and six years, and requires that all such
indebtedness be retired by June 1, 2000. In the event that refinancing or
sale can be accomplished in the period prior to June 1, 1999, certain
indebtedness may be retired at a discount. In the event that benchmarks for
retirement of indebtedness are not met, the TKPL plan provides that an
alternate general partner will assume responsibilities for operation and
management of TKPL, and will initiate procedures to liquidate the assets of
TKPL on an expedited basis. There is no assurance that necessary
refinancing(s) and/or sale(s) can be achieved or that the alternate general
partner will not assume control of TKPL. In view of the foregoing and the
likelihood of satisfying such conditions, the Company has determined that
its debt and equity interests in TKPL have no recoverable value.
Debt Assumed Pursuant To The Merger. On December 21, 1993, the Company
assumed approximately $182.6 million of restructured debt from KPI in
connection with the Merger. Information with respect to such debt is as
follows (in thousands):
Balance
Assumed
KPI Restructured Debt 12/21/93
Senior Bank Mortgage Debt $ 83,992
Junior Bank Mortgage Debt 11,354
Insurance Company Mortgage Debt 60,707
Negative Amortization (Insurance
Company Debt) 80
Other Mortgage Debt 21,168
Tax Notes 5,040
Mechanics' Liens 287
Total $182,628
For additional information concerning terms, interest rates, and maturity
dates see "Loans and Mortgages Payable" footnote contained in the Notes to
Consolidated Financial Statements.
RESULTS OF OPERATIONS
Rental Revenues. Rental revenues increased $151,000 from the year ended
December 31, 1992, to the year ended December 31, 1993. This increase
resulted primarily from (i) the rental revenues (from December 21, 1993
through December 31, 1993) from the 93 buildings acquired pursuant to the
Merger (approximately $1,345,000) and (ii) increases in miscellaneous rental
revenues during 1993. These increases to rental revenues were substantially
offset by the decrease in rental revenues (approximately $1,311,000) on the
126 buildings which the Company owned the entire year. For 1992, rental
revenues increased $564,000 from the year ended December 31, 1991. This
increase resulted primarily from (i) increased billings to tenants for
contingent rental revenues and (ii) the effect of reductions in the
occupancy rate of the Company's buildings being partially offset by increased
rental rates. At December 31, 1993, the Company's buildings were on average
88 percent leased. At December 31, 1992 and 1991, the Company's buildings
were on average 88 and 91 percent leased, respectively.
Interest Revenues. Interest revenues declined $25,000 from the year ended
December 31, 1992 to the year ended December 31, 1993. This decline in
interest revenues was due to (i) lower interest rates earned on the Company's
temporary cash investments and (ii) the lower average balance of cash to
invest. For 1992, interest revenues decreased $6,868,000 from the year ended
December 31, 1991. This decrease resulted from the failure of KPI to pay
contractual interest due on or after September 30, 1991, under the Restated
Credit Agreement and the Land Credit Agreement.
During the KPI Chapter 11 Case, the Company ceased to record interest on
loans under the Restated Credit Agreement and the Land Credit Agreement. As
a result of declines in the estimated fair value of the collateral underlying
such loans to KPI prior to the Merger, which had been deemed foreclosed
in-substance, the Company recorded a provision for loss in the amount of
$18.7 million through December 21, 1993. This included a $2.0 million
provision recorded during 1992 based upon management's periodic evaluation
of collateral values.
During 1993, 1992, and 1991, interest revenues on loans to KPI under the
Credit Agreement and Restated Credit Agreement totalled $0, $0, and
$4,786,000, respectively. The Credit Agreement and Restated Credit Agreement
loans had floating interest rates based on the average yield of U. S.
Treasury Notes maturing in three years plus 2.5 percent, with an 11 percent
floor and a 13 percent ceiling. On the effective date of the Merger, the
Company received the collateral for the Restated Credit Agreement loans in
full satisfaction of these loans.
During 1993, 1992, and 1991, interest revenues on loans to KPI under the
Land Credit Agreement (the "Land Loans") totalled $0, $0, and $1,934,000.
The Land Loans contractually earned interest at a fixed rate of 10.25 percent
and were to mature in November, 2000. The Company did not receive any debt
service payments in respect of the Land Loans during the pendency of KPI's
Chapter 11 Case. On the effective date of the Merger, the Company received
the collateral for the Land Credit Agreement loans in full satisfaction of
these loans.
Management Fee Revenues. During 1993, the Company earned $92,000 of
management fees from TKPL and third party management contracts which it
assumed from KPI on the date of the Merger. Management fee revenue does not
qualify as passive income for purposes of determining whether the Company has
met the REIT requirement that at least 95 percent of the Company's gross
income is derived from passive sources. Accordingly, in the event the
Company derives income in excess of five percent from management and other
"non-passive" activities, the Company would no longer qualify as a REIT for
federal income tax purposes.
Expenses. Property operating expenses include such charges as utilities,
taxes, janitorial, maintenance, and property insurance. During 1993,
property operating expenses and management fees increased $1,311,000 or 6.8
percent, compared to 1992, primarily due to (i) the operating expenses (from
December 21, 1993 through December 31, 1993) on the 93 buildings acquired
pursuant to the Merger (approximately $546,000) and (ii) increases in real
estate taxes, utilities and maintenance costs on the 126 buildings owned by
the Company for the entire year. During 1992, property operating expenses
and management fees increased $839,000 or 4.5 percent primarily due to
increases in maintenance costs on the Company's buildings, which was
partially offset by reductions in real estate taxes and utility costs during
1992. For 1993, property operating expenses and management fees as a percent
of rental revenues were 44.9 percent. For 1992 and 1991, property operating
expenses and management fees as a percent of rental revenues were 42.2
percent and 40.8 percent, respectively. In 1993, the increase in the percent
of operating expenses and management fees to rental revenues was primarily
due to decreases in rental revenues and increases in real estate taxes,
utilities and maintenance costs on the 126 buildings owned by the Company for
the entire year. In 1992, the increase in the percent of operating expenses
and management fees to rental revenues was due to the increase in maintenance
costs of the Company's buildings.
Depreciation expense has been calculated on the straight-line method based
upon the useful lives of the Company's depreciable assets, generally 5 to 40
years. For 1993, depreciation expense increased $731,000 or 9.5 percent
compared to the prior year due to improvements made to the Company's existing
properties during 1993 and 1992. For 1992, depreciation expense increased
$544,000 or 7.6 percent compared to the prior year due to improvements made
to the Company's existing properties during 1991 and 1992.
For 1993, amortization expense increased $138,000 compared to the prior year
due to amounts incurred for loan financing costs, deferred tenant costs, and
goodwill related to the Merger during the year. For 1992, amortization
expense increased $61,000 compared to the prior year due to amounts incurred
for loan financing costs and deferred tenant costs during the year.
Under an advisory agreement with Koger Advisors, Inc. ("KA"), which was
terminated by the Company on December 31, 1991, the Company reimbursed KA for
actual costs incurred in performing advisory services. Advisory expenses
were 0.1 percent of average annualized invested assets for 1991.
General and administrative expenses were 0.6 percent, 1.0 percent, and 0.5
percent of average annualized invested assets for 1993, 1992, and 1991,
respectively. For 1993, general and administrative expenses decreased
$1,664,000 compared to the prior year primarily due to the reduction of
required legal and professional services for dealing with the KPI Chapter 11
Case. For 1992, general and administrative expenses increased $1,963,000
primarily due to (i) the transfer of general and administrative functions
from KA to the Company and (ii) increases in legal fees and professional
fees, principally related to the KPI Chapter 11 Case.
Total interest expense decreased by $59,000 during 1993 primarily because
the average outstanding balance of the Company's loans and mortgages payable
declined. This more than offset the interest expense on the KPI restructured
debt assumed pursuant to the Merger from December 21, 1993 to the end of the
year. Total interest expense decreased by $1,535,000 during 1992 primarily
as a result of the decline in the prime rate, which was the contractual
interest rate for the Company's bank loans. During 1993, 1992, and 1991,
the weighted average interest rate on the Company's variable rate loans was
6.2 percent, 6.2 percent, and 7.9 percent, respectively. The average amount
of these loans outstanding for the Company during 1993, 1992, and 1991 was
$95,110,000, $98,918,000, and $96,481,000, respectively.
Operating Results. Net income totalled $2,452,000 and $933,000 for 1993
and 1992, respectively, and net loss totalled $5,949,000 for 1991. For 1993,
net income increased over the prior year primarily because reductions in the
provision for loan losses and general and administrative expenses were
partially offset by increases in property operations expense and depreciation
and amortization expense. For 1992, the increase is primarily due to the
reduction in provision for loan losses (from $16.7 million to $2.0 million)
and the reduction in total interest expense (from $13.1 million to $11.5
million), which was largely offset by the reduction in interest revenues and
the increases in property operating expenses, depreciation and amortization
expense, and general and administrative expenses.
Management periodically reviews its investment in properties for evidence
of other than temporary impairments in value. Factors considered consist of,
but are not limited to, the following: current and projected occupancy rates,
market conditions in different geographic regions, and management's plans
with respect to its properties. Where management concludes that expected
cash flows will not enable the Company to recover the carrying amount of its
investments, losses are recorded and asset values are reduced. No such
impairments in value existed during 1993, 1992 or 1991.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. The Company's primary internal sources of cash are
the collection of rents in respect of buildings owned and, prior to KPI's
bankruptcy filing in 1991, receipt of interest on its loans outstanding to
KPI under the Restated Credit Agreement and the Land Credit Agreement. On
the effective date of the Merger, the Company acquired all of the collateral
for the loans to KPI under the Restated Credit Agreement and the Land Credit
Agreement in full satisfaction of these loans. As a real estate investment
trust for Federal income tax purposes (a "REIT"), the Company is required to
pay out annually, as dividends, 95 percent of its REIT taxable income (which,
due to non-cash charges, including provision for losses and depreciation, may
be substantially less than cash flow). In the past, the Company has paid out
dividends in amounts at least equal to its taxable income. The Company
believes that its cash provided by operating activities will be sufficient to
cover debt service payments, and to pay the dividends required, if any, to
maintain REIT status through 1994.
As set forth in the Notes to Consolidated Financial Statements and in
Results of Operations above, because of a decline in the estimated fair value
of collateral which secured the loans to KPI foreclosed in-substance prior to
the Merger, the Company had recorded a total provision for loss on such loans
of $18.7 million through December 21, 1993.
The level of cash flow generated by rents depends primarily on the occupancy
rates of the Company's buildings and increases in effective rental rates on
new and renewed leases and under escalation provisions. As of December 31,
1993, approximately 94 percent of the Company's annualized gross rental
revenues were derived from existing leases containing provisions for rent
escalations. However, market conditions may prevent the Company from
escalating rents under said provisions.
At December 31, 1993, leases representing approximately 23.0 percent of the
gross annual rent from the Company's properties, without regard to the
exercise of options to renew, were due to expire during 1994. Leases were
renewed on approximately 74 percent and 60 percent of the Company's net
rentable square feet which expired during 1993 and 1992, respectively. With
the current economic conditions, certain of these tenants may not renew their
leases or may reduce their demand for space. Based upon the significant
amount of leases which will expire during 1994 and the intense competition
for tenants in the markets in which the Company operates, the Company has
and expects to continue to offer incentives to certain new and renewal
tenants, such as reduced rent during initial lease periods and payment of
tenant improvements costs, which the Company expects will require greater
capital expenditures in 1994 than in 1993. Although most of the Company's
leases permit it to increase rents annually to reflect increases in the
Consumer Price Index or increases in real estate taxes and certain operating
expenses, the Company has chosen, for competitive reasons, in certain cases
not to demand the full increase permitted. In addition, current market
conditions may require that rental rates at which leases are renewed or at
which vacated space is leased be lower than rental rates under existing
leases. These factors may result in reduced occupancy rates for the
Company's buildings which could result in reduced levels of cash flow
generated by operations. The Company cannot predict with any certainty the
degree to which the current economic conditions will affect its operations,
however, slower economic growth in the markets in which the Company owns
buildings may result in lower occupancy rates for, and reduced cash flow
from, the Company's properties.
Governmental tenants (including the State of Florida and the United States
Government) which account for 22 percent of the Company's leased space at
December 31, 1993, may be subject to budget reductions in times of recession
and governmental austerity. There can be no assurance that governmental
appropriations for rents may not be reduced. Additionally, with the current
economic conditions related to the rental of office space, certain of the
private sector tenants which have contributed to the Company's rent stream
may reduce their current demands or curtail their need for additional office
space.
Investing Activities. At December 31, 1993, all of the Company's invested
assets were in properties. Improvements to the Company's existing properties
have been financed through internal operations. During 1993, the Company's
expenditures for improvements to existing properties increased by $3,449,000
over the prior year due to (i) increased building improvement activity, (ii)
increased leasing activity and longer term renewal activity related to lease
expirations in 1993, and (iii) the acquisition of 93 buildings on December
21, 1993 pursuant to the Merger. Prior to the Merger, purchases of
properties were made from KPI under the Purchase Agreement. During 1992
and 1991, the Company did not purchase any buildings.
With the consummation of the Merger, the Company acquired 93 additional
buildings generally located in Koger Centers in which the Company previously
owned buildings. Management of the Company believes that the Merger will
result in advantages to the Company in three significant areas. First,
management believes that the Merger represented the most expeditious and
advantageous method of resolving the uncertainty about the financial
condition of the Company which existed because of the KPI Chapter 11 Case.
Second, by achieving common ownership and management of buildings within the
Koger Centers where the Company and KPI had both owned buildings, the
combined entity will be in a position to maximize the values of all assets.
Third, as one of the largest publicly-held REIT's, management believes that
the combined entity will have access to sources of new debt or equity capital
which neither of the Company nor KPI would have had alone, although there can
be no assurance additional debt or equity can be raised by the Company on
terms acceptable to it.
While the Company believes that the resolution of the KPI Chapter 11 Case,
and consummation of the Merger has provided such advantages, the terms of
the restructured indebtedness of KPI assumed by the Company and the modified
terms of the Company's existing indebtedness will require that a substantial
portion of any debt or equity financing achieved by the Company during the
foreseeable future be applied to the reduction of the current secured
indebtedness of the Company. The Company's restructured debt contains
provisions requiring the Company to use the first $50 million of proceeds
from any equity offering to pay down certain debt. To the extent that the
equity offering proceeds exceed $50 million, one half of the excess must be
used to pay down certain debt with the remainder being available for use at
the Company's discretion. In addition, the Company's bank loans contain
certain principal prepayment obligations in addition to normal principal
repayment. Two of these bank loans require that the Company make additional
principal payments totalling $10 million by December, 1998. Another bank
loan provides that the Company must reduce the principal balance of this
loan, which existed at the date of the Merger, by $5 million (less the amount
of scheduled principal payments which are $2,150,000 in the aggregate) by
December, 1996. Under such circumstances, it is unlikely that the Company
will have financial resources available to complete any significant
additional purchases of income-producing properties, even if the Company
determined that such purchases were otherwise available.
During the quarter ended June 30, 1991, the Company loaned $10 million to
KPI under a promissory note which was collateralized by a pledge of the
Company's stock owned by KPI. On June 29, 1991, the Company repurchased
1,081,081 shares of its common stock from KPI, payment for which was made by
giving KPI full credit against the $10 million loan.
Financing Activities. Historically, the Company's primary external sources
of cash have been bank borrowings, mortgage financings, and public offerings
of equity securities. The proceeds of these financings have been used by the
Company to acquire additional buildings under the Purchase Agreement and, in
anticipation of such acquisitions, had been loaned to KPI under the Restated
Credit Agreement and the Land Credit Agreement.
At December 31, 1993, the Company had no uncollateralized loans outstanding
to banks under short-term open lines of credit. During 1991, the Company
adopted a program to refinance its uncollateralized indebtedness with
financing which was more closely matched in term with the long-term nature of
its assets. Through March 31, 1991, the Company had converted $30 million of
an open line into a term loan which originally matured in January, 1992. The
maturity date on this loan was extended on several occasions through the date
of the Merger. The Company had a revolving line of credit with another bank
which bore interest at the bank's prime rate and matured on December 31, 1992,
at which time the outstanding balance of the loan, which also represented the
maximum amount available under this line of credit, was $43,648,000. On
January 1, 1993, this loan was converted to a term loan which would have been
amortized over 25 years by equal quarterly payments for principal reduction
plus interest at the bank's prime rate. The lender had the option to require
payment of the outstanding principal at the end of 24 months from the
commencement of the term period and at the expiration of each successive 24
month period thereafter. This loan renewed and modified an existing unsecured
line of credit in the original principal amount of $25 million. From the
proceeds of this loan, the Company also repaid an additional $20 million of
its uncollateralized lines of credit owed to another bank. During the quarter
ended June 30, 1991, the Company restructured an existing demand line of
credit with another bank and borrowed an additional $9,365,000 which increased
the total loan outstanding to $25,365,000. On September 30, 1991, the Company
borrowed an additional $458,000 which increased the total loan outstanding to
$25,823,000. The loan converted on that date to a two-year term loan
collateralized by certain properties.
In December, 1993, in connection with the Merger and the resolution of the
KPI Chapter 11 Case, the Company entered into agreements with its three major
bank lenders which provided for revised terms and conditions, including
extended maturity dates, interest rates and amortization schedules. With
respect to approximately $72.7 million of secured bank indebtedness, the
maturity of that indebtedness has been extended to December 21, 2000. During
the first three years of this term, the interest rate is fixed at 6.42
percent per annum for approximately $47.7 million and at 6.386 percent per
annum for approximately $25 million. During the remaining four years of the
term, the interest rate will be set at a rate equal to the sum of (x) the
effective interest rate prevailing on December 21, 1996 for U.S. Treasury
Obligations having a term to maturity of four years plus (y) 210 basis points,
subject to a maximum of 11 percent per annum. Amortization with respect to
this indebtedness will be based on equal monthly installments over a
twenty-five year amortization period. The Company will be required to make
additional principal payments totalling approximately $10 million on December
21, 1998, although the Company's obligation to do so would be reduced to the
extent that it had made prepayments in respect of secured indebtedness to
such lenders out of equity proceeds during the first three years after the
Merger. These lenders have required that until the Company has raised an
aggregate of $50 million of equity the following limitations on dividends
will be applied: (a) in 1996 and 1997, $11,000,000 unless imposition of the
limit would cause loss of REIT status and (b) in 1998 and 1999, $11,000,000
regardless of impact of REIT status.
With respect to approximately $27.6 million of bank indebtedness of the
Company, the maturity has been extended to December 21, 1998 with interest at
the prime rate of the specific bank plus one-half percent per annum. On or
before December 21, 1996, the Company will be required to repay not less than
$5 million of principal of this indebtedness. If the Company pays an
additional $5 million prior to December 21, 1998, the maturity will be
extended to seven years. Distributions of equity proceeds to this lender
made consistent with the terms of the Plan will be a credit against
approximately $8 million of these required principal payments.
In addition, each of these lenders have required affirmative and negative
covenants and other agreements which may become burdensome to the Company.
In particular, all three bank lenders have required that, commencing on the
fifth anniversary of the Effective Date, the Company maintain a debt to net
worth ratio of 1.0 to 1, that the Company maintain loan-to-value ratios
determined on the basis of periodic appraisals of bank collateral and that,
under certain circumstances, additional collateral be provided for
indebtedness to such bank. At December 31, 1993, the debt to net worth ratio
of the Company was 1.2 to 1.0. In addition, each of these bank lenders have
required other covenants generally similar to the provisions set forth in the
Plan with respect to the KPI restructured debt. These other covenants
include reporting requirements, provisions limiting the amount of annual
dividends, limitations regarding additional debt, and general and
administrative expense limitations. In addition, the Company is also
required to maintain certain financial ratios.
With the consummation of the Merger, the Company assumed approximately
$182.6 million of KPI restructured debt. At December 31, 1993, the
outstanding balance of this debt was approximately $181 million. For
additional information concerning terms, interest rates, and maturity dates
see "Loans and Mortgages Payable" footnote in the Notes to Consolidated
Financial Statements.
Based upon current interest rates and assuming only scheduled principal
payments for 1994, management expects total interest expense for 1994 to
increase to approximately $25.5 million. In addition, the high degree of
leverage of the Company may result in the impairment of its ability to obtain
additional financing, to make acquisitions, and to take advantage of
significant business opportunities that may arise, including activities which
require significant funding. This high degree of leverage may also increase
the vulnerability of the Company to adverse general economic and industry
conditions and to increased competitive pressures, especially rental
pressures from less highly leveraged competitors.
In order to generate funds sufficient to make principal payments in respect
of indebtedness of the Company over the longer term, as well as necessary
capital and tenant acquisition expenditures, the Company will be required to
successfully complete refinancings of its indebtedness or procure additional
equity capital. However, there can be no assurance that any such
refinancings or equity investments will be achieved or will generate adequate
funds on a timely basis for these purposes. If additional funds are raised by
issuing equity securities, further dilution to existing shareholders may
result. Moreover, under the terms of the Plan, the Company will be required
to utilize the first $50 million of any proceeds from the sale of equity
securities, as well as 50 percent of such proceeds in excess of $50 million,
to reduce secured indebtedness. The prepayments generally will be made pro
rata among the holders of secured indebtedness and will not generally relieve
the Company of the obligation to meet maturities on the remaining secured
indebtedness. Unfavorable conditions in the financial markets, the high
degree of leverage of the Company, restrictive covenants contained in its
debt instruments and various other factors may limit the ability of the
Company to successfully undertake any such financings and no assurance can
be given as to the availability of alternative sources of funds.
In addition, in the event the Company is unable to generate sufficient funds
to meet principal payments in respect of its indebtedness and distribution
requirements of 95 percent of annual REIT taxable income to its shareholders,
the Company may be unable to qualify for REIT status under the Internal
Revenue Code of 1986. In such an event, the Company will incur federal
income taxes and perhaps penalties, and may be required to decrease the
payment of dividends to its shareholders, and the market price of the
Company's Shares may decrease. The Company would also be prohibited from
requalifying for status as a REIT for tax purposes for five years.
IMPACT OF INFLATION
The Company may experience increases in its expenses as a result of
inflation; however, the amount of such increases cannot be accurately
determined. The Company attempts to pass on inflationary cost increases
through escalation clauses which are included in most leases. However,
market conditions may prevent the Company from escalating rents.
Inflationary pressure may increase operating expenses, including labor and
energy costs (and, indirectly, property taxes) above expected levels, at a
time when it may not be possible to increase lease rates to offset such
higher operating expenses. In addition, inflation can have secondary effects
upon occupancy rates by decreasing the demand for office space in many of the
markets in which the Company will operate. At December 31, 1993, 94 percent
of the Company's annualized rentals were subject to leases having annual
escalation clauses as described under Item 2 "Properties," above. At
December 31, 1992 and 1991, 94 percent of the Company's annualized rentals
were subject to leases having annual escalation clauses.
The interest rate on approximately $58,861,000 of the Company's debt is
floating. Interest rates on the Company's remaining debt is subject to reset
at various dates through December 21, 2003, based upon then current interest
rates for U.S. Treasury obligations. Therefore, the interest rates payable
from time to time on this debt will reflect changes in underlying market
rates of interest, and thus be subject to the effects of inflation.
Historically, inflation has often caused increases in the value of income-
producing real estate through higher rentals. The Company, however, can
provide no assurance that inflation will increase the value of its properties
in the future.
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
Independent Auditors' Report 27
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1993
and 1992 28
Consolidated Statements of Operations for Each
of the Three Years in the Period Ended
December 31, 1993 29
Consolidated Statements of Changes in
Shareholders' Equity for Each of the Three
Years in the Period Ended December 31, 1993 30
Consolidated Statements of Cash Flows for Each
of the Three Years in the Period Ended
December 31, 1993 31
Notes to Consolidated Financial Statements for
Each of the Three Years in the Period Ended
December 31, 1993 32
Financial Statement Schedules:
Schedule IV - Indebtedness of Related Parties
for Each of the Three Years in the Period
Ended December 31, 1993 50
Schedule X - Supplementary Income Statement
Information for Each of the Three Years in
the Period Ended December 31, 1993 51
Schedule XI - Real Estate and Accumulated
Depreciation as of December 31, 1993 52
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Koger Equity, Inc.
Jacksonville, Florida
We have audited the accompanying consolidated balance sheets of Koger Equity,
Inc. and subsidiaries (the "Company") as of December 31, 1993 and 1992, and
the related consolidated statements of operations, changes in shareholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1993. Our audits also included the financial statement
schedules listed in the Index at Item 8. These financial statements and
financial statement schedules are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Koger Equity, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
As discussed in Note 9 to the consolidated financial statements the Company
is a defendant in a class action proceeding and a derivative action and has
an indemnity agreement with certain former directors of KPI. The ultimate
outcome of these uncertainties cannot presently be determined. Accordingly,
no provision for any loss that may result upon resolution of these matters
has been made in the accompanying consolidated financial statements.
DELOITTE & TOUCHE
Jacksonville, Florida
March 4, 1994
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1993 AND 1992
(In Thousands Except Share Data)
1993 1992
ASSETS
Real Estate Investments:
Operating properties $565,957 $311,261
Furniture and equipment 813 25
Accumulated depreciation (30,706) (22,300)
Operating properties - net 536,064 288,986
Undeveloped land held for investment 33,054
Undeveloped land held for sale, at
lower of cost or market value 6,982
Loans to Koger Properties, Inc.
foreclosed in-substance, net 94,889
Cash and temporary investments 18,566 9,283
Accounts receivable, net 3,030 1,910
Receivable from The Koger Partnership, Ltd. 634
Cost in excess of fair value of net assets
acquired from KPI, net of accumulated
amortization of $23 11,623
Other assets 5,136 1,773
TOTAL ASSETS $615,089 $396,841
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Mortgages and loans payable $330,625 $155,362
Accounts payable 3,945 1,009
Payable to Koger Properties, Inc. 1,644
Accrued interest 294 823
Accrued real estate taxes payable 1,201 719
Dividends payable to Koger Properties, Inc. 214
Other liabilities 3,574 1,556
Total Liabilities 339,639 161,327
Commitments and Contingencies
(Notes 2, 3, 4 and 9) - -
Shareholders' Equity
Common stock, $.01 par value; 100,000,000
shares authorized; issued: 20,471,577 and
14,312,500 shares; outstanding 17,597,177
and 13,219,519 shares 205 143
Capital in excess of par value 318,574 267,824
Warrants 1,368
Accumulated dividends in excess of
net income (19,872) (22,324)
Treasury stock, at cost; 2,874,400 and
1,092,981 shares (24,825) (10,129)
Total Shareholders' Equity 275,450 235,514
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $615,089 $396,841
See Notes to Consolidated Financial Statements.
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1993
(In Thousands Except Per Share Data)
1993 1992 1991
Revenues
Rental $46,108 $45,957 $45,393
Interest 206 231 7,099
Management fees ($89 from TKPL) 92
Total revenues 46,406 46,188 52,492
Expenses
Property operations 18,507 17,066 16,260
Management fee to Koger Management, Inc. 2,184 2,314 2,281
Depreciation and amortization 8,958 8,089 7,484
Mortgage and loan interest 11,471 11,530 13,065
General and administrative 2,411 4,075 2,112
Provisions for losses on loans to Koger
Properties, Inc. foreclosed in-substance 1,982 16,700
Provision for uncollectible rents 343 199
Direct cost of management fees 56
Undeveloped land costs 24
Advisory fee 539
Total expenses 43,954 45,255 58,441
Net Income(Loss) $ 2,452 $ 933 $(5,949)
Earnings(Loss) Per Common Share $ 0.18 $ 0.07 $ (0.43)
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
KOGER EQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1993
(In Thousands Except Per Share Data)
<CAPTION>
Accumulated
Capital Dividends Total
Common Stock in Excess in Excess Share-
Shares Par of Par of Net Treasury holders'
Issued Value Value Warrants Income Stock Equity
BALANCE,
<S> <C> <C> <C> <C> <C> <C> <C>
DEC. 31, 1990 14,313 $ 143 $267,824 $ (6,426) $ (129) $261,412
Treasury stock acquired (10,000) (10,000)
Net loss (5,949) (5,949)
Dividends ($.77 per share) (10,882) (10,882)
BALANCE,
DEC. 31, 1991 14,313 143 267,824 (23,257) (10,129) 234,581
Net income 933 933
BALANCE,
DEC. 31, 1992 14,313 143 267,824 (22,324) (10,129) 235,514
Common stock issued 6,159 62 50,750 50,812
Treasury stock acquired (14,696) (14,696)
Warrants issued $1,368 1,368
Net income 2,452 2,452
BALANCE,
DEC. 31, 1993 20,472 $ 205 $318,574 $1,368 $(19,872) $(24,825) $275,450
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1993
(In Thousands)
1993 1992 1991
Operating Activities
Net income (loss) $ 2,452 $ 933 $(5,949)
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization 8,958 8,089 7,484
Provision for losses on loans to KPI
foreclosed in-substance - 1,982 16,700
Provision for uncollectible rents 343 199 -
Amortization of mortgage discounts 267 216 -
Accrued interest added to principal 38 - -
Total 12,058 11,419 18,235
Changes in assets and liabilities, net
of effects from purchase
of assets from KPI:
Increase (decrease) in accounts payable,
accrued liabilities
and other liabilities (104) 270 924
Increase (decrease) in payable to KPI 1,287 (160) (709)
Increase in receivables and other assets (1,316) (1,076) (53)
Net cash provided by operating activities 11,925 10,453 18,397
Investing Activities
Improvements to properties (6,423) (2,974) (3,603)
Deferred tenant costs (598) (297) (189)
Additions to furniture and equipment - (19) -
Merger costs (4,221) - -
Cash acquired in purchase of assets
from KPI 15,596 - -
Investments in loans to KPI - - (10,000)
Payments received on loans to KPI -
Cash Collateral Order 1,392 1,181 95
Net cash provided by (used in) investing
activities 5,746 (2,109) (13,697)
Financing Activities
Proceeds from exercise of stock options 1 - -
Dividends paid - - (10,668)
Proceeds from loans - net - - 9,642
Principal payments on mortgages and loans (7,670) (2,227) (2,855)
Financing costs (719) - -
Net cash used in financing activities (8,388) (2,227) (3,881)
Net increase in cash and cash equivalents 9,283 6,117 819
Cash and cash equivalents - beginning
of year 9,283 3,166 2,347
Cash and cash equivalents - end of year $ 18,566 $ 9,283 $ 3,166
See Notes to Consolidated Financial Statements.
<PAGE>
KOGER EQUITY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
Organization. Koger Equity, Inc. was incorporated in Florida on June 21,
1988. Koger Properties, Inc. ("KPI") had maintained a 20 percent interest in
Koger Equity, Inc. through June 28, 1991. On June 29, 1991, Koger Equity
repurchased 1,081,081 shares of its common stock from KPI, which reduced
KPI's percentage ownership to 13.5 percent of Koger Equity's issued and
outstanding shares. On December 21, 1993, KPI was merged with and into Koger
Equity, Inc. (the "Merger").
Principles of Consolidation. The consolidated financial statements include
the accounts of Koger Equity, Inc. and its wholly owned subsidiaries (the
"Company"). All material intercompany accounts have been eliminated in
consolidation.
Real Estate Investments. Operating properties, furniture and equipment, and
undeveloped land held for investment are stated at cost less accumulated
depreciation. Undeveloped land held for sale is carried at the lower of cost
or market value. The Company's debt and equity interest in The Koger
Partnership, Ltd. acquired from KPI were determined by management to have no
assignable value.
Periodically, management reviews its portfolio of operating properties and
undeveloped land held for investment and in those instances where properties
have suffered an impairment in value that is deemed to be other than
temporary, the properties will be reduced to their net realizable value. This
review includes a quarterly analysis of occupancy levels and rental rates for
the Company's properties in order to identify properties which may have
suffered an impairment in value. Management prepares estimates of future cash
flows for these properties to determine whether the Company will be able to
recover its investment. In making such estimates, management considers the
conditions in the commercial real estate markets in which the properties are
located, current and expected occupancy rates, current and expected rental
rates, and expected changes in operating costs. As of December 31, 1993,
there were no such impairments in value. Maintenance and repairs are charged
to operations. Acquisitions, additions, and improvements are capitalized.
Prior to the Merger, loans foreclosed in-substance consisted of loans to KPI
accounted for as foreclosed property even though actual foreclosure had not
occurred. The carrying value of these loans was reduced to the estimated
fair value of the underlying collateral, less estimated selling costs, in
1991 when in-substance foreclosure occurred. At that time, the Company
determined the estimated fair value of the underlying collateral by obtaining
appraisals on certain property and performing forecasted discounted cash flow
analyses on other property. The forecasted discounted cash flow analyses
were reviewed by an independent appraiser. The Company periodically reviewed
the estimated fair value of the underlying collateral and as a result had
established an additional allowance for loss in 1992. During 1992, this
review consisted of obtaining new appraisals, updating previous appraisals
and performing updated forecasted discounted cash flow analyses based on
market assumptions provided by an independent appraiser. During 1993, this
review consisted of performing updated discounted cash flow analyses. The
underlying collateral for these loans was obtained by the Company with the
consummation of the Merger.
Cash collateral order payments received on these loans were recorded as
reductions to principal.
Depreciation and Amortization. The Company uses the straight-line method
for depreciation and amortization. Acquisition costs and building and tenant
improvements are depreciated over the periods benefitted by the expenditures
which range from 5 to 40 years. Deferred tenant costs are amortized over the
term of the related leases. Deferred financing charges are amortized over
the terms of the related agreements. Cost in excess of fair value of net
assets acquired related to the Merger is being amortized over 15 years.
Revenue Recognition. Rentals are generally recognized as revenue over the
lives of leases according to provisions of the lease agreements. However, the
straight-line basis, which averages annual minimum rents over the terms of
leases, is used to recognize minimum rent revenues under leases which provide
for material varying rents over their terms. Interest income is recognized
on the accrual basis on interest-earning investments. Interest for which
payment was due, based upon the contractual provisions of the loans to KPI
under the Restated Credit Agreement and the Land Credit Agreement, after KPI
filed a petition under Chapter 11 of the United States Bankruptcy Code in
September 1991 and through the date of the Merger, was not accrued.
Federal Income Taxes. The Company is qualified and has elected tax
treatment as a real estate investment trust under the Internal Revenue Code
(a "REIT"). Accordingly, the Company distributes at least 95 percent of its
REIT taxable income to its shareholders. Since the Company had no REIT
taxable income in 1993 or 1992, no distributions to shareholders were made.
To the extent that the Company pays dividends equal to 100 percent of real
estate investment trust taxable income, the earnings of the Company are taxed
at the shareholder level.
Earnings (Loss) Per Common Share. Earnings (loss) per common share have
been computed based on the weighted average number of shares of common stock
outstanding (13,351,525 shares for the year ended December 31, 1993,
13,219,519 shares for the year ended December 31, 1992, and 13,749,693 shares
for the year ended December 31, 1991). There were no dilutive common
equivalent shares outstanding during the years ended December 31, 1993, 1992,
and 1991.
Fair Value of Financial Instruments. The Company believes that the carrying
amount of its financial instruments (cash and short-term investments,
accounts receivable, loans to KPI foreclosed in-substance, accounts payable,
and mortgages and loans payable) is a reasonable estimate of fair value of
these instruments.
Statements of Cash Flows. Cash in excess of daily requirements is invested
in short-term monetary securities. Such temporary cash investments have an
original maturity of less than three months and are deemed to be cash
equivalents for purposes of the statements of cash flows.
During 1993, KPI was merged with and into the Company. Pursuant to the
Merger, the Company received the collateral for the loans to KPI, which were
accounted for as foreclosed in-substance, in full satisfaction of those
loans. As of December 21, 1993, the loans to KPI foreclosed in-substance
had a carrying value of approximately $93,498,000 which was management's
best estimate of the fair value of the collateral received ($121,743,000)
less the mortgage debt related to such collateral ($28,245,000) which was
assumed by the Company.
In addition, the Company acquired the remaining assets and liabilities of
KPI by issuing 6,158,977 shares of the Company's common stock and warrants
to purchase 644,000 shares of the Company's common stock. The following
represents the fair value of the KPI assets acquired and liabilities assumed
by the Company pursuant to the Merger in exchange for the Company's common
stock and warrants (in thousands).
Fair value of assets and treasury stock
acquired, including cash of $15,596 $215,855
Fair value of common stock and warrants
issued and direct merger costs (56,461)
Fair value of liabilities assumed $159,394
During 1991, the Company converted $30,000,000, of a $50,000,000
uncollateralized line of credit, into a term loan collateralized by certain
buildings. The remaining $20,000,000 portion of this credit facility plus
$418,000 in related financing costs were repaid from the proceeds of a
revolving line of credit from another bank. In addition, in 1991 the
Company loaned $10,000,000 to KPI under a promissory note which was
collateralized by a pledge of the Company's stock owned by KPI. On June 29,
1991, the Company repurchased 1,081,081 shares of its common stock from
KPI, payment for which was made by giving full credit against the $10,000,000
loan. The purchase was based upon the composite closing price per share of
the Company's common stock on June 28, 1991, of $9.25.
For 1993, 1992, and 1991, total interest payments were $12,421,000,
$10,693,000, and $13,129,000, respectively, for the Company.
Reclassification. Certain 1992 amounts have been reclassified to conform
with 1993 presentation.
2. TRANSACTIONS WITH RELATED PARTIES.
General. The Company was incorporated for the purpose of investing in the
ownership of income producing properties, primarily commercial office
buildings developed by KPI. On September 25, 1991, KPI and The Koger
Partnership, Ltd. ("TKPL"), a Florida limited partnership of which KPI was
the managing general partner, filed petitions under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code"). On August 10, 1993, TKPL
completed the establishment of a $4.5 million reorganization financing
facility which represented the fulfillment and the final condition to TKPL's
emergence from bankruptcy and, as a result, the plan of reorganization for
the TKPL Chapter 11 Case became effective as of June 1, 1993. On December
21, 1993, KPI was merged with and into the Company.
Purchase Agreement. Under a purchase agreement (the "Purchase Agreement")
with KPI and its subsidiaries, through December 31, 1990, the Company
purchased an aggregate of 126 buildings for $299.9 million. In connection
with such purchases, the Company purchased $80.6 million of buildings in 1988
for cash. Subsequent buildings were purchased by either assuming previously
existing indebtedness of the selling entity secured by the purchased
properties or by reducing the amount of indebtedness outstanding under a
Credit Agreement between the Company as lender and KPI and its affiliates,
as borrowers, dated August 25, 1988, as amended (the "Credit Agreement").
The total of previously existing indebtedness assumed was $32,377,000
related to the purchase of 30 buildings. The Purchase Agreement established,
and the purchase transactions were accomplished with procedures, including
independent appraisals, which required that each purchase transaction be
conducted in good faith, and at purchase prices, which in the Company's
opinion, provided not less than a reasonably equivalent value to the seller
in each instance.
Loans to KPI Foreclosed In-Substance. As of December 31, 1990, the Company
and KPI entered into an Amended and Restated Credit Agreement (the "Restated
Credit Agreement") which replaced the Credit Agreement. These loans were
collateralized by first and second mortgages and assignments of rents on 62
completed office buildings and two parcels of land held for future
development which were owned by KPI and located in existing Koger Centers in
which the Company owned buildings or claimed rights under the Purchase
Agreement. These loans bore interest at a floating rate, adjusted quarterly
and determined by adding 2.5 percent to the average yield for the prior
quarter on U. S. Treasury Notes maturing three years after any date during
such quarter but not less than 11 percent or more than 13 percent. KPI
failed to make the interest payments due on this loan as of September 30,
1991, did not make contractual interest payments after that date, and was in
default by reason of such failure. Unpaid interest (amounting to $23,676,000
from the date of KPI's bankruptcy to December 20, 1993) has not been
recognized in the accompanying consolidated financial statements of the
Company. On October 17, 1991, the Bankruptcy Court entered an Order granting
KPI's Motion to Use Cash Collateral (the "Cash Collateral Order"). Under the
terms of the Cash Collateral Order, during the period of the KPI Chapter 11
Case, the Company was entitled to be paid debt service in respect of the
loans which were outstanding under the Restated Credit Agreement to the
extent of the net cash flow of the collateral for such loans, after provision
for payment of property-specific operating costs and expenses, a management
fee equal to five percent of rents received, an allocation of KPI's excess
overhead, certain escrows for property-specific capital and tenant
improvements costs, leasing commissions and taxes, and payment of debt
service on senior mortgages, if any. The Company recognized no interest on
these loans during 1993 and 1992. For the year ended December 31, 1991, KPI
paid the Company $4,786,000, for interest on these loans. All payments
received under the Cash Collateral Order ($94,910 in 1991, $1,180,447 in
1992 and $1,392,113 in 1993) were applied to the principal balance
outstanding. Immediately prior to the Merger, the loans outstanding
under the Restated Credit Agreement totalled approximately $85.4 million,
with a carrying value of approximately $67.0 million. On the date of the
Merger, the Company received the collateral for the loans to KPI under the
Restated Credit Agreement in full satisfaction of these loans.
As of December 31, 1990, the Company and KPI entered into an agreement (the
"Land Credit Agreement") under which the Company loaned $28.3 million to KPI.
The loans under the Land Credit Agreement were collateralized by mortgages
on land held for future development in existing Koger Centers in which the
Company owned buildings or claimed rights under the Purchase Agreement. The
interest rate on these loans was fixed at 10.25 percent. KPI failed to make
interest payments due on this loan as of September 30, 1991, did not make
contractual interest payments after that date, and was in default by reason
of such failure. Unpaid interest (amounting to $6,673,000 from the date of
KPI's bankruptcy to December 20, 1993) has not been recognized in the
accompanying consolidated financial statements of the Company. The Company
recognized no interest on this loan during 1993 and 1992. During 1991, KPI
paid the Company $1,934,000 for interest on this loan. Since none of the
properties which collateralized this loan generated cash flow, the Company
did not receive any debt service payments for this loan under the provisions
of the Cash Collateral Order. Immediately prior to the Merger, the loan
outstanding under the Land Credit Agreement totalled approximately $28.3
million, with a carrying value of $26.5 million, which was net of a $1.4
million discount. This discount was not being amortized as interest income
because management had discontinued recognition of interest income on this
loan. On the date of the Merger, the Company received the collateral for the
loan to KPI under the Land Credit Agreement in full satisfaction of this loan.
Through the date of the Merger, the Company continued to account for the
collateral for the loans under the Restated Credit Agreement and the Land
Credit Agreement as loans foreclosed in-substance and had recorded a
provision for loss in the amount of $18.7 million through December 21, 1993.
This included a $2 million provision recorded during 1992 based upon
management's continuing evaluation of collateral values.
Resolution of KPI Chapter 11 Case. On April 30, 1993, the Company and KPI
jointly proposed a plan of reorganization of KPI (the "Plan") which provided
for the merger of KPI with and into the Company in exchange for the issuance
of shares of the Company's common stock (the "Shares") to certain creditors
of KPI and the issuance of warrants to purchase Shares (the "Warrants") to
shareholders of KPI and holders of certain securities laws claims against
KPI and the settlement of the Company's claim against KPI. On August 11,
1993, the shareholders of the Company approved the Merger and the issuance of
the Shares and Warrants pursuant thereto. On December 8, 1993, the Plan was
confirmed by the Bankruptcy Court and the Merger became effective on December
21, 1993. See Note 3 "KPI Merger" for further discussion.
Advisory Agreement. Under the terms of an advisory agreement, Koger
Advisors, Inc. ("KA"), a former wholly owned subsidiary of KPI, managed the
Company's investment portfolio and provided advice and recommendations with
respect to all aspects of the Company's business through December 31, 1991.
For the year ended December 31, 1991, the Company reimbursed KA $539,000,
for out-of-pocket expenses incurred by KA in providing advisory services to
the Company. The term of the Advisory Agreement ended December 31, 1991.
Functions formerly performed by KA have been performed by the Company through
its officers and employees since January 1, 1992.
Management Agreement. Prior to the Merger, Koger Management, Inc. ("KMI")
was responsible for the leasing, operation, maintenance, and management of
each of the Company's properties. The management fee was five percent of
the gross rental receipts collected on the property managed for the Company
by KMI. For the years ended December 31, 1993, 1992, and 1991, the Company
incurred management fee expenses to KMI of $2,184,000, $2,314,000, and
$2,281,000, respectively, for property management services. The Management
Agreement expired on December 31, 1991, but had been extended on a month-to-
month basis. With the Merger, the Company assumed all of the leasing and
other management responsibilities for its properties including those acquired
in the Merger.
Other. A director of the Company is a Vice President of an affiliate of a
shareholder who along with certain of its affiliates owns 18 percent of the
Shares of the Company. The Company has entered into an agreement with this
shareholder to register shares owned by the shareholder and its affiliates
pursuant to the registration requirements of the Securities Act of 1933 in up
to four public offerings and include these Shares in an unlimited number of
public offerings which may be made on behalf of the Company or others for a
period of eight years following the effective date of the Merger, December
21, 1993. All expenses, except for brokerage discount, of any of these
offerings will be borne by the Company.
In addition, one of the agreements contains provisions which permit the
shareholder and certain of its affiliates to own the greater of (i) 23
percent of the outstanding Shares or (ii) 4,047,350 of the outstanding
Shares, as adjusted for recapitalization without triggering the Company's
common stock rights agreement. The Company has also covenanted that
following the effective date of the Merger, December 21, 1993, for a period
of eight years the Company would not amend, alter or otherwise modify the
common stock rights agreement or take any action, which would limit or
eliminate certain rights of the shareholder and its affiliates without
prior consent of the shareholder.
3. KPI MERGER.
On December 8, 1993, the Plan was confirmed by the Bankruptcy Court and the
Merger of KPI into the Company became effective on December 21, 1993.
Pursuant to the Merger, the Company received the collateral of 62 office
buildings and thirteen parcels of land and related restructured mortgages,
for the loans to KPI under the Restated Credit Agreement and the Land Credit
Agreement in full satisfaction of these loans. In addition, in exchange for
the remaining office buildings, land parcels, related restructured debt and
other net assets of KPI, the Company issued 6,158,977 Shares, or
approximately 35 percent of the Shares outstanding after the Merger, to
certain unsecured creditors of KPI. The KPI common stock outstanding
immediately prior to the Merger was converted into the right to receive one
Warrant for every 50 shares of KPI common stock. Holders of certain
securities law claims against KPI also received Warrants. A total of 644,000
Warrants were issued. Each Warrant gives the holder the right to purchase
one Share at a price of $8.00 per share, such rights to be exercisable until
June 30, 1999. The Warrants are subject to redemption at the option of the
Company at prices ranging from $1.92 to $5.24 per Warrant.
With the Merger, the Company acquired substantially all of the assets of
KPI, free and clear of all liens, claims and encumbrances, except (i)
encumbrances relating to certain secured indebtedness of KPI (aggregating
$182.6 million) which was restructured under the Plan and (ii) an option
and right of first refusal held by TKPL on certain developed buildings and
parcels of undeveloped land, which are located in TKPL office centers. KPI
assets acquired by the Company in the Merger included a total of 93 buildings
containing 3,848,130 net rentable square feet together with approximately
295 acres of unimproved land suitable for development, and 1,781,419 Shares
held by KPI. As a result of the Merger, the Company assumed all of the
leasing and other management responsibilities for its properties including
those acquired in the Merger. In addition, immediately prior to the Merger
KPI transferred all of its debt and equity interest in TKPL to a newly formed
wholly owned subsidiary of the Company, Southeast Properties Holding
Corporation, Inc., which became the managing general partner of TKPL.
The accounting treatment for the Merger has been separated into two
components: (i) the receipt by the Company of the collateral for the loans
to KPI made pursuant to the Restated Credit Agreement and the Land Credit
Agreement (loans to KPI foreclosed in-substance), in full satisfaction of
these loans; and (ii) the acquisition by the Company of the remaining assets
and restructured liabilities of KPI.
At the date of the Merger, the KPI real estate assets securing the loans
due from KPI and related restructured mortgage balances were recorded at
their relative fair values. The remaining assets and treasury stock acquired
and liabilities assumed in exchange for the Shares and Warrants issued were
recorded at their relative fair values under the purchase method of
accounting. The acquisition price for these net assets was established
based upon the value of Shares ($8.25 per Share) and Warrants ($2.125 per
Warrant) as of the consummation date of the Merger plus the direct
acquisition costs totaling $4,281,000 incurred by the Company. Cost in
excess of fair value of net assets acquired from KPI totalled $11,646,000
and is being amortized over 15 years.
Revenues and expenses of the assets and liabilities acquired from KPI are
reflected in the Consolidated Statements of Operations for the 11 days from
the date of the Merger, December 21, 1993, through December 31, 1993.
The following unaudited pro forma results of operations for the years ended
December 31, 1993 and 1992 assume the acquisition occurred as of the
beginning of the respective periods after giving effect to certain
adjustments including amortization of cost in excess of fair value of net
assets acquired from KPI, increased interest expenses on assumed debt and
increased depreciation expense on the new adjusted accounting bases of the
real estate assets acquired. The pro forma results have been prepared for
comparative purposes only and do not purport to indicate the results of
operations which would actually have occurred had the combination been in
effect on the dates indicated, or which may occur in the future.
(in thousands)
UNAUDITED
1993 1992
Total Revenues $94,459 $91,933
Total Expenses 91,183 90,530
Net Income $ 3,276 $ 1,403
Earnings Per Common Share $ 0.19 $ 0.08
4. INVESTMENTS IN THE KOGER PARTNERSHIP, LTD.
General. Pursuant to the Merger, Southeast Properties Holding Corporation,
Inc. ("Southeast"), a wholly owned subsidiary of the Company, became the
managing general partner of TKPL. Immediately prior to the Merger, KPI
transferred all of its debt and equity interest in TKPL to Southeast. These
interests included (1) 90,360 TKPL General and Limited Partnership Units (the
"Units") and (2) a restructured unsecured note from TKPL with a principal
amount of approximately $31 million. In light of the terms of the TKPL plan
of reorganization and its restructured debt, the Company has determined that
these investments have no value.
Basis of Accounting for the Investment in TKPL. Southeast has significant
influence over TKPL's activities because it owns 32 percent of TKPL's
outstanding Units. However, Southeast does not control TKPL for accounting
purposes and, accordingly, accounts for its investment using the equity
method. No losses of TKPL are allocated to Southeast because Southeast is
not obligated to fund losses of TKPL as stated in the Third Amended and
Restated Agreement of Limited Partnership dated August 3, 1993.
Duties to and Compensation from TKPL. Southeast, in its capacity as
Managing General Partner, generally has responsibility for all aspects of
TKPL's operations and receives as compensation for its services a management
fee equal to nine percent of the gross rental revenues derived from the
properties it manages for TKPL. All third-party leasing commissions incurred
on TKPL buildings are the responsibility of the Company. From the date of
the Merger, December 21, 1993, through December 31, 1993, the management
fees earned were approximately $89,000. In the event that certain benchmarks
for retirement of indebtedness are not met, the TKPL plan provides that an
alternate general partner will assume responsibilities for operation and
management of TKPL, and will initiate procedures to liquidate the assets of
TKPL on an expedited basis. There is no assurance that necessary
refinancing(s) and/or sale(s) can be achieved or that the alternate general
partner will not assume control of TKPL.
Option Agreement with TKPL. Pursuant to the Merger, the Company assumed an
Option Agreement, between KPI and TKPL, which granted TKPL the exclusive
right to acquire (the "Option") from KPI all of its interest in any or all
of the developed buildings and parcels of undeveloped land, which are located
in TKPL office centers (the "Option Property"). Under the Option Agreement,
TKPL was also granted a right of first refusal as to the Option Property.
The Option's exercise price will be based on the fair value of the subject
property determined as of a date within 180 days of exercise. The Option
Agreement will be effective until June, 2000.
Incentive Agreement with TKPL. Pursuant to the Merger, Southeast assumed
an incentive agreement, originally between KPI and TKPL. Under the terms of
this agreement, TKPL shall pay to Southeast, as long as Southeast is the
property manager for TKPL, an incentive fee (the "Incentive Fee") in respect
of any sale or refinancing of individual buildings (or buildings as unified
office parks). The Incentive Fee will be computed based on the net proceeds
received by TKPL in respect of such dispositions or refinancings (defined
generally as gross proceeds of such dispositions or refinancings, less any
repayment of certain obligations in respect of such disposed or refinanced
property, and payment of any related costs of sales or refinancing costs
(commissions to related parties not to exceed 3 percent of net proceeds))
and will decline according to the following schedule:
Twelve Month
Periods following Percentage of
June, 1993 Net Proceeds
1 through 4 15%
5 through 6 5%
Thereafter 0%
Pursuant to an agreement, the first $5 million of Incentive Fees which
otherwise would be payable to Southeast under the terms of the Incentive
Agreement will be required to be deposited into a special collateral account
to provide additional collateral to secure the payment of certain debt of
TKPL.
<PAGE>
Summarized Financial Information. The condensed balance sheets of TKPL as
of December 31, 1993 and 1992 and the condensed statements of operations for
TKPL for the three years ended December 31, 1993, are summarized below
(in thousands).
BALANCE SHEET DATA: As Restated
(in thousands) 1993 1992
Total Assets $157,239 $175,072
Liabilities $188,740 $194,780
Deficiency in assets (31,501) (19,708)
Total Liabilities and Deficiency in Assets $157,239 $175,072
OPERATIONS DATA: As Restated As Restated
(in thousands) 1993 1992 1991
Revenues $ 35,753 $ 36,765 $ 36,342
Operating, Interest and Other Expenses (34,089) (31,957) (35,674)
Depreciation and Amortization (13,457) (15,201) (15,426)
Net loss $(11,793) $(10,393) $(14,758)
5. LOANS AND MORTGAGES PAYABLE.
During 1993, the Company's bank loans were modified and extended in
connection with the Merger. These bank loans had an outstanding balance of
$100,308,000 at December 31, 1993. Prior to the modification of the loans,
the loans bore interest at rates equal to such banks' prime rates. These
loans are collateralized by mortgages on certain operating properties. At
December 31, 1993, $47,656,000 of these loans bear interest at 6.42 percent
and have a final maturity date of December 21, 2000. This loan is
collateralized by properties with a carrying value of $69,137,000. At
December 31, 1993, $25,027,000 of these loans bear interest at 6.386 percent
and have a final maturity date of December 21, 2000. This loan is
collateralized by properties with a carrying value of $43,210,000. The
interest rate on both of these bank loans will be adjusted in December, 1996
to a rate equal to the sum of (i) the effective interest rate prevailing on
four year U.S. Treasury Obligations, plus (ii) 210 basis points, subject to
a maximum of 11 percent per annum. Monthly payments on these loans include
principal amortization based on a 25 year amortization period. In addition,
the Company will be required to make additional principal payments totalling
$10 million by December, 1998. At December 31, 1993, $27,625,000 of these
loans bear interest at the bank's prime rate plus one-half percent and has a
maturity date of December 21, 1998, with an optional two year extension.
Monthly payments on this loan include interest and fixed payments of
principal which increase annually. This loan is collateralized by properties
with a carrying value of $49,888,000. On or before December 21, 1996, the
Company will be required to repay not less than $5 million of principal of
this indebtedness. If the Company pays an additional $5 million prior to
December 21, 1998, the maturity will be extended to seven years.
At December 31, 1993, the Company had mortgages payable which total
$49,334,000. The mortgages payable represent the outstanding balance of
$22,917,000, which is net of a $170,000 discount, for debt assumed in
connection with property purchased from KPI through 1990 and the outstanding
balance of $26,417,000, which is net of a $1,121,000 discount, for mortgage
debt obtained from an insurance company. Such mortgages are generally
amortizing, bear interest at rates ranging from 7.75 percent to 10.125
percent, and are collateralized by office buildings with a carrying value of
$97,567,000 at December 31, 1993.
In connection with the Merger, the Company assumed approximately $182.6
million of restructured debt from KPI on December 21, 1993. Information
with respect to such debt is as follows (in thousands):
Outstanding Balance
KPI Restructured Debt 12/21/93 12/31/93
Senior Bank Mortgage Debt $ 83,992 $ 83,992
Junior Bank Mortgage Debt 11,354 10,278
Insurance Company Mortgage Debt 60,707 60,298
Negative Amortization (Insurance Company Debt) 80 118
Other Mortgage Debt 21,168 20,958
Tax Notes 5,040 5,040
Mechanics' Liens 287 287
$182,628 $180,971
Senior Bank Mortgage Debt, acquired in connection with the Merger, with
outstanding balances of approximately $84 million will mature in December,
2003. Interest payments are due monthly based on a 6.62 percent interest
rate with monthly amortization beginning in December, 1994. The interest
rate will adjust in April, 1998 to a rate equal to the sum of (i) the then
prevailing interest rate on five year U.S. Treasury Obligations plus (ii)
210 basis points with a maximum rate of 10 percent.
Junior Bank Mortgage Debt totaling approximately $10.3 million is secured
by properties that also serve as collateral for Senior Bank Mortgage Debt.
The Junior Bank Mortgage Debt matures in December, 2000 and accrues interest
at the prime rate of the lender (6 percent at December 31, 1993). Accrued
interest on Junior Bank Mortgage Debt must be paid no later than December,
1998. Monthly interest payments are required beginning in January, 1999.
Accrued interest on this debt will be forgiven if the outstanding balance is
paid in full prior to December, 1996. Interest accrued and forgiven will be
reflected as an adjustment to interest expense in the year forgiven.
Insurance Company Mortgage Debt with outstanding balances at December 31,
1993, of approximately $59.9 million were acquired in connection with the
Merger. This indebtedness is non-recourse to the Company, but is secured by
all former KPI properties on which each lender held mortgages. These
mortgages include provisions during the period ending December 21, 1996,
for a portion of the interest earned, equal to 25 percent, 20 percent and 15
percent in, respectively, the first, second and third years, may be deferred
at the option of the Company and added to principal, subject to a minimum
interest payment rate of seven and one-half percent per annum. The interest
rates will be reset on various dates, as defined. No reset interest rate
may be less than eight percent per annum. However, if any interest reset
rate would exceed ten percent per annum, the Company may elect to establish
the interest reset rate at ten percent per annum, in which case the maturity
of the indebtedness in question shall be the date on which a U.S. Treasury
Obligation purchased on the interest reset date in question with an effective
interest rate of 210 basis points below ten percent per annum would mature.
In the absence of an election to fix any interest reset rate at ten percent
per annum, all of such indebtedness matures on December 21, 2003. The loans
begin principal amortization in 1997. Additional Insurance Company Mortgage
Debt totalling $0.4 million which retained their existing balances and terms
were also acquired from KPI in connection with the Merger. The interest
rates on these loans range from 7.5 percent to 9.5 percent.
Other Mortgage Debt acquired in the Merger totals approximately $21 million
and matures in June, 2001. Interest payments are due monthly based on the
prime rate plus one percent with a minimum rate of 6.62 percent and a maximum
rate of 10 percent.
At December 31, 1993, approximately $4.5 million of Tax Notes were
outstanding to taxing authorities and banks for 1991 taxes on certain
properties acquired from KPI. The Tax Notes mature in December, 1999 and
bear interest at 8.5 percent. The notes are interest only for two years and
beginning in December, 1995 must be repaid in five equal annual installments
of principal. Other notes issued for outstanding taxes are unsecured with
an outstanding balance of $501,000. These notes mature September, 1997 and
accrue interest at 7.0 percent. Principal and interest are paid on a
quarterly basis commencing March, 1994.
Mechanics Liens of $287,000 mature in December, 2000. Payments are made
annually and bear interest at 8.5 percent.
The Company's restructured debt contains provisions requiring the Company
to use the first $50 million of proceeds from any equity offering to pay
down certain debt. To the extent that equity offering proceeds exceed $50
million, one half of the excess must be used to pay down debt with the
remainder being available for use at the Company's discretion.
In addition to reporting and other requirements, the restructured debt
agreements contain provisions limiting the amount of annual dividends,
limiting additional borrowings, and limiting general and administrative
expense. The Company is also required to maintain certain financial ratios.
The annual maturities of loans and mortgages payable, which are gross of
$1,291,000 of unamortized discounts, as of December 31, 1993, are summarized
as follows (dollars in thousands):
Year Ending
December 31, Total
1994 $ 3,252
1995 5,736
1996 8,901
1997 14,564
1998 18,920
Subsequent Years 280,543
Total $331,916
6. LEASES.
The Company's operations consist principally of owning and leasing of
office space. Most of the leases are for terms of three to five years.
Generally, the Company pays all operating expenses, including real estate
taxes and insurance. At December 31, 1993, 94 percent of the Company's
annualized rentals were subject to rent escalations based on changes in the
Consumer Price Index or increases in real estate taxes and certain operating
expenses. A substantial number of leases contain options that allow leases
to renew for varying periods.
The Company's leases are operating leases and expire at various dates
through 2003. Minimum future rental revenues from leases in effect at
December 31, 1993, determined without regard to renewal options, are
summarized as follows:
Year Ending Amount
December 31, (In thousands)
1994 $ 79,048
1995 58,728
1996 37,983
1997 24,618
1998 14,026
Subsequent Years 30,218
Total $244,621
The above minimum future rental income does not include contingent rentals
that may be received under provisions of the lease agreements. Contingent
rentals amounted to $1,407,000, $1,638,000, and $762,000 for the years 1993,
1992, and 1991, respectively.
7. STOCK OPTIONS AND RIGHTS.
1988 Stock Option Plan. The Company's Amended and Restated 1988 Stock
Option Plan (the "1988 Plan") provides for the granting of options to
purchase up to 500,000 shares of its common stock to key employees of the
Company and its subsidiaries. The 1988 Plan provides that the options
granted contain stock appreciation rights which may be exercised in lieu of
the option. To exercise the option, payment of the option price is required
before the option shares are delivered. Alternatively, the optionee may
elect to receive shares equal in value to the difference between the
aggregate fair market value of the shares exercised on the exercise date and
the aggregate exercise price of those shares. With the consent of the
Company's Compensation Committee, the optionee may also elect to exercise
the option in part by receiving cash equal to the minimum amount required
to be withheld for payroll tax purposes and the balance by receiving shares
equal to the difference between the aggregate fair market value and the
aggregate exercise price, less any cash received. All options originally
granted under the 1988 Plan on August 25, 1988, at an exercise price of
$20.00 per share were exercisable on December 31, 1993, and terminate August
24, 1995, seven years after the date of grant.
Pursuant to the 1988 Plan, the Compensation Committee of the Company's
Board of Directors granted options to purchase 286,250 shares on February
5, 1992 to the Company's officers at an exercise price of $5.125 per share,
which was the closing market price on the American Stock Exchange on the date
of the grant. These options expire seven years from the date of grant and
are exercisable beginning one year from the date of grant at a cumulative
annual rate of 20 percent of the shares covered by each option being fully
exercisable five years after the date of grant. The grant of certain of
these options was conditioned upon the surrender of previously granted and
outstanding options to purchase 23,825 shares at an exercise price of $20.00
per share.
1988 Stock Purchase Option Plan. As incentive compensation, on August 25,
1988, the Company granted a Stock Purchase Option to purchase up to 500,000
shares of its common stock to its former advisor, KA, which were assigned to
key employees of KA, KMI, KPI, and other affiliates of KA. The Stock
Purchase Option provides that upon exercise of an option, the optionee may
purchase shares for cash or may elect to receive shares equal in value to
the excess of the fair market value of shares exercised over the exercise
price. The shares became exercisable in March, 1990 and will expire June 29,
1995. Options to purchase shares under the Stock Purchase Option were
assigned by KA to its respective key employees and those of its affiliates
who are now employees of the Company.
Information concerning the options granted is summarized below.
Date of Shares Under Exercise Price
Plan Grant Option Per Share Total
1988 Stock
Option Plan 8/25/88 173,246 $20.000 $3,464,920
2/05/92 286,150 5.125 1,466,519
Stock
Purchase
Option 8/25/88 299,180 20.000 5,983,600
At December 31, 1993, there were 40,504 shares available for the granting
of options under the 1988 Plan. At December 31, 1993, options to purchase
100 shares had been exercised.
1993 Stock Option Plan. The Company's 1993 Stock Option Plan (the "1993
Plan") was approved by the Shareholders of the Company at its Annual Meeting
held on August 11, 1993. The 1993 Plan provides for the granting of options
to purchase up to 1,000,000 shares of its common stock to key employees of
the Company and its affiliates. The 1993 Plan provides that the options
granted contain stock appreciation rights which may be exercised in lieu of
the option. To exercise the option, payment of the option price is required
before the option shares are delivered. Alternatively, the optionee may
elect to receive shares equal in value to the difference between the aggregate
fair market value of the shares exercised on the exercise date and the
aggregate exercise price of those shares. With the consent of the Company's
Compensation Committee, the optionee may also elect to exercise the option in
part by receiving cash equal to the minimum amount required to be withheld
for payroll tax purposes and the balance by receiving shares equal to the
difference between the aggregate fair market value and the aggregate
exercise price, less any cash received. At December 31, 1993, no options
had been granted under the 1993 Plan. At December 31, 1993, there were
1,000,000 shares available for the granting of options under the 1993 Plan.
Shareholder Rights Plan. Pursuant to a Shareholder Rights Plan (the
"Rights Plan"), on September 30, 1990, the Board of Directors of the
Company declared a dividend of one Common Stock Purchase Right for each
outstanding share of common stock of the Company. Under the terms of the
Rights Plan, the rights which were distributed to the shareholders of record
on October 11, 1990, trade together with the Company's common stock and are
not exercisable until the occurrence of certain events (none of which have
occurred through December 31, 1993), including acquisition of, or
commencement of a tender offer for, 15 percent or more of the Company's
common stock. In such event, each right entitles its holder (other than
the acquiring person or bidder) to acquire additional shares of the Company's
common stock at a fifty percent discount from the market price. The rights
are redeemable under circumstances as specified in the Rights Plan. The
Rights Plan was amended effective December 21, 1993 for a certan shareholder
and its affiliates, see Note 2 for further discussion of this amendment.
8. DIVIDENDS.
The Company paid no dividends during 1993 or 1992. Dividends of $.77 per
share were paid during the year ended December 31, 1991, all of which was
ordinary income for income tax purposes. The Company intends that the
quarterly dividend payout in the last quarter of each year will be adjusted
to reflect the distribution of at least 95 percent of the Company's taxable
income as required by the Federal income tax laws.
The Company's taxable income/(loss) prior to the dividends paid deduction
for the years ended December 31, 1993, 1992, and 1991 was approximately
$(7,887,000), $(13,329,000), and $10,646,000, respectively. The difference
between net income for financial reporting purposes and taxable income
results primarily from different methods of accounting for bad debts,
depreciable lives related to the properties owned, and advance rents
received. At December 31, 1993, the net tax basis of the Company's assets
and liabilities exceeded the net book basis of assets and liabilities in the
amount of approximately $136,000.
Pursuant to the Plan and the Merger of KPI into the Company, the Company
will be subject to certain dividend limitations which, however, will not be
applied if they would cause loss of the Company's REIT status.
9. LITIGATION.
The Company, certain of its present and former officers and directors, and
KPI and certain of its subsidiaries are parties to a class action filed in
October, 1990 (the "Securities Action"). It is alleged in the Securities
Action that various press releases, shareholder reports, and/or securities
filings failed to disclose and/or misrepresented the Company's business
policies in violation of certain provisions of the federal securities law
and seeks unspecified damages therefore. The Company believes that claims
made in the Securities Action are without merit and intends to vigorously
contest the proceeding.
A derivative action in the District Court was commenced on October 29,
1990, by Howard Greenwald and Albert and Phyllis Schlesinger, shareholders
of the Company, against the Company, KPI, all of the then current directors
of the Company, including: Ira M. Koger, James B. Holderman, Allen R. Ransom,
Wallace F. E. Kienast, S. D. Stoneburner, Yank D. Coble, Jr., G. Christian
Lantzsch, A. Paul Funkhouser and Stephen D. Lobrano, alleging breach of
fiduciary duty by favoring KPI over the interest of the Company and failing
to disclose or intentionally misleading the public as to the Company's cash
flow, dividend and financing policies and status, and seeking damages
therefor (the "Derivative Action"). During the course of the Derivative
Action, the plaintiffs therein further alleged that Mr. Lobrano was liable
to the Company for certain alleged acts of legal malpractice. The Company's
Board of Directors' Independent Litigation Committee, which was composed of
outside independent members of the Company's Board of Directors, completed
an extensive investigation of the facts and circumstances surrounding the
Derivative Action, including the allegations against Mr. Lobrano. It was
the conclusion of this committee that the ultimate best interest of the
Company and its shareholders would not be served in prosecuting this
litigation. Subsequently, the Company moved that the Derivative Action be
dismissed under the provisions of Florida law. Thereafter, the plaintiffs
filed a Second Amended and Supplemental Complaint which realleged the
original cause of action ("Count I"); and realleged the cause of action
against Stephen D. Lobrano ("Count II"); and a new cause of action against
the members of the Special Litigation Committee for alleged violation of
fiduciary duties in conducting its investigation ("Count III"). During 1993,
the Company filed further motions seeking dismissal of the Second Amended
and Supplemental Complaint. On January 27, 1994, the United States
Magistrate issued his Report and Recommendation concerning the Derivative
Action, which recommended that (1) Count I should be dismissed pursuant to
the Special Litigation Committee Report, (2) Count III against the Special
Litigation Committee members should be dismissed, and (3) Count II should
not be dismissed. Both plaintiffs and the Company have filed objections to
portions of this Report and Recommendation, which is now pending before the
District Court.
At this time the Company's legal counsel is unable to determine whether the
outcome of the above litigation will have a material impact on the Company.
Accordingly, no provision has been made in the consolidated financial
statements for any liability that may result from this litigation.
Under the terms of the merger agreement between the Company and KPI, the
Company has agreed to indemnify each current and former non-officer director
of KPI other than Ira M. Koger (the "Indemnified Persons") in respect of
amounts to which such Indemnified Person would be otherwise entitled to
indemnification under Florida law, the articles of incorporation or the
by-laws of KPI arising out of acts or omissions prior to September 25, 1991
(the "Indemnity"). Certain of the former non-officer directors of KPI are
defendants in a Pension Plan class action suit. The Company is not named in
this suit. However, certain former non-officer directors of KPI may be
Indemnified Persons. The obligations, if any, of the Company under such
indemnification do not exceed (i) $1,000,000 in the aggregate and (ii)
$200,000 per Indemnified Person and are subject to certain other conditions
precedent. Based upon its investigation to date, the Company does not
believe that this suit will give rise to any material liability to
Indemnified Persons or to the Company. Accordingly, no provision has been
made in the Consolidated Financial Statements for any liability that may
result from the Indemnity.
<PAGE>
10.INTERIM FINANCIAL INFORMATION (UNAUDITED).
Selected quarterly information for the two years in the period ended
December 31, 1993, is presented below (in thousands except per share amounts):
Net Earnings
Rental Total Income (Loss) Per
Quarters Ended Revenues Revenues (Loss) Common Share
March 31, 1992 $11,488 $11,529 $820 $.06
June 30, 1992 11,643 11,701 292 .02
September 30, 1992 11,356 11,423 (142) (.01)
December 31, 1992 11,470 11,535 (37) -
March 31, 1993 10,970 11,030 951 .07
June 30, 1993 10,982 11,037 610 .05
September 30, 1993 11,212 11,265 (26) -
December 31, 1993 12,944 13,074 917 .06
<PAGE>
<TABLE>
Schedule IV
KOGER EQUITY, INC. AND SUBSIDIARIES
INDEBTEDNESS OF RELATED PARTIES
FOR EACH OF THE THREE YEARS IN THE
PERIOD ENDED DECEMBER 31, 1993
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993
Balances (a) Balances
Name 1-1-93 Transfers Additions Reductions 12-31-93
Koger Properties, Inc. $ 94,889,172 $ 0 $ 0 $(94,889,172) $ 0
1992
Balances (a) Balances
Name 1-1-92 Transfers Additions Reductions 12-31-92
Koger Properties, Inc. $ 99,484,091 $ 0 $ 0 $ (4,594,919) $ 94,889,172
1991
Balances (a) Balances
Name 1-1-91 Transfers Additions Reductions 12-31-91
Koger Properties, Inc. $116,279,001 $ 0 $ 0 $(16,794,910) $ 99,484,091
(a) Through the date of the Merger, the Company continued to account for
the collateral for the loans under the Restated Credit Agreement and
the Land Credit Agreement, due from Koger Properties, Inc. ("KPI") as
loans foreclosed in-substance and had recorded a provision for loss
in the amount of $18.7 million to reduce such loans to estimated
fair value. On September 25, 1991, KPI filed a petition under
Chapter 11 of the U.S. Bankruptcy Code. KPI did not make contractual
interest payments on these loans which were due on or after September
30, 1991. On October 17, 1991, the Bankruptcy Court entered an Order
granting KPI's Motion to use cash collateral (the "Cash Collateral
Order"). Under the Cash Collateral Order, the Company received
$2,667,470 ($1,392,113 in 1993, $1,180,447 in 1992 and $94,910 in
1991) in debt service payments through December 21, 1993, which were
applied to principal. In 1992, a discount of approximately
$1,432,000 was recorded on the loans under the Land Credit Agreement
and related mortgage debt outstanding.
<PAGE>
Schedule X
KOGER EQUITY, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED DECEMBER 31, 1993
(in thousands)
Year Ended Year Ended Year Ended
12-31-93 12-31-92 12-31-91
Maintenance and repairs $3,696 $3,282 $2,313
Utilities $7,020 $6,638 $6,761
Janitorial $2,570 $2,603 $2,614
Real estate taxes $4,076 $3,838 $3,926
The Company had no royalties or advertising costs during each of the three
years in the period ended December 31, 1993.
<PAGE>
</TABLE>
<TABLE>
Schedule X
KOGER EQUITY, INC. AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(in thousands)
<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT
INITIAL COST TO ACQUISITION TOTAL COST (d) (a)
BLDGS & IMPROVE CARRYING BLDGS & (b)(c) ACCUM. MORT- DATE DEPRECIABLE
CENTER LAND IMPROV. MENTS COSTS LAND IMPROV. TOTAL DEPR. GAGES ACQUIRED LIFE
OPERATING REAL ESTATE:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATLANTA CHAMBLEE $13,177 $63,211 $2,033 $ 0 $13,177 $65,244 $78,421 $5,641 $ 34,101 1988 - 1993 5 - 40 YRS.
ATLANTA GWINNETT 0 3 0 0 0 3 3 0 0 1993 5 - 40 YRS.
AUSTIN 4,274 13,650 216 0 4,274 13,866 18,140 179 3,453 1990 - 1993 5 - 40 YRS.
CHARLOTTE CARMEL 910 9,993 0 0 910 9,993 10,903 0 9,372 1993 5 - 40 YRS.
CHARLOTTE EAST 5,788 25,078 494 0 5,788 25,572 31,360 1,070 14,694 1989 - 1993 5 - 40 YRS.
EL PASO 3,108 10,107 1,102 0 3,108 11,209 14,317 947 1,674 1990 - 1993 5 - 40 YRS.
GREENSBORO SOUTH 6,391 38,700 1,886 0 6,391 40,586 46,977 2,266 23,953 1988 - 1993 5 - 40 YRS.
GREENSBORO WENDOVER 0 11 0 0 0 11 11 0 0 1993 5 - 40 YRS.
GREENVILLE 3,833 16,104 599 0 3,833 16,703 20,536 1,426 7,296 1988 - 1993 5 - 40 YRS.
JACKSONVILLE BAYMEADOWS 7,625 23,716 0 0 7,625 23,716 31,341 0 35,725 1993 5 - 40 YRS.
JACKSONVILLE CENTRAL 6,915 35,321 2,092 0 6,915 37,413 44,328 2,663 13,521 1989 - 1993 5 - 40 YRS.
MEMPHIS GERMANTOWN 3,518 21,820 451 0 3,518 22,271 25,789 1,880 13,505 1988 - 1993 5 - 40 YRS.
MEMPHIS KIRBY GATE 0 1 0 0 0 1 1 0 0 1993 5 - 40 YRS.
MIAMI 2,040 7,295 0 0 2,040 7,295 9,335 0 8,000 1993 5 - 40 YRS.
NORFOLK WEST 535 4,485 0 0 535 4,485 5,020 0 4,022 1993 5 - 40 YRS.
ORLANDO CENTRAL 8,342 30,575 2,250 0 8,342 32,825 41,167 3,687 18,625 1988 - 1993 5 - 40 YRS.
ORLANDO UNIVERSITY 2,900 12,218 166 0 2,900 12,384 15,284 522 9,806 1990 - 1993 5 - 40 YRS.
RALEIGH CROSSROADS 820 5,994 0 0 820 5,994 6,814 0 4,818 1993 5 - 40 YRS.
RICHMOND SOUTH 0 105 0 0 0 105 105 0 0 1993 5 - 40 YRS.
ST. PETERSBURG 6,657 29,525 1,022 0 6,657 30,547 37,204 2,277 20,667 1988 - 1993 5 - 40 YRS.
SAN ANTONIO 9,638 29,649 2,850 0 9,638 32,499 42,137 2,511 7,304 1990 - 1993 5 - 40 YRS.
TALLAHASSEE A. P. 6,063 28,043 1,713 0 6,063 29,756 35,819 2,772 15,837 1988 - 1993 5 - 40 YRS.
TALLAHASSEE C. C. 3,561 22,903 164 0 3,561 23,067 26,628 1,507 21,068 1988 - 1993 5 - 40 YRS.
TULSA NORTH 1,600 4,300 404 0 1,600 4,704 6,304 372 0 1990 5 - 40 YRS.
TULSA SOUTH 4,466 12,834 504 0 4,466 13,338 17,804 980 4,455 1990 - 1993 5 - 40 YRS.
SUBTOTALS 102,161 445,641 17,946 0 102,161 463,587 565,748 30,700 271,896
FURNITURE & EQUIPMENT 813 0 813 813 6 5 - 7 YRS.
IMPROVEMENTS IN PROGRESS 209 0 209 209
TOTAL OPERATING
REAL ESTATE $102,161 $446,454 $18,155 $ 0 $102,161 $464,609 $566,770 $30,706 $271,896
</TABLE>
<PAGE>
<TABLE>
Schedule XI
KOGER EQUITY, INC. AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(in thousands)
<CAPTION>
COSTS CAPITALIZED
SUBSEQUENT
INITIAL COST TO ACQUISITION TOTAL COST (d) (a)
BLDGS & IMPROVE CARRYING BLDGS & (b)(c) ACCUM. MORT- DATE DEPRECIABLE
CENTER LAND IMPROV. MENTS COSTS LAND IMPROV. TOTAL DEPR. GAGES ACQUIRED LIFE
UNIMPROVED LAND:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATLANTA GWINNETT $ 5,780 $ 5,780 $ 5,780 $ 79 1993
BIRMINGHAM 1,750 1,750 1,750 32 1993
CHARLOTTE CARMEL 3,250 3,250 3,250 71 1993
CHARLOTTE EAST 468 468 468 8 1993
COLUMBIA SPRING VALLEY 150 150 150 0 1993
GREENSBORO WENDOVER 1,491 1,491 1,491 0 1993
GREENVILLE 949 949 949 0 1993
JACKSONVILLE BAYMEADOWS 2,319 2,319 2,319 48 1993
MEMPHIS GERMANTOWN 4,505 4,505 4,505 49 1993
MEMPHIS KIRBY GATE 3,474 3,474 3,474 68 1993
MIAMI 2,970 2,970 2,970 61 1993
NORFOLK WEST 2,265 2,265 2,265 6 1993
ORLANDO UNIVERSITY 2,880 2,880 2,880 39 1993
RALEIGH CROSSROADS 2,495 2,495 2,495 39 1993
RICHMOND SOUTH 1,860 1,860 1,860 0 1993
ST. PETERSBURG 1,000 1,000 1,000 34 1993
SAN ANTONIO 1,430 1,430 1,430 103 1993
TULSA NORTH 1,000 1,000 1,000 9 1993
TOTAL UNIMPROVED LAND 40,036 0 0 0 40,036 0 40,036 0 646
TOTAL $142,197 $446,454 $18,155 $ 0 $142,197 $464,609 $606,806 $30,706 $272,542
</TABLE>
<PAGE>
Schedule XI
KOGER EQUITY, INC. AND SUBSIDIARIES
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1993
(in thousands)
(a) At December 31, 1993, the outstanding balance of mortgages payable was
$272,542. In addition, the Company has loans outstanding with variable
interest rates which are collateralized by mortgages on pools of
buildings. At December 31, 1993, the outstanding balance of these loans
was $58,861.
(b) Aggregate cost basis for Federal income tax purposes was $633,181 at
December 31, 1993.
(c) Reconciliation of total real estate carrying value for the years ended
December 31, 1993, 1992 and 1991 is as follows:
1993 1992 1991
Balance at beginning of year $311,286 $308,293 $304,690
Additions during year:
Acquisitions 289,097 19 4
Improvements 6,423 2,974 3,599
Balance at close of year $606,806 $311,286 $308,293
Acquisitions of land and buildings during 1993 were made pursuant to
the merger of KPI with and into the Company.
(d) Reconciliation of accumulated depreciation for the years ended December
31, 1993, 1992 and 1991 is as follows:
1993 1992 1991
Balance at beginning of year $22,300 $14,625 $7,493
Additions during year:
Depreciation expense 8,406 7,675 7,132
Balance at close of year $30,706 $22,300 $14,625
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information about directors of the Company who are not executive
officers is contained in the Company's Proxy Statement (the "1994 Proxy
Statement") and is incorporated herein by reference.
The following tabulation lists the executive officers of the Company,
their ages and their occupations for the past five years:
S. D. Stoneburner . . . . .Chairman of the Board
Irvin H. Davis. . . . . . .President, Chief Executive Officer and Director
Victor A. Hughes, Jr. . . .Senior Vice President, Chief Financial Officer
and Director
James L. Stephens . . . . .Treasurer and Chief Accounting Officer
Mr. Stoneburner, age 75, was elected as Chairman of the Board of Directors
of the Company on December 20, 1991, and has been a Director of the Company
since June, 1988. He had also previously served the Company as President and
Chief Financial Officer from June 22, 1988 through March 6, 1990. Mr.
Stoneburner is the former Vice Chairman of the Board and former Chief
Financial Officer of KPI, having served in that capacity from 1973 through
June 21, 1988.
Mr. Davis, age 64, was elected President and Chief Executive Officer of
the Company on December 11, 1991. He has served as a Director of the Company
since August 15, 1991. He previously held the positions of President and
Chief Executive Officer pro tempore of the Company from August 15, 1991 to
December 10, 1991. Prior to that Mr. Davis served the Company as Senior Vice
President and Asset Manager from August 1, 1991 to August 14, 1991 and as
Senior Vice President/Asset Management from June, 1988 to February 1, 1991.
Mr. Davis was a Senior Vice President of KPI from 1982 to 1988 and also
served in that capacity from February, 1991 to August 1, 1991.
Mr. Hughes, age 58, has been the Chief Financial Officer of the
Company since March 31, 1991, Senior Vice President of the Company since
May 20, 1991, and Assistant Secretary of the Company from March 11, 1991
through December 21, 1993. Mr. Hughes was elected to the Board of Directors
of the Company on July 29, 1992. Mr. Hughes had previously held the position
of Vice President of the Company from April 1, 1990 to March 11, 1991. Mr.
Hughes was President of Koger Securities, Inc., a former wholly owned
subsidiary of KPI, from 1982 to March, 1990.
Mr. Stephens, age 36, has been the Treasurer and Chief Accounting
Officer of the Company since March 31, 1991. He also has held the position
of Assistant Secretary of the Company from May 20, 1991 through December 21,
1993. Mr. Stephens was the Accounting Manager of KA from December, 1990 to
March, 1991. He was a Division Controller of KPI from March, 1989 to
December, 1990 and Cost Accounting Manager of KPI from September, 1987 to
March, 1989.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers to file with the SEC and the
American Stock Exchange initial reports of ownership and reports of changes
in ownership of the common stock of the Company. Executive officers and
directors are required by the SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended December 31, 1993
all Section 16(a) filing requirements applicable to its executive officers
and directors were complied with.
Item 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by
reference to the section headed "Executive Compensation" in the 1994 Proxy
Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The stock ownership of each person known to the Company to be the
beneficial owner of more than five percent (5%) of its outstanding common
stock is incorporated by reference to the section headed "Principal Holders
of Voting Securities" of the 1994 Proxy Statement. The beneficial ownership
of Common Stock of all directors of the Company is incorporated by reference
to the section headed "Election of Directors" contained in the 1994 Proxy
Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to Item 1. "Business," 2. "Properties," 3. "Lega
Proceedings," 7. "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" and Note 2 "Transactions With Related
Parties" to the Notes to Consolidated Financial Statements contained in this
Report and to the heading "Certain Relationships and Transactions" contained
in the 1994 Proxy Statement for information regarding certain relationships
and related transactions which information is incorporated herein by
reference.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)(1) See "Item 8 - Financial Statements and Supplementary Data -
Index to Consolidated Financial Statements and Financial
Statement Schedules" for a list of the financial statements
included in this report. The financial statements for The
Koger Partnership, Ltd. are herein incorporated by reference
as filed in its Form 10-K for the year ended December 31,
1993 (Commission File No. 0-8891).
(2) The consolidated supplemental financial statement schedules
required by Regulation S-X are included on pages 50 through
54 in this Form.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter
ended December 31, 1993.
(c) The following exhibits are filed as part of this
report:
Exhibit
Number Description
2 Agreement and Plan of Merger, dated as of
December 21, 1993 between the Company and
Koger Properties, Inc.*
3 (a) Amended and Restated Articles of
Incorporation. Incorporated by reference
to Exhibit IV of the 1993 Proxy Statement
filed by the Registrant on June 30, 1993
(File No. 1-9997).
(b) Koger Equity, Inc. By Laws, as Amended and
Restated on May 5, 1992. Incorporated by
reference to Exhibit 3 of the Form 10-Q
filed by the Registrant for the quarter
ended March 31, 1993 (Filed No. 1-9997).
4 (a) Common Stock Certificate of Koger Equity,
Inc. See Exhibit 4(a) to Registration
Statement on Form S-11 (Registration No.
33-22890) which Exhibit is herein
incorporated by reference.
(b)(1)(A) Koger Equity, Inc. Rights Agreement (the
"Rights Agreement") dated as of September
30, 1990 between the Company and Wachovia
Bank and Trust Company, N.A. as Rights
Agent ("Wachovia"). See Exhibit 1 to a
Registration Statement on Form 8-A, dated
October 3, 1990, (File No. 1-9997) which
Exhibit is herein incorporated by
reference.
(b)(1)(B) First Amendment to the Rights Agreement,
dated as of March 22, 1993, between the
Company and First Union National Bank of
North Carolina, as Rights Agent ("First
Union"), entered into for the purpose of
replacing Wachovia. Incorporated by
reference to Exhibit 4(b)(4) of the Form
10-Q filed by the Registrant for the
quarter ended March 31, 1993
(File No. 1-9997).
<PAGE>
Exhibit
Number Description
(b)(1)(C) Second Amendment to the Rights Agreement,
dated as of December 21, 1993, between
the Company and First Union. See Exhibit
5 to an Amendment on Form 8-A/A to a
Registration Statement on Form 8-A, dated
December 21, 1993, (File No. 1-9997) which
Exhibit is herein incorporated by
reference.
(b)(2) Form of Common Stock Purchase Rights
Certificate (attached as Exhibit A to the
Rights Agreement). Pursuant to the Rights
Agreement, printed Common Stock Purchase
Rights Certificates will not be mailed
until the Distribution Date (as defined
in the Rights Agreement).
(b)(3) Summary of Common Stock Purchase Rights
(attached as Exhibit B to the Rights
Agreement).
(c)(1) Warrant Agreement, dated as of December
21, 1993, between the Company and First
Union (the "Warrant Agreement"). See
Exhibit 2 to an Amendment on Form 8-A/A
to a Registration Statement on Form 8-A,
dated December 21, 1993, (File No. 1-
9997) which Exhibit is herein incorporated
by reference.
(c)(2) Form of a Common Share Purchase Warrant
issued pursuant to the Warrant Agreement.
See Exhibit 1 to an Amendment on Form
8-A/A to a Registration Statement on Form
8-A (File No. 1-9997) dated December 21,
1993, which Exhibit is herein incorporated
by reference.
10 Material Contracts
(a)(1) Purchase Agreement among Koger Equity,
Inc., Koger Properties, Inc., and The
Koger Company. Incorporated by reference
to Exhibit 10(a) of Form 10-K filed by the
Registrant for the period ended December
31, 1988 (File No. 1-9997).
(a)(2) First Amendment to Purchase Agreement.
Incorporated by reference to Exhibit
10(a)(2) of Form 10-Q filed by the
Registrant for the quarter ended June 30,
1989 (File No. 1-9997).
(b)(1) Credit Agreement among Koger Equity, Inc.,
Koger Properties, Inc. and The Koger
Company. Incorporated by reference to
Exhibit 10(b) of Form 10-K filed by the
Registrant for the period ended December
31, 1988 (File No. 1-9997).
(b)(2) First Amendment to Credit Agreement.
Incorporated by reference to Exhibit
10(b)(2) of Form 10-Q filed by the
Registrant for the quarter ended June 30,
1989 (File No. 1-9997).
(c) Advisory Agreement between Koger Equity,
Inc. and Koger Advisors, Inc.
Incorporated by reference to Exhibit 10(c)
of Form 10-K filed by the Registrant for
the period ended December 31, 1988 (File
No. 1-9997).
(d)(1) Management Agreement between Koger Equity,
Inc. and Koger Management, Inc.
Incorporated by reference to Exhibit 10(d)
of Form 10-K filed by the Registrant for
the period ended December 31, 1988 (File
No. 1-9997).
<PAGE>
Exhibit
Number Description
(d)(2) Amended Schedule "A" to Management
Agreement between Koger Management, Inc.
and Koger Equity, Inc. Incorporated by
reference to Exhibit 10(d)(2) of Form 10-Q
filed by the Registrant for the quarter
ended September 30, 1989 (File No. 1-9997).
(e)(1)(A) Koger Equity, Inc. 1988 Stock Option Plan.
Incorporated by reference to Exhibit
10(e)(2) of Form 10-Q filed by the
Registrant for the quarter ended September
30, 1989 (File No. 1-9997).
(e)(1)(B) Koger Equity, Inc. Amended and Restated
1988 Stock Option Plan. Incorporated by
reference to Exhibit 10(e)(1)(A) of Form
10-Q filed by the Registrant for the
quarter ended June 30, 1992 (File No.
1-9997).
(e)(2)(A) Koger Equity, Inc. 1988 Stock Option
Agreement. Incorporated by reference to
Exhibit 10(e)(2) of Form 10-Q filed by the
Registrant for the quarter ended March
31, 1989 (File No. 1-9997).
(e)(2)(B) Form of Stock Option Agreement pursuant
to Koger Equity, Inc. 1988 Stock Option
Plan, as amended and restated.
Incorporated by reference to Exhibit
10(e)(2)(A) of Form 10-Q filed by the
registrant for the quarter ended June 30,
1992 (File No. 1-9997).
(f)(1) Stock Purchase Option between Koger
Equity, Inc. and Koger Advisors, Inc.
Incorporated by reference to Exhibit
10(f)(1) of Form 10-Q filed by the
Registrant for the quarter ended March
31, 1989 (File No. 1-9997).
(f)(2) Koger Equity, Inc. Assignment of Stock
Purchase Agreement. Incorporated by
reference to Exhibit 10(f)(2) of Form 10-Q
filed by the Registrant for the quarter
ended March 31, 1989 (File No. 1-9997).
(g) Addendum Agreement between Koger Equity,
Inc. and Koger Properties, Inc.
Incorporated by reference to Exhibit 10(g)
of Form 10-K filed by the Registrant for
the period ended December 31, 1988 (File
No. 1-9997).
(h) Agreement between KPI and the Company,
dated September 30, 1990. Incorporated
by reference to Exhibit 10(h) of Form
10-Q filed by the Registrant for the
quarter ended September 30, 1990
(File No. 1-9997).
(i) Land Credit Agreement dated December 31,
1990 between Koger Properties, Inc. and
the Company. Incorporated by reference
to Exhibit 10(i) of Form 10-K filed by the
Registrant for the year ended December 31,
1990 (File No. 1-9997).
(j) Second Amendment To Credit Agreement dated
as of March 30, 1990. Incorporated by
reference to Exhibit 10(j) of Form 10-K
filed by the Registrant for the year ended
December 31, 1990 (File No. 1-9997).
(k) Amended and Restated Credit Agreement
dated December 31, 1990. Incorporated by
reference to Exhibit 10(k) of Form 10-K
filed by the Registrant for the year ended
December 31, 1990 (File No. 1-9997).
<PAGE>
Exhibit
Number Description
(l) Term Loan commitment with NCNB National
Bank of Florida dated January 25, 1991.
Incorporated by reference to Exhibit 10(l)
of Form 10-Q filed by the Registrant for
the quarter ended June 30, 1991 (File No.
1-9997).
(l)(2) Agreement to extend NCNB Loan Maturity
Date, dated February 4, 1992. Incorporated
by reference to Exhibit 10(1)(2) of the
Form 10-Q filed by the Registrant for the
quarter ended September 30, 1992 (File No.
1-9997).
(l)(3) Agreement to Extend NCNB Loan Maturity
Date, dated June 8, 1992. Incorporated
by reference to Exhibit 10(1)(3) of the
Form 10-Q filed by the Registrant for the
quarter ended September 30, 1992 (File
No. 1-9997).
(l)(4) Agreement to Extend NCNB Loan Maturity
Date, dated September 30, 1992.
Incorporated by reference to Exhibit 10(l)
(4) of the Form 10-Q filed by the
Registrant for the quarter ended
September 30, 1992 (File No. 1-9997).
(l)(5) Amendment to NCNB Loan Agreement, dated
January 28, 1993. Incorporated by
reference to Exhibit 10(l)(5) of the Form
10-K filed by the Registrant for the year
ended December 31, 1992 (File No. 1-9997).
(l)(6) Agreement to Extend NationsBank (NCNB)
Loan Maturity Date, dated April 30, 1993.
Incorporated by reference to Exhibit
10(l)(6) of the Form 10-Q filed by the
Registrant for the quarter ended March 31,
1993 (File No. 1-9997).
(l)(7) Commitment letter to Koger Equity, Inc.
from NationsBank of Florida, N.A., to
modify and extend mortgage loan, dated
October 13, 1993. Incorporated by
reference to Exhibit 10(l)(7) of Form
10-Q filed by the Registrant for the
quarter ended September 30, 1993
(File No. 1-9997).
(l)(8) Agreement to Extend NationsBank (NCNB)
Loan Maturity Date, dated as of October
15, 1993. Incorporated by reference to
Exhibit 10(l)(7) of Form 10-Q filed by
the Registrant for the quarter ended
September 30, 1993 (File No. 1-9997).
(l)(9) Restated Loan Agreement between
NationsBank of Florida, N.A., and Koger
Equity, Inc., dated December 21, 1993.*
(m) Loan Agreement with Barnett Bank of
Jacksonville, N.A. dated April 5, 1991.
Incorporated by reference to Exhibit 10(m)
of Form 10-Q filed by the Registrant for
the quarter ended June 30, 1991 (File No.
1-9997).
(m)(1) Commitment letter to Koger Equity, Inc.,
from Barnett Bank of Jacksonville, N.A.,
to modify and extend term loans, dated
September 22, 1993. Incorporated by
reference to Exhibit 10(m)(l) of Form 10-Q
filed by the Registrant for the quarter
ended September 30, 1993 (File No. 1-9997).
(m)(2) Consolidated Renewal Promissory Note between
Barnett Bank of Jacksonville, N.A., and
Koger Equity, Inc., dated December 21,
1993.*
(n)(1) Commitment Letter to Koger Equity, Inc.
with First Union National Bank of Florida
dated April 19, 1991. Incorporated by
reference to Exhibit 10(n)(1) of Form
10-Q filed by the Registrant for the
quarter ended June 30, 1991 (File No.
1-9997).
<PAGE>
Exhibit
Number Description
(n)(2) Amendment to commitment Letter to Koger
Equity, Inc. with First Union National
Bank of Florida dated June 5, 1991.
Incorporated by reference to Exhibit
10(n)(2) of Form 10-Q filed by the
Registrant for the quarter ended June 30,
1991 (File No. 1-9997).
(n)(3) Commitment Letter to Koger Equity of
South Carolina, Inc. with First Union
National Bank of Florida dated May 31,
1991. Incorporated by reference to Exhibit
10(n)(3) of Form 10-Q filed by the
Registrant for the quarter ended June 30,
1991 (File No. 1-9997).
(n)(4) Commitment Letter to Koger Equity of South
Carolina, Inc. with First Union National
Bank of Florida dated May 31, 1991.
Incorporated by reference to Exhibit
10(n)(4) of Form 10-Q filed by the
Registrant for the quarter ended June 30,
1991 (File No. 1-9997).
(n)(5) Commitment Letter to Koger Equity of North
Carolina, Inc. with First Union National
Bank of Florida dated May 31, 1991.
Incorporated by reference to Exhibit
10(n)(5) of Form 10-Q filed by the
Registrant for the quarter ended June 30,
1991 (File No. 1-9997).
(n)(6) Amendment to Commitment Letter to Koger
Equity of North Carolina, Inc. with First
Union National Bank of Florida dated
June 5, 1991. Incorporated by reference
to Exhibit 10(n)(6) of Form 10-Q filed by
the Registrant for the quarter ended June
30, 1991 (File No. 1-9997).
(n)(7) Loan Extension Agreement and Modification
of Mortgage between Koger Equity, Inc.,
and First Union National Bank of Florida.
Incorporated by reference to Exhibit
10(n)(7) of Form 10-Q filed by the
Registrant for the quarter ended September
30, 1993 (File No. 1-9997).
(n)(8) Loan Extension Agreement and Modification
of Mortgage and Assignment of Leases
(and Consent of Guarantor) between Koger
Equity of South Carolina, Inc., Koger
Equity, Inc., and First Union National
Bank of Florida. Incorporated by
reference to Exhibit 10(n)(8) of Form 10-Q
filed by the Registrant for the quarter
ended September 30, 1993 (File No. 1-9997).
(n)(9) Loan Extension Agreement and Modification
of Deed of Trust (and Consent of Guarantor)
between Koger Equity of North Carolina,
Inc., Koger Equity, Inc., and First Union
National Bank of Florida. Incorporated by
reference to Exhibit 10(n)(9) of Form 10-Q
filed by the Registrant for the quarter
ended September 30, 1993 (File No. 1-9997).
(n)(10) Commitment letter to Koger Equity, Inc.,
with First Union National Bank of Florida
to restructure loan, dated October 19,
1993. Incorporated by reference to
Exhibit 10(n)(10) of Form 10-Q filed by
the Registrant for the quarter ended
September 30, 1993 (File No. 1-9997).
(n)(11) Consolidated Note between First Union
National Bank of Florida and Koger Equity,
Inc., dated December 21, 1993.*
<PAGE>
Exhibit
Number Description
(o) Shareholders Agreement, dated August 9,
1993, between the Company and TCW Special
Credits, a California general partnership.*
(p) Registration Rights Agreement, dated as of
August 9, 1993, between the company and
TCW Special Credits, a California general
partnership.*
(q)(1) Amended and Restated Management Agreement,
dated August 3, 1993, between The Koger
Partnership, Ltd. and Koger Properties,
Inc.*
(q)(2) First Amendment to Amended and Restated
Management Agreement, dated December 21,
1993, between The Koger Partnership, Ltd.
and Koger Properties, Inc.*
(q)(3) TKP Co-Management Agreement, dated as of
December 21, 1993, between The Koger
Partnership, Ltd. and the Company and
Southeast Properties Holding Corporation,
Inc.*
(q)(4) Delegation of Duties Under TKP Co-
Management Agreement, dated as of December
21, 1993, between the Company and its
wholly owned subsidiary, Koger Real Estate
Services, Inc.*
(r)(1) Incentive Fee Agreement, dated August 3,
1993, between The Koger Partnership, Ltd.
and Koger Properties, Inc.*
(r)(2) First Amendment to Incentive Fee Agreement,
dated December 21, 1993, between The Koger
Partnership, Ltd, and Koger Properties,
Inc.*
(s) Limited Recourse Guaranty and Security
Agreement, dated August 3, 1993, by The
Koger Partnership, Ltd. and Koger
Properties, Inc. in favor of the holders
of the Basic Restructured Mortgages Notes
of The Koger Partnership, Ltd.*
(t) Option and Purchase and Sale Agreement,
dated August 3, 1993, between The Koger
Partnership, Ltd. and Koger Properties,
Inc.*
(u) Subordination Agreement, dated as of
August 3, 1993, executed
and delivered by Koger Properties, Inc.*
22 Subsidiaries of the Registrant.*
28 (a) Order Granting Debtor's Motion to Use Cash
Collateral entered in RE Chapter 11 of
Koger Properties, Inc. (Case No. 91-12294-
8P1) by United States Bankruptcy Court,
Middle District of Florida, Tampa
Division. Incorporated by reference to
Exhibit 28 of Form 10-K filed by the
Registrant for the year ended December 31,
1991 (File No. 1-9997).
(b) First Amended and Restated Disclosure
Statement, dated as of March 1, 1993,
pursuant to Section 1125 of the Bankruptcy
Code to accompany First Amended and
Restated Plan of Reorganization dated as
of March 1, 1993, for Koger Properties,
Inc., proposed jointly by Koger
Properties, Inc. and Koger Equity, Inc.,
including all exhibits thereto.
Incorporated by reference to Exhibit 29 of
Form 10-K filed by the Registrant for the
year ended December 31, 1992.
*Filed with this Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, Koger Equity, Inc., has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KOGER EQUITY, INC.
By: IRVIN H. DAVIS
Irvin H. Davis, President and
Chief Executive Officer
Date: March 11, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
Signature Title Date
IRVIN H. DAVIS President, Chief Executive Officer March 11, 1994
(Irvin H. Davis) and Director
VICTOR A. HUGHES Senior Vice President, Chief March 11, 1994
(Victor A. Hughes) Financial Officer and Director
JAMES L. STEPHENS Treasurer and Chief Accounting March 11, 1994
(James L. Stephens) Officer
S. D. STONEBURNER Chairman of the Board of March 11, 1994
(S. D. Stoneburner) Directors and Director
D. PIKE ALOIAN Director March 11, 1994
(D. Pike Aloian)
BENJAMIN C. BISHOP Director March 11, 1994
(Benjamin C. Bishop)
Director
(Charles E. Commander, III)
Director
(David B. Hiley)
G. CHRISTIAN LANTZSCH Director March 11, 1994
(G. Christian Lantzsch)
Director
(Thomas K. Smith, Jr.)
Director
(George F. Staudter)
Exhibit 2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
KOGER EQUITY, INC.
AND
KOGER PROPERTIES, INC.
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 21, 1993, by and
between KOGER EQUITY, INC., a Florida corporation ("KE") and KOGER
PROPERTIES, INC., a Florida corporation and a debtor-in-possession in its
Bankruptcy Case (as defined below) ("KPI")
WITNESSETH:
WHEREAS, KPI has commenced a voluntary case (No. 91-12294-8PI) (the
"Bankruptcy Case") under Chapter 11 of the United States Bankruptcy Code,
11 U.S.C. 101 et seq. (the "Bankruptcy Code");
WHEREAS, a plan of reorganization for KPI has been filed jointly with
the United States Bankruptcy Court for the Middle District of Florida, Tampa
Division (the "Bankruptcy Court"), by KPI and KE;
WHEREAS, the Bankruptcy Court has entered an order dated June 8, 1993
approving the Disclosure Statement filed by KPI and KE relating to the Plan
as containing adequate information with respect thereto and has entered an
order dated December , 1993 approving the execution and delivery by KPI of
this Agreement (collectively, the "Approval Orders");
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter set forth, and in reliance on the representations and
warranties referred to herein and subject to the terms and conditions hereof,
the parties hereto hereby agree as follows:
ARTICLE 1.
CERTAIN DEFINITIONS
For all purposes of this Agreement, except where otherwise expressly
indicated, the following definitions apply:
"Agreement" means this Agreement and all Schedules and Exhibits hereto,
as the same may be amended from time to time pursuant to Section 10.11 hereof.
"Assumed Contracts" means the executory contracts and unexpired leases
assumed by KPI under the Plan, the list of which shall be filed with the
Bankruptcy Court prior to the confirmation of the Plan.
"Bankruptcy Code" has the meaning ascribed to it in the preamble.
"Bankruptcy Court" has the meaning ascribed to it in the preamble.
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure and
the Local Rules of the Bankruptcy Court (including any applicable local rules
of the United States District Court for the Middle District of Florida), as
in effect on the Effective Date.
"best of KE's knowledge" means to the best knowledge of any of the
executive officers and directors of KE and the KE Subsidiaries and, when used
in Section 4.11 hereof, "best of KE's knowledge" means to the best knowledge
of any of the executive officers and directors of KE and the KE Subsidiaries
acquired since the date on which the applicable property was transferred from
KPI to KE.
"best of KPI's knowledge" means to the best knowledge of any of the
officers and directors of KPI and the KPI Subsidiaries.
"Cash" means cash, cash equivalents and other readily marketable
direct obligations of the United States of America, including, but not
limited to bank deposits, certificates of deposit, checks and other similar
items.
"Certificate of Merger" means the Certificate of Merger substantially
in the form attached hereto as Exhibit 2.1(a).
"Closing" has the meaning ascribed to it in Section 2.3(a) hereof.
"Closing Date" has the meaning ascribed to it in Section 2.3(a) hereof.
"Committee" means the Official Committee of Unsecured Creditors in the
Bankruptcy Case.
"Confirmation Date" means the date on which the Confirmation Order
shall be entered.
"Confirmation Order" means the order which shall be entered by the
Bankruptcy Court confirming the Plan and shall be reasonably satisfactory to
KE in form and substance.
"Disclosure Schedule" means the disclosure schedule to the
representations and warranties attached hereto and forming a part of this
Agreement.
"Disclosure Statement" means the disclosure statement with respect to
the Plan that was approved by the Bankruptcy Court and has been transmitted
to holders of claims and interests in the Bankruptcy Case soliciting
acceptances of the Plan.
"Effective Time" has the meaning ascribed to it in Section 2.2 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"FBCA" means the Florida Business Corporations Act, as such Act may be
amended from time to time.
"Final Order" means, as to any court, administrative agency or other
tribunal, an order or judgment of such tribunal entered on its docket which
has not been modified, amended or stayed and as to which the time to appeal
or petition for rehearing or certiorari has expired and as to which no appeal
or petition for rehearing or certiorari has been timely filed or taken, the
order or judgment of the court has been affirmed by the highest court (or
other tribunal having appellate jurisdiction over the order or judgment) to
which the order was appealed or the petition for rehearing or certiorari has
been denied, and the time to take any further appeal or to seek further
rehearing or certiorari has expired.
"Governmental Requirements" means all laws, ordinances, statutes,
codes, rules, regulations, orders and decrees of the United States, the
state, the county, the city, or any other political subdivision in which
(i) with respect to KPI, a KPI Property, or any part or parcel thereof, is
located, and any other political subdivision, agency or instrumentality
exercising jurisdiction over KPI or KPI Property or any part or parcel
thereof or (ii) with respect to KE, a KE Property, or any part or parcel
thereof, is located, and any other political subdivision, agency or
instrumentality exercising jurisdiction over KE or KE Property or any part
or parcel thereof.
"Hazardous Materials" means any substance the presence of which on a
KPI or KE Property, as the case may be, is regulated by any Governmental
Requirements, including but not limited to: (i) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901 et seq.), as amended from time to time, and regulations
promulgated thereunder; (ii) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(42 U.S.C. Section 9601 et seq.) ("CERCLA" or "SuperFund"), as amended from
time to time, and regulations promulgated thereunder; (iii) asbestos;
(iv) polychlorinated biphenyls; (v) any petroleum-based products; and
(vi) underground storage tanks, whether empty, filled or partially filled
with any substance.
"Hazardous Materials Contamination" means the uncontrolled presence of
(whether presently existing or hereafter occurring) Hazardous Materials, in
the environment at a KPI or KE Property, as the case may be.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations of the Federal Trade
Commission promulgated thereunder.
"KE Common Stock" means the common stock of KE, par value $.01 per
share.
"KE Leased Property" means the properties listed as such on the
Disclosure Schedule hereto.
"KE Properties" shall have the meaning ascribed to it in Section 4.8.
"KE Rights Agreement" means the Common Stock Rights Agreement between
KE and First Union National Bank, as rights agent, dated as of September 30,
1990.
"KE Subsidiaries" means the subsidiaries of KE, if any.
"KPI Common Stock" means the common stock of KPI, par value $0.10 per
share.
"KPI Leased Property" means the properties listed as such on the
Disclosure Schedule hereto.
"KPI Properties" shall have the meaning ascribed to it in Section 3.8.
"KPI Stock Consideration" shall mean the consideration to be received
by holders of KPI Common Stock which shall constitute Allowed Class 9
Interests pursuant to the Plan and the Merger as provided in Section
2.5(c)(i) hereof.
"KPI Subsidiaries" means the subsidiaries of KPI, if any.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, an estate, an unincorporated organization
and a government or any department or agency thereof.
"Plan" means the Third Amended and Restated Plan of Reorganization of
Koger Properties, Inc. proposed jointly by Koger Properties, Inc. and Koger
Equity, Inc. dated as of April 30, 1993, as amended. The following terms
are used herein with the meaning set forth in the Plan: Administrative
Expenses, Allowed Claims, Allowed Interests, Claims, Class or Classes,
Disbursing Agent, Effective Date, Paying Agent(s), Petition Date,
Restructured Note, Reorganized TKP, Southeast, Southeast Assets, Tax Note,
Restructured Secured Notes and TKP.
"Rights" means the rights to purchase shares of Series A Preferred
Stock of KPI issued pursuant to the Rights Agreement.
"Rights Agreement" means the Preferred Stock Rights Agreement dated as
of September 30, 1990, between KPI and First Union National Bank, as
successor Rights Agent.
"Surviving Corporation" means KE after the Effective Time of the
Merger.
"SEC" means the Securities and Exchange Commission, or any government
agency succeeding to its functions.
"Tax" and "Taxes" shall be understood to include any tax, assessment
or similar governmental charge, impost or levy, including, without
limitation, ad valorem or similar real estate taxes, together with any
related liabilities, penalties, fines, additions to tax or interest, imposed
by the United States or any state, county, local or foreign government or
subdivision or agency thereof.
"TKP Plan" means the Third Amended and Restated Plan of Reorganization
of The Koger Partnership, Ltd. dated as of October 28, 1992, as amended,
which was confirmed by order of the Bankruptcy Court on March 24, 1993.
"Unrestricted Cash" means Cash which is not subject to any claim,
lien, encumbrance, escrow or right of setoff of any Person or which is not
set aside for specific application.
"Warrant Agreement" means the agreement between KE and First Union
National Bank substantially in the form of Exhibit D to the Plan.
"Warrants" means the warrants to be issued by KE which shall entitle
the holder thereof to purchase one share of KE Common Stock on the terms set
forth in the Warrant Agreement attached as Exhibit D to the Plan.
ARTICLE 2.
THE MERGER
2.1. The Merger.
(a) Upon the terms and subject to the conditions of this Agreement,
pursuant to the authority granted by the Confirmation Order, KPI shall be
merged with and into KE (the "Merger") at the Effective Time (as defined
below) in accordance with the FBCA (Florida Statutes Section 607.1101 et
seq.), with KE as the surviving corporation, all as provided in the
Certificate of Merger, which the parties hereto agree to execute, acknowledge
and deliver to the Secretary of State of Florida for filing pursuant to the
FBCA, on or during the Closing.
(b) At the Effective Time, KE shall be the successor to all of the
assets, interests and entitlements of KPI owned by KPI as of the Effective
Time, and to all of the liabilities and obligations of KPI existing as of the
Effective Time, as provided in the Plan. The name, identity, existence,
rights, privileges, powers, franchises, properties and assets of KE shall
continue unaffected and unimpaired by the Merger, all as provided by the
FBCA. At the Effective Time, the identity and separate existence of KPI shall
cease, and all of the rights, privileges, powers, franchises, properties and
assets of KPI shall be vested in KE.
2.2. Effective Time. On or following the date upon which each of the
conditions set forth in Articles 7 and 8 hereof have been satisfied or waived,
the Merger shall become effective on the filing of the Certificate of Merger
with the Secretary of State of the State of Florida (the "Effective Time").
2.3. The Closing.
(a) The closing of the Merger and the transactions contemplated in
this Agreement (the "Closing") shall take place at the offices of Martin,
Ade, Birchfield & Mickler, P.A. in Jacksonville, Florida (or at such other
place as the parties may mutually agree upon) on (i) the second business day
following the satisfaction or waiver, to the extent permitted hereunder, of
the conditions to the consummation of the Merger specified in Articles 7 and
8 of this Agreement, or (ii) such other date as the parties hereto may
mutually agree upon. The date on which the Closing actually occurs is
referred to herein as the "Closing Date". At the Closing, there shall be
delivered to KE and KPI the opinions, certificates and other documents
required to be delivered under Articles 7 and 8 hereof.
(b) All deliveries, payments and other transactions and documents
relating to the Closing, including the filing of the Certificate of Merger
with the Secretary of State of Florida, shall be interdependent and none
shall be effective unless and until all are effective, except for any of the
same as to which the party entitled to the benefit thereof has waived
satisfaction or performance thereof as a condition precedent to the Closing.
2.4. Plan of Reorganization. The Merger shall be effected as a
principal component of the Plan. The Closing Date and the Effective Time
hereunder shall occur on or as soon as practicable after the Effective Date
under the Plan.
2.5. Merger Consideration. At the Closing, KE shall provide,
pursuant to the Plan, to the holders of Allowed Claims or to the Paying
Agents under the Plan for the benefit of holders of Allowed Claims and
Interests under the Plan, as the case may be, the merger consideration which
shall consist of the following components (collectively, the "Merger
Consideration"):
(a) Delivery of Certain Notes. Subject to the terms and conditions
of the Plan and the Confirmation Order, KE shall execute and deliver to the
holders of Allowed Claims in Classes 1A(1) through 1A(20), 1B, 1C, and 1E
under the Plan, respectively, Restructured Notes, Tax Notes and Restructured
Secured Notes (the "Debt Consideration") in the amounts and containing the
terms provided in the Plan;
(b) Delivery of KE Common Stock. Subject to the terms and conditions
of the Plan and the Confirmation Order, KE shall deliver to the Disbursing
Agent 6,158,977 shares of KE Common Stock issuable under the Plan to Holders
of Allowed Claims in Classes 3, 4 and 5; however, in the event that KE shall
commit to increase the number of shares of KE Common Stock to be distributed
under the Plan in respect of Allowed Class 3 Claims and Allowed Class 4
Claims, as set forth in Section 13.3 of the Plan, KE shall also deliver to
the Disbursing Agent such increased number of shares; and
(c) Delivery of Warrants. Subject to the terms and conditions of the
Plan and the Confirmation Order, KE shall deliver to the Disbursing Agent an
aggregate of 644,000 constituting (i) Warrants issuable under the Plan to
Holders of KPI Common Stock who are Holders of Allowed Interests in Class 8,
one Warrant for each fifty (50) shares of KPI Common Stock; and (ii) 100,000
Warrants issuable under the Plan to Holders of Allowed Claims and Interests
in Classes 7 and 10.
2.6. Articles of Incorporation; By-Laws; Directors and Officers.
(a) From and after the Effective Time, the Articles of Incorporation
of KE shall be the Amended and Restated Articles of Incorporation of the
Surviving Corporation as amended as provided in the Certificate of Merger.
A copy of such Amended and Restated Articles of Incorporation of KE is
attached hereto as Exhibit 2.6A.
(b) From and after the Effective Time, the By-Laws of KE, as in
effect immediately before the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended. A copy of the By-laws of KE
are attached hereto as Exhibit 2.6B.
(c) At the Effective Time, the number of directors of the Surviving
Corporation shall be increased to ten and the directors shall be the
following persons who shall have been designated as such in accordance with
Section 7.1 of the Plan:
Directors Designated by
Koger Equity, Inc. Board: Benjamin C. Bishop, Jr.
Irvin H. Davis
David B. Hiley
Victor A. Hughes
G. Christian Lantzsch
George F. Staudter
S. D. Stoneburner
Directors Designated by
the Committee: D. Pike Aloian
Charles E. Commander, III
Thomas K. Smith, Jr.
(d) At the Effective Time, the officers of KE immediately before the
Effective Time shall be the officers of the Surviving Corporation, in each
case until their successors are elected or appointed and have qualified.
2.7. Conversion of KPI Common Stock. At the Effective Time, as
provided in the Plan, each share of KPI Common Stock issued and outstanding
immediately prior to the Effective Time, and all claims arising out of the
Rights Agreement and the rejection thereof pursuant to the Plan, shall, by
virtue of the Plan and the Confirmation Order, and without action on the part
of the holder thereof, be cancelled and thereafter represent the right to
receive Warrants as provided in the Plan.
2.8. Stock Transfer Books. At the Effective Time, or otherwise by
Order of the Bankruptcy Court, the stock transfer books of KPI shall be
closed and there shall be no further transfers of shares of KPI Common Stock
thereafter on the records of KPI.
2.9. Appraisal Rights and Other Shareholder Rights. The holders of
KPI Common Stock are not entitled to any appraisal rights hereunder or under
Florida law. As to KPI, the Merger shall be approved by reason of
authorization granted in the Plan and the Confirmation Order, and except
pursuant to the voting and other rights of holders of KPI Common Stock with
respect to the Plan under the Bankruptcy Code, holders of KPI Common Stock
will have no right or authority with respect to the Merger under state or
federal law.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF KPI
KPI hereby represents and warrants to and agrees with KE as follows:
3.1. Organization, Etc. KPI is duly organized, validly existing, and
in good standing under the laws of Florida. Each of the KPI Subsidiaries is
duly organized, validly existing and in good standing in the state of its
incorporation. By reason of the entry of the Approval Orders, and subject to
the entry of the Confirmation Order, KPI has the legal or corporate power and
authority to execute and deliver this Agreement. Subject to the Confirmation
Order becoming a Final Order, KPI has the legal and corporate power to
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. Each of KPI and the KPI Subsidiaries is
duly qualified and is in good standing as a foreign corporation to do
business in the jurisdictions identified on the Disclosure Schedule and,
except as set forth on the Disclosure Schedule, has not failed to be so
qualified in any jurisdiction or jurisdictions in which the failure to so
qualify would have a material adverse effect on KPI and the KPI Subsidiaries
taken as a whole.
3.2. Authorization of Agreement; No Violations; Consents. Under the
authority granted by the Approval Orders, this Agreement has been duly and
validly executed and delivered by KPI and, upon the Confirmation Order
becoming a Final Order, will constitute a valid and binding agreement of KPI,
enforceable in accordance with its terms. Except as set forth on the
Disclosure Schedule, the execution and delivery of this Agreement and, upon
entry of the Confirmation Order, the consummation of the Merger and the other
transactions contemplated hereby will not, with or without the giving of
notice or the lapse of time, or both, conflict with, or result in any
violation of or default under (a) any provision of KPI's Restated Certificate
of Incorporation or By-Laws, (b) any note, bond, mortgage, indenture, lease,
agreement or other material instrument, permit, concession, grant, franchise
or license to which KPI is a party or by which any of its properties or assets
may be bound, (c) any judgment, order, decree, injunction, statute, rule,
permit, license or regulation applicable to KPI, the KPI Subsidiaries or any
of their respective properties or (d) which results in the acceleration of any
material obligation or the creation of any material lien, charge or
encumbrance upon any, of the assets of KPI, except for violations or defaults
under (b), (c) or (d) above which, in the aggregate, would not have a
material adverse effect on KPI and the KPI Subsidiaries taken as a whole or
KPI's ability to effect the Merger. Except as set forth on the Disclosure
Schedule, other than in connection with or in compliance with the provisions
of the FBCA, the Exchange Act, the HSR Act and the Bankruptcy Code, no
authorization, consent or approval of, or declaration of, filing with, or
notice to, any governmental body or authority is necessary for the execution
and delivery of this Agreement by KPI or the consummation by KPI of the
transactions contemplated hereby. Except to the extent set forth in the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will require the
consent of any person or entity, other than consents which have been obtained
or which will be obtained prior to the Closing.
3.3. Capital Stock. The authorized capital stock of KPI consists of
50,000,000 shares of KPI Common Stock, of which 27,200,922 shares were issued
as of the date hereof, 1,200 shares were held by KPI as treasury stock and
27,199,722 shares were outstanding; and 2,500,000 shares of preferred stock,
of which 500,000 shares have been designated Series A Preferred Stock (none
of which are outstanding). All of the outstanding shares of KPI Common Stock
have been validly issued and are fully paid and nonassessable. Except for
the Rights and for options exercisable for an aggregate of 1,157,000 shares
of KPI Common Stock, KPI does not have any outstanding subscriptions, options,
warrants, rights or other agreements or commitments obligating KPI to issue or
sell shares of its capital stock or any securities or obligations convertible
into, or exchangeable for, any shares of its capital stock.
3.4. Subsidiaries and KE Common Stock. The Disclosure Schedule
contains a list of each of the Subsidiaries of KPI. Except as otherwise set
forth on the Disclosure Schedule, KPI owns, directly or indirectly, all of the
outstanding capital stock of, or other equity interests in, the KPI
Subsidiaries, free and clear of all liens, charges, pledges, security interests
or other encumbrances, and all of such capital stock or other equity interests
have been duly authorized and validly issued and are fully paid and
nonassessable. No KPI Subsidiary has any outstanding subscriptions, options,
warrants, rights or other agreements or commitments obligating it to issue or
sell any share of its capital stock, or any other equity interest, or any
securities or obligations convertible into or exchangeable for, any shares of
capital stock of, or any other equity interest in, such Subsidiary. KPI is
the beneficial and holder of record of an aggregate of 1,781,000 shares of KE
Common Stock.
3.5. Annual and Quarterly Reports.
(a) KPI has previously furnished KE with true and complete copies of
KPI's Annual Reports on Form 10-K as filed with the SEC for each of the fiscal
years ended March 31, 1992, 1991, and 1990, inclusive, and the Quarterly
Reports on Form 10-Q as filed with the SEC for the fiscal quarter ended
December 31, 1992 (collectively, the "KPI Reports").
(b) As of December 31, 1992, neither KPI nor any of the KPI
Subsidiaries had any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due, and whether required to
be recorded or reflected on such balance sheet under generally accepted
accounting principles, that are material to KPI and the KPI Subsidiaries
taken as a whole, except for those specifically disclosed or provided for in
the audited consolidated balance sheet of KPI for the fiscal year ended March
31, 1992, or the notes thereto, or the unaudited consolidated balance sheet of
KPI at December 31, 1992. Except as set forth on the Disclosure Schedule,
since December 31, 1992, neither KPI nor any of the KPI Subsidiaries has
incurred any liabilities other than liabilities which (i) have been incurred
in the ordinary course of business consistent with past practice, (ii) have
not had a material adverse effect on the ability of KPI to consummate the
transactions contemplated by this Agreement or on the condition (financial or
otherwise), properties, assets, liabilities, business, prospects or results
of operations of KPI and the KPI Subsidiaries taken as a whole or (iii) were
otherwise the subject of specific approval by the Bankruptcy Court.
3.6. Absence of Material Adverse Changes. Since December 31, 1992,
except as set forth on the Disclosure Schedule, KPI and the KPI Subsidiaries
have conducted their respective businesses only in the ordinary and usual
course in substantially the same manner as theretofore conducted since the
Petition Date, and neither KPI nor any of the KPI Subsidiaries has undergone
any change which has had, or may reasonably be expected to have, a material
adverse effect on the ability of KPI to consummate the transactions
contemplated by this Agreement or, except as disclosed in the Disclosure
Schedule pursuant to Section 3.5(b) above, on the condition (financial or
otherwise), properties, assets, liabilities, business, prospects or results
of operations of KPI and the KPI Subsidiaries taken as a whole.
3.7. Taxes. Except as set forth in the KPI Reports or in the
Disclosure Schedule, or for other exceptions which would not have a material
adverse effect on the condition (financial or otherwise), properties, assets,
liabilities, business, prospects or results of operations of KPI and the KPI
Subsidiaries taken as a whole:
(a) all returns and reports of all Taxes including, without
limitation, consolidated federal income tax returns of KPI, withholding
tax returns, declarations of estimated tax and tax reports, required
to be filed with respect to KPI and the KPI Subsidiaries or any of
their income, properties or operations, have been duly filed in a
timely manner (taking into account all extensions of due dates);
(b) to the best of KPI's knowledge, all information provided
in such returns, declarations and reports is true, correct and complete
in all material respects;
(c) all Taxes attributable to KPI and the KPI Subsidiaries
that are or were due and payable on or prior to the date hereof have
been paid, except for (x) Taxes that are being contested in good faith
and with respect to which adequate reserves have been made and are
reflected on the September 30, 1992 balance sheet and (y) Taxes that
are Allowed Claims;
(d) the provisions for Taxes on the consolidated balance sheets
of KPI and the KPI Subsidiaries contained in the KPI Reports were
prepared in accordance with generally accepted accounting principles
consistently applied from period to period; and
(e) There is no claim or assessment pending or, to the best of
KPI's knowledge, threatened against KPI or any one of the KPI
Subsidiaries for any alleged deficiency in Taxes, and to the best of
its knowledge, KPI does not know of any audit or investigation with
respect to any liability of KPI or any one of the KPI Subsidiaries
for Taxes, which if adversely determined, would have a material adverse
effect on the financial condition of KPI. The consolidated federal
income tax returns for KPI and the KPI Subsidiaries for the fiscal
years after 1980 have not been examined by the Internal Revenue
Service.
3.8. Owned Properties. The Disclosure Schedule contains a complete
and correct list as of the date hereof of all real properties and interests
therein owned as of the date hereof by KPI or any KPI Subsidiary (the "KPI
Properties"). Except as stated in the Disclosure Schedule, each of KPI and
the respective KPI Subsidiaries has good and marketable title to the KPI
Properties and good title to all tangible personal property reflected in the
March 31, 1992 balance sheet included in the KPI Reports or acquired after
such date (except to the extent disposed of since such date in the ordinary
course of business or pursuant to order of the Bankruptcy Court), in each
case free and clear of all mortgages, liens, charges, encumbrances, easements,
security interests or title imperfections except (a) liens for current taxes
not yet due and payable, (b) encumbrances, easements and security interests
which do not materially detract from the value or interfere with the use of
the properties affected thereby, (c) liens and security interests which
secure Allowed Claims under Classes 1A(1) through 1A(20) and Classes 1B, 1C,
1D and 1E under the Plan, (d) purchase money security interests and post-
petition financings incurred pursuant to authority granted by the Bankruptcy
Court incurred after the Petition Date, and (e) easements for the erection
and maintenance of public utilities serving the KPI Properties (the exceptions
identified on the Disclosure Schedule and those described in the foregoing
clauses (a), (b), (c), (d) and (e) being referred to herein as "Permitted
Encumbrances"). Except as set forth in the Disclosure Schedule, to the best
of KPI's knowledge, all plants, buildings and improvements, and all machinery
and equipment contained therein and all operations conducted therein, and all
other real property owned by KPI or any KPI Subsidiary, including, without
limitation, the KPI Properties, conform in all material respects with all
applicable material building and zoning and other laws, ordinances,
regulations and permits, and the continuation of any such operation will not
result in a material violation of any such building and zoning and other laws,
ordinances, regulations and permits. Except as set forth in the Disclosure
Schedule, KPI does not know of any present or past material violations by KPI
or any KPI Subsidiary of any such building or zoning and other laws,
ordinances, regulations and permits, nor any pending or threatened disputes
with respect thereto, nor any facts that might form a reasonable basis for
such a dispute. KPI has previously furnished or made available to KE copies
of title insurance policies with respect to the KPI Properties. Since the
date of each such title policy, to the best knowledge of KPI, and except as
set forth on the Disclosure Schedule, there have been no additional easements,
encumbrances or defects to title that are not reflected in such title
policies.
3.9. Leased Properties. The Disclosure Schedule contains a complete
and correct list as of the date specified therein of all real and tangible
personal properties and interests therein leased as of the date hereof by KPI
or any KPI Subsidiary as lessee. Except as stated in the Disclosure Schedule
as of the date specified therein, each of KPI and the respective KPI
Subsidiaries has valid leasehold interests in all real properties and tangible
personal properties leased by it, in each case free and clear of all
mortgages, liens, charges, encumbrances, easements, security interests or
title imperfections. KPI has made available to KE complete and correct
copies of all leases of real property and material personal property, and
enjoys peaceful and undisturbed possession under all leases under which it or
any Subsidiary operates as lessee. Except as otherwise agreed upon by KPI and
KE, all such leases are included among the Assumed Contracts. Except as set
forth in the Disclosure Schedule, to the best of KPI's knowledge, all
activities of KPI in properties leased by it conform in all material respects,
with all applicable material building, fire, safety, zoning and all other laws,
ordinances, regulations and permits, and except as set forth in the Disclosure
Schedule, and to the best of KPI's knowledge, the continuation of any such
activity will not result in a material violation of any such building and
zoning or other laws, ordinances, regulations or permits. Except as set forth
in the Disclosure Schedule, KPI does not know of any present or past
violations by KPI or any KPI Subsidiary of any such building or zoning or
other laws, ordinances, regulations and permits, nor any pending or threatened
disputes with respect thereto, nor any facts that might form a reasonable basis
for such a dispute.
3.10. Leases of Owned Properties. The Disclosure Schedule contains,
as of the date specified therein, a complete and correct list of all leases
by KPI as lessor of any KPI Property or portion thereof ("KPI Leases"). Except
as set forth in the Disclosure Schedule, to the best of KPI's knowledge, KPI
is not in default in any material manner under any of the KPI Leases, and KPI
is not aware of any material defaults by other Persons party to any of the KPI
Leases nor of any event or condition which with the passage of time or the
giving of notice would constitute such a material default. Except as set
forth in the Disclosure Schedule, to the best of KPI's knowledge, the KPI
Leases are enforceable against the other Persons party thereto in accordance
with their terms.
3.11. Assumed Contracts. The Disclosure Schedule contains a complete
and correct list of all Assumed Contracts to which KPI is a party. As of the
Effective Time, all of the Assumed Contracts shall have been assumed by KPI
under orders of the Bankruptcy Court which provide that the consummation of
the Merger will constitute an assignment of the Assumed Contracts to KE and
will not give rise to any right of any party thereto to terminate, and KPI is
not in default or breach of such Assumed Contracts. To the best of KPI's
knowledge, except as described in the Disclosure Schedule, there does not
exist any default or breach of any of the Assumed Contracts by any party
thereto which default or breach does not or would not, individually or in the
aggregate, constitute damages or costs in excess of $100,000.
3.12. Environmental Matters. To the best of KPI's knowledge, except
as set forth on the Disclosure Schedule, each of KPI and the KPI Subsidiaries
is in compliance with all applicable material published rules and regulations
(and applicable standards and requirements) of the U.S. Environmental
Protection Agency and of any similar agencies in any jurisdiction in which
KPI and the KPI Subsidiaries owns or leases real property. To the best of
KPI's knowledge, except as set forth in the Disclosure Schedule, there is no
suit, claim, action or proceeding now pending before any court, governmental
agency or board or other forum or threatened in writing by any person or
entity for (i) non-compliance by either KPI or any KPI Subsidiary with any
state or federal environmental law, permit, rule or regulation or (ii)
relating to the release into the environment by either KPI or any KPI
Subsidiary of any Hazardous Materials or waste generated by either KPI or any
KPI Subsidiary, whether or not occurring at or on the site owned, leased or
operated by either KPI or any KPI Subsidiary. To the best of KPI's knowledge,
except as set forth in the Disclosure Schedule, there are no citations, fines
or penalties heretofore assessed against KPI under any Governmental
Requirements relating to air or water pollution, solid waste disposal or
other environmental protection matters, or relating to occupation, health or
safety, that remain unpaid, and except as set forth in the Disclosure Schedule
hereto, no such citations, fines or penalties have been assessed or threatened
in writing since January 1, 1988. To the best of KPI's knowledge, except as
set forth in the Disclosure Schedule, none of KPI or the KPI Subsidiaries has
received written notice of any violation of a type referred to in any portion
of this Section 3.12 which has not been corrected. Copies of KPI's last
inspection reports, if any, from each applicable authority with respect to any
Governmental Requirements described in any portion of this Section 3.12 and
relating to the properties of KPI and the KPI Subsidiaries have previously
been provided to KE. To the best of KPI's knowledge, the Disclosure Schedule
sets forth a complete list of all above-ground and underground storage tanks,
vessels, and related equipment and containers that are subject to federal,
state or local laws, statutes, rules or regulations, and sets forth their
present contents, and, if known, what the contents have been at any time in
the past, and what program of remediation, if any, is contemplated with
respect thereto. KPI has previously furnished or made available to KE copies
of Phase I environmental audits, if any, which were prepared on or prior to
the date hereof by environmental consultants or auditors of national standing
with respect to any of the KPI Properties. Without limitation of the
foregoing, except as set forth on the Disclosure Schedule and except as would
be present in KPI Properties or KPI Leased Properties in the ordinary course,
in compliance in all material respects, with applicable law, to the best of
KPI's knowledge:
(a) No Hazardous Materials are located on any KPI Property or
KPI Leased Property, or have been released into the environment, or
deposited, discharged, placed or disposed of at, on, under or near any
KPI Property or KPI Leased Property, or transported to or from any KPI
Property or KPI Leased Property. No portion of any KPI Property or KPI
Leased Property is being used or has been used at any previous time,
for the disposal, storage, treatment, processing, manufacturing or
other handling of Hazardous Materials;
(b) No asbestos or asbestos-containing materials have been
installed, used, incorporated into, or disposed of on any KPI Property
or KPI Leased Property;
(c) No polychlorinated biphenyls or materials containing
polychlorinated biphenyls are located on or in any KPI Property or
KPI Leased Property;
(d) No underground storage tanks are located on any part or
parcel of any KPI Property or KPI Leased Property or were previously
located on any part or parcel of any KPI Property or KPI Leased
Property and subsequently removed or filled;
(e) No investigation, administrative order, consent order,
agreement, litigation or settlement with respect to Hazardous
Materials or Hazardous Materials Contamination is proposed, threatened
in writing, anticipated or in existence with respect to any KPI
Property or KPI Leased Property, or any part or parcel thereof;
(f) The KPI Properties and KPI Leased Properties and their
existing and prior uses are and have been in compliance with, and at
all times have complied with, any applicable material Governmental
Requirements relating to environmental matters or Hazardous Materials;
(g) There is no condition on any KPI Property or KPI Leased
Property which is in material violation of any applicable material
Governmental Requirements relating to Hazardous Materials, and KPI
has received no communication from or on behalf of any Governmental
Authority that any such condition exists; and
(h) Neither any KPI Property nor any KPI Leased Property, nor
any part or parcel thereof, is currently listed on the National
Priority List or any analogous state list.
KPI further represents and warrants that, except for studies, audits,
and reports pertaining to KPI Properties and KPI Leased Properties which have
been made available to KE and are listed on the Disclosure Schedule, there
have been no environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or which are in the possession of or, to the best
of KPI's knowledge, available to KPI in relation to any KPI Property or KPI
Leased Property.
3.13. Commissions. To the best of KPI's knowledge, within the three
years preceding the date hereof, neither KPI nor any of the KPI Subsidiaries
has made or solicited, in connection with work performed or to be performed
or sought to be performed, contracts awarded to or bid on by KPI or any KPI
Subsidiary or otherwise sought by KPI or any KPI Subsidiary, any payments (in
goods, money or services) which have violated or would violate the Foreign
Corrupt Practices Act or any other similar federal, state or local statute,
regulation or ordinance.
3.14. Employment Arrangements. The Disclosure Schedule contains a
true and complete list of all union contracts and all employment agreements
providing for salaries in excess of $50,000 per annum with employees that are
not terminable at will and all agreements, plans and arrangements pertaining
to pension, profit- sharing, deferred compensation, bonuses, retirement,
hospitalization, medical expense payments, vacation, severance or other
employee benefits.
3.15. Litigation. Except as set forth in the Disclosure Schedule
hereto, there are no material judicial or administrative actions, suits, or
proceedings pending or threatened against KPI, the continued prosecution of
which will not be permanently enjoined by reason of the entry of the
Confirmation Order under Section 1141 of the Bankruptcy Code.
3.16. Other Information. The information set forth on Appendix A to
Exhibit A to the Plan provided by KPI to KE and its advisors is true, correct
and complete as of the date set forth therein in all material respects.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF KE
KE represents and warrants to and agrees with KPI as follows:
4.1. Organization, Etc. KE is duly organized, validly existing, and
in good standing under the laws of Florida. Each of the KE Subsidiaries is
duly organized, validly existing and in good standing in the state of its
incorporation. KE has the corporate power and authority to execute, deliver,
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. Each of KE and the KE Subsidiaries is duly
qualified and in good standing as a foreign corporation to do business in the
jurisdictions identified on the Disclosure Schedule and, except as set forth
in the Disclosure Schedule, has not failed to be so qualified in any
jurisdiction or jurisdictions in which the failure to so qualify would have a
material adverse effect on KE and the KE Subsidiaries taken as a whole.
4.2. Authorization of Agreement; No Violations; Consents.
The execution, delivery and performance of this Agreement by KE has been duly
authorized by its Board of Directors. This Agreement has been duly and
validly executed and delivered by KE and, subject to approval by the holders
of KE Common Stock, constitutes a valid and binding agreement of KE,
enforceable in accordance with its terms, except that such enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally. Neither the execution, delivery
and performance of this Agreement nor the consummation of the transactions
contemplated hereby will, with or without the giving of notice or the lapse of
time, or both, conflict with, or result in any violation of or default under
(a) any provision of the articles of incorporation, or the bylaws, of KE,
(b) any note, bond, mortgage, indenture, lease, agreement or other material
instrument, permit, concession, grant, franchise or license to which KE or
any KE Subsidiary is a party or by which any of their properties or assets
may be bound, (c) any judgment, order, decree, injunction, statute, rule,
permit, license or regulation applicable to KE, the KE Subsidiaries or any of
their respective properties, or (d) which result in the acceleration of any
material obligation or the creation of any lien, charge or encumbrance upon
any of the assets of KE except, in the cases of (b), (c) or (d) for
violations or defaults which would not in the aggregate have a material
adverse effect on KE and the KE Subsidiaries taken as a whole or KE's ability
to effect the Merger. Except as set forth in the Disclosure Schedule, other
than in connection with or in compliance with the provisions of the FBCA, the
Exchange Act, the HSR Act, and the Bankruptcy Code, no authorization, consent
or approval of, or declaration of, filing with or notice to any governmental
body or authority is necessary for the execution and delivery of this
Agreement by KE or the consummation by KE of the transactions contemplated
hereby. Except to the extent set forth in the Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will require the consent of any person or
entity, other than consents which have been obtained or which will be obtained
prior to the Closing.
4.3. Capital Stock and Warrants. The authorized capital stock of KE
consists of 100,000,000 shares of KE Common Stock. As of March 31, 1993,
13,219,619 shares were issued and outstanding and 1,092,981 shares were held
by KE as treasury stock. All of the outstanding shares of KE Common Stock
have been duly authorized, validly issued and are fully paid, nonassessable
and were not issued in violation of any statutory preemptive rights or, to
the best of KE's knowledge, preemptive rights of any current shareholder of
KE. Except as contemplated by the Plan or this Agreement and for rights
issued pursuant to the KE Rights Plan and for options exercisable for an
aggregate of 775,012 shares of KE Common Stock, and for options issuable
pursuant to the 1993 Stock Option Plan of KE, KE does not have any
outstanding subscriptions, options, warrants, rights or other agreements or
commitments obligating KE to issue or sell shares of its capital stock or any
securities or obligations convertible into, or exchangeable for, any shares
of its capital stock. The shares of KE Common Stock to be delivered to
Disbursing Agent pursuant to Section 2.5 hereof, have been duly authorized,
and upon their distribution by Disbursing Agent following the Effective Time
shall be validly issued, fully paid, non-assessable and shall not have been
issued in violation of any preemptive rights. The form and issuance of the
Warrants pursuant to this Agreement, the Warrant Agreement, and the shares of
KE Common Stock issuable upon exercise of the Warrants have been duly
authorized by the Board of Directors of KE, and upon exercise thereof and
payment of the exercise price, such KE Common Stock shall be validly issued,
fully paid, nonassessable, and shall not have been issued in violation of any
preemptive rights.
4.4. Subsidiaries. The Disclosure Schedule contains a list of each of
the Subsidiaries of KE. Except as otherwise set forth on the Disclosure
Schedule, KE owns, directly or indirectly, all of the outstanding capital
stock of, or other equity interests in, the KE Subsidiaries, free and clear
of all liens, charges, pledges, security interests or other encumbrances, and
all of such capital stock or other equity interests have been duly authorized
and validly issued and are fully paid and nonassessable. No KE Subsidiary
has any outstanding subscriptions, options, warrants, rights or other
agreements or commitments obligating it to issue or sell any share of its
capital stock, or any other equity interest, or any securities or obligations
convertible into or exchangeable for, any shares of capital stock of, or any
other equity interest in, such Subsidiary.
4.5. Annual and Quarterly Reports.
(a) KE has previously furnished KPI with true and complete copies of
KE's Annual Reports on Form 10-K as filed with the SEC for each of the fiscal
years ended December 31, 1992, 1991 and 1990, inclusive, collectively, the
"KE Reports"). Each of the balance sheets included in the KE Reports
(including any related notes and schedules) present fairly the consolidated
financial position of KE as of the dates indicated, and the other financial
statements included in the KE Reports (including any related notes and
schedules) present fairly the consolidated results of operations or other
information included therein of KE for the periods indicated, in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved (except as otherwise stated therein).
(b) As of December 31, 1992, neither KE nor any of the KE Subsidiaries
had any liabilities of any nature, whether accrued, absolute, contingent or
otherwise, whether due or to become due and whether required to be recorded
or reflected on a balance sheet under generally accepted accounting
principles, that were material to KE and the KE Subsidiaries taken as a whole,
except for those specifically disclosed or provided for in the audited
consolidated balance sheet for the fiscal year ended December 31, 1992, or the
notes thereto. Except as set forth on the Disclosure Schedule, since
December 31, 1992, neither KE nor any of the KE Subsidiaries has incurred any
liabilities other than liabilities which both (i) have been incurred in the
ordinary course of business consistent with past practice and (ii) have not
had a material adverse effect on the ability of KE to consummate the
transactions contemplated by this Agreement, or on the condition (financial
or otherwise), properties, assets, liabilities, business, prospects or results
of operations of KE and the KE Subsidiaries taken as a whole.
4.6. Absence of Material Adverse Changes. Since December 31, 1992,
KE and the KE Subsidiaries have conducted their respective businesses only in
the ordinary and usual course in substantially the same manner as theretofore
conducted, and neither KE nor any of the KE Subsidiaries has undergone any
change which has had or may reasonably be expected to have, a material adverse
effect on the ability of KE to consummate the transactions contemplated by
this Agreement or, except as disclosed in the Disclosure Schedule pursuant to
Section 4.5(b), on the condition (financial or otherwise), properties, assets,
liabilities, business, prospects or results of operations of KE and the KE
Subsidiaries taken as a whole.
4.7. Taxes. Except as set forth in the KE Reports or on the
Disclosure Schedule or for other exceptions which would not have a material
adverse effect on the condition (financing or otherwise), properties, assets,
liabilities, business, prospects or results of operation of KE audited KE
Subsidiaries taken as a whole:
(a) all returns and reports of all Taxes including, without
limitation, consolidated federal income tax returns of KE, withholding
tax returns, declarations of estimated tax and tax reports, required
to be filed with respect to KE and the KE Subsidiaries or any of their
income, properties or operations, have been duly filed in a timely
manner (taking into account all extensions of due dates);
(b) to the best of KE's knowledge, all information provided in
such returns, declarations and reports is true, correct and complete
in all material respects;
(c) all Taxes attributable to KE and the KE Subsidiaries that
are or were due and payable on or prior to the date hereof have been
paid, except for Taxes that are being contested in good faith and
that are adequately reserved against;
(d) the provisions for Taxes on the consolidated balance
sheets of KE and the KE Subsidiaries contained in the KE Reports are
in accordance with generally accepted accounting principles
consistently applied from period to period; and
(e) there is no claim or assessment pending or, to the best of
KE's knowledge, threatened against KE or any one of the KE
Subsidiaries for any alleged deficiency in Taxes, and to the best of
its knowledge, KE does not know of any audit or investigation with
respect to any liability of KE or any one of the KE Subsidiaries for
Taxes, which if adversely determined, would have a material adverse
effect on the financial condition of KE. To the best of KE's
knowledge, the consolidated federal income tax returns for KE and the
KE Subsidiaries for the calendar years 1989, 1990 and 1991 have not
been examined by the Internal Revenue Service.
4.8. Owned Properties. The Disclosure Schedule hereto contains a
complete and correct list as of the date hereof of all real properties and
interests therein owned as of the date hereof by KE or any KE Subsidiary (the
"KE Properties"). Except as stated in the Disclosure Schedule or in the KE
Reports, each of KE and the respective KE Subsidiaries has good and marketable
title to the KE Properties and good title to all tangible personal property
reflected in the December 31, 1992 balance sheet included in the KE Reports
or acquired after such date (except to the extent disposed of since such date
in the ordinary course of business), in each case free and clear of all
mortgages, liens, charges, encumbrances, easements, security interests or
title imperfections except (a) liens for current taxes not yet due and
payable, (b) encumbrances, easements and security interests which do not
materially detract from the value or interfere with the use of the properties
affected thereby, (c) purchase money security interests, (d) easements for
the erection and maintenance of public utilities serving the KE Properties
(the exceptions identified on the Disclosure Schedule and those described in
the foregoing clauses (a), (b), (c) and (d) being referred to herein as
("Permitted Encumbrances"). To the best of KE's knowledge, all plants,
buildings and improvements, and all machinery and equipment contained therein
and all operations conducted therein, and all other real property owned by
KE or any KE Subsidiary, including, without limitation, the KE Properties,
conform in all material respects with all applicable material building and
zoning and other laws, ordinances, regulations and permits, and the
continuation of any such operation will not result in a material violation of
any such building and zoning and other laws, ordinances, regulations and
permits. Except as set forth in the Disclosure Schedule hereto, KE does not
know of any present or past violations by KE or any KE Subsidiary of any such
building or zoning and other laws, ordinances, regulations and permits, nor
any pending or threatened disputes with respect thereto, nor any facts that
might form a basis for such a reasonable dispute.
4.9. Leased Properties. The Disclosure Schedule contains a complete
and correct list as of the date specified therein of all real and tangible
personal properties and interests therein leased as of the date hereof by KE
or any KE Subsidiary as lessee. Except as stated in the Disclosure Schedule
as of the date specified therein, each of KE and the respective KE
Subsidiaries has valid leasehold interests in all real properties and tangible
personal properties leased by it, in each case free and clear of all material
mortgages, liens, charges, encumbrances, easements, security interests or
title imperfections. KE has made available complete and correct copies of all
leases of real property and material personal property to KPI and enjoys
peaceful and undisturbed possession under all leases under which it or any KE
Subsidiary operates as lessee. To the best of KE's knowledge, all activities
of KE in properties leased by it conform with all applicable building, fire,
safety, zoning and all other laws, ordinances, regulations and permits in all
material respects, and to the best of KE's knowledge, the continuation of any
such activity will not result in a material violation of any such building
and zoning or other laws, ordinances, regulations or permits. Except as set
forth in the Disclosure Schedule, KE does not know of any present or past
violations by KE or any KE Subsidiary of any such building or zoning or other
laws, ordinances, regulations and permits, nor any pending or threatened
disputes with respect thereto, nor any facts that might form a reasonable
basis for such a dispute.
4.10. Leases of Owned Properties. The Disclosure Schedule contains
as of the date specified therein a complete and correct list of all leases by
KE as lessor of any KE Property or portion thereof ("KE Leases"). To the best
of KE's knowledge, KE is not in default in any material manner under any of
the KE Leases, and KE is not aware of any material defaults by other Persons
party to any of the KE Leases nor of any event or condition which with the
passage of time or the giving of notice would constitute such a material
default. To the best of KE's knowledge, the KE Leases are enforceable against
the other Persons party thereto in accordance with their terms.
4.11. Environmental Matters. To the best of KE's knowledge, each of
KE and the KE Subsidiaries is in compliance with all applicable material
published rules and regulations (and applicable standards and requirements)
of the U.S. Environmental Protection Agency and of any similar agencies in
any jurisdiction in which KE and the KE Subsidiaries owns or leases any real
property. To the best of KE's knowledge, except as set forth in the
Disclosure Schedule, there is no suit, claim, action or proceeding now pending
before any court, governmental agency or board or other forum or threatened
by any person or entity or any basis for any such suit, claim, action or
proceeding, for (i) non-compliance by either KE or any KE Subsidiary with any
state or federal environmental law, permit, rule or regulation or (ii)
relating to the release into the environment by either KE or any KE Subsidiary
of any Hazardous Materials or waste generated by either KE or any KE
Subsidiary, whether or not occurring at or on the site owned, leased or
operated by either KE or any KE Subsidiary. To the best of KE's knowledge,
except as set forth in the Disclosure Schedule, there are no citations, fines
or penalties heretofore assessed against KE under any Governmental
Requirements relating to air or water pollution, solid waste disposal or other
environmental protection matters, or relating to occupation, health or safety,
that remain unpaid, and except as set forth in the Disclosure Schedule hereto,
no such citations, fines or penalties have been assessed or threatened since
January 1, 1988. To the best of KE's knowledge, except as set forth in the
Disclosure Schedule, none of KE or the KE Subsidiaries has received written
notice of any violation of a type referred to in any portion of this Section
4.11 which has not been corrected. Copies of KE's last inspection reports, if
any, from each applicable authority with respect to any Governmental
Requirements law described in any portion of this Section 4.11 and relating to
the properties of KE and the KE Subsidiaries have been previously provided to
KPI. To the best of KE's knowledge, the Disclosure Schedule hereto sets forth
a complete list of all above-ground and underground storage tanks, vessels,
and related equipment and containers that are subject to federal, state or
local laws, statutes, rules or regulations, and sets forth their present
contents, and, if known, what the contents have been at any time in the past,
and what program of remediation, if any, is contemplated with respect thereto.
Without limitation of the foregoing, except as set forth on the Disclosure
Schedule and except as would be present in KE Properties or KE leased
Properties in the ordinary course in compliance in all material respects with
applicable law, to the best of KE's knowledge:
(a) No Hazardous Materials are located on any KE Property or KE
Leased Property, or have been released into the environment, or
deposited, discharged, placed or disposed of at, on, or under any KE
Property or KE Leased Property, or transported to or from any KE
Property or KE Leased Property. No portion of any KE Property or KE
Leased Property is being used or has been used at any previous time,
for the disposal, storage, treatment, processing, manufacturing or
other handling of Hazardous Materials;
(b) No asbestos or asbestos-containing materials have been
installed, used, incorporated into, or disposed of on any KE Property
or KE Leased Property;
(c) No polychlorinated biphenyls or materials containing
polychlorinated biphenyls are located on or in any KE Property or KE
Leased Property;
(d) No underground storage tanks are located on any part or
parcel of any KE Property or KE Leased Property or were previously
located on any part or parcel of any KE Property or KE Leased Property
and subsequently removed or filled;
(e) No investigation, administrative order, consent order,
agreement, litigation or settlement with respect to Hazardous
Materials or Hazardous Materials Contamination is proposed,
threatened, anticipated or in existence with respect to any KE
Property or KE Leased Property, or any part or parcel thereof;
(f) The KE Properties and KE Leased Properties and their
existing and prior uses are and have been in compliance with, and at
all times have complied with, any applicable material Governmental
Requirements relating to environmental matters or Hazardous Materials;
(g) There is no condition on any KE Property or KE Leased
Property which is in material violation of any applicable Governmental
Requirements relating to Hazardous Materials, and KE has received no
communication from or on behalf of any Governmental Authority that any
such condition exists; and
(h) Neither any KE Property nor any KE Leased Property, nor any
part or parcel thereof, is currently listed on the National Priority
List or any analogous state list.
KE further represents and warrants that, except for studies, audits,
and reports pertaining to KE Properties and KE Leased Properties which have
been made available to KPI and are listed on the Disclosure Schedule, there
have been no environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or which are in the possession of or, to the best
of KE's knowledge, available to KE in relation to any KE Property or KE Leased
Property.
4.12. Commissions. To the best of KE's knowledge, within the three
years preceding the date hereof, neither KE nor any of the KE Subsidiaries has
made or solicited, in connection with work performed or to be performed or
sought to be performed, contracts awarded to or bid on by KE or any KE
Subsidiary, or otherwise sought by KE or any KE Subsidiary, any payment
(in goods, money or services) which have violated or would violate the Foreign
Corrupt Practices Act or any other similar federal, state or local statute,
regulation or ordinance.
4.13. Employment Arrangements. The Disclosure Schedule contains a
true and complete list of all union contracts and all employment agreements
providing for salaries in excess of $50,000 per annum with employees that are
not terminable at will, and all agreements, plans and arrangements pertaining
to pension, profit- sharing, deferred compensation, bonuses, retirement,
hospitalization, medical expense payments, vacation, severance or other
employee benefits.
4.14. Litigation. Except as set forth in the Disclosure Schedule,
there are no material judicial or administrative actions, suits or proceedings
pending or threatened against KE.
ARTICLE 5.
COVENANTS
5.1. Approvals, Consents, Etc. KPI and KE shall cooperate and use
their best efforts to obtain as promptly as possible all approvals, consents
and waivers required to be obtained by each of them from any party, public or
private, in order to effectuate the transactions contemplated hereby. Each of
KPI and KE shall use its best efforts to assure that the other conditions set
forth in Articles 7 and 8 hereof are satisfied by the Closing Date.
5.2. Conduct of Business. After the date hereof through and until the
Effective Time, each party hereto shall maintain its assets and properties in
adequate condition and repair for the purpose intended, except for ordinary
wear and tear and damage by fire, flood or other casualty. Except as required
by law, as permitted or required hereby or under the Plan or as the other
party may otherwise agree in writing, neither party shall, prior to the
Effective Time:
(a) enter into any transaction or take any action which would
result in any of their respective representations and warranties
contained in this Agreement not being true and correct in any material
respect at and as of the Closing Date;
(b) modify or amend its Articles of Incorporation or By-laws
other than as required by Section 1123(a) of the Bankruptcy Code;
(c) amend the KE Rights Agreement (other than an amendment to
increase the amount of shares of KE Common Stock held by a stockholder
which would trigger the distribution of the Rights under the KE Rights
Agreement);
(d) except as contemplated hereby or by the Plan, change the
number of shares of capital stock outstanding or issue or agree to
issue, directly or indirectly, any shares of capital stock or any
option, warrant, right of conversion, or any other right to purchase
or acquire any shares of capital stock;
(e) except as contemplated hereby or by the Plan, declare or
pay any dividends (in excess of real estate investment trust taxable
income in the case of KE) or repurchase, directly or indirectly, any
shares of capital stock or any option or warrant to purchase capital
stock, except that KE may issue or agree to issue options pursuant to
KE's 1988 Stock Option Plan or 1993 Stock Option Plan;
(f) acquire, sell, lease or dispose of any material asset or
property, except that KPI may, sell or dispose of Southeast Assets and
the real property as provided in the Plan; provided, however, that any
and all net proceeds therefrom are held by KPI;
(g) assume, guarantee, endorse or otherwise become liable or
responsible for the obligations of any Person, except, with respect
to KPI, as general partner in TKP or Reorganized TKP, as specifically
provided in the Amended Partnership Agreement (as defined in the TKP
Plan);
(h) enter into any employment agreement with any person or
modify any employment agreement existing as of the date hereof in any
material respect; or
(i) take, or agree in writing or otherwise to take, any of the
foregoing actions.
5.3. Hart-Scott-Rodino and Other Government Filings.
5.3.1. Hart-Scott-Rodino Filings. Each of KPI and KE shall promptly
make all required filings under the HSR Act, including, without limitation,
a Notification and Report Form for Certain Mergers and Acquisitions (or any
successor form) and any amendments thereto with the Federal Trade Commission
and the Department of Justice, in connection with the transactions
contemplated by this Agreement as required by the anti-trust laws of the
United States.
5.3.2. Additional Information. In the event that a request for
additional information is properly made of either of KPI or KE pursuant to
the HSR Act, KPI or KE, as the case may be, shall use its best efforts to
comply with such request as soon as practicable after receipt of such
request.
5.3.3. Other Filings. KPI and KE will cooperate with each other in
the preparation and submission to any governmental, judicial, public or
regulatory body or authority, including the preparation of KE's proxy
statement to be filed with the SEC, in a timely manner, of all filings
necessary or advisable to obtain the approvals, consents and waivers referred
to in Section 5 hereof. All such filings, as well as any subsequent filings
in any such proceeding, or filings in response to any proceeding relevant to
the transactions contemplated by this Agreement initiated by any such body or
authority, shall be subject to prior review by each of KPI and KE,
respectively.
5.4. Notification of Certain Additional Matters. Each party shall
give the other prompt notice of (i) any actual notice of, or communication
with respect to, the occurrence of a default or event which, with notice or
lapse of time or both, would become a default, received subsequent to the date
of this Agreement and before the Effective Time, under any agreement,
indenture, mortgage, lease or instrument where any such default, or defaults
in the aggregate, would have a material adverse effect on such party and its
Subsidiaries taken as a whole, (ii) any written notice from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement, and (iii) any
material adverse change or development in the business or financial condition
of such party.
5.5. No Solicitation. Unless so directed by Bankruptcy Court order
(which order shall not have been sought, consented to or solicited by or at
the direction of the Board of Directors of KPI, except as required by
applicable law, including, without limitation, laws relating to the fiduciary
duties of directors), neither the Board of Directors of KPI nor any member
thereof nor any Person acting at its direction shall, directly or indirectly,
(a) seek to amend or modify the Plan or to submit to the Bankruptcy Court or
parties in interest any other plan of reorganization, (b) seek or solicit any
proposal ("Proposal") to acquire some or all of the stock or assets of KPI
(other than those assets specified in Section 5.2(f) above), or to effect a
merger or consolidation of KPI with or into any other corporation or any
similar transaction, an investment in, or loan to KPI (other than loans or
investments approved by KE in writing), or any purchase, sale, transfer or
disposition by KPI of any of the material assets of KPI or assets which, in
the aggregate, would be material to KPI other than those assets specified in
Section 5.2(f) above, or (c), after the Effective Date of the Plan, seek the
entry of an order vacating or modifying the Confirmation Order. The Board of
Directors of KPI will promptly notify KE of the entry or issuance of any order
of the type referred to above or of any request for entry or issuance of such
an order and will, except as required by applicable law, including, without
limitation, laws relating to the fiduciary duties of directors, use its
reasonable best efforts to oppose any motion which seeks relief from the
provisions hereof with respect to any Proposal. The Board of Directors of
KPI will promptly communicate to KE the terms of any Proposal or contact it
may receive in respect of any such transaction. The Board of Directors of
KPI agrees not to release any third party from any confidentiality or
standstill agreement to which KPI is a party and to use all reasonable efforts
to enforce its rights thereunder to the full extent of the law. Nothing
contained in this Section 5.5 shall be deemed to prohibit KPI or its Board
of Directors from, in response to any unsolicited Proposal, furnishing
non-public information concerning KPI's business, properties or assets to an
Person, participating in any discussions or negotiations regarding, or
otherwise cooperating with any Person (including by modifying, amending,
terminating or waiving a standstill agreement) with respect to, any Proposal
but only in each case to the extent that counsel to the Board of Directors of
KPI advises it that such information is required to be so provided or other
action is required to be taken as an exercise of its fiduciary duty.
5.6. Subsequent Actions. If, at any time after the Effective Time,
KE reasonably requests any deeds, bills of sale, assignments, assurances or
any other actions or things as necessary or desirable to vest, perfect or
confirm, of record or otherwise, its right, title and interest in, to or
under any of the assets of KPI acquired or to be acquired by KE as a result
of, or in connection with, the Merger or otherwise to carry out the
transactions contemplated by this Agreement, the officers or directors of KE
shall be authorized to execute and deliver, in the name and on behalf of KPI,
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of KPI or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm all right,
title and interest in, to and under such rights, properties or assets in KE
or otherwise to carry out this Agreement, and the transactions contemplated
hereby.
5.7. Bankruptcy Court Approvals. Each of KE and KPI shall make all
reasonable efforts to obtain as soon as practicable the approval by the
Bankruptcy Court of this Agreement and the Disclosure Statement, the
approvals of the Plan by majorities of any Class defined in the Plan, entry
by the Bankruptcy Court of the Confirmation Order and accomplishment of
such further steps as may be necessary or appropriate so that the
Confirmation Order shall become a Final Order. Upon request of KPI, KE
agrees (i) to assist and cooperate with KPI in obtaining approval of this
Agreement and the Disclosure Statement, (ii) to assist and cooperate with KPI,
in KPI's negotiations with, and solicitation of approvals from, holders of
Claims and Interests for the purpose of obtaining the approvals of majorities
of any Class defined in the Plan, and/or (iii) to assist KPI in obtaining
entry of the Confirmation Order. Notwithstanding anything to the contrary
contained in this Agreement, the Merger is subject to the issuance of said
Confirmation Order, and to said Confirmation Order becoming a Final Order.
5.8. Proxy Statement; Disclosure Statement. KE shall prepare and
file with the SEC as soon as reasonably practicable after the date hereof a
preliminary proxy statement with respect to the transactions contemplated by
this Agreement reflecting the recommendation of the Board of Directors of KE
that the Shareholders of KE vote to approve the Merger and this Agreement,
and shall use all reasonable efforts to have such proxy statement cleared by
the SEC under the Exchange Act and to cause the proxy statement to be mailed
to the shareholders of KE as soon as practicable thereafter. The information
in the proxy statement with respect to KE and the KE Subsidiaries will not,
as of the date of the proxy statement, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. At KE's request, KPI
shall furnish to KE all such information concerning KPI as may be reasonably
required to be disclosed in the proxy statement. None of the information
supplied by KPI with respect to KPI and the KPI Subsidiaries for inclusion
in the proxy statement will, as of the date of the proxy statement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading. KPI agrees, subject to approval of the Bankruptcy Court, to
vote the shares of KE held by it on the record date for stockholders entitled
to notice of and to vote at the special meeting in favor of the Merger, this
Agreement and all other matters necessary for the consummation of the
transactions contemplated by this Agreement and shall not, after the date
hereof and prior to the special meeting, sell, transfer, assign, pledge or
otherwise dispose of such shares of KE Common Stock. KPI and KE shall each
promptly notify the other if at any time before the Closing Date it becomes
aware that the proxy statement contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. In such event, KE
shall prepare a supplement or amendment to the proxy statement which corrects
such misstatement or omission, and shall cause the same to be filed with the
SEC and distributed to stockholders of KE.
KPI and KE shall each furnish to one another all such information
required to be disclosed in the Disclosure Statement. Each of KPI and KE
shall promptly notify the other if at any time before the Effective Date it
becomes aware that the Disclosure Statement contains any untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. In such event,
the parties shall prepare a supplement or amendment to the Disclosure
Statement which corrects such misstatement or omission and shall cause the
same to be filed with the Bankruptcy Court and distributed to holders of
Claims and Interests entitled to vote on the Plan. None of the information
supplied by KE or KPI for inclusion in the Disclosure Statement, at the date
such information is supplied or included, will, as of the respective date of
such Disclosure Statement, and at the times such Disclosure Statement is
distributed to holders of Claims and Interests, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
To the extent applicable, KE will notify KPI promptly of the receipt of
any comments from the SEC or its staff, and of any request by the SEC or its
staff for amendments or supplements to the proxy statement or for additional
information, will supply KPI with copies of all correspondence between KE or
any of its representatives, on the one hand, and the SEC and its staff, on
the other hand, with respect to the proxy statement, will consult with KPI
before mailing the proxy statement or any amendment thereof or supplement
thereto to KE shareholders, and, if at any time prior to the Closing Date any
event shall occur which should be set forth in an amendment or supplement to
the proxy statement, will promptly prepare, file and mail such amendment or
supplement.
5.9. Stockholders' Meeting. As soon as practicable after the date
hereof, KE will set a record date, prepare and forward a notice to the
shareholders of KE of a special meeting and take all actions in accordance
with the FBCA and its Articles of Incorporation and Bylaws to convene a
special meeting of KE shareholders entitled to vote on the Merger and upon
any other matters necessary or desirable for the consummation of the
transactions contemplated by this Agreement and the Plan. The date of the
special meeting shall be as soon as practicable following the clearance of the
proxy statement by the SEC. The Board of Directors of KE will, subject to
its fiduciary duty in consultation with legal counsel, recommend to the
stockholders of KE the approval and adoption of the matters necessary for the
consummation of the transactions contemplated by this Agreement.
5.10. American Stock Exchange/New York Stock Exchange. As soon as
practicable after the date hereof, KE shall file an application with the
American Stock Exchange or the New York Stock Exchange for listing the
additional shares of KE Common Stock, the Warrants issuable pursuant to this
Agreement, and the shares of KE Common Stock issuable upon exercise of the
Warrants.
5.11. Further Assurances. Subject to the terms and conditions herein
provided and to the fiduciary duty of KE's Board of Directors and officers in
consultation with legal counsel, each of the parties agrees to use reasonable
efforts promptly to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to obtain confirmation of the Plan, to consummate and
make effective the Merger and the other transactions contemplated by this
Agreement, subject, however, to the appropriate vote of stockholders of KE.
In case at any time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each
party to this Agreement are hereby directed and authorized to use reasonable
efforts to effectuate all such action.
5.12. Environmental Matters. From the date of this Agreement until
the Closing: (a) except in material compliance with applicable law, neither
party shall receive, store, dispose or release any Hazardous Materials on
or from any of its respective Properties, Leased Properties, or transport any
Hazardous Materials to or from any Properties or Leased Properties; (b) permit
the existence of any material Hazardous Materials Contamination on any of its
respective Properties or Leased Properties; (c) each party shall give written
notice to the other party immediately upon acquiring knowledge of the presence
of any reportable quantity of Hazardous Materials Contamination on any
Property or Leased Properties, with a full description thereof; (d) each
party shall, at its sole cost and expense, reasonably comply with any
Governmental Requirements requiring the removal, treatment or disposal of such
Hazardous Materials or Hazardous Materials Contamination and provide the
other party with satisfactory evidence of such compliance; and (e) each
party shall ensure that all written leases, licenses, and agreements of any
kind now or hereafter executed which permit any party to occupy, possess, or
use in any way any of its respective Properties or Leased Properties include
an express covenant to the effect that such party shall comply with the
provisions of this paragraph.
5.13. Site Assessments. KE, at any time prior to the Closing
hereunder, may contract for the services of persons (the "Site Reviewers")
to perform an environmental site assessment ("Site Assessments") on any KPI
Property or KPI Leased Property, for the purpose of determining whether there
exists on such KPI Property or KPI Leased Property any environmental
condition which could result in any material liability, cost or expense to
the owner, occupier or operator of such KPI Property or KPI Leased Property
arising under any Governmental Requirements relating to Hazardous Materials.
The Site Assessments may be performed at any time or times, upon reasonable
written notice to KPI, and under reasonable conditions established by KPI.
The Site Reviewers may perform such tests on such KPI Properties and KPI
Leased Properties as are necessary to conduct the Site Assessments in the
reasonable opinion of the Site Reviewers. KPI will supply to the Site
Reviewers such available historical and operational information regarding the
KPI Properties and KPI Leased Properties as may be reasonably requested by the
Site Reviewers to facilitate the Site Assessments and will make available for
meetings with the Site Reviewers appropriate personnel having knowledge of
such matters. KE shall make the results of such Site Assessments fully
available to KPI. The cost of performing such Site Assessments shall be paid
by KE.
5.14. Indemnification of Officers and Directors. KE shall indemnify
and hold harmless each of the current and former non-officer directors of KPI
other than Ira M. Koger (the "Indemnified Persons") in respect of amounts to
which such Indemnified Persons would otherwise be entitled to indemnification
under Florida law, the articles of incorporation or by-laws of KPI arising
out of acts or omissions prior to the Petition Date without giving effect to
the occurrence of the Bankruptcy Case, or any order relating thereto
including, without limitation, Bar Orders, the Confirmation Order or any order
of the Bankruptcy Court relating thereto (each, a "Covered Claim"); provided,
however, that the obligations of KE hereunder to any Indemnified Person shall
not exceed (i) $1,000,000 in the aggregate and (ii) $200,000 per each
Indemnified Person or such Indemnified Person's pro rata share of the costs
of any joint defense of multiple Indemnified Persons. Indemnified Persons
shall be entitled to advances from the Escrow Fund in respect of legal costs
and expenses as may relate to a Covered Claim, upon execution and delivery
to KE of an undertaking, in accordance with the law of the State of Florida,
to repay such advances. The foregoing indemnification shall be available only
to such Indemnified Persons who shall execute in favor of KE, KPI, Reorganized
KPI and any and all of their respective subsidiaries and successors or
assigns, a waiver and release of any and all liabilities and obligations of
KE and KPI arising out of any contractual, statutory or other right of
indemnification, contribution and reimbursement arising out of or related to
such Person's acting as a director of KPI and shall withdraw any proofs of
claims filed with the Bankruptcy Court in the Bankruptcy Case.
5.15. Preliminary Injunctions, Etc. The parties shall use all
reasonable efforts to have vacated or reversed any temporary restraining
order, preliminary or permanent injunction or other order by any United
States federal or state court or governmental body which prohibits or
otherwise limits the consummation of the transactions contemplated by this
Agreement.
ARTICLE 6.
THE PLAN
6.1. Confirmation Order. Consummation of this Agreement shall be
subject to the provisions of the Confirmation Order as the same shall be
entered by the Bankruptcy Court and shall be in effect and not stayed on the
Effective Date.
6.2. Appeals. After the Effective Date of the Plan, if the
Confirmation Order or any other orders of the Bankruptcy Court relating to
this Agreement, the Disclosure Statement, the solicitation of acceptances of
the Plan or confirmation of the Plan shall be appealed by any party (or a
petition for certiorari or motion for rehearing or reargument shall be filed
with respect thereto), KPI, prior to the Effective Time, will take all
reasonable and necessary steps to prosecute such appeal, petition or motion
or defend against such appeal, petition or motion as KE shall request, and KE
shall cooperate in such efforts, and each of KE and KPI shall use its best
efforts to obtain an expedited resolution of any such appeal.
ARTICLE 7.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF KE
7.1. Conditions Precedent. The obligations of KE pursuant to this
Agreement are subject to the satisfaction at or prior to Closing of each of
the following conditions:
(a) Except for consents the absence of which would not have a
material adverse effect on the financial condition and prospects of
KPI and the KPI Subsidiaries taken as a whole, the consents of all
entities who are parties to Assumed Contracts, and the consents of any
governmental or regulatory agency, to the Merger, if required to
effect the Merger and the transactions contemplated hereby, and, if
necessary, their assignments to KE, shall have been obtained;
(b) There shall not have been a material adverse change in the
condition (financial or otherwise), business, properties, or results
of operations, or a material increase in liabilities of KPI and the
KPI Subsidiaries taken as a whole during the period from December 31,
1992 to the Effective Time; for purposes of this Section 7.1(b), a
material adverse change shall include, without limitation, any such
material adverse change caused by or relating to any order of the
Bankruptcy Court or any order which reasonably can be expected to have
a material adverse effect, the material terms of which order KE has
not approved in advance;
(c) KE shall have received from the Internal Revenue Service
and there shall remain in full force and effect a tax ruling with
respect to the issues concerning the Plan and the Merger, which ruling
shall satisfy the terms and conditions for a reasonably acceptable tax
ruling as set forth in a letter dated May 6, 1993 from KE to KPI;
(d) All representations and warranties made by KPI in this
Agreement shall be true and correct in all material respects as of the
date made, and on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date (except when made
as of a specified date);
(e) KPI shall have performed and complied in all material
respects with all covenants, obligations, and agreements to be
performed by it on or before the Closing Date pursuant to this
Agreement;
(f) No temporary restraining order, preliminary or permanent
injunction or other order by any United States federal or state court
or governmental body which prohibits the consummation of the
transactions contemplated by this Agreement shall have been issued
and remain outstanding;
(g) The holders of the KE Common Stock, as provided by the
FBCA, shall have approved the Merger, this Agreement, and the issuance
of additional shares of KE Common Stock and the Warrants in connection
therewith;
(h) The shares of KE Common Stock and the Warrants to be issued
pursuant to this Agreement and the Plan shall have been approved for
listing on the American Stock Exchange or New York Stock Exchange,
subject to official notice of issuance;
(i) KE shall have received on the date that this Agreement is
executed and on the Closing Date an opinion of Willkie, Farr &
Gallagher, counsel to KPI as debtor in possession, substantially in
the form attached hereto as Exhibit 7.1(i);
(j) All of the KPI Subsidiaries shall have been merged with and
into KPI or otherwise liquidated;
(k) KPI shall have delivered to KE a certificate, dated the
Closing Date, of the chief executive officer and the chief financial
officer of KPI to the effect that the conditions specified in
subsections (a), (b), (d), (e), (f) and (j) of this Section 7.1 have
been met;
(l) The Effective Date of the Plan shall have occurred;
(m) The TKP Plan shall have been confirmed and become
effective without modification or amendment after the date hereof;
all claims against KPI in its Chapter 11 case arising out of its
general partnership interest in TKP shall be settled and resolved
without further liability of KPI; and the Restructured KPI Note (as
defined in the TKP Plan) shall have been converted into a priority
partnership interest in accordance with Section 24 of the Third
Amended and Restated Partnership Agreement of The Koger Partnership,
Ltd., on terms satisfactory to KE; and
(n) KE shall have received certificates from persons who
receive shares of KE Common Stock pursuant to the Plan and hold 5% or
more of outstanding KE Common Stock as of the Closing in the form
attached hereto as Exhibit 7.1(n).
7.2. Waiver of Conditions. KE may waive any of the conditions to the
Merger described in Section 7.1. To be effective, a waiver must be in writing,
executed on behalf of KE and delivered to KPI. Nothing set forth in the Plan,
the Disclosure Statement or this Agreement shall be construed as requiring KE
to waive any of such conditions.
ARTICLE 8.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF KPI
8.1. Conditions Precedent. The obligations of KPI under this Agreement
are subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) All representations and warranties made by KE in this
Agreement shall be true and correct in all material respects as of the
date made, and on and as of the Closing Date, with the same force and
effect as thought made on and as of the Closing Date (except when made
as of a specified date);
(b) KE shall have performed and complied in all material
respects with all covenants, obligations, and agreements to be
performed or complied with by it on or before the Closing Date
pursuant to this Agreement;
(c) Except for consents the absence of which would not have a
material adverse effect on the financial condition and prospects of
KE and the KE Subsidiaries taken as a whole or on the Surviving
Corporation, (i) the consents of all governmental or regulatory
authorities or agencies having jurisdiction over the transactions
contemplated by this Agreement shall have been given and all
applicable waiting periods shall have expired and (ii) all consents
and approvals from any other third parties necessary for KE to
continue to conduct its business as previously conducted shall have
been obtained;
(d) There shall not have been a material adverse change in the
condition (financial or otherwise) of the business, properties, or
results of operations, or a material increase in liabilities of KE
and the KE subsidiaries taken as a whole during the period from
December 31, 1992, to the Closing Date;
(e) No temporary restraining order, preliminary or permanent
injunction or other order by any United States federal or state court
or governmental body which prohibits the consummation of the
transactions contemplated by this Agreement shall have been issued and
remain outstanding;
(f) The holders of the KE Common Stock, as provided by the FBCA,
shall have approved the Merger, this Agreement and the issuance of
additional shares of KE Common Stock and the Warrants in connection
therewith;
(g) The shares of KE Common Stock and Warrants to be issued
pursuant to this Agreement and the Plan shall have been approved for
listing on the American Stock Exchange or New York Stock Exchange,
subject to official notice of issuance;
(h) As of the Effective Date, KE shall have Cash not less than
$5,000,000;
(i) The TKP Plan shall have been confirmed and become effective
without modification or amendment after the date hereof; all claims
against KPI arising out of its general partnership interest in TKP
shall be settled and resolved by reason of the confirmation of the TKP
Plan, and KPI shall have no further liability to any person in respect
of obligations of TKP other than as set forth in the TKP Plan;
(j) The Effective Date of the Plan shall have occurred;
(k) KPI shall have received on the date that this Agreement is
executed and on the Closing Date an opinion of Ropes & Gray, counsel
to KE, substantially in the form attached hereto as Exhibit 7.2(k);
and
(l) KE shall have delivered to KPI a certificate, dated the
Closing Date, of the Chief Executive Officer and the Chief Financial
Officer of KE to the effect that the conditions specified in
subsections (a), (b), (c), (d), (e), (f), (g), and (h) of this
Section 8.1 have been met;
8.2. Waiver of Conditions. KPI may waive any of the conditions to
the Merger described in Section 8.1. To be effective, a waiver must be in
writing, executed on behalf of KPI and delivered to KE. Nothing set forth in
the Plan, Disclosure Statement or this Agreement shall be construed as
requiring KPI to waive any of such conditions.
ARTICLE 9.
TERMINATION
9.1. Termination. This Agreement may be terminated prior to the
Closing:
(a) by mutual written consent approved by the Boards of
Directors of KPI and KE; or
(b) by KE, by written notice to KPI, in the event any closing
condition specified in Article 7 is reasonably determined by KE to
have become incapable of being satisfied on or before September 30,
1993, provided such incapacity has not been caused by a material
breach by KE of any of its covenants hereunder; or
(c) by KPI, by written notice to KE, in the event any closing
condition specified in Article 8 is reasonably determined by KPI to
have become incapable of being satisfied on or before September 30,
1993, provided such incapacity has not been caused by a material
breach by KPI of any of its covenants hereunder; or
(d) by KE or KPI by written notice to the other, if the
Closing has not occurred on or before September 30, 1993; or
(e) by KE or KPI, by written notice to the other, if the Court
enters an order declining to confirm the Plan under Section 1129 of
the Code or if, prior to the Effective Date of the Plan, the
Confirmation Order is vacated or reversed by a Final Order of a court
of competent jurisdiction; or
(f) by KE or KPI at any time prior to the Closing Date if any
statute, rule, regulation, order or decision shall have been enacted
or promulgated by any government, government agency or court, foreign
or domestic, which would make consummation of any of the transactions
contemplated by this Agreement illegal (which the party seeking to
terminate this Agreement shall have used its best efforts to have
lifted or reversed), and such statute, rule, regulation, order or
decision has become a Final Order, if applicable; or
(g) by KE or KPI if, at the stockholder's meeting referred to
in Section 5.9 hereof (including any adjournment thereof) this
Agreement and the Merger shall fail to be adopted and approved by the
requisite vote of the shareholders of KE.
9.2. Effect of Termination. In the event of termination of this
Agreement by either KPI or KE as provided above, this Agreement shall
forthwith become void and there shall be no further liability on the part of
KPI or KE, or their respective officers or directors to the other hereunder
except for any liability arising out of a breach of this Agreement.
ARTICLE 10.
GENERAL
10.1. Expenses. Each of KPI and KE shall pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its own advisers, accountants, counsel, and
other experts.
10.2. Waivers. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be deemed to constitute
a waiver by such party taking such action of compliance by any other party
with any representation, warranty, covenant or agreement contained herein.
The waiver by or on behalf of any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
10.3. Binding Effect; Benefits. This Agreement shall not be binding
on any party hereto until duly executed and delivered by both parties hereto.
This Agreement shall inure to the benefit of the parties hereto and shall be
binding upon the parties hereto and their respective successors and permitted
assigns, but this Agreement may not be assigned by any party hereto without
the prior written consent of the other party hereto. Except as otherwise set
forth herein, nothing in this Agreement, expressed or implied, is intended to
confer on any Person, other than the parties hereto or their respective
successors and permitted assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
10.4. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants (other than the covenant contained
in Section 5.14 which shall survive the Closing) contained in this Agreement
shall not survive the Closing Date, and neither KPI nor KE shall have any
liability thereafter to the other for any breach of any representation or
warranty made by them herein.
10.5. Notices. All notices, requests, demands and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given when
delivered in person or upon receipt when transmitted by telecopy or telex or
after dispatch by certified or registered first class mail, postage prepaid,
return receipt requested, or Federal Express, to the party to whom the same
is so given or made:
IF to KPI, to: Jack H. Chambers
President and Chief Executive Officer
Koger Properties, Inc.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
With copies to: Barry N. Seidel, Esq.
Willkie, Farr & Gallagher
One Citicorp Center
153 E. 53rd Street
New York, NY 10022
If to KE, to: Irvin H. Davis, President
Koger Equity, Inc.
3986 Boulevard Center Drive
Suite 101
Jacksonville, Florida 32207
With copies to: William F. McCarthy, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
and
Harold F. McCart, Jr., Esq.
Boling & McCart
76 South Laura Street
Suite 700
Jacksonville, Florida 32202
10.6. Entire Agreement. This Agreement (including the Schedules and s
hereto), the Plan and the Confirmation Order, constitute the entire agreement
between the parties hereto and supersede all prior agreements, representations,
warranties, statements, promises, and understandings, whether written or oral,
with respect to the subject matter hereof, and cannot be changed or terminated
orally. No party hereto shall be bound by or charged with any written or oral
agreements, representations, warranties, statements, promises, or
understandings not specifically set forth in this Agreement or in any or
Schedule hereto, the Plan, the Confirmation Order, or in any certificate or
instrument to be delivered pursuant hereto on or before the Closing.
10.7. Headings; Certain Terms. The section and other headings
contained in this Agreement are for reference purposes only and shall not be
deemed to be a part of this Agreement or to affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term
"including" means "including, but not limited to" unless otherwise specified.
10.8. Governing Law. This Agreement shall be construed as to both
validity and performance and enforced in accordance with and governed by the
laws of the State of Florida.
10.9. Severability. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement
shall not be affected thereby, and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law. Upon
the determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect their original intent as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
10.10. Public Announcements. Prior to the Closing, KE and KPI shall
cooperate in connection with all actions to publicize, advertise, announce,
or disclose to any governmental authority or other third person the execution
or terms of this Agreement or the transactions contemplated hereby. Except as
required by the Bankruptcy Code or the federal securities laws, neither party
will make any public disclosure, release or announcement without the prior
written consent of the other party.
10.11. Amendments. This Agreement may not be modified or changed
except by an instrument or instruments in writing signed by each of KE and
KPI. This Agreement may be amended in writing at any time prior to the
Effective Time by mutual consent of the respective Boards of Directors of the
parties, without any action or approval by shareholders of such parties,
provided that any such amendment shall not be made after approval by the
shareholders of KE other than for amendments which are not materially adverse
to KE or KPI and do not modify the amount or nature of the consideration
provided in the Merger.
10.12. Section References. All references contained in this Agreement
to any section number are references to sections of this Agreement unless
otherwise specifically stated.
10.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
10.14. Specific Performance. The parties hereto recognize that any
breach of the terms of this Agreement may give rise to irreparable harm for
which money damages would not be an adequate remedy, and accordingly agree
that, in addition to other remedies, the non-breaching party will be entitled
to enforce the terms of this Agreement by a decree of specific performance
without the necessity of proving the inadequacy of a remedy of money damages.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement, or
have caused this Agreement to be signed on their behalf by an officer
thereunto duly authorized, on the respective dates stated below.
[Seal] KOGER PROPERTIES, INC., Debtor
and Debtor-in-Possession
Attest:
By:_________________________________ By:_______________________________
Secretary Title: President and Chief
Executive Officer
[Seal] KOGER EQUITY, INC.
Attest:
By:_________________________________ By:_______________________________
Assistant Secretary Title: President and Chief
Executive Officer
Exhibit 10(l)(9)
RESTATED LOAN AGREEMENT
THIS RESTATED LOAN AGREEMENT is made and entered into as of this 21st
day of December, 1993, by and between KOGER EQUITY, INC., a Florida
corporation, for itself and as successor by merger to each of KOGER EQUITY OF
SOUTH CAROLINA, INC., a South Carolina corporation, KOGER EQUITY OF GEORGIA,
INC., a Georgia corporation, KOGER EQUITY OF NORTH CAROLINA, INC., a North
Carolina corporation, KOGER EQUITY OF TENNESSEE, INC., a Tennessee corporation,
KOGER EQUITY OF TEXAS, INC., a Texas corporation, and KOGER EQUITY OF OKLAHOMA,
INC., an Oklahoma corporation whose mailing address is c/o 3986 Boulevard
Center Drive, Suite 101, Jacksonville, Florida 32207, and NATIONSBANK OF
FLORIDA, N.A., a national banking association, as successor to NCNB NATIONAL
BANK OF FLORIDA, a national banking association, whose mailing address 750
South Orlando Avenue, Winter Park, Florida 32789. Defined terms used herein
shall have the meaning set forth in Article I hereof unless otherwise defined
herein.
R E C I T A L S:
1. Each of the entities described hereinabove are parties to that
certain Loan Agreement dated March 15, 1991, in connection with a loan in the
original principal amount of $30,000,000.00 dated March 15, 1991, by Lender
to the Borrower.
2. The Loan has been modified and extended from time to time prior to
the date hereof. Borrower has requested and Lender has consented to modify,
renew, and extend the Loan on terms more particularly set forth in this
Restated Loan Agreement.
3. The Borrower, Lender and Guarantors wish to restate in its entirety
the terms of the Original Loan Agreement between such parties dated March 15,
1991, and for that purpose have entered into this Restated Loan Agreement on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of Lender renewing and extending its
loan to Borrower in the unpaid principal amount of TWENTY-SEVEN MILLION SIX
HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($27,625,000.00), at the
Interest Rate as evidenced by a renewal promissory note of even date herewith,
pursuant to the Commitment by and between Borrower, Guarantors, and Lender
dated October 13, 1993, as extended, and accepted by Borrower, and other good
and valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, Borrower, Lender and Guarantor, hereby agree as follows:
ARTICLE I.
DEFINITIONS
The Recitals described hereinabove are incorporated herein and by this
reference made a part of this Restated Loan Agreement. The following words and
terms when used in this Restated Loan Agreement (unless the contents shall
clearly indicate otherwise) shall have the following meanings:
1. "Affiliate" means a person or entity (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, the Borrower or any Subsidiary; (ii) which
beneficially owns or holds 20 or more of any class of the outstanding voting
stock of the Borrower; or (iii) more of the outstanding voting stock (or in
the case of a person or entity which is not a corporation, 10 or more of the
equity interest) of which is beneficially owned or held by the Borrower or any
Subsidiary. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of a person or entity whether through ownership of voting stock, by contract
or otherwise.
2. This definition has been intentionally deleted.
3. "Appraisal" means the appraisal from time to time of any of the
Parcels satisfying the requirements of Article IV 17 of this Restated Loan
Agreement.
4. "Borrower" means, collectively, Koger Equity, Inc., on its own
behalf and as successor by merger to each of the following corporations, which
were formerly its corporate subsidiaries, namely Koger Equity of South
Carolina, Inc., a South Carolina corporation, Koger Equity of Georgia, Inc., a
Georgia corporation, Koger Equity of North Carolina, Inc., a North Carolina
corporation, and Koger Equity of Tennessee, Inc., a Tennessee corporation, and
the Guarantors, and their successors and assigns. Each requirement of and
reference to the Borrower set forth herein shall apply to Koger Equity, Inc.,
as constituted after the Statutory Mergers and the Reorganization Merger,
including without limitation as successor by merger to each and all of the
foregoing corporations, and the Guarantor, unless specifically provided herein
to the contrary.
5. "Commitment" means that certain Commitment To Modify and Extend
Mortgage Loan by and between Borrower and Lender, dated October 13, 1993, and
accepted by Borrower.
6. "Consolidated Net Worth" means the depreciated book value of all
assets properly appearing on the consolidated balance sheet of Borrower and
its Subsidiaries prepared in accordance with generally accepted accounting
principles, with no adjustments due to revaluation from and after the date of
the Reorganization Merger (as hereinafter defined), less the sum of the
following:
(i) Consolidated Total Liabilities;
(ii) the amount at which any shares of stock of Borrower or any
Subsidiary appear on the asset side of such consolidated
balance sheet;
(iii) advances to stockholders or Affiliates of the Borrower except
those provided for under Affiliate Agreements;
(iv) the book amount of good will and other items generally defined
as an intangible asset pursuant to generally accepted
accounting principles; and
(v) all reserves other than contingency reserves not allocated for
any particular purpose and not deducted from assets.
7. "Consolidated Total Liabilities" means the aggregate amount of all
liabilities which appear on the consolidated balance sheet of Borrower and its
Subsidiaries prepared in accordance with generally accepted accounting
principles from and after the date of the Reorganization Merger, including but
not limited to capitalized lease obligations, all outstanding letters of
credit for the benefit of the Borrower or any of its Subsidiaries, and negative
goodwill of Borrower and its Subsidiaries.
8. "Debt Service Coverage Ratio" means the ratio calculated in
accordance with the following formula:
Net Operating Income
Loan Constant x the Principal Amount of the Loan
9. "Default Rate" means the interest rate in effect from time to time
after an event of default as more particularly described in the Note.
10. "Extension Agreements" means those certain Extension Agreements
executed coincident herewith by Borrower and filed in each of the counties of
each state where the Mortgages are recorded to give public notice of the
renewal and extension of the Loan.
11. "Fiscal Year" means the 12-month period of Borrower commencing on
January 1 of each calendar year and ending on December 31 of each calendar
year.
12. "Free Cash Flow Ratio" means the ratio of the aggregate net
operating income (after taxes applicable) of Borrower, plus depreciation,
amortization, and any other on-cash charges, divided by the sum total of
dividends, capital expenditures, tenant improvements, and regularly-scheduled
principal payments. The numerator shall be increased by the cash balance
obtained from Koger Properties, Inc., as of the date of the Reorganization
Merger. For the purposes of this calculation, capital expenditures will be the
greater of the actual amount incurred or $5,000,000.00 annually on a Fiscal
Year basis after the Reorganization Merger. The ratio will be calculated on a
cumulative basis starting as of January 1, 1992, allowing Borrower to use the
accumulated cash to pay dividends if operations do not generate adequate cash
flow to do so.
13. "Guarantor" means, collectively, Koger Equity of Texas, Inc., a
Texas corporation and Koger Equity of Oklahoma, Inc., an Oklahoma corporation,
and their respective successors and assigns, including Borrower as successor
by merger to each of such corporations. Each requirement of and reference to
the Guarantor shall apply to Borrower as successor to both the foregoing
corporations, equally, unless specifically provided herein to the contrary.
14. "Guaranty" means that certain Unlimited, Unconditional and
Continuing Guaranty dated March 15, 1991, executed by Koger Equity of Texas,
Inc., a Texas corporation, and Koger Equity of Oklahoma, an Oklahoma
corporation, as reaffirmed on January 28, 1993, and as further reaffirmed the
date hereof.
15. "Improvements" shall collectively refer to all of the improvements
constructed on the Land.
16. "Indebtedness" means with respect to any person or entity, all
indebtedness of such person or entity for borrowed money, all indebtedness of
such person or entity for the acquisition of property other than purchases of
products and merchandise in the ordinary course of business, indebtedness
secured by any Lien on the property of such person or entity whether or not
such indebtedness is assumed, all liability of such person or entity by way of
endorsements (other than for collection or deposit in the ordinary course of
business); all guarantees of indebtedness of any other person or entity by
such person or entity (excluding any guarantees made among the entities
comprising the Borrower and Guarantor) (including any agreement, contingent
or otherwise, to purchase any obligation representing such indebtedness or
property constituting security therefor, or to advance or supply funds for
such purpose or to maintain working capital or other balance sheet or income
statement condition, or any other arrangement in substance effecting any of
the foregoing); all leases and other items which in accordance with generally
accepted accounting principles are classified as liabilities on a balance
sheet; provided that in no event shall the term Indebtedness include capital
stock of any Subsidiary, deferred income taxes, reserves for deferred income
taxes and investment credits, other deferred credits and reserves, and
deferred compensation obligations.
17. "Interest Rate" is the rate of interest from time to time in
effect as the "Interest Rate" defined more particularly in the Note.
18. "Land" means, collectively, the various parcels of real property
owned by Borrower, as successor by merger to each of Koger Equity of Texas,
Inc., Roger Equity of Oklahoma, Inc., or Koger Equity of Georgia, Inc. and
located in Texas, Oklahoma, and Georgia, respectively, as more particularly
described in the Mortgage, as well as any Additional Property (as defined in
Article VII.2 which may be provided by Borrower or Guarantor to Lender in
accordance with the terms of Article VII.3. hereof.
19. "Lender" or "Bank" means NationsBank of Florida, N.A., a national
banking association, and successor to NCNB National Bank of Florida, a
national bank association, organized and existing under the laws of the United
States, having its principal place of business in Tampa, Florida, and its
successors and assigns.
20. "Liabilities" means all liabilities, obligations and Indebtedness
of any and every kind and nature (including, without limitation, interest,
charges, expenses, attorneys' fees and other sums chargeable to Borrower by
Lender and future advances made to or for the benefit of Borrower), arising
under, or pursuant to this Restated Loan Agreement, the Note, or any Loan
Documents, whether heretofore, now, or thereafter owing, arising, due, or
payable from Borrower to Lender and howsoever evidenced, created, incurred,
acquired or owing, whether primary, secondary, direct, contingent, fixed, or
otherwise, including obligations of performance.
21. "Lien" means any interest in property securing any obligation
owed to, or a claim by, a person or entity other than the owner of the
property, including without limitation security interests arising from a
mortgage, deed of trust, deed to secure debt, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes.
22. "Loan" means that certain loan in the original principal amount
of $30,000,000.00, as renewed this date in principal amount of $27,625,000.00,
from the Lender to the Borrower as described in the Commitment.
23. "Loan Constant" means at the Loan Closing and thereafter a rate
equal to the seven (7) year U.S. Treasury Bond yield, plus two hundred (200)
basis points, converted to a mortgage constant rate based on a twenty-five
(25) year amortization schedule.
24. "Loan Documents" means this Restated Loan Agreement, the
Commitment, the Note, the Mortgage, the Extension Agreements, the Guaranty and
all other documents executed in connection with the Loan.
25. "Loan Closing" means the consummation of the Loan renewal and
extension transaction described in this Restated Loan Agreement.
26. "Makers" means each of the original makers to the Original Note,
namely, Koger Equity of North Carolina, Inc., a North Carolina corporation;
Koger Equity of South Carolina, Inc., a South Carolina corporation; Koger
Equity of Georgia, Inc., a Georgia corporation; Koger Equity of Tennessee,
Inc., a Tennessee corporation; and Koger Equity, Inc., a Florida corporation.
27. "Mortgages" means collectively, the deeds of trust, deeds to
secure debt, and mortgages and security agreements and all renewals,
extensions, and modifications thereof (including without limitation the
Extension Agreements) with respect to the Land.
28. "Net Operating Income" means the actual gross rental income of
Borrower with respect to the Property, minus actual operating expenses with
respect to the Property, as reasonably determined by the Lender.
29. "Note" means that certain second renewal promissory note of even
date herewith in the original principal amount of $27,625,000.00 executed by
Borrower in favor of the Lender, in the form attached hereto as Exhibit "A".
30. "Original Loan Agreement" means that certain Loan Agreement
between Borrowers, Guarantors, and Lender dated March 15, 1991, setting forth
the terms and conditions of the Loan, which has been restated hereby except to
the extent incorporated herein by reference.
31. "Original Loan Documents" means the Original Note, the Original
Loan Agreement, and those certain instruments, documents, matters, and things
described in Article II of the Original Loan Agreement, including without
limitation the Mortgages, Assignments of Leases, UCC-1 Financing Statements,
Additional Assignments, Assignments of Licenses and Permits, Anti-coercion
Acknowledgments, and Hazardous Substance Certificate and Indemnification
Agreement.
32. "Original Note" means that original promissory note from Borrower
to Lender dated March 15, 1991, in the original principal amount of
$30,000,000, as modified and amended from time to time, and as renewed by that
certain Renewal Promissory Note from Borrower to Lender dated January 25, 1993,
but deemed effective January 15, 1992.
33. "Option Period" means that additional two year period from which
the Borrower may extend the Maturity Date of December 21, 1998, to December 21,
2000 pursuant to Article VII.4 of this Restated Loan Agreement, subject to the
terms hereof.
34. "Parcel" means each individual parcel of Land and the Improvements
located thereon.
35. "Principal Amount of Loan" means the outstanding unpaid principal
balance of the Note on the date of execution thereof.
36. "Property" means collectively, all of the Parcels.
37. "Reorganization Merger" means the merger of Koger Properties, Inc.,
a Florida corporation, as debtor, into Borrower, as proposed jointly by Koger
Properties, Inc., and Koger Equity, Inc., as then constituted in the Third
Amended and Restated Disclosure Statement dated as of April 30, 1993, in
Chapter 11 Case, Case No.: 91-12294-8PI (the "Bankruptcy Case") in the United
States Bankruptcy Court, Middle District of Florida, Tampa Division (the
"Proposed Plan of Reorganization for Koger Properties, Inc."), as confirmed
by order dated December 8, 1993 in the Bankruptcy Case.
38. "Restated Loan Agreement" means this Restated Loan Agreement.
39. "Statutory Mergers" means the statutory merger of Koger Equity,
Inc. with each of the other corporate entities which are Makers and Guarantor
so that Borrower is the surviving corporate entity after giving effect to the
statutory merger.
40. "Subsidiary" or "Subsidiaries" means any corporation of which
Borrower owns, directly or through a subsidiary, at the date of determination,
more than 50% of the outstanding stock having voting power for the election of
directors, irrespective of whether or not at such time stock of any other
class or classes might have voting power by reason of the happening of any
contingency.
41. "Unencumbered Property" means the improved real property owned by
Borrower not subject to any Lien set forth in Borrower's consolidated balance
sheet delivered to Lender from time to time pursuant to this Restated Loan
Agreement.
42. "Unsecured Property to Unsecured Debt Ratio" means the ratio of
(i) the aggregate depreciated book value of the Unencumbered Property to (ii)
Indebtedness of the Borrower not secured by any lien.
All accounting terms not specifically defined in this Restated Loan
Agreement shall have the meaning given to such term in accordance with
generally accepted accounting principles ("GAAP").
ARTICLE II.
LOAN DOCUMENTS
A. Documents to be Delivered At Closing. At the Loan Closing, Borrower
shall execute and deliver, or cause to be executed and delivered to Lender
Borrower's consent, acknowledgment and agreement as successor in interest of
the other Makers and Guarantor, to the force and continuing binding effect,
following the Statutory Merger, to the Original Loan Documents, and the
following documents, all in a form satisfactory to the Lender:
1. Note: The Note.
2. Extension Agreements: The Extension Agreements.
3. UCC-3 Financing Statements (Local and State): UCC-3
Financing Statements (local and state) reflecting and showing the name change
effected by the Statutory Merger and covering all tangible and intangible
personal property, fixtures and equipment placed or to be placed on or under
the Property, and such other documents as will insure Lender a first perfected
security interest in and to said personal property, fixtures and equipment.
4. Anti-Coercion Acknowledgment: A written acknowledgment from
Borrower (on a form to be provided by Lender) regarding the notice set forth
in Article VIII 16 hereof.
5. Corporate Borrowing Authority Documents: Corporate documents
which evidence the necessary authorization for the actions to be taken by
Borrower for itself and on behalf of the other Makers and each Guarantor in
connection with the Commitment and the Loan. Appropriate documents shall
include the articles of incorporation, the by-laws, a corporate borrowing
resolution, an incumbency certificate, and a current certificates of good
standing showing each of the Statutory Mergers to have occurred and Borrower
to be qualified to do business, in each case for all appropriate jurisdictions.
6. Attorney's Opinion: Written opinions, addressed to Lender,
from Borrower's and Guarantor's attorneys, in the form attached hereto as
Exhibit "B".
B. Documents to be delivered Prior to Closing. Prior to the Loan
Closing, Borrower for itself and on behalf of each of the Makers and each
Guarantor, as appropriate, shall deliver, or cause to be delivered to Lender,
the following documents, all in a form satisfactory to Lender:
1. Mortgagee Title Insurance Binders and Policies. Mortgagee
title insurance endorsements to existing title insurance policies provided
pursuant to the Original Loan Agreement and new policies where required by
law insuring in either case the Mortgages, as modified through the date of
recording of the Extension Agreements as valid first liens on each Parcel
constituting the Property subject only to exceptions as shall be approved in
writing by Lender, issued by Ticor Title Insurance Company or Lawyers Title
Insurance Company or other title insurance company satisfactory to Lender and
in a form approved by Lender, including any reinsurance agreements received by
Lender. The policies shall (a) provide coverage in the amount of the full
value of each Parcel constituting the Property, but in no event shall the
aggregate coverage of such policies be less than the principal amount of the
Loan; (b) include a variable rate endorsement (Form T-33 in Texas as to Texas
properties); (c) delete all "standard" exceptions except taxes for the current
year, unless such taxes are due and payable; (d) list only those title
exceptions acceptable to Lender; (e) include insurance of all appurtenant
easements, and f) contain such "affirmative" coverage as may be obtainable and
required by Lender, including, but not limited to, affirmative insurance over
mechanic's liens. Specifically related to the foregoing as to (i) Parcels
located in Texas, a T-38 endorsement(s) showing Lender's Mortgage on such
properties to continue without interruption or intervening liens, encumbrances,
or interests shall be satisfactory to Lender when accompanied by evidence
satisfactory to Lender that ad valorem real property taxes are paid on a
current basis and (ii) Parcels located in Oklahoma, a fully paid title
insurance policy and tax certificate providing the same assurance as the Texas
endorsement outlined above.
2. Documents Already on Hand. As a result of the Original Loan
Agreement, Lender has already on file those ancillary loan documents, matters,
and things required by Article II B of the Original Loan Agreement. Borrower
covenants and agrees to provide to Lender endorsements to all policies of
flood insurance, liability insurance, permanent hazard insurance, and
consequential loss insurance showing Borrower as the owner following the
Statutory Merger.
3. Additional Documentation/Miscellaneous. In addition to the
documentation provided for elsewhere in this Restated Loan Agreement, the
Borrower shall execute, at the Loan Closing, the following documents which
shall be in a form acceptable to Lender: (i) Further Assurance Agreement,
(ii) Title Affidavits, (iii) an affidavit containing such certifications as to
factual matters as may be required by Borrower's counsel to render the opinion
equipped herein, and (iv) all other Loan documents that are customarily
provided in loan transactions of this type.
4. Post Closing Report Regarding Facilities For Handicapped: Borrower
shall provide evidence at Closing that to the best of Borrower's knowledge and
belief the various improvements at the various Parcels constituting the
Property comply at Closing with all present legal requirements regarding
access of facilities for handicapped or disabled persons, including without
limitation, the Federal Architectural Barriers Act of 1988 (42 U.S.C. Section
4151, et seq., the Fair Housing Amendment Act of 1988 (42 U.S.C. Section 3601,
et seq.), the American Disabilities Act of 1990 (42 U.S.C. Section 12101, et
seq.), and the Rehabilitation Act of 1973 (26 U.S.C. Section 794)
(collectively, the "Handicapped Facilities Acts"). Should any of the
particular improvements at various of the Parcels constituting the Property
fail to comply with the Handicapped Facilities Acts, then the Borrower at
Closing shall execute an indemnification and hold harmless agreement by which
the Borrower shall indemnify and hold harmless Lender from any claim,
liability, loss, or damage, including without limitation, attorneys' fees and
costs, related to or arising out of such facilities failing to be in compliance
with the Handicapped Facilities Acts.
5. Vacant Land. Within thirty (30) days following the date hereof (and
thereafter during the term of this Restated Loan Agreement if Borrower shall
acquire title to any vacant land), Borrower shall provide Lender with detailed
information regarding such holdings of vacant land owned by the Borrower and
all of its Subsidiaries, including, but not limited to (i) the size of such
land; (ii) its location; (iii) the date acquired; (iv) any encumbrances,
liens, and other similar information pertaining thereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
As a material inducement to the Lender to renew the Loan, Borrower
makes the following representations and warranties, which shall survive the
execution and delivery of the Note:
1. Validity of Loan Documents and Original Loan Documents. The Loan
Documents are, and except as restated by the Loan Documents the Original Loan
Documents continue to be, in all respects legal, valid and binding obligations
of the Borrower, and/or Guarantor, as applicable, enforceable according to
their terms and grant to Lender a direct, valid and enforceable first priority
lien security interest in each Parcel of the Property, including all of the
personalty located therein.
2. Validity of Guaranty. Notwithstanding the facts that koger Equity,
Inc. (i) was one of the joint and several Makers under the Original Note, and
(ii) is one of the Makers on the Note for itself and as successor by merger on
behalf of each of the other original Makers, and (iii) is the successor by
merger to each of the corporate entities constituting the Guarantor, the
Borrower represents, warranties, and agrees that (a) the obligations evidenced
by the Guaranty are not intended to be merged into the obligations evidenced
by the Original Note as renewed by the Note, and (b) the Mortgages continue to
be enforceable and as collateral security for the obligations which are secured
thereby, including without limitation, the Guaranty and the Note.
3. Priority of Lien on Personalty. No bill of sale, security agreement,
financing statement or other title retention agreement (except those executed
in favor of Lender) is in effect and valid or will be executed with respect to
any personal property, equipment or fixtures or used in the operation or
maintenance of the Improvements.
4. Conflicting Transactions of Borrower or Guarantor. The consummation
of the transactions hereby contemplated and the performance of Borrower's or
Guarantor's obligations under and by virtue of the Loan Documents will not
result in any breach, of, or constitute a default under any mortgage, security
deed, deed of trust, lease, bank loan or credit agreement, corporate charter
or by-laws, partnership agreement or joint venture agreement or other
instrument to which Borrower or Guarantor is a party or by which it may be
bound or affected.
5. Pending Litigation. Except as disclosed in Borrower's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993, there are no
actions, suits, assessments, or proceedings pending or, to the knowledge of
Borrower and Guarantor, threatened against or affecting Borrower or Guarantor
or the Property, or involving the validity or enforceability of any of the
Loan Documents or the priority of the lien thereof, at law or in equity, or
before or by any governmental authority, except actions, suits and proceedings
which are fully covered by insurance and which, if adversely determined, would
not substantially impair Borrower's or Guarantor's ability to perform each and
every one of its obligations under and by virtue of the Loan Documents; and
that to the Borrower's and Guarantor's knowledge, it is not in default with
respect to any order, writ, injunction, decree or demand of any court or any
governmental authority and that no event has occurred which, with the passage
of time, would be deemed a default. Additionally, none of the Borrower or
Guarantor, prior to or subsequent to the Statutory Merger, are parties to any
pending litigation which challenges the authorization, validity, or
enforceability of the Loan Documents or the Original Loan Documents or the
authority of Borrower and the Guarantor following the Reorganization Merger to
execute the Loan Documents necessary to effect the renewal of the Loan.
6. Violations of Governmental Law, Ordinances or Regulations. Neither
Borrower nor Guarantor have knowledge of any violations or notice of violations
of any federal or state law or municipal ordinance or order or requirement of
the counties or cities in which the Property is located or any municipal
department or other governmental authority having jurisdiction affecting the
Property, which violations in any way relate to or affect the Property.
7. Compliance with Zoning Ordinances and Similar Laws. The Improvements
and the current use of the Property comply with all governmental laws and
regulations, and requirements, standards and regulations of appropriate
supervising boards of fire underwriters and similar agencies.
8. Availability of Utilities. All utility services necessary for the
operation of the Improvements for their current use are available at the
boundaries of the Land, including water supply, storm and sanitary sewer
facilities, electric and telephone facilities.
9. Condition of Premises. The Property is not now damaged or injured
as a result of any fire, explosion, accident, flood or other casualty.
10. Usury. The amounts received by Lender which are or which may be
deemed to be interest hereunder or under any of the Loan Documents or otherwise
in connection with the transactions herein contemplated constitute lawful
interest and are not usurious or illegal under the laws of the States of
Florida, Georgia, North Carolina, South Carolina, Tennessee, Texas or Oklahoma
and no aspect of the transactions contemplated by this Restated Loan Agreement
is or will be usurious.
11. Encumbrances on Land. Other than the title exceptions noted in the
mortgagee title insurance commitments, policies, and endorsements thereto
insuring the Mortgage delivered to Lender pursuant to Article II B.l, Borrower
and Guarantor have no knowledge of other encumbrances affecting title to the
Land.
12. Accuracy of Information. The Loan is based on the accuracy of
Borrower's and Guarantor's representations and statements to Lender. To the
Borrower's knowledge, neither this Restated Loan Agreement nor any documents,
financial statements, credit information, certificate or statement required
herein to be furnished or furnished by Borrower or Guarantor to Lender contains
any untrue statement of a fact or omits to state a fact material to this
Restated Loan Agreement or to Lender's decision to enter into this Restated
Loan Agreement or to the transaction contemplated hereunder. Lender shall have
the option to declare this Restated Loan Agreement to be breached if there
shall have been any material misrepresentation, misstatement or any material
error in any statement, document or other submission delivered to Lender. The
Commitment is hereby incorporated herein by reference; but to the extent it
conflicts with the Loan Documents, the Loan Documents shall govern.
13. Set-offs. Borrower does not have any defenses or set-offs with
respect to any monies disbursed or otherwise advanced or to be advanced by
Lender to Borrower under the Note or this Restated Loan Agreement.
14. Continuation and Investigation. The warranties and representations
contained herein shall be and remain true and correct so long as any of
Borrower's or Guarantor's obligations hereunder have not been satisfied, or so
long as part of the Loan shall remain outstanding. All representations,
warranties, covenants and agreements of Borrower and Guarantor made herein or
in any certificate or other document delivered to Lender by or on behalf of
Borrower or Guarantor pursuant to or in connection with this Restated Loan
Agreement (or the Original Loan Agreement) shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made
by Lender or on its behalf, and shall survive the making of any or all of the
disbursements contemplated by the Original Loan Agreement and the renewal of
the Loan by this Restated Loan Agreement.
15. Financial Information Disclosure. The financial information
furnished by Borrower and Guarantor to Lender in connection with its
application to renew the Loan and in the financial statements submitted to
Lender is complete and accurate in all material respects and neither Borrower
or any of the Subsidiaries, or Guarantor have any undisclosed direct or
contingent liabilities.
16. Organization of Borrower and Guarantor.
(a) Following the Statutory Merger and Reorganization Merger,
Borrower is a corporation duly organized, existing and in good standing under
the laws of its state of incorporation, is duly qualified as a foreign
corporation, in good standing, in the states in which it does business, and
has all requisite corporate power and authority to own its respective
properties and assets and to carry on the respective business in which it is
engaged, and the obtaining and performance of the Loan have been duly
authorized by all necessary action of its board of directors under applicable
law, and do not and will not (i) violate any provision of law or any of any
organizational or other organic documents of Borrower, or (ii) result in a
breach of, constitute a default under, require any consent under, or result
in the creation of any lien, charge, or encumbrance (other than as contemplated
by this Restated Loan Agreement or the Loan Documents) upon any property of
Borrower, pursuant to any instrument, order, or other agreement to which
Borrower is a party or by which Borrower any of its officers as such, or any
of its property is bound.
(b) Each of the Subsidiaries is a wholly owned subsidiary of
Borrower.
17. Disclosure of Encumbrances. There are no judgments, liens,
encumbrances, or other security interests outstanding against Borrower or
Guarantor with respect to the Property.
18. Office Buildings.
(a) Occupied Buildings. The Improvements on each of the Parcels
include completed office buildings.
(b) Occupancy Rate. The Improvements located on the Property
have an average 88% occupancy rate, calculated over a continuous twelve (12)
month period ended September 30, 1993, pursuant to fully performing leases as
of the date hereof.
19. Additional Representations. With respect to the Property:
(a) All requisite approvals, consents, permits, licenses of
the local, county, regional, state and federal governmental agencies which have
jurisdiction over, and regulations related to, the construction and operation
of the Property have been obtained or are available.
(b) All public utilities, including water, sanitary and storm
sewer, electrical and telephone service, are available to the Property in such
capacities as are sufficient for the use and operation of the Improvements.
There are no sewer and water hookup, water extraction, electrical or other
utility moratoriums currently in effect or, pending, threatened, or imminent
with respect to the Property. Other than normal use charges, there are no
expenses in connection with the use of such utilities including without
limitation contributions in aid of construction or construction of lift
stations, force mains or additional lines, and there is no future obligation
to hook-up to any utility plants. Pedestrian and vehicular access are
available to and from the Property and comply with all legal requirements for
the Property.
ARTICLE IV.
COVENANTS OF BORROWER AND GUARANTOR
Borrower hereby covenants and agrees with the Lender as follows:
1. Restated Loan Agreement. To duly and punctually perform, observe
and comply with all of the terms, provisions, conditions, covenants and
agreements of Borrower and Guarantor, as applicable to be performed, observed
and complied with hereunder under the Loan Documents, and Original Loan
Documents, except to the extent inconsistent with the Loan Documents, and any
other documents and instruments delivered by Borrower and Guarantor to Lender
in connection with the Loan. Neither Borrower nor Guarantor will suffer or
permit any default or Event of Default to exist hereunder or thereunder.
Borrower and Guarantor will promptly give notice in writing to Lender (a) of
the occurrence of any material litigation or proceedings affecting Borrower
or Guarantor which is not covered by insurance, (b) of the occurrence of any
litigation or proceeding which may affect Borrower or Guarantor in an amount
in excess of $1,000,000.00 whether or not Borrower's or Guarantor's liability,
if any, is covered by insurance, and/or (c) of any dispute between Borrower or
Guarantor and any governmental or regulatory body or any other party which
dispute may materially interfere with Borrower's or Guarantor's normal
operations of the Improvements; provided, however, that neither Borrower nor
Guarantor shall not be required to give Lender written notice of any personal
injury litigation.
2. Gap. There are no matters pending against Borrower, Guarantor, or
any Parcel of the Property which could result in a change in the status of the
title to the Property in the period of time between the effective date of the
commitments for, or endorsements to, mortgagee title insurance delivered to
Lender pursuant to Article II B.1. and the recording of the Extension
Agreements (the "Gap"). Borrower and Guarantor covenant that they shall not
commit any act or permit any act to be committed that might result in an
adverse change in the status of the title to each Parcel of the Property during
the Gap, and Borrower and Guarantor shall indemnify Lender from any losses,
costs and expenses (including reasonable attorneys' fees) suffered as a result
of a change in the status of the title to the Property during the Gap.
3. Licenses and Permits. To reserve and keep in force all licenses,
permits, and franchises necessary for the proper conduct of its business and
duly pay and discharge all taxes, assessments, and governmental charges upon
Borrower or Guarantor or against the Property before the date on which
penalties attach thereto, unless and to the extent only that the same shall
be contested in good faith and by appropriate proceedings.
4. Requirements of Borrower. To provide the following to Lender at the
times indicated:
(a) Quarterly Consolidated and Consolidating Balance Sheets. As
soon as practicable, in any event within forty-five (45) days after the end of
each of the first three quarterly periods of each Fiscal Year, deliver or cause
to be delivered to Lender a consolidated and consolidating balance sheet of
Borrower and is Subsidiaries as at the last day of such quarterly period and
related consolidated and consolidating statements of earnings, stockholders'
equity and cash flows for such quarterly period and cumulative Fiscal Year to
date for Borrower and its Subsidiaries, setting forth each case comparative
form figures for the corresponding period in the preceding Fiscal Year, all
in reasonable detail and certified by an authorized officer of Borrower as
true and correct and to have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, subject to
changes resulting from normal recurring year-end adjustments. Lender
acknowledges and Borrower agrees that delivery of the following to Lender on
a quarterly basis will satisfy the foregoing requirements of this subparagraph:
(1) the current Form 10-Q for the first three (3) quarters of the Fiscal Year
for Borrower as filed with the Securities and Exchange Commission, accompanied
by Borrower's consolidated and consolidating financial statements, as
appropriate, and (2) a certificate of a duly authorized officer of Borrower
containing computations demonstrating compliance with Article IV, Sections 13
(a), (b), (c), (d), (e), (f), (h), (i), and (p). In addition, Borrower shall
submit with such interim financial reports a statement showing income and
expenses for the prior calendar quarter and for the fiscal year calendar to
date, contingent liabilities; detailed cash flow statements for each of the
Parcels constituting the Property; and any supporting schedules or
documentation which Lender may require. Detailed cash flow statements shall
include, as applicable: the project name; location; percentage of the
Borrowers' ownership interest; leasing status; net operating income; current
loan balance; debt service; source of any operating deficit; amount of and
beneficiary of any cash distributions; and the amount of cash flow projections
for the next fiscal year (twelve month period) for each project and/or entity
shall be submitted. Such statements also shall include, but shall not be
limited to, the following, together with any other things as may be required
by Lender: rent schedules showing tenants' names, occupied tenant space, lease
terms, rents (including free rent, rent concessions, and tenant inducements),
vacant space, proposed rents, and expenses, and any other things as may be
required by Lender. Additionally, within thirty (30) days of Lender's request,
Borrower shall provide as to its other properties (or portions thereof) not
constituting part of the collateral Property the same type of information
required in this subparagraph.
(b) Year End Audited Financial Statements. As soon as
practicable and in any event no later than April 30th after the end of each
Fiscal Year, deliver to Lender an audited balance sheet of Borrower and its
Subsidiaries as at the end of such Fiscal Year in consolidated and
consolidating form, and related statements of earnings, stockholders' equity
and cash flows for such Fiscal Year in consolidated and consolidating form,
setting forth in each case comparative form figures for the corresponding
period in the preceding Fiscal Year, which financial statements shall not
materially differ from the financial statements as at such Fiscal Year end and
for such Fiscal Year then ended previously delivered to Lender, all in
reasonable detail and satisfactory in scope to Lender and certified by and
containing an unqualified opinion without exception of a nationally recognized
firm of independent certified public accountants, together with copies of any
management letters issued by such accountants in connection with such audit.
Lender acknowledges and Borrower agrees that delivery of the following to
Lender will satisfy the requirements of this subparagraph: (l) the current
Form 10-K for any Borrower and its Subsidiaries as filed with the Securities
and Exchange Commission accompanied by Borrower's consolidated and
consolidating financial statements, as appropriate, and (2) a certificate of
a duly authorized officer of Borrower containing computations demonstrating
compliance with Article IV, Sections 13(a), (b), (c), (d), (e), f), (h), (i),
and (p).
(c) Officer's Certificate of Performance. Together with each
delivery of those items required by Article IV Section 4(a) and 4 (b) above,
Borrower shall deliver to Lender an officer's certificate of a duly authorized
officer of Borrower setting forth: (i) to the best of such officer's
knowledge, Borrower has kept, observed, performed and fulfilled each and
every agreement binding on and contained in this Restated Loan Agreement and
is not at that time in default of the keeping, observance, performance or
fulfillment of any of the terms, provisions and conditions hereof, and (ii)
that no default under any of the Loan Documents has occurred, or specifying
all such defaults of which they may have knowledge and the nature of any
remedial action the Borrower proposes to take with respect thereto.
(d) Additional Financial Data. With reasonable promptness,
deliver such additional financial or other data as Lender may reasonably
request.
5. Disclosure of Financial Statements. Borrower and Guarantor authorize
Lender to deliver a copy of any financial statements or any other information
relating to the business, operations or financial condition of Borrower and
Guarantor which may be furnished to it or come to its attention pursuant to
the Commitment or this Restated Loan Agreement or otherwise, to any regulatory
body or agency having jurisdiction over Lender or to any person or entity
which shall have the right or obligation to succeed to all or any part of
Lender's interest in the Note or the Loan Documents.
6. Leases, Renewals and Additional Leases. With respect to each lease
or renewal of the Property, or any portion or Parcel thereof, to be entered
into subsequent to Loan Closing, Borrower or Guarantor will submit certified
copies of each lease and renewal to Lender within fifteen (15) days after
receipt thereof by Borrower and Guarantor. If, in the sole opinion of Lender,
any such lease or renewal results in the Property having less than the Debt
Service Coverage Ratio then required by Article IV 12, or results in an
aggregate value of the Property, of less than one hundred thirty three percent
(133.33%) of the then outstanding principal amount of the Loan, then Lender
may, at its option, require Borrower, at its expense, to obtain new appraisals
of the Property consistent with Lender's requirements from time to time of
such Parcel. The Borrower, upon five (5) days written notice from Lender after
receipt of the appraisals, shall either (i) reduce the outstanding aggregate
principal balance of the Note, or (ii) provide Additional Property to secure
the Note so that, in either event, the aggregate value of the Property is equal
to at least one hundred thirty-three and 33/100 percent (133.33%) of the then
outstanding aggregate principal amount of the Note, and the Property has at
least the Debt Service Coverage Ratio required by Article IV 12. No grace
period shall be allowed with respect to Borrower's and Guarantor's compliance
with the requirements of this paragraph. The submission and encumbrance of
additional collateral to Lender pursuant to this subparagraph shall not give
rise to a default under Article IV, Section 13(f) below.
7. Insurance. So long as the Loan is outstanding, Borrower and
Guarantor shall maintain insurance of the kinds, covering the risks, and in
the amounts required by Article II B.4. of the Original Loan Agreement.
Borrower or Guarantor shall submit to Lender satisfactory evidence that all
insurance premiums have been paid. Further, each insurance policy provided to
Lender by the Borrower or Guarantor shall be written by Liberty Mutual
Insurance Company or another insurer having not less than "A-XII" Best's Rating
according to the most current edition of Best's Key Rating Guide, and shall
name Lender as an additional insured. The address for notices to Lender shall
be set forth in each policy as follows: 750 S. Orlando Avenue, Winter Park,
Florida 32789-4895, Attention: Loan Administration Section, The Real Estate
Bank. Borrower or Guarantor will also exhibit or deliver such policies of
insurance to Lender upon request by Lender and provide appropriate loss payable
or mortgagee clauses in the insurance policies in favor of Lender, as its
interest may appear, when requested by Lender. With respect to the Property
only, Lender shall have the right to settle and compromise any and all casualty
or loss claims under any policy required to be maintained by Borrower or
Guarantor hereunder and Borrower and Guarantor hereby appoints Lender as their
attorney-in-fact, with power to demand, receive, and receipt for all monies
payable thereunder, to execute in the name of Borrower or Guarantor or Lender
or both any proof of loss, notice, draft, or other instruments in connection
with such policies or any loss thereunder and generally to do and perform any
and all acts as Borrower or Guarantor by for this appointment, might or could
perform.
8. UCC - Financing Statements. Upon request by Lender, Borrower
and Guarantor shall execute and deliver to Lender financing statements in form
and substance satisfactory to Lender to perfect or continue any and all
security interests of Lender in any part of the Property.
9. Audit and Examination of Books and Records. Borrower and Guarantor
shall permit any representative or agent of Lender to examine and audit any
or all of Borrower's and Guarantor's books and records with respect to the
Property when requested by Lender.
10. Environmental Assessment. Lender may, at its option, require the
Borrower no more frequently than every twelve (12) months to submit evidence
in the form of an environmental assessment report or updated assessment
conforming to Lender's guidance document of any of the Property, prepared by
an engineer or other environmental consultant reasonably satisfactory to
Lender, at Borrower's expense, setting out whether or not any of the Property
is located within any area designated as a hazardous substance site by any
federal, state or other governmental authority and whether or not any hazardous
or toxic wastes or other materials regulated, controlled or prohibited by any
federal, state or local environmental laws, including but not limited to
asbestos, are located on any of the Property or in the Improvements located
thereon. Lender reserves the right to declare the Loan in default if it
determines that the Land or Improvements are contaminated with any hazardous
or toxic materials. Any such environmental assessment shall be provided to
Lender within ninety (90) days of receipt of a written request from Lender.
11. Occupancy Rate. During the term of this Loan, the Borrower and
Guarantor will use their best efforts to maintain at all times an average
occupancy rate of at least ninety percent (90%) pursuant to fully performing
leases for the Property.
12. Debt Service Coverage. The Property must maintain over a continuous
twelve (12) month periods at all times during the first three years of the Loan
Term, at least 1.15:1 Debt Service Coverage Ratio and thereafter at least
1.25:1 Debt Service Coverage Ratio. If Lender determines that the Property
shall at any time fail to meet the requirements hereof then Lender may, at its
option, in accordance with Article VII 3, hereof, require that Borrower, upon
five (5) business days written notice from Lender, either (i) reduce the then
outstanding aggregate principal balance of the Note, or (ii) provide Additional
Property to secure the Note so that, in either event, and the Property has at
least the Debt Service Coverage Ratios herein required. No grace period shall
be allowed with respect to Borrower's compliance with the requirements of this
paragraph. The submission and encumbrance of additional collateral to Lender
pursuant to this subparagraph shall not give rise to a default under Article
IV, Section 13(f) below.
13. Financial Covenants. The borrower must comply at all times with
the following financial covenants unless Lender, in its sole and absolute
discretion, waives or excuses compliance therewith in writing:
(a) At no time during the term of the Loan may Borrower's
Consolidated Total Liabilities relative to Borrower's Consolidated Net Worth,
exceed the following maximum ratios for the following periods of the Loan term:
(i) 1.5:1 for years 1-3, inclusive; (ii) 1.25:1 for years 4 and 5 inclusive;
and (iii) 1.0:1 during the Option Period, if same is exercised. Notwithstanding
anything herein to the contrary, if the Public Offering is completed, the ratio
of Borrower's Consolidated Total Liabilities to Borrower's Consolidated Net
Worth cannot exceed 1.0:1.
(b) Borrower, at all times during the term of the Loan
(including the Option Period, if applicable), must maintain at least ninety
percent (90%) of the Consolidated Net Worth of Borrower, as of, and after
giving effect to, the Reorganization Merger, with a minimum Consolidated Net
Worth of $220,000,000. Such minimum Consolidated Net Worth requirement shall
be subject to increase by an amount equal to the net proceeds received by
Borrower from any Public Offering.
(c) Borrower, at all times during the term of the Loan
(including the Option Period, if applicable), must maintain a "Free Cash Flow
Ratio" of at least 1.00:1, calculated over a continuous twelve (12) month
period.
(d) In addition to all other payments of principal required by
the Note and this Restated Loan Agreement, Borrower shall pay to all
appropriate parties, including Lender, the Equity Proceeds Allocation, as
hereinafter defined, derived from any public equity offering by Borrower (the
"Public Offering") following the Reorganization Merger and at any time during
the term of the Loan, and the Option Period, if applicable (but not the issue
of securities pursuant to the Reorganization Merger), All such Equity Proceeds
Allocation received by Lender shall be applied as a reduction of the Loan
balance due at the Loan Maturity Date and without interruption or reduction of
scheduled payments of principal.
Equity Proceeds Allocation. Equity Proceeds Allocation means, with
respect to any Public Offering of the Borrower after the date hereof, the
following allocation of net proceeds from all such offerings in the aggregate:
A. The first $50,000,000 of such net proceeds will be applied as
follows:
(i) the first $10,000,000 to pay the indebtedness of Borrower
to Lender incurred prior to the Reorganization Merger; and
(ii) the next $40,000,000 will be applied:
(a) first, pro rata to pay (1) negative Amortization
under Section 2.3 of the option B Restructured Notes, (2) negative
Amortization Adjustment under Section 3.3 of the Option B Restructured Notes,
(3) the Option A Junior Restructured Notes, t4) the Option C Equity Share,
(5) the Tax Notes and (6) the Lender Tax Notes (all amounts in this clause
(A) are referred to collectively as "Second Tier Obligations"); and
(b) next, pro rata to pay all outstanding secured debt
of the Borrower.
B. 50% of such net proceeds in excess of $50,000,000 (the "Lender
Excess Share") shall be applied as follows:
(i) first, an amount equal to 15% of the Lender Excess Share
to pay the indebtedness of Borrower to Barnett Bank of Jacksonville, N.A.
incurred prior to the Reorganization Merger;
(ii) second, an amount equal to 7 1/2% of the Lender Excess
Share to pay the indebtedness of Borrower to First Union National Bank of
Florida incurred prior to the Reorganization Merger;
(iii) third, an amount equal to 15% of the Lender Excess Share
to pay, pro rata, any outstanding indebtedness of the Borrower to insurance
company lenders; and
(iv) fourth, the balance of the Lender Excess Share to pay,
pro rata, all secured indebtedness of the Borrower.
C. 50% of such net proceeds in excess of $50,000,000 (the "Koger
Equity Excess Share") shall be retained by the Borrower for its business
purposes, including the repayment indebtedness; provided, however, that until
the Second Tier Obligations have been paid in full, the Borrower shall not
apply any of the Koger Equity Excess Share to pay principal of the Option A
Senior Restructured Notes or of the Option B Restructured Notes (other than
accrued interest added to principal as Negative Amortization under Section 2.3
of the Option B Restructured Notes) except to the extent required by the terms
of the Option A Senior Restructured Notes and the Option B Restructured Notes
as in effect on the date hereof. Each defined term utilized in this definition
of "Equity Proceeds Allocation" and not otherwise defined herein shall have
the same meaning as set forth in the Proposed Plan of Reorganization for Koger
Properties, Inc.
Notwithstanding the foregoing provisions:
I. No secured lender shall be entitled to receive any payment provided
above unless such lender has waived any prepayment penalty and yield
maintenance provisions with respect to such payment, and
II. Each of The Prudential Insurance Company of America and The
Travelers Insurance Company shall be entitled to apply any payment provided
above to such obligations of the Borrower to such holder as such holder shall,
in its sole and absolute discretion, determine by providing written notice of
such determination to the Borrower within ten (10) days after receipt of such
payment.
(e) Borrower shall not incur over the term of the Loan
(including the Option Period, if applicable) any obligations for borrowed
money debt, which when taken singularly or when aggregated increases the then
existing aggregate debt of the Borrower by more than $5,000,000. Such
$5,000,000 debt amount may be borrowed, paid, reborrowed, and repaid from time
to time over the term of this Loan, including the option Period. Refinancing
existing debt following the Reorganization Merger is acceptable provided that
the principal amount of such debt shall not exceed the then outstanding
principal balance of the loan refinanced thereby.
(f) Borrower may alter debt and mortgage encumbrances between
Parcels; however, Borrower must at all times retain at least $30,000,000 in
net realizable value in unencumbered improved real properties.
(g) Dividends paid by Borrower may not exceed 95% of the annual
net income of Borrower per GAAP prepared financial statements on a cumulative
basis; provided, however, that depreciation and amortization shall be
calculated on a tax basis; provided, however, that the Borrower, subject to
the continued limitation imposed by paragraph IV, 13(c) relating to the Free
Cash Flow Ratio, shall be entitled to pay additional dividends beyond the
foregoing limitation in amounts, but not in excess of the amounts, necessary
from time to time to maintain its status as a real estate investment trust
under the Internal Revenue Code of 1986, as amended from time to time (the
"Additional Dividends"). No such Additional Dividends shall be paid unless
Borrower has delivered to Lender in satisfactory form in writing. (i) an
opinion from Borrower's tax counsel with a nationally recognized law firm, or
(ii) a certificate from a nationally reorganized accounting firm that the
Additional Dividends must be paid to retain real estate investment trust
status. Borrower will provide a Borrower's Certificate within 45 days of the
end of every fiscal quarter certifying the following: (i) the amount of
depreciation and amortization on a taxable basis is $ ; (ii) therefore,
the taxable net income $ ; (iii) the total dollar amount of
dividends paid is $ ); and (iv) resulting in a ratio of dividends to
REIT taxable net income (expressed as a percent) %.
(h) In addition to the Loan covenants required during the Loan
Term (and Option Period, if applicable), the Borrower shall provide Lender
evidence that (i) $575,000 per calendar year for the first three calendar years
of the Loan, and (ii) $300,000 per calendar year for the remaining term of the
Loan (including the Option Period) is spent or contracted to be spent on
capital improvements on the Property (exclusive of costs to bring the buildings
into compliance with the requirements of the Americans With Disability Act).
Capital improvement minimum expenditures will be measured on a cumulative
basis. Any amount not spent toward the required cumulative capital expenditure
in any given calendar year shall be paid within thirty (30) days after the end
of any such calendar year as an additional principal reduction without
postponement, interruption, or application to any other principal payment
obligation.
(i) In addition to the provisions of Article IV, Section 12,
and Article IV, Section 13 (a) through (h) above inclusive, except to the
extent inconsistent therewith, commencing three years from the date hereof and
thereafter, the following requirements must be met by the Borrower:
(1) The Debt Service Coverage Ratio calculated on the portfolio of
Property must exceed 1.25:1 over a continuous twelve (12) month
period.
(2) The principal balance of the Loan must be reduced by either (a)
$5,000,000 (less the amount of regularly scheduled principal
payments then received by Lender calculated over the first three
(3) year period of the Note) if funds are not raised by the Public
Offering, or (b) $10,000,000 regardless of the amount of regularly
scheduled amortization then received by Lender [as required by
Article IV, Section 13(d) hereof] if funds are raised in the Public
Offering. Any such payment shall be applied to the reduction of the
principal balance of the Loan due at the Maturity Date, as extended
by the Option Period, if applicable, and without interruption or
reduction of scheduled payments of principal. Neither of the
aforesaid principal reductions shall require Lender to release any
collateral.
(j) Borrower and Guarantor shall permit any person or entity
designated by Lender which constitutes its employee, agent or representative
to visit and inspect any of the properties (including the Property), corporate
books and financial reports of the borrower and to discuss its affairs,
finances and accounts with its principal officers, all at such times and as
often as Lender may reasonably request; provided, however, that except to the
extent set forth in Article IV 5 hereof, Lender shall treat all information
received by it as confidential.
(k) Borrower and Guarantor shall conform to and duly observe
all laws, regulations and other valid requirements of any regulatory authority
with respect to the conduct of its business.
(l) Borrower shall cause any Subsidiary to do with respect to
itself, its business and its assets each of the things required of the Borrower
pursuant to the Commitment or this Restated Loan Agreement.
(m) Upon any officer of the Borrower obtaining knowledge of an
Event of Default under Article V of this Restated Loan Agreement or under any
Loan Document, Borrower or Guarantor shall cause such officer promptly to
deliver to Lender a certificate as to the nature thereof, the period of
existence thereof, and whatever remedial action the Borrower proposes to take
or has taken with respect thereto.
(n) Upon any officer of the Borrower or Guarantor obtaining
knowledge of any material litigation, dispute or proceedings being instituted
or threatened against Borrower, or any attachment, levy, execution or other
process being instituted against any material or material amount of assets
(either individually or in the aggregate) of Borrower or Guarantor, Borrower
or Guarantor shall cause such officer promptly to give Lender written notice
of such litigation, dispute, proceeding, levy, execution or other process.
(o) Borrower shall use its best efforts to comply with all of
the requirements of ERISA applicable to it and furnish to Lender a statement
of the principal financial officer of Borrower describing in reasonable detail
any Reportable Event (as defined in ERISA).
(p) Borrower shall maintain an Unsecured Property to Unsecured
Debt Ratio of not less than 2.0 at all times.
(q) Borrower and Guarantor agree that all indebtedness of
either Guarantor to any Borrower existing as of the date of the Statutory
Merger has been merged, extinguished, and paid in its entirety.
14. Ownership and Control: There shall be no change in the ownership
of any wholly owned Subsidiary of Borrower unless Lender, in its sole and
absolute discretion, has given its prior written approval provided, however,
that the Borrower may merge or consolidate a Subsidiary with a Subsidiary,
and/or a Subsidiary with Borrower if, in Lender's reasonable opinion, at the
time of such merger or consolidation both entities to be merged or consolidated
have positive net worths exclusive of the debt of Borrower. Lender shall
utilize the definition of "Consolidated Net Worth", set forth in Article I 6,
on a non-consolidation basis, to make such determination. For purposes of this
paragraph 14, Lender consents to (i) the transfer by Borrower to Southeast
Properties, Inc., a wholly owned Subsidiary of Borrower, of Borrower's rights,
title, and interest in The Koger Partnership, Ltd. ("TKP"), and (ii) to the
subsequent transfer by Southeast Properties, Inc. of its right, title, and
interest in TKP, provided, however, the resulting effects of any such transfer
shall be in compliance with the other terms, conditions and financial covenants
of the Restated Loan Agreement.
15. Subordinate Financing and Transfer. There shall be no subordinate
financing of the personal or real property securing the Loan and no sale or
transfer of ownership of the Property, or any portion thereof, unless Lender,
in its sole and absolute discretion, has given its prior written approval.
16. Further Reorganization. Subsequent to the Reorganization Merger
and Statutory Merger, Borrower shall not be a party to any further merger,
consolidation, or acquisition without Lender's prior written consent.
17. Further Appraisals and Compliance. Borrower shall provide to Lender
then current appraisals on June 1, 1994, and on the third anniversary thereof
on the Property. Borrower shall cooperate fully with the appraisal process,
including, but not limited to, allowing reasonable entry upon and into the
Property. If at any time the Borrower is in non-compliance in any Loan
financial covenant set forth herein related to the Property, then new
Appraisals may be required at Lender's option, and the cost of such Appraisals
shall be paid by Borrower. Such Appraisals shall be prepared in accordance with
written instructions from Lender and shall be prepared by a professional
appraiser approved in writing by Lender who is a member of the American
Institute of Real Estate Appraisers, and is certified and appropriately
licensed by the State in which the Parcel is located and shall be in narrative
form and shall conform to the Uniform Standards of Professional Appraisal
Practice established by the Appraisal Foundation and the minimum standards
adopted by the Office of the Comptroller of the Currency. Further, the
Appraisals shall be subject to review and reasonable adjustment by Lender's
Real Estate Appraisal Department which shall establish the final Lender
valuation of each Parcel.
18. Preparation of Market Summaries. Borrower shall deliver to Lender
every six months during the Loan Term a market summary prepared by the
property managers or leasing agents of Borrower for each Parcel encumbered by
the Loan Documents, discussing current factors impacting the Parcel in
question, including performance of competitive properties, absorption, and
rates and changes in supply of competitive space.
19. Title Policy Endorsements. When requested by Lender during the
Loan term, Borrower shall provide an endorsement to Lender's title policies
which reflects that (a) the real estate taxes for any of the Property have
been paid; (b) no new title matters have appeared of record to which Lender
has not consented; and (c) no liens, encumbrances, or lis pendens have been
filed against any of the Property.
ARTICLE V.
DEFAULTS
An "Event of Default" shall be deemed to have occurred hereunder if
any of the following occur:
1. Default Under Promissory Note. Borrower fails to make any principal
or interest payment required in the Note or any other payment required
thereunder or pursuant to this Restated Loan Agreement or other Loan Document.
2. Default Under Loan Documents. Any default or Event of Default occurs
under this Restated Loan Agreement, the Guaranty, or any of the Loan Documents
or default occurs pursuant to the terms of any other indebtedness or obligation
now or hereafter existing between Borrower and Lender or any other lender or
creditor of borrower and Borrower has not cured or is not diligently pursuing
the cure of any such default within fifteen (15) days after notice of such
default from Lender or such other lender or creditor; provided, however, that
this provision shall not be construed as granting a grace period with respect
to other events of default set forth in this Restated Loan Agreement or any of
the Loan Documents.
3. Breach of Warranty. Any representations, warranties or covenants
made or agreed to be made in this Restated Loan Agreement or in any other Loan
Document, heretofore, concurrently or hereafter executed, shall be breached by
Borrower or Guarantor or shall prove misleading.
4. Filing of Liens Against the Property. Any lien for labor, material,
taxes or otherwise shall be filed against the Property and not be removed
within thirty (30) days after Borrower receives notice thereof.
5. This paragraph 5 has been intentionally deleted.
6. Levy Upon the Premises. A levy is made upon or a receiver is
appointed for all or any portion of the Property.
7. Bankruptcy or Insolvency of Borrower. The Borrower or Guarantor
files a voluntary petition in bankruptcy for adjudication as a bankrupt or
insolvent, or files any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future federal,
state or other statute, law or regulation, relating to bankruptcy, insolvency
or other relief for debtors, or the Borrower's or Guarantor's seeking or
consenting to or acquiescing in the appointment of any trustee, receiver or
liquidator of the Borrower or Guarantor or of all of the rents, revenues,
issues, earnings, profits or income thereof, or the making of any general
assignment for the benefit of creditors, or Borrower's or Guarantor's written
admission of its inability to pay its debts generally as they become due.
8. Timely Discharge of Bankruptcy or Insolvency. The Borrower or
Guarantor fails to timely answer or to discharge within sixty (60) days of
filing a petition filed against the Borrower or Guarantor seeking any
reorganization, arrangement, composition, readjustment, liquidation or
dissolution or similar relief under any present or future federal, state or
other statute, law or regulation relating to bankruptcy, insolvency or other
relief for debtors, or the appointment of any trustee, receiver or liquidator
of the Borrower or Guarantor or of all or any substantial part of the Property
or of any or all of the rents, revenues, issues, earnings, profits or income
thereof without Borrower's or Guarantor's consent or acquiescence.
9. Assignment for Benefit of Creditors. Borrower or Guarantor shall
make a general assignment for the benefit of its creditors.
10. Transfer of Premises. Borrower or Guarantor shall without Lender's
prior written consent, which consent may be arbitrarily withheld, whether
voluntarily or by operation of law, sell, transfer, convey or further encumber
all or any part of its interest in the Property or in any of the improvements
located thereon or used or intended to be used in connection therewith,
excepting only transfers due to involuntary condemnation which (i) do not
materially affect the use of the Property for its intended purposes hereunder
or (ii) for which Borrower or Guarantor does not substitute collateral
therefore as provided in Article VII 3 hereof.
11. Suspicion of Default. Lender shall reasonably suspect the
occurrence of one or more of the above-mentioned Events of Default and Borrower
or Guarantor, or both, within forty-five (45) days of a written request by
Lender, shall fail to provide evidence reasonably satisfactory to Lender that
such event or events of default have not in fact occurred.
12. Encroachment of Improvements. The Improvements shall encroach upon
any street or road setback or easement or upon any adjoining property which
materially affects the use of the Property for its intended purpose hereunder,
unless such encroachment is listed as an exception to title in a title policy
accepted by Lender pursuant to Article II B.l. with respect to the affected
Parcel or shown on the surveys delivered to and accepted by Lender; or the
Improvements shall violate any ordinance, regulation, rule or direction of any
federal or state agency, or of any governmental or quasi-governmental
authority, or any zoning setback lines, or if any permit license shall be
conditional in nature and Borrower or Guarantor shall fail to punctually
satisfy the conditions so as to prevent is invalidity.
13. Violation or Breach of Agreement Affecting Title. If Borrower or
Guarantor shall cause or permit a violation or breach in any agreement,
covenant or restriction affecting title to the Property, including but not
limited to matters appearing as permitted exceptions in the title insurance
policies insuring the Mortgages.
14. Liens or Encumbrances. Borrower or Guarantor grants, suffers or
permits any mortgage, deed of trust, lien, encumbrance, or security interest
to arise or attach to any of the Property; or any judgment is entered against
borrower or Guarantor with respect to the Property that is not satisfied or
appealed within thirty (30) days.
15. Borrower or Guarantor as Guarantor. Except for indebtedness of any
employee benefit plans, the Borrower or Guarantor shall guaranty, endorse, or
otherwise become surety for or upon the obligation of any person, firm, or
corporation, unless such entity is a Subsidiary of Borrower and the financial
reports and tax return of such Subsidiary is reported in accordance with
generally accepted accounting principles on Borrower's consolidated financial
statements and tax returns.
16. Merger or Substantial Sale of Assets. The Borrower or Guarantor
shall enter into any merger or consolidation, other than in accordance with
Article IV 14 hereof, or sell, lease, transfer, or otherwise dispose of all or
a substantial part of its assets (except in the ordinary course of business),
whether now owned or hereafter acquired; or change its name or any name in
which it does business; or move its principal place of business without giving
written notice thereof to Lender at least thirty (30) days prior thereto.
17. Distribution of Cash or Property to Shareholders. Except for (i)
the payment of dividends (in cash or stock) in the normal course of business,
and as permitted by Article IV 13(g), and (ii) reasonable contributions to
employee benefit plans, the Borrower or Guarantor makes any distribution of
cash or property to its shareholders or owners or permits the withdrawal of
any assets from Borrower's or Guarantor's business.
18. Loss, Damage or Destruction of Property. Any substantial part of
the inventory, equipment, or other property of the Borrower, real or personal,
tangible or intangible, is damaged or destroyed and the damage or destruction
is not covered by collectible insurance.
19. Validity. The Restated Loan Agreement, the Note or any of the Loan
Documents or Original Loan Documents shall, at any time after their respective
execution and delivery, and for any reason other than the repayment of the Loan
or voluntary release by Lender, cease to be in full force and effect or shall
be declared null and void, or be revoked or terminated, or the validity or
enforceability thereof shall be contested by the Borrower or Guarantor or any
shareholder of the Borrower or Guarantor, or the Borrower or Guarantor shall
deny that it has any further liability or obligation thereunder.
ARTICLE VI.
REMEDIES OF LENDER
Upon the occurrence of any one or more of the events of default set
out in Article V hereof, Lender shall, at its option, be entitled, in addition
to and not in lieu of the remedies provided for in the Note, the Mortgages, or
other Loan Documents, to proceed to exercise any of the following remedies:
1. Default Constitutes Default Under Loan Documents. Borrower and
Guarantor agree that the occurrence of an Event of Default shall constitute a
default under each of the Loan Documents, thereby entitling Lender (i) to
exercise any of the various remedies therein provided, including the
acceleration of the indebtedness evidenced by the Note and the foreclosure of
any of the Mortgages and (ii) cumulatively to exercise all other rights,
options and privileges provided by law or in equity.
2. Possession Under Default. To the fullest extent permitted by
applicable law, to take immediate possession of all real property, equipment,
inventory, fixtures, and any or all other collateral securing the Loan,
whether now owned or hereafter acquired, without notice, demand, presentment,
or resort to legal process, and, for those purposes, to enter any premises
where any of the collateral is located and remove the collateral therefrom or
render it unusable.
3. Repairs Under Default. To make any repairs to the Property which
Lender deems necessary or desirable for the purposes of sale.
4. Rights of Set Off. To exercise any and all rights of set-off which
Lender may have against any account, fund, or property of any kind, tangible
or intangible, belonging to Borrower or Guarantor which shall be in Lender's
possession or under its control.
5. Right to Cure. To cure such defaults, with the result that all costs
and expenses incurred or paid by Lender in effecting such cure shall be
additional charges on the Loan which bear interest at the interest rate of
the Loan and are payable upon demand.
ARTICLE VII.
GENERAL CONDITIONS
1. Expenses.
(a) Borrower shall be responsible and liable for, and shall hold Lender
harmless from, and shall pay:
(i) all costs and expenses incurred in connection with the
Loan (pre- and post-closing), including, but not limited to: Title and other
insurance premiums; surveys; appraisals; brokerage commissions and claims of
brokerage; property, sales, documentary stamp and intangible taxes;
construction consultants' fees; attorneys' fees; hazardous substance report
costs; and recording charges; and
(ii) On a post-closing basis, Borrower shall pay directly or
reimburse Lender for any such costs and expenses, including, but not limited
to, consultant's and attorney's fees for which invoices were not available at
the Loan Closing, or which are incurred subsequent to the Loan Closing. The
obligations of this paragraph shall be secured by the Loan Documents.
(b) Borrower agrees to pay any and all documentary, intangible stamp,
excise or other taxes or fees, now or after payable in respect to the Loan,
this Restated Loan Agreement or other Loan Documents or any modifications
thereof, and indemnify and hold the Lender harmless with respect thereto.
Should Borrower fail to pay any such expenses within ten (10) days of notice
thereof from Lender, the Borrower further agrees that the Lender may pay such
expenses and add to the principal balance of the Loan the amount of any such
documentary, intangible stamp, excise or other taxes or fees advanced by Lender
with respect to the Loan or the Loan Documents, the decision of the Lender as
to the amount thereof to be conclusive, absent manifest error. Further,
Borrower gives the Lender the authority to debit its accounts maintained with
the Lender for any principal, interest, fees or other amounts for which the
Borrower is liable for under this Paragraph 2.
2. Additional Property/Valuation of Collateral.
(a) For the purposes of Article IV6 and 12 hereof if, in Lender's sole
opinion, after review by Lender's in-house appraisers, the value of the
Property then encumbered by the Mortgage and Loan Documents does not
represent at least one hundred thirty-three and 33/100 percent (133.33) of the
total aggregate principal balance of the Note and, if applicable, have at
least the Debt Service Coverage Ratio then required by Article IV 12, then
Lender may give Borrower written notice thereof, after which the Borrower must
within five (5) days of receipt of such notice either (i) reduce the
outstanding principal balance of the Note so that Lender's valuation of the
Property is equal to at least one hundred thirty-three and 33/100 percent
(133.33%) of the reduced aggregate principal balance of the Note and, if
applicable, so that the Property has at least the Debt Service Coverage Ratio
then required by Article IV 12, or (ii) elect to provide additional real
property and improvements (the "Additional Property") to secure the Note so
that the aggregate value of the Property encumbered by the Mortgage and other
Loan Documents, after reasonable adjustment by the Lender in-house valuation,
is equal to at least one hundred thirty three and 33/100 percent (133.33%) of
the outstanding aggregate principal amount of the Note, and, if applicable, so
that the Property has at least the Debt Service Coverage Ratio then required by
Article IV 12.
(b) In the event Borrower elects to utilize the method described in
option (ii) hereinabove, it shall give written notice to Lender of its election
to do so within the said five (5) day period specifying the Additional Property
proposed as collateral for the Loan. Such notice shall be accompanied by the
Appraisal of the Additional Property meeting the requirements of Article IV 17
hereof together with all information pertaining thereto as otherwise required
by the Commitment and this Restated Loan Agreement. Such Additional Property
shall be subject to the approval of Lender in its sole and absolute discretion
and must meet all of the criteria for the Property set forth in this Restated
Loan Agreement. If such Additional Property is acceptable to Lender then,
within thirty (30) days from the date of notice from Lender accepting such
Additional Property, Borrower shall cause the Additional Property to be
encumbered by the Mortgage and other Loan Documents in accordance with the
terms hereof. If the Additional Property is not acceptable to Lender or is not
for any reason whatsoever encumbered by the Mortgage and other Loan Documents
within the 30-day period in a manner acceptable to Lender, then Borrower shall
reduce the aggregate outstanding principal balance of the Note in accordance
with Option (i), above, at the end of the 30-day period. If Borrower fails to
elect to provide Additional Property as collateral or makes such election, but
fails to provide information required at the time of such election, then
Borrower shall be deemed to have elected Option (i) above. No grace period
shall be allowed with respect to the Borrower's compliance with the
requirements hereof. The submission and encumbrance of Additional Property to
Lender pursuant to this subparagraph shall not give rise to a default under
Article IV, Section 13(f) hereof.
3. Substitution of Property.
(a) Except as provided in Article VII(4)(b), below, neither Borrower
nor Guarantor shall not be entitled to a release of any of the Property from
the lien and encumbrance of the Mortgage and other Loan Documents until such
time as the entire outstanding principal balance of the Note, together with
all accrued and unpaid interest thereon and such other sums as may be due
under the terms of the Mortgage and other Loan Documents or the Commitment
or this Restated Loan Agreement, have been paid in full. The Borrower shall
not be entitled to substitute collateral as provided in Article VII, Section
(4)(b) if Borrower is in default under the Note or any of the Mortgages and
other Loan Documents.
(b) The Borrower shall have the right to release any of the Property
by substituting additional real property and improvements in lieu thereof,
which substitute property must be satisfactory to Lender in its sole and
absolute discretion. In addition to Lender's approval, any substitute real
property and improvements must meet the following criteria: (a) the proposed
substitute property will have improved, completed and occupied office buildings
thereon, (b) the aggregate value of the Property, inclusive of the proposed
substitute property, but exclusive of the portion of the Property proposed to
be released, as determined by an in-house Lender valuation, shall be equal to
at least One Hundred Thirty-Three and 33/100 Percent (133.33%) of the
aggregate principal amount of the Note; (c) the Land and Improvements on the
proposed substitute property must be free and clear of all liens and
encumbrances; (d) the Property, inclusive of the proposed substitute property,
but exclusive of the portion of the Property proposed by Borrower to be
released, must have at least the Debt Service Coverage Ratio then required by
Article IV 12 hereof; and (f) all matters related to the Improvements
including, but not limited to, building age, building condition, compliance
with American Disabilities Act, results of inspections, the percentage lease
turnover, the terms and conditions of leases and other related matters must
be acceptable to Lender in its sole and absolute discretion. Any request to
substitute real property and improvements shall be accompanied by an Appraisal
meeting the requirements of Article IV 17. In the event Borrower or Guarantor
desires to substitute such real property and improvements, the Borrower or
Guarantor must deliver written notice of its election to do so, together with
all other documents and information required by the Commitment and this
Restated Loan Agreement to be submitted in connection with the Property, and
any other information reasonably requested by Lender.
4. Extension Option. Borrower shall have the option to extend the
Maturity Date of December 15, 1998 to December 15, 2000, if the Conditions
Precedent, as hereinafter defined, are satisfied as of the date of such
election and as of the Maturity Date. In order to exercise the Extension
Option for the Option Period, Borrower must have satisfied the following
conditions precedent (the "Conditions Precedent"):
(i) No Event of Default exists, nor does any situation exist
which with notice or passage of time would constitute an Event of Default
under any of the Note, the Mortgages, the Restated Loan Agreement, the Loan
Documents, or the Original Loan Agreement and Original Loan Documents, except
as modified by the Loan Documents;
(ii) Borrower shall provide written notice to Lender of
Borrower's intention to extend the Loan term through the Option Period,
which notice shall be given no earlier than ninety (90) days nor later than
thirty (30) days prior to the Maturity Date; and
(iii) Borrower shall have made the principal reduction
required by Article IV. 13 (i).
(iv) Borrower shall have a Consolidated Total Liabilities to
Consolidated Net Worth ratio of no more than 1.0:1.
ARTICLE VIII.
MISCELLANEOUS
1. Notices To All Parties. All notices, statements, requests and
demands given to or made upon any party hereto in accordance with the
provisions of this Restated Loan Agreement shall be deemed to have been given
or made when hand delivered or received in if deposited in the United States
Mail, certified mails, return receipt requested, proper postage prepaid,
addressed to such party at the address or addresses hereinabove stated
following the names of the respective parties, or to a different address in
accordance with any unrevoked written direction from such party to the other
parties hereto, except in cases herein where it is expressly provided that
such notice, request or demand shall not be effective until received by the
party to whom it is intended.
2. No Partnership or Joint Venture. Nothing herein nor the acts of the
parties hereto shall be construed to create a partnership or joint venture
between Borrower and/or Guarantor or Lender, nor a fiduciary relationship on
behalf of any third-party beneficiaries, and the parties hereby acknowledge
that no such relationship exists between them.
3. Usury. It is the intent of Borrower, Guarantor and Lender and all
other parties to this Note, the Mortgage and the Loan Documents to conform to
and contract in strict compliance with applicable usury law from time to time
in effect. All agreements between Borrower, Guarantor and Lender (or any other
party liable with respect to any indebtedness under this Note, the Mortgage,
the Guaranty, or under the Loan Documents) are hereby limited by the provisions
of this paragraph which shall override and control all such agreements, whether
now existing or hereafter arising. In no way, nor in any event or contingency
(including but not limited to prepayment, default, demand for payment, or
acceleration of the maturity of any obligation), shall the interest taken,
reserved, contracted for, charged, chargeable, or received under this Note,
the Guaranty or Loan Document or otherwise, exceed the maximum nonusurious
amount permitted by applicable law (the "Maximum Amount"). If, from any
possible construction of any document, interest would otherwise be payable in
excess of the Maximum Amount, any such construction shall be subject to the
provisions of this paragraph and such document shall ipso facto be
automatically reformed and the interest payable shall be automatically reduced
to the Maximum Amount, without the necessity of execution of any amendment or
new document. If Lender shall ever receive anything of value which is
characterized as interest under applicable law and which would apart from this
provision be in excess of the Maximum Amount, an amount equal to the amount
which would have been excessive interest shall, without penalty, be applied to
the reduction of the principal amount owing under the Note, Guaranty or Loan
Document in the inverse order of its maturity and not to the payment of
interest, or refunded to Borrower or Guarantor or the other payor thereof if
and to the extent such amount which would have been excessive exceeds such
unpaid principal. The right to accelerate maturity of the Note or any other
indebtedness due in connection with the Mortgage, the Guaranty or Loan
Documents does not include the right to accelerate any interest which has not
otherwise accrued on the date of such acceleration, and Lender does not intend
to charge or receive any unearned interest in the event of acceleration. All
interest paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the
full stated term (including any renewal or extension) of such indebtedness so
that the amount of interest on account of such indebtedness does not exceed
the Maximum Amount.
4. Time. Time is of the essence in connection with Borrower's and
Guarantor's performance under this Restated Loan Agreement and all Loan
Documents.
5. Waiver. No waiver of any term, provision, condition, covenant or
agreement herein contained shall be effective unless set forth in writing and
signed by Lender, and any such waiver shall be effective only to the extent
set forth in such writing. No failure by Lender to exercise or delay by Lender
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof, or the
exercise of any right or remedy provided by law. No notice or demand on
Borrower or Guarantor in any case shall, in itself, entitle Borrower or
Guarantor to any other or further action in any circumstances without notice
or demand.
6. Rights of Third Parties. All conditions of Lender's obligations
hereunder, are imposed solely and exclusively for the benefit of Lender, its
successors and assigns, and no other person shall have standing to require
satisfaction of such conditions in accordance with their terms and no other
person, under any circumstances, shall be deemed to be a beneficiary of such
conditions, any and all of which Lender may freely waive in whole or in part
at any time if in its sole discretion, it deems it desirable to do so.
7. Evidence of Satisfaction of Conditions. Any condition of this
Restated Loan Agreement which requires the submission of evidence of the
existence or nonexistence of a specified fact or facts implies as a condition
the existence or nonexistence, as the case may be, of such fact or facts, and
Lender shall at all times be free independently to establish to its
satisfaction and in its absolute discretion such existence or nonexistence.
8. Assignment. Lender shall have the unconditional right to assign all
or any part of its interest hereunder to any third parties, but Borrower may
not assign this Restated Loan Agreement or any of its rights or obligations
hereunder without Lender's prior written consent.
9. Successors and Assigns Included in Parties. Whenever in this
Restated Loan Agreement one of the parties hereto is named or referred to, the
heirs, legal representatives, successors and assigns of such parties shall be
included, and all covenants and agreements contained in this Restated Loan
Agreement by or on behalf of the Borrower or by or on behalf of Lender shall
bind and inure to the benefit of their respective heirs, legal representatives,
successors and assigns whether so expressed or not.
10. Headings. The headings of the sections, paragraphs and subdivisions
of this Restated Loan Agreement are for the convenience of reference only,
are not to be considered a part hereof and shall not limit or otherwise affect
any of the terms hereof.
11. Invalid Provisions to Affect No Others. If fulfillment of any
provision hereof or any transaction related hereto at The time performance of
such provisions shall be due shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if any clause or provision herein
operates or would prospectively operate to invalidate this Restated Loan
Agreement in whole or in part, then such clause or provision shall be
considered as not included herein, and the remainder of this Restated Loan
Agreement shall remain operative and in full force and effect.
12. Number and Gender. Whenever the singular or plural number or the
masculine, feminine or neuter gender is used herein, it shall equally include
the other.
13. Amendments. Neither this Restated Loan Agreement nor any provisions
hereof may be changed waived, discharged or terminated orally, but only be
written instrument signed by the party against whom enforcement of the change,
waiver, discharge or termination is sought.
14. Governing Law. The Borrower, Guarantor and Lender agree that this
Restated Loan Agreement and the Loan Documents with the exception of the
Mortgages and Extension Agreements shall be governed by and construed according
to the laws of the State of Florida and that the foregoing election of choice
of law is a material part of this Loan and has been made with advice of
counsel.
15. Litigation. In the event of any litigation between the parties
concerning this Restated Loan Agreement or any other Loan Documents, the
prevailing party shall be entitled to costs and reasonable attorneys' fees
through and including all bankruptcy proceedings and all appeals.
16. Anti-Coercion Notice. The insurance laws of the State of Florida
provide that Lender may not require Borrower to take insurance through any
particular insurance agent or company to insure the Premises. Borrower, subject
to the rules adopted by the Florida Insurance Commissioner, has the right to
have insurance placed with an insurance agent or company of Borrower's choice,
provided the company meets Lender's requirements. Lender has the right to
designate reasonable financial requirements as to the company and the adequacy
of the insurance coverage.
17. Assignment to other lender. The Lender agrees that upon the written
request and at the direction of the Borrower, the Lender will assign, without
recourse, the Mortgage, the Note, and the Loan Documents to such lender as may
be reasonably designated by the Borrower, all at no cost or expense to the
Lender and on such other terms as are satisfactory to Lender; provided that
the Lender first receives from such lender payment equal to the entire
outstanding principal balance of the Note, together with all accrued interest
thereon to the date of payment, and all other costs and expenses due under the
Note, this Restated Loan Agreement or any other Loan Document.
18. Title Insurance Allocation. The parties hereto acknowledge and
agree that value allocations have been made by Lender for title insurance
purposes only.
19. Event of Conflict. In the event of a conflict between the terms
and provisions of this Restated Loan Agreement, the Commitment or the other
Loan Documents, the terms of this Restated Loan Agreement shall control, except
as to the Hazardous Substance Certificate and Indemnification Agreement.
20. Waiver of Trial by Jury BY ACCEPTANCE HEREOF, BORROWER AND
GUARANTORS AGREE THAT NEITHER BORROWER NOR GUARANTORS, NOR ANY ASSIGNEE,
SUCCESSOR, OR LEGAL REPRESENTATIVE OF BORROWERS OR GUARANTORS (ALL OF WHOM
ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED
UPON OR ARISING OUT OF THE NOTE, THE ORIGINAL LOAN DOCUMENTS, THE MORTGAGES,
THE GUARANTY, THE RESTATED LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY
INSTRUMENT EVIDENCING, SECURING, OR RELATING TO THE INDEBTEDNESS AND OTHER
OBLIGATIONS EVIDENCED THEREBY OR HEREBY, ANY RELATED AGREEMENT OR INSTRUMENT,
ANY OTHER COLLATERAL FOR THE INDEBTEDNESS EVIDENCED THEREBY OR HEREBY OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG THE PARTIES, OR ANY OF THEM.
NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY
TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY
THE PARTIES WITH BANK, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
BANK HAS IN NO WAY AGREED WITH OR REPRESENTED TO ANY OF THE PARTIES THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
BORROWER:
ATTEST: KOGER EQUITY, INC.
By: James L. Stephens By: Victor A. Hughes, Jr.
James L. Stephens Victor A. Hughes, Jr.
Its: Assistant Secretary Its: Senior Vice President
(CORPORATE SEAL)
LENDER:
NATIONSBANK OF FLORIDA, N.A.
Susan B. Holtray By: Robert Kraich
Robert W. Kraich,
Its: Senior Vice President
<PAGE>
EXHIBIT "A" TO RESTATED LOAN AGREEMENT
SECOND RENEWAL PROMISSORY NOTE
Executed as of December 21, 1993, effective
As of April 1, 1993
$27,625,000.00
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned, KOGER EQUITY, INC., a Florida
corporation, for itself and as successor by merger to each of (i) KOGER EQUITY
OF SOUTH CAROLINA, INC., a South Carolina corporation; (ii) KOGER EQUITY OF
GEORGIA, INC., a Georgia corporation; (iii) KOGER EQUITY OF NORTH CAROLINA,
INC., a North Carolina corporation; (iv) KOGER EQUITY OF TENNESSEE, INC., a
Tennessee corporation (those corporations referred to in (i) through (iv) are
referred to collectively, the "Maker"), and (v) the Guarantors (as hereinafter
defined) hereby unconditionally promises to pay to the order of NATIONSBANK OF
FLORIDA, N.A., a national banking association, as successor to NCNB National
Bank of Florida, a national banking association, its successors or assigns
("Lender"), at 750 South Orlando Avenue, Winter Park, Florida 32789,
Attention: Loan Administration, or at such other place which is not located
in Texas, Oklahoma, or Georgia as may be designated in writing by Lender, the
principal sum of TWENTY-SEVEN MILLION SIX HUNDRED TWENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($27,625,000.00), or such lesser amount as shall equal the
aggregate unpaid principal amount of the loan (the "Loan") made and renewed
by the Lender to the Maker under the Restated Loan Agreement, hereinafter
defined, in lawful money of the United States of America and in immediately
available funds, together with interest on the unpaid principal amount of the
Loan, at the Interest Rate, hereinafter defined, at such office, in like money
and funds, until the Loan shall be paid in full.
From and after April 1, 1993 through the date of execution hereof the
Loan has borne interest at the Prime Rate (hereinafter defined) pursuant to
letter agreements between Maker and Lender dated April 30, 1993 and as of
October 15, 1993 (the "Letter Agreements"). As of the date of execution hereof,
all payments of principal and interest required by the original note dated
March 15, 1991, in the original principal amount of $30,000,000.00 from Maker
to Lender, as renewed by that certain Renewal Promissory Note dated as of
January 15, 1992, in the or iginal principal amount of $29,000,000.00 from
Maker to Lender, as modified by the Letter Agreements, have been made.
NOTE: This Second Renewal Promissory Note renews, amends and restates in its
entirety without enlargement that certain Renewal Promissory Note dated as of
January 15, 1992, in the original principal amount of $29,000,000.00 from
Maker to Lender.
From and after the date of execution hereof, regardless of the
effective date hereof, interest (the "Interest Rate") shall accrue on the
principal balance from time to time outstanding hereunder at a variable rate
per annum equal to the Prime Rate (as hereinafter defined), plus one-half of
one percent (0.50%) per annum. For purposes hereof, "Prime Rate" means the
fluctuating rate of interest per annum established by NationsBank in Tampa,
Florida as its prime lending rate in effect from time to time, whether or not
such rate shall be otherwise published. Such Prime Rate is established by
NationsBank as an index or base rate and may or may not at any time be the
best or lowest rate of interest offered by NationsBank. Maker's Interest Rate
shall change each time the Prime Rate changes. The Prime Rate of NationsBank
is only a benchmark, is purely discretionary, and is not necessarily the
lowest or best rate charged any borrowing customer of Lender. On the date of
execution hereof, there shall be due and Maker shall pay all accrued interest,
principal, late fees, and penalties, if any, due from November 15, 1993 under
the Letter Agreements through the date of execution and delivery hereof.
Commencing on January 15, 1994, and continuing on the same day of each
month thereafter until the Maturity Date (as hereinafter defined) of the Loan
payments of principal shall be payable in the amounts set forth below, as
follows:
Principal Payment Amount
Due Date And Frequency
(a) January 15, 1994 through $56,250.00 Monthly
December 15, 1994, inclusive
(b) January 15, 1995 through $60,416.67 Monthly
December 15, 1995, inclusive
(c) January 15, 1596 through $62,500.00 Monthly
December 15, 1996, inclusive
(d) January 15, 1997 through A principal amount month-
November 15, 1998, and ly equal to the principal
thereafter monthly during amount outstanding after
the Option Period, as payment of (i) the thir-
hereinafter defined, if ty-six (36) principal
applicable. installments required
hereinabove from January
15, 1994 through December
15, 1996, (ii) and all
other payments required
and by the Restated Loan
Agreement; divided by
three hundred (300).
Accrued interest at the Interest Rate shall be payable on the same
day as each principal payment is due and in addition thereto.
The outstanding principal balance and all accrued but unpaid interest
shall be due and payable on December 21, 1998 the ("Maturity Date"). Provided
no default or event of default exists under the Loan, or conditions exist
which with notice or passage of time would constitute a default or event of
default under the Loan, and Maker has satisfied all Conditions Precedent
(defined in Article VII, paragraph 4, Extension option, of the Restated Loan
Agreement) as herein required, then Maker, at its option, may extend the
Maturity Date of the Loan once for an extension of two (2) years (the "Option
Period") as provided in Article VII, paragraph 4, Extension Option, of the
Restated Loan Agreement. If extended by the Option Period, the definition of
the Maturity Date shall automatically be redefined in such event to include
the term of the Option Period.
This Second Renewal Note renews and amends in its entirety the Note
and shall hereafter be construed as the Note referred to in the loan agreement
dated March 15, 1991, as restated in its entirety coincident herewith, between
the Maker and the Lender (the "Restated Loan Agreement") and together with the
original Note evidences the Loan made and renewed by the Lender thereunder.
Capitalized terms used in this Second Renewal Note and not otherwise defined
herein have the respective meanings assigned to them in the Restated Loan
Agreement.
Notwithstanding any provision contained herein to the contrary, the
Lender may, in accordance with and subject to the terms and conditions of
Article IV 6 and Article IV 12 of the Restated Loan Agreement, require that
the Maker reduce a portion of the outstanding principal balance of this Second
Renewal Note prior to the Maturity Date.
This Second Renewal Note may be prepaid in part or in full at any time
without premium, penalty or notice.
Interest hereunder shall be computed on the basis of a 360-day year
for the actual number of days in the interest period.
This Second Renewal Note is guaranteed by an Unconditional, Unlimited
and Continuing Guaranty dated March 15, l991, (the "Guaranty"), executed by
Koger Equity of Texas, Inc. and Koger Equity of Oklahoma, Inc., (jointly and
severally, the "Guarantors") as affirmed and ratified this date by Koger
Equity, Inc., as successor (by reason of the Statutory Mergers and
Reorganization Merger) to each of the Guarantors, which Guaranty is secured
by deeds of trust, mortgages and security agreements executed by Guarantors
in favor of Lender, which deeds of trust, mortgages and security agreements
constitute liens on certain real and personal property in Bexar, El Paso and
Travis Counties, Texas and Tulsa County, Oklahoma, respectively, of which
Koger Equity, Inc., as successor by merger to each of Guarantors is the fee
simple owner. This Second Renewal Note is further secured by a deed to secure
debt executed by Koger Equity of Georgia, Inc. (the foregoing deeds of trust,
deed to secure debt, mortgages and security agreements, as modified and
extended from time to time, are hereinafter collectively referred to as the
"Mortgages" and individually referred to as "a Mortgage"). Reference is hereby
made to the Restated Loan Agreement and the Mortgages for a description of
Events of Default and rights of acceleration of the Maturity Date in the
event of default. It is expressly agreed that all of the covenants, conditions,
and agreements contained in the Restated Loan Agreement are made a part of
this Second Renewal Note and shall control the interpretation and enforcement
of this Second Renewal Note.
It is agreed hereby that (i) if default be made in the payment of any
amount required to be paid to Lender, as above provided, or (ii) if an Event
of Default as defined in Article V of the Restated Loan Agreement, shall occur,
or (iii) a default be made in the performance of, or compliance with, any of
the covenants and conditions of the Guaranty or the Mortgages then, in any or
all such events, the entire outstanding amount of principal of this Second
Renewal Note, with all interest then accrued and unpaid, shall at the option
of Lender and without notice (the Maker hereby expressly waives notice of
such default) become immediately due and payable, time being of the essence.
Payment of this obligation is further secured by various assignments
and other instruments in favor of Lender. (All such assignments and instruments
from time to time securing payment of all or any portion of this Second
Renewal Note are called the "Other Loan Documents.") Upon the occurrence of
any event of default specified in the Other Loan Documents then, at Lender's
option, the entire outstanding principal balance of this Second Renewal Note,
together with accrued and unpaid interest, shall become immediately due and
payable.
The Maker agrees to pay all costs of collection incurred in enforcing
this Second Renewal Note, including reasonable attorneys' fees and those costs
and attorneys' fees incurred by Lender in any appellate proceedings.
Each maker, endorser and guarantor or any person, firm or corporation
becoming liable under this Second Renewal Note hereby consents to any
extensions or renewals of this Second Renewal Note or any part thereof,
without notice, and agrees that they will remain liable under this Second
Renewal Note during any extensions or renewals thereof, until the debts
represented hereby are paid in full.
Provided Lender has not exercised its right to accelerate this Second
Renewal Note as herein provided, in the event any payment required under this
Second Renewal Note or the Restated Loan Agreement is not received by Lender
when said payment is due, Maker shall pay Lender a late charge of four percent
(4%) of the payment not so received, the parties agreeing that said charge is
a fair and reasonable charge for the late payment and shall not be deemed a
penalty or as compounding interest.
In the event Lender accelerates this Second Renewal Note as herein
provided, then the entire unpaid principal balance of this Second Renewal Note,
together with all interest accrued and unpaid at the time of such acceleration,
shall bear interest at the lesser of (i) the maximum rate permitted under
applicable law, or (ii) twenty percent (20%) per annum (the "Default Rate").
It is the intent of Maker and Lender and all other parties to this
Second Renewal Note, the Restated Loan Agreement, the Guaranty, the Mortgages
and the Other Loan Documents to conform to, and contract in strict compliance
with, the applicable usury law from time to time in effect. All agreements
between Maker and Lender (or any other party liable with respect to any
indebtedness under this Second Renewal Note, the Restated Loan Agreement, the
Guaranty, the Mortgages or under the Other Loan Documents) are hereby limited
by the provisions of his paragraph which shall override and control all such
agreements, whether now existing or hereafter arising. In no way, nor in any
event or contingency (including but not limited to prepayment, default, demand
for payment, or acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, chargeable, or received
under this Second Renewal Note, the Restated Loan Agreement, the Guaranty, the
Mortgages, or any Other Loan Document or otherwise, exceed the maximum
nonusurious amount permitted by applicable law (the "Maximum Amount"). If,
from any possible construction of any document, interest would otherwise be
payable in excess of the Maximum Amount, any such construction shall be
subject to the provisions of this paragraph and such document shall ipso
facto be automatically reformed and the interest payable shall be
automatically reduced to the Maximum Amount, without the necessity of
execution of any amendment or new document. If Lender shall ever receive
anything of value which is characterized as interest under applicable law and
which would apart from this provision be in excess of the Maximum Amount, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be refunded to Maker or the other payor thereof if and to
the extent such amount which would have been excessive exceeds such unpaid
principal. The right to accelerate maturity of this Second Renewal Note or
any other indebtedness due hereunder or in connection with the Restated Loan
Agreement, the Guaranty, the Mortgages or Other Loan Documents does not
include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to charge or
receive any unearned interest in the event of acceleration. All interest paid
or agreed to be paid to Lender shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full stated
term (including any renewal or extension) of such indebtedness so that the
amount of interest on account of such indebtedness does not exceed the
Maximum Amount. By operation of Section 687.12, Florida Statutes (1993), the
interest rate charged under this Second Renewal Note is authorized by Chapter
665, Florida Statutes (1993) and applicable federal law.
All entities or persons now or at any time liable for payment of this
Second Renewal Note hereby waive presentment, demand, protest, notice of
protest and dishonor, acceleration and notice of intent to accelerate this
Second Renewal Note. The Maker expressly consents to any extensions or
renewals, in whole or in part, and all delays in time of payment or other
performance which Lender may grant at any time and from time to time without
limitation and without any notice or further consent of the undersigned.
The remedies of Lender as provided herein, or in the Restated Loan
Agreement, the Guaranty, the Mortgages or the Other Loan Documents shall be
cumulative and concurrent and may be pursued singularly, successively or
together, at the sole discretion of Lender, and may be exercised as often as
the occasion therefor shall arise.
This Second Renewal Note may not be changed orally, but only by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
Notwithstanding the location where this Second Renewal Note has been
executed and delivered, or the location of the real and personal property
which is encumbered by the Mortgages, the Maker and Lender hereby agree that
the terms of this Second Renewal Note shall be governed and construed in
accordance with the internal laws and judicial decisions of the State of
Florida.
BY EXECUTION AND ACCEPTANCE HEREOF, THE UNDERSIGNED MAKER AND LENDER,
RESPECTIVELY, AGREE THAT NEITHER MAKER OR LENDER, NOR ANY ASSIGNEE, SUCCESSOR,
HEIR, OR LEGAL REPRESENTATIVE OF MAKER OR LENDER (ALL OF WHOM ARE HEREINAFTER
REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION OR\PROCEDURE BASED UPON OR
ARISING OUT OF THIS SECOND RENEWAL NOTE OR ANY INSTRUMENT EVIDENCING, SECURING,
OR RELATING TO THE INDEBTEDNESS AND OTHER OBLIGATIONS EVIDENCED HEREBY, ANY
RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE INDEBTEDNESS
EVIDENCED HEREBY OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG THE
PARTIES, OR ANY OF THEM. NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY
SUCH OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED, WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES WITH LENDER, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. LENDER HAS IN NO WAY AGREED
WITH OR REPRESENTED TO ANY OF THE PARTIES THAT THE PROVISIONS OF THIS PARAGRAPH
WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the undersigned has executed this Second Renewal
Promissory Note on the date specified above.
ATTEST: KOGER EQUITY, INC.
By: By:
Name: Name: Irvin H. Davis
Title: Title: President
(CORPORATE SEAL) Maker's Address:
3986 Boulevard Center Drive
Suite 101
Jacksonville, FL 32207
Taxpayer I.D. Number 59-2898045
Exhibit 10(m)(2)
CONSOLIDATED
RENEWAL PROMISSORY NOTE
$47,656,238.53 December 21, 1993
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned, KOGER EQUITY, Inc. (the
"Borrower"), hereby promises to pay to the order of BARNETT BANK OF
JACKSONVILLE, N.A. (the "Lender"), whose address is 50 North Laura
Street, Jacksonville, Florida 32202, the principal sum of Forty-
Seven Million Six Hundred Fifty-Six Thousand Two Hundred Thirty-Eight
and 53/100 ($47,656,238.53) Dollars, together with interest on the
outstanding principal balance hereof until payment in full at the rate
provided herein. This Note shall be governed by the following provisions:
1. Payments.
a. The Borrower shall make payments of debt service amount
in respect of the outstanding balance hereunder monthly on the first day of
each calendar month commencing on January 1, 1994. Such payments shall include
interest and amortization of principal to be computed based on an assumed term
to maturity of twenty-five (25) years commencing on the date hereof. Such
amortization shall be based on the Original Rate (as defined below) during the
period prior to the Interest Reset date, and shall, on the Interest Reset Date,
be adjusted to the amount of such debt service payment based on the Reset
Interest Rate.
b. The Borrower shall make additional principal payments as set
forth in paragraph 4 hereof.
c. The Borrower shall pay all remaining outstanding principal
hereunder, together with all then accrued and unpaid interest, on December
21, 2000 (the "Final Maturity Date").
2. Interest Rate.
a. During the period commencing on the date hereof and ending
on the third anniversary 12/30/96 hereof (the "Interest Reset Date"), interest
shall accrue on the outstanding principal balance of this Note at a rate per
annum that is equal to the sum of i) the effective interest rate which was
prevailing on December 21, 1993 for the U.S. Treasury Obligations having a
term to maturity of three (3) years plus ii) 185 basic points (the "Original
Rate").
THIS CONSOLIDATED RENEWAL NOTE RENEWS AND MODIFIES THOSE CERTAIN PROMISSORY
NOTES DATED, RESPECTIVELY, APRIL 5, 1991 AND AUGUST 7, 1992, EXECUTED BY
KOGER EQUITY, INC. IN FAVOR OF THE LENDER. DOCUMENTARY STAMP TAXES HAVE BEEN
PAID ON THE MORTGAGES EXECUTED BY THE BORROWER SECURING SUCH NOTES.
b. During the period commencing on the Interest Reset Date
12/20/96 and ending on the Final Maturity Date, interest shall accrue on the
outstanding principal balance of this Note at a rate per annum that is equal
to the sum of i) the effective interest rate which is prevailing on the
Interest Reset Date for U.S. Treasury Obligations having a term to maturity
of four (4) years plus ii) 210 basis points (the "Reset Interest Rate"). In
no event shall the Reset Interest Rate exceed eleven (11%) percent per annum.
c. Interest shall calculated on a daily basis and on the basis
of a 365/366 day year (based upon the actual number of days elapsed).
d. The total liability of the Borrower and any endorsers or
guarantors hereof for payment of interest shall not exceed any limitations
imposed on the payment of interest by applicable usury laws. If any interest
is received or charge by any holder herein excess of that amount, the Borrower
shall be entitled to an immediate refund of the excess.
e. Upon the occurrence of an Event of Default hereunder,
interest shall accrue at the Default Rate hereinafter set forth notwithstanding
the provisions of this section.
3. Prepayment. The Borrower shall be entitled to prepay this Note in
whole or in part at any time without penalty. All prepayments of principal
shall be applied in the inverse order of maturity.
4. Mandatory Prepayment. In addition to the payments hereinabove
described, Borrower shall be required to make the following principal
payments:
a. On the Fifth Anniversary. On December 21, 1998, Borrower
shall pay down the principal hereof by Five Million and no/100 ($5,000,000.00)
Dollars; provided, however, that any equity proceeds received by Lender in
respect of any indebtedness of Borrower to Lender during the period ending on
December 21, 1996 shall be received in lieu of such man portion thereof.
b. With Equity Proceeds. The First Fifty Million Dollars
($50,000,000.00) of proceeds of equity offerings (raised from public or
private sources) will be applied as follows:
(1) The first Ten Million and no/100 ($10,000,000.00)
Dollars will be paid to NationsBank of Florida, N.A. ("NationsBank") in
reduction of Borrower's indebtedness to NationsBank incurred prior to the
merger of Koger Properties, Inc. ("KPI") into Borrower.
(2) The next Forty Million and no/100 ($40,000,000.00)
Dollars will be applied first, to pay Negative Amortization, Negative
Amortization Adjustment, Junior Restructured Notes, Tax Notes, Option C Equity
Share, and Lenders' Tax Notes (hereinafter, collectively, the "Second Tier
Obligations") pro-rata, and then pro rata to the payment of all outstanding
secured indebtedness of Borrower. Fifty percent (50%) of net proceeds of
equity offerings in excess of Fifty Million and no/100 ($50,000,000.00) Dollars
(the "Lender Excess Share") shall be applied as follows: first, an amount equal
to fifteen percent (15%) of the Lender Excess Share to the payment of this
Note; second, an amount equal to seven and one-half percent (7.5%) of the
Lender Excess Share to the payment of Borrower's indebtedness to First Union
National Bank of Florida ("FUNB") incurred prior to the merger of KPI into
Borrower; third an amount equal to fifteen percent (15%) of the Lender Excess
Share to the payment, pro rata, of the then outstanding indebtedness of
Borrower to insurance company lenders; and fourth, to the payment, pro rata,
of all outstanding secured indebtedness of Borrower (including the above-
referenced lenders).
(3) 50% of such net proceeds in excess of $50,000,000
(the "KE Excess Share") shall be retained by the Borrower for its business
purposes, including the repayment of indebtedness; provided, however, that
until the Second Tier Obligations have been paid in full, the Borrower shall
not apply any of the KE Excess Share to pay principal of the Option A Senior
Restructured Notes or of the Option B Restructured Notes (other than accrued
interest added to principal as Negative Amortization under Section 2.3 of the
Option B Restructured Notes) except to the extent required by the terms of the
Option A Senior Restructured Notes and the Option A Senior Restructured Notes
and the Option B Restructured Notes as in effect on the date hereof.
(4) All capitalized terms set forth in this paragraph
4, not otherwise herein defined, shall have the meaning assigned to them
pursuant to the Third Amended Restated Plan of Reorganization of KPI dated as
of April 13, 1993, as modified pursuant to an amended motion for leave to
modify and amend plan dated August 17, 1993, and as confirmed by order of the
United States Bankruptcy Court for the Middle District of Florida, Tampa
Division entered on December 8, 1993 (the "Plan").
C. Loan Agreement. The Borrower shall make such other mandatory
prepayments as may be required in the Loan Agreement (hereinafter defined).
5. Application of Payments. Except as otherwise provided herein, all
payments hereunder shall be applied first to the Lender's costs and expenses,
then to fees authorized hereunder or under the Loan Agreement, then to interest
and then to principal.
6. Default. Any of the following events shall be considered an "Event
of Default:
a. Nonpayment of principal, interest, any fee or any other
amount due hereunder ten (10) business days after such amount becomes due and
payable; or
b. The occurrence of any Event of Default under that certain
Loan Agreement (as amended or restated from time to time, the "Loan Agreement")
dated April 5, 1991, executed by the Borrower and the Lender, as amended on
August 7, 1992 and as further amended as of December 21, 1993, as the same
may be amended or restated from time to time.
If any Event of Default shall occur, the Lender may, without notice to the
Borrower, declare the outstanding principal of this Note, all interest due
hereon and all other amounts payable under this Note or otherwise to be
forthwith due and payable. Thereupon, this Note, all such interest and all
such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower. Upon the occurrence of any Event of
Default, the outstanding principal of this Note, and any accrued and unpaid
interest, shall bear interest at a rate of either five percent (5.0%) per
annum above the Prime Rate (the interest rate announced from time to time by
Barnett Banks, Inc. as its prime rate, which prime rate is a reference rate
and is not necessarily the lowest or best rate the Lender may from time
to time charge its customers) after default until paid or, if such rate is
usurious under the laws of Florida, then at the highest legal rate
permissible thereunder (the "Default Rate").
7. No Usury. Under no circumstances shall the aggregate amount paid
or agreed to be paid hereunder exceed the Maximum Rate, and the payment
obligations of the Borrower under this Note are hereby limited accordingly.
It is the intent of the Lender and the Borrower in the execution of this Note
and all other instruments now or hereafter securing this Note to contract in
strict compliance with Applicable Usury Law. In furtherance thereof, the
Lender and the Borrower stipulate and agree that none of the terms and
provisions contained in this Note or in any other instrument executed in
connection herewith or therewith shall ever be construed to create a contract
to pay for the use, forbearance or detention of money at a rate in excess of
the Maximum Rate. Maximum Rate means the highest lawful rate of interest
permitted to be charged under the Applicable Usury Law (hereinafter defined).
In determining whether or not the interest paid or payable exceed the
Maximum Rate, the Borrower and the Lender shall, to the full extent
permitted by Applicable Usury Law, exclude voluntary prepayments and the
effects thereof and amortize, prorate, allocate and spread, in equal parts
the total amount of interest and other charges throughout the entire term of
this Note so that the interest rate is uniform throughout the entire term of
this Note. Neither the Borrower nor any guarantors, endorsers or other parties
now or hereafter becoming liable for payment of this Note shall ever be
required to pay interest on the Note at the rate in excess of the Maximum
Rate, and the provisions of this section shall control all other provisions
of this Note and of any other instrument now or hereafter executed in
connection herewith which may be in apparent conflict with this section. The
Lender expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event that the maturity of the loan
evidenced by this Note (the "Loan") is accelerated. If under any circumstances,
whether by reason of advancement or acceleration of the unpaid principal
balance of the Loan or otherwise, the aggregate amounts paid on the Loan shall
include amounts which by law are deemed interest and which would exceed the
Maximum Rate, the Borrower stipulates that the payment and collection of such
excess amounts shall have been, and shall be deemed to have been, the result
of a mistake on the part of both the Borrower and the Lender. If the maturity
of the Loan shall be accelerated for any reason, or if the aggregate principal
balance of the Loan is paid prior to the Final Maturity Date, and as a result
thereof the interest received for the actual period of existence of the Loan
exceeds the Maximum Rate, the Lender shall refund the Borrower the amount of
such excess or shall credit the amount of such excess against the Loan then
outstanding. In the event that the Lender shall collect monies which are
deemed to constitute interest which would increase the effective interest
rate under this Note to a rate in excess of the Maximum Rate, all such sums
deemed to constitute interest in excess of the Maximum Rate shall, upon such
determination, at the option of the Lender, be immediately returned to the
Borrower or credited against the Loan then outstanding. As used herein
"Applicable Usury Law" means, at any time, any applicable usury law, whether
now or hereafter existing, in effect in (a) the State of Florida, (b) the
United States of America or (c) any other jurisdiction that applies to the
interest and other charges under the Loan Documents.
8. Expenses. All parties liable for the payment of this Note agree to
pay the Lender all costs incurred by it in connection with the collection of
this Note. Such costs include, without limitation, fees for the services of
counsel and legal assistants employed to collect this Note, whether or not
suit be brought, and whether incurred in connection with collection, trial,
appeal or otherwise. All such parties further agree to indemnify and hold
the Lender harmless against liability for the payment of state documentary
stamp taxes, intangible taxes or other taxes (including interest and
penalties, if any), excluding income or service taxes of the Lender, which may
be determined to be payable with respect to this transaction.
9. Late Charge. A late charge of five percent (5.0%) of any payment
required hereunder shall be imposed on each and every payment not received
by the Lender within fifteen (15) days after it is due. However, the late
charge shall not in any event exceed $250.00 with respect to any delinquent
installment. The late charge is not a penalty, but liquidated damages to
defray administrative and related expenses due to such late payment. The
late charge shall be immediately due and payable and shall be paid by the
Borrower to the Lender without notice or demand. This provision for a late
charge is not and shall not be deemed a grace period, and the Lender has no
obligation to accept a late payment. Further, the acceptance of a late payment
shall not constitute a waiver of any default then existing or thereafter
arising under this Note.
10. Setoffs. The Borrower and any endorsers, sureties, guarantors, and
all others who are, or who may become liable for the payment hereof, severally
expressly grant to the Lender a continuing first lien security interest in any
and all money, general or specific deposits, or property of any such parties
now or hereafter in the possession of the Lender. The Borrower and such other
parties authorize and empower the Lender, in its sole discretion, at any time
after the occurrence of a default hereunder to appropriate and, in such order
as the Lender may elect, apply any such money, deposits or property to the
payment hereof or to the payment of any and all indebtedness, liabilities, and
obligations of such parties to the Lender or any of the Lender's affiliates,
whether now existing or hereafter created or arising or now owned or howsoever
after acquired by the Lender or any of the Lender's affiliated (whether such
indebtedness, liabilities and obligations are or will be joint or several,
direct or indirect, absolute or contingent, liquidated or unliquidated,
matured or unmatured, including, but not limited to, any letter of credit
issued by the Lender for the account of any such parties).
11. Submission to Jurisdiction. This Note is governed by Florida law.
The Borrower, and any endorsers, sureties, guarantors and all others who are,
or who may become liable for the payment hereof, severally, irrevocably and
unconditionally: i) agree that any suit, action or other legal proceeding
arising out of or relating to this Note may be brought, at the option of the
Lender, in a court of record of the State of Florida in Duval or Orange County,
or in the United States District Court for the Middle District of Florida, or
in any other court of competent jurisdiction; ii) consent to the jurisdiction
of each such court in any such suit, action or proceeding; and iii) waive any
objection which it or they may have to the laying of venue of any such suit,
action or proceeding in any such courts.
12. Affirmation. The Borrower acknowledges that this Note renews and
modifies those certain Promissory Notes dated, respectively, April 5, 1991
and August 7, 1992, executed by Koger Equity, Inc. in favor of the Lender in
the original principal amounts of $45,000,000 and $6,000,500, respectively.
The Borrower acknowledges that the outstanding principal balance of such
notes, as consolidated and renewed by this Note, is $47,656,238.53 as of the
date hereof. The Borrower agrees to pay such amount, together with the terms
hereof without offset or counterclaim of any kind. Neither this Note nor any
agreement related hereto shall constitute a novation.
13. Miscellaneous. The Borrower and all sureties, endorsers and
guarantors of this Note shall make all payments hereunder in lawful money
of the United States at the Lender's address set forth herein or at such
other place as the Lender may designate in writing. The remedies of the Lender
as provided herein shall be cumulative and concurrent, and may be pursued
singly, successively or together, at the sole direction of the Lender and
may be exercised as often as occasion therefor shall arise. No act or omission
or commission of the Lender, including specifically any failure to exercise
any right, remedy or recourse, shall be effective, unless set forth in a
written document executed by the Lender, and then only to the extent
specifically recited therein. A waiver or release with reference to one event
shall not be construed as continuing, as a bar to, or as a waiver or release
of any subsequent right, remedy or recourse as to any subsequent event. This
Note shall be construed and enforced in accordance with Florida law and shall
be binding on the successors and assigns of the parties hereto. The term
"Lender" as used herein shall mean any holder of this Note.
The Borrower and all sureties, endorsers and guarantors of this Note
hereby: i) waive demand, notice of demand, presentment for payment, notice
of nonpayment or dishonor, protest, notice of protest and all other notice,
filing of suit and diligence in collecting this Note, or in the Lender's
enforcing any of its rights under any guaranties securing the repayment
hereof; ii) agree to any substitution, addition or release of collateral or
any party or person primarily or secondarily liable hereon; (iii) agree that
the Lender shall not be required first to institute any suit, or to exhaust
his, their or its remedies against the Borrower or any other person or party
to become liable hereunder, or against any collateral in order to enforce
payment of this Note; iv) consent to any extension, rearrangement, renewal or
postponement of time of payment of this Note and to any other indulgence with
respect hereto without notice, consent or consideration to any of them; and v)
agree that, notwithstanding the occurrence of any of the foregoing (except
with the express written release by the Lender of any such person), they shall
be and remain jointly and severally, directly and primarily, liable for all
sums due under this Note.
14. Waiver of Trial by Jury. THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE, ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS NOTE OR ANY RELATED LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS
OF ANY PARTY HERETO OR TO ANY RELATED LOAN DOCUMENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT THIS NOTE.
KOGER EQUITY, INC.
By: Victor A. Hughes, Jr.
Its Senior Vice President
(CORPORATE SEAL)
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
On the 17th day of December, 1993, before me, the subscriber, a Notary
Public in and for the Commonwealth and County aforesaid, personally appeared
Victor A. Hughes, Jr., who acknowledged himself/herself to be the Senior Vice
President of Koger Equity, Inc., a Florida corporation, and that he/she, being
authorized to do so, executed the foregoing Modification of Deed of Trust on
behalf of said Koger Equity, Inc. for the purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
Barbara D. Coleman
Notary Public
My commission expires:
August 5, 1994
Exhibit 10(n)(11)
CONSOLIDATED NOTE
$25,026,510.78 December 21, 1993
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned, KOGER EQUITY, INC., a Florida
corporation ("Borrower"), hereby promises to pay to FIRST UNION NATIONAL BANK
OF FLORIDA, a national banking corporation ("Lender") or order, the principal
sum of TWENTY-FIVE MILLION TWENTY-SIX THOUSAND FIVE HUNDRED TEN AND 78/100
DOLLARS ($25,026,510.78), together with daily interest on the aggregate
principal amount hereof from time to time unpaid at a per annum rate equal to
the Applicable Rate (as defined below) from the date hereof, all payable as
provided below.
1. Definitions. Certain capitalized terms are used in this Note as specifically
defined in this Section 1 as follows:
1.1. "Agreement" means that certain Loan Modification Agreement dated
of even date herewith by and between Lender and Borrower, as hereafter amended,
modified, extended, renewed, supplemented or substituted from time to time.
1.2. "Applicable Rate" means:
(a) on any date prior to the Reset Date, 6.386% per annum and
(b) on any other date, the lesser of 11% per annum or the Reset
Rate.
1.3. "Applicable Usury Law" means, at any time, any applicable usury
law, whether now or hereafter existing, in effect in (a) the jurisdiction first
specified in Section 9.4 hereof, (b) the United States of America or (c) any
other jurisdiction that applies to the interest and other charges under this
Note.
1.4. "Borrower" is defined in the first paragraph hereof.
1.5. "Business Day" means any day other than a Saturday, Sunday or a
day on which commercial banks are authorized or required by law or other
governmental action to close in the state in which the Property is located.
1.6. "Equity Proceeds Allocation" means, with respect to any equity
offering of the Borrower after the date hereof, the following allocation of
net proceeds from all such offerings in the aggregate:
(a) The first $50,000,000 of such net proceeds will be applied as
follows:
(i) the first $10,000,000 to pay the Borrower's indebtedness
to NationsBank, N.A. incurred prior to the merger of KPI into Borrower
pursuant to the Plan; and
(ii) the next $40,000,000 will be aplied:
(A) first, pro rata to pay (1) Negative Amortization
under Section 2.3 of the Option B Restructured Notes, (2)
Negative Amortization Adjustment under Section 3.3 of the
Option B Restructured Notes, (3) the Option A Junior
Restructured Notes, (4) the Option C Equity Share, (5) the Tax
Notes and (6) the Lender Tax Notes (all amounts in this clause
(A) are referred to collectively as "Second Tier Obligations");
and
(B) next, pro rata to pay all outstanding secured
indebtedness of the Borrower.
(b) 50% of such net proceeds in excess of $50,000,000 (the "Lender
Excess Share") shall be applied as follows:
(i) first, an amount equal to 15% of the Lender Excess Share to
pay the Borrower's indebtedness to Barnett Bank of Jacksonville, N.A.
incurred prior to the merger of KPI into Borrower;
(ii) second, an amount equal to 7 1/2% of the Lender Excess
Share to pay the Borrower's indebtedness to Lender incurred prior to
the merger of KPI into Borrower;
(iii) third, an amount equal to 15% of the Lender Excess Share
to pay, pro rata, any outstanding indebtedness of the Borrower to
insurance company lenders; and
(iv) fourth, the balance of the Lender Excess Share to pay, pro
rata, all secured indebtedness of the Borrower.
(c) 50% of such net proceeds in excess of $50,000,000 (the "KE Excess
Share") shall be retained by the Borrower for its business purposes, including
the repayment of indebtedness; provided, however, that until the Second Tier
Obligations have been paid in full, the Borrower shall not apply any of the KE
Excess Share to pay principal of the Option A Senior Restructured Notes or of
the Option B Restructured Notes (other than accrued interest added to principal
as Negative Amortization under Section 2.3 of the Option B Restructured Notes)
except to the extent required by the terms of the Option A Senior Restructured
Notes and the Option B Restructured Notes as in effect on the Effective Date.
Notwithstanding the foregoing provisions:
(I) No secured lender shall be entitled to receive any payment
provided above unless such lender has waived any prepayment penalty and
yield maintenance provisions with respect to such payment, and
(II) Each of The Prudential Insurance Company of America and
The Travelers Insurance Company shall be entitled to apply any payment
provided above to such obligations of the Borrower to such holder as
such holder shall, in its sole and absolute discretion, determine by
providing written notice of such determination to the Borrower within
10 days after receipt of such payment.
1.7. "Event of Default" means the occurrence of any Event of Default,
as defined in the Agreement.
1.8. "Final Maturity Date" means December 21, 2000.
1.9. "KE Renewal Note" means that certain KE Renewal Note in the
principal amount of $15,940,498.96 dated of even herewith executed by Borrower
payable to the order of Lender.
1.10. "KENC Renewal Note" means that certain KENC Renewal Note in the
principal amount of $5,306,230.88 dated of even herewith executed by Borrower
payable to the order of Lender.
1.11. "KESC Renewal Note" means that certain KESC Renewal Note in the
principal amount of $3,779,780.94 dated of even herewith executed by Borrower
payable to the order of Lender.
1.12. "KPI" means Koger Properties, Inc., a Florida corporation.
1.13. "Lease Assignments" means the Lease Assignments, as defined in
the Agreement.
1.14. "Lender" is defined in the first paragraph hereof and in Section
9.5 hereof.
1.15. "Lender Tax Notes" means the Lender Tax Notes, as defined in the
Agreement.
1.16. "Loan" means the aggregate principal amount of indebtedness
evidenced by this Note at any one time outstanding.
1.17. "Loan Documents" means each of this Note, as hereafter amended,
modified, extended, renewed, supplemented or substituted from time to time,
the Mortgages, the Lease Assignments and all other instruments evidencing or
securing the Obligations.
1.18. "Maximum Rate" means the highest lawful rate of interest
permitted to be charged under the Applicable Usury Law.
1.19. "Monthly Amortization" means an amount that is sufficient to
amortize the Loan in equal monthly installments, consisting of principal and
interest, over an assumed term to maturity of 25 years, commencing on the
first day of the first month following the date hereof, at an interest rate
equal to the Applicable Rate in effect on the date hereof, which amount and
assumed interest rate shall be adjusted on the Reset Date to reflect the
Applicable Rate then in effect and the pincipal balance hereof then
outstanding.
1.20. "Mortgages" means the Mortgages, as defined in the Agreement.
1.21. "Obligations" means all indebtedness of the Borrower owing to
the Lender under this Note, the Mortgages, the Lease Assignments or the other
Loan Documents, including obligations in respect of principal, interest, late
fees and other fees, charges, indemnities and expenses (including reasonable
attorneys' and paraprofessionals' fees and expenses) from time to time owing
hereunder or thereunder.
1.22. "Option A Junior Restructured Notes" means the Option A Junior
Restructured Notes, as defined in the Agreement.
1.23. "Option A Senior Restructured Notes" means the Option A Senior
Restructured Notes, as defined in the Agreement.
1.24. "Option B Restructured Notes" means the Option B Restructured
Notes, as defined in the Agreement.
1.25. "Option C Equity Share" means (a) $1,400,000 in the case of
Option C Restructured Notes originally issued to FGHP Pinnacle Limited
Partnership and (b) $1,900,000 in the case of Option C Restructured Notes
originally issued to Kleinwort Benson Limited.
1.26. "Option C Restructured Notes" means the Option C Restructured
Notes, as defined in the Agreement.
1.27. "Payment Date" means the first day of each calendar month.
1.28. "Plan" means the Third Amended and Restated Plan of
Reorganization of Koger Properties, Inc. Proposed Jointly by Koger Properties,
Inc. and Koger Equity, Inc. dated as of April 30, 1993, as modified pursuant to
an amended motion for leave to modify and amend plan dated August 17, 1993 and
as confirmed by order of the United States Bankruptcy Court, Middle District
of Florida, Tampa Division entered on December 8, 1993, filed in Chapter 11
Case No. 91-12294-8PI.
1.29. "Property" means the real property encumbered by the Mortgages.
1.30. "Reset Date" means December 21, 1996.
1.31. "Reset Rate" means the sum of (a) 2.10% per annum plus (b) the
Treasury Rate in effect on the Reset Date.
1.32. "Restructured Notes" means the Restructured Notes, as defined
in the Agreement.
1.33. "Tax Notes" means the Tax Notes, as defined in the Agreement.
1.34. "Treasury Rate" means the rate of interest equal to the annual
yield of U.S. Government Securities, Treasury Constant Maturities with a term
to maturity of four years (the "Government Securities"), as such interest rate
shall be stated and referred to in Document H.15(519) currently published by
the Board of Governors of the Federal Reserve System and titled "Federal
Reserve Statistical Release" for the calendar week immediately preceding the
Reset Date. If the yield of the Government Securities for the calendar week
immediately preceding the Reset Date is not published on or before the
Business Day preceding the Reset Date, then the Treasury Rate shall be based
upon the yield of the Government Securities as set forth for the most recent
calendar week for which such publication has occurred. If the publication of
the yield of Government Securities is ever discontinued, then the Treasury
Rate shall be based upon the index which is published by the Board of Governors
of the Federal Reserve System in replacement thereof or, if no such replacement
index is published, the index which, in the Lender's reasonable determination,
most nearly corresponds to the yield of the Government Securities.
2. Interest. The Loan shall accrue and bear daily interest at a rate per annum
which shall at all times equal the Applicable Rate. For purposes of this Note,
interest (and any amount expressed as interest) shall be computed on a daily
basis and on the basis of a 360-day year. If requested by Lender, on the date
hereof, the Borrower will pay an amount equal to interest which shall accrue
hereunder from December 20, 1993 through December 31, 1993, which amount
shall be applied toward interest hereunder for such period. Prior to the Final
Maturity Date or accelerated maturity of the Loan, the Borrower will, on each
Payment Date, pay the accrued and unpaid interest on the Loan, commencing
January 1, 1994. On the Final Maturity Date or any accelerated maturity of the
Loan, the Borrower will pay all accrued and unpaid interest on the Loan. Upon
the delivery by Lender to Borrower of a written notice of Borrower's failure to
make any payment hereunder when due, the Borrower will pay daily interest at
a per annum rate equal to the sum of the Applicable Rate plus 4% on any such
overdue installments of principal and, to the extent permitted by applicable
law, on any such overdue installments of interest owed under this Note, and,'
in the event of nonpayment following maturity or acceleration, on the entire
principal and interest due and payable hereunder. In the event of any such
default, the Borrower will also pay late charges to the extent required by the
promissory notes originally secured by the Mortgages.
3. Payment.
3.1. Payment at Maturity. On the Final Maturity Date or any accelerated
maturity of the Loan, the Borrower will pay to the Lender an amount equal to
the Loan then outstanding, together with all accrued and unpaid interest
thereon and all other Obligations then outstanding.
3.2. Mandatory Scheduled Monthly Payments. Commencing on January 1,
1994, on each Payment Date the Borrower will pay to the Lender an amount of
principal of the Loan equal to the principal portion of the Monthly
Amortization, together with accrued interest in an amount equal to the
interest portion of the Monthly Amortization, as provided in Section 2 hereof.
3.3. Payments Upon Equity Offering. Within 10 days after the closing
under an equity offering of the Borrower, the Borrower will pay to the Lender
a principal amount of the Loan equal to the net proceeds of such offering
allocable to the Loan in accordance with the Equity Proceeds Allocation,
without prepayment penalty or yield maintenance charge.
3.4 Mandatory Principal Reduction. On December 21, 1998, the Borrower
will pay to the Lender, in addition to all other payment of principal and
interest due hereunder on such Payment Date, an additional principal amount of
Five Million Dollars ($5,000,000), less any principal payment in respect of
any indebtedness of Borrower to Lender received by Lender on or prior to
December 21, 1996 from the proceeds of an equity offering of the Borrower.
3.5 Payments Upon Sale or Mortgage. Subject to Section 9.2 of the
Agreement, upon the sale of the Property or any portion thereof or the
recording of a mortgage on the Property or any portion thereof that is junior
to the Mortgages, the Borrower will pay to the Lender an amount equal to the
Loan then outstanding, together with all accrued and unpaid interest thereon
and all other Obligations then outstanding.
3.6. Voluntary Prepayment. Upon three days notice to the Lender, the
Loan may be prepaid, in whole or from time to time in part, without premium
or penalty.
3.7. Time and Place of Payment. Any payment under this Note shall be
made to the Lender in lawful money of the United States of America not later
than 2:00 p.m. (Jacksonville, Florida time) on the date such payment is due
at the office of the Lender or such other place as the Lender may specify by
notice to the Borrower. If the date on which any payment is due under this
Note is not a Business Day, then for all purposes hereof such payment shall
be deemed to be due on the next succeeding Business Day, and any such
extension of time shall be included in the computation of interest hereunder.
Any payment under this Note shall be deemed to be made by the Borrower and
received by the Lender only upon receipt by the Lender of immediately available
funds.
3.8 Application of Payments. Any payment under this Note not otherwise
provided for herein shall be applied by the Lender as follows:
First, to the payment of any unpaid late fees, any costs of
collection and any other costs and expenses due and payable by the
Borrower to the Lender under the Loan Documents.
Second, any surplus then remaining to the payment of any
accrued and unpaid interest on the Loan.
Third, any surplus then remaining to the payment of the
aggregate principal amount of the Loan then outstanding.
4. Security. The indebtedness evidenced by this Note is secured by certain
collateral that has been mortgaged, pledged, collaterally granted and assigned
or otherwise conveyed to the Lender pursuant to the Mortgages, the Lease
Assignments and the other Loan Documents, and reference is made to each of such
documents for a description of the collateral subject thereto and the
respective rights and obligations of the Borrower and the Lender thereunder.
This Note is the Consolidated Note referred to in the Agreement, and is
entitled to the benefits and security of the Mortgages, the Lease Assignments
and the other Loan Documents.
5. Acceleration. Upon the occurrence and continuance of an Event of Default,
the Lender may, at its option and without the necessity of notice to the
Borrower, declare the aggregate unpaid principal balance of this Note
immediately due and payable in full, and the Lender may proceed to foreclose
the Mortgages and the Lease Assignments, to exercise any other rights and
remedies available to the Lender under the Mortgages and the Lease Assignments
and to exercise any other rights and remedies against the Borrower or with
respect to this Note which the Lender may have pursuant to the Loan Documents,
at law, in equity or otherwise. Notwithstanding the foregoing, the Lender shall
not be required to provide notice and opportunity to cure with respect to the
payment of principal, interest or any other sums which are due and payable by
the Borrower to the Lender on the Final Maturity Date.
6. No Usury. Under no circumstances shall the aggregate amount paid or agreed
to be paid hereunder exceed the Maximum Rate, and the payment obligations of
the Borrower under this Note are hereby limited accordingly. It is the intent
of the Lender and the Borrower in the execution of this Note and all other
instruments now or hereafter securing this Note to contract in strict
compliance with Applicable Usury Law. In furtherance thereof, the Lender
and the Borrower stipulate and agree that none of the terms and provisions
contained in this Note or in any other instrument executed in connection
herewith shall ever be construed to create a contract to pay for the use,
forbearance or detention of money at a rate in excess of the Maximum Rate. In
determining whether or not the interest paid or payable exceeds the Maximum
Rate, the Borrower and the Lender shall, to the full extent permitted by
Applicable Usury Law, exclude voluntary prepayments and the effects thereof
and amortize, prorate, allocate and spread, in equal parts, the total amount
of interest and other charges throughout the entire term of this Note so that
the interest rate is uniform throughout the entire term of this Note. Neither
the Borrower nor any guarantors, endorsers or other parties now or hereafter
becoming liable for payment of the Loan shall ever be required to pay interest
on the Loan at a rate in excess of the Maximum Rate, and the provisions of
this Section 6 shall control all other provisions of this Note and of any
other instruments now or hereafter executed in connection herewith which may be
in apparent conflict with this Section 6. The Lender expressly disavows any
intention to charge or collect excessive unearned interest or finance charges
in the event that the maturity of the Loan is accelerated. If under any
circumstances, whether by reason of advancement or acceleration of the unpaid
principal balance of the Loan or otherwise, the aggregate amounts paid on
the Loan shall include amounts which by law are deemed interest and which
would exceed the Maximum Rate, the Borrower stipulates that the payment and
collection of such excess amounts shall have been, and shall be deemed to have
been, the result of a mistake on the part of both the Borrower and the Lender.
If the maturity of the Loan shall be accelerated for any reason, or if the
aggregate principal balance of the Loan is paid prior to the Final Maturity
Date, and as a result thereof the interest received for the actual period of
existence of the Loan exceeds the Maximum Rate, the Lender shall refund to the
Borrower the amount of such excess or shall credit the amount of such excess
against the Loan then outstanding. In the event that the Lender shall
collect monies which are deemed to constitute interest which would increase
the effective interest rate under this Note to a rate in excess of the Maximum
Rate, all such sums deemed to constitute interest in excess of the Maximum Rate
shall, upon such determination, at the option of the Lender, be immediately
returned to the Borrower or credited against the Loan then outstanding.
7. Renewal, Consolidation, Substitution and Supersession. This Note is given
in renewal and substitution of and consolidates the KE Renewal Note, KENC
Renewal Note and KESC Renewal Note, and this Note amends, restates and renews
the obligations evidenced thereby. Upon acceptance by the Lender of this Note,
such promissory notes renewed, substituted and consolidated hereby shall in
their entirety be superseded by this Note, and the repayment of the
indebtedness thereunder shall be governed by this Note as fully as if the
aggregate unpaid indebtedness thereunder had been advanced hereunder by the
Lender to the Borrower.
8. Recourse. Notwithstanding any provisions of this Note, the Mortgages, the
Lease Assignments or any other Loan Document to the contrary, this Note shall
be fully recourse against the Borrower and the Borrower shall be fully liable
for payment of all amounts due and payable hereunder or under any of the Loan
Documents, whether pursuant to a suit for collection hereunder, a suit,
proceeding or other action for collection of a deficiency amount after
foreclosure under the Mortgages or the Lease Assignments or in any other
action or proceeding.
9. Miscellaneous.
9.1 Certain Waivers; Expenses. The Borrower and each other party, if
any, now or hereafter liable under this Note, whether as principal, endorser or
otherwise, hereby severally (a) waive presentment, demand for payment, protest
and notice of dishonor; (b) waive recourse to suretyship defenses generally,
including extensions of time, release of security or other indulgences that
may be granted by the Lender to the Borrower or any other party liable under
this Note; (c) consent to any and all delays, extensions, renewals or other
modifications to this Note or any other Loan Document, or waivers of any term
hereof or thereof, or release or discharge by the Lender of any party liable
hereon, or the release, substitution or exchange of any security for the
payment hereof or the failure to act on the part of the Lender or any
indulgence shown by the Lender, from time to time in one or more instances
(without notice to or further assent from any such parties), and agree that
no such action, failure to act, or failure to exercise any right or remedy
on the part of the Lender shall in any way affect or impair the obligations
of any such parties or be construed as a waiver by the Lender of, or
otherwise affect, any of Lender's rights under this Note or under any of the
Loan Documents; and (d) agree to pay, on demand, all reasonable costs and
expenses (including reasonable fees of attorneys and paraprofessionals) of
collection of this Note or any endorsement or guaranty hereof, and/or the
enforcement of the Lender's rights with respect to, or the administration,
supervision, preservation, protection of, or realization upon, any property
securing payment hereof, including, without limitation, reasonable fees of
attorneys and paraprofessionals (including fees for appellate proceedings or
other judicial proceeding of any kind).
9.2 Course of Dealing. Any forbearance by the Lender or the holder of
this Note in exercising any right or remedy hereunder or any other Loan
Document, or otherwise afforded by applicable law, shall not be a waiver or
preclude the exercise of any right or remedy by Lender. The acceptance by
Lender of payment of any sum payable hereunder after the due date of such
payment shall not be a waiver of the right to Lender or the holder of this
Note to require prompt payment when due of all other sums payable hereunder
or to declare a default for failure to make prompt payment.
9.3 Amendments. This Note may not be amended or modified unless such
amendment or modification is in writing and signed by the Lender and the
Borrower.
9.4 Governing Law. This Note shall be governed by and construed in
accordance with the laws of Florida. In any litigation in connection with or
to enforce this Note or any of the other Loan Documents, the Borrower hereby
irrevocably consents and confers personal jurisdiction on the courts of the
County of Duval in the State of Florida or on the United States Courts located
within the County of Duval in the State of Florida or on the United States
Bankruptcy Court of the Middle District of Florida, Tampa Division, and
expressly waives any objections as to venue in any such courts and agrees that
service of process may be made on the Borrower by mailing a copy of the summons
and complaint by registered or certified mail, return receipt requested, to
the Borrower's address. Nothing contained herein shall, however, prevent the
lender from bringing any action or exercising any rights within any other
state or jurisdiction or from obtaining personal jurisdiction by any other
means available by applicable law.
9.5 Successors and Assigns. The term "Lender" as used in this Note
shall include the Lender's successors, endorsees and assigns. The term
"Borrower" as used in this Note shall include the respective successors,
assigns, heirs and personal representatives thereto, or thereof; provided,
however, that no obligations of the Borrower hereunder may be assigned without
the prior written consent of the Lender. This Note shall be the joint and
several obligation of all borrowers, endorsers, guarantors and sureties, if
any, as may exist now or hereafter in addition to the Borrower, and shall be
binding upon them and their respective successors and assigns and shall inure
the benefit of the Lender and its successors and assigns. The term "Lender"
shall mean the holder of this Note at the time in question.
9.6 Notices. All notices under this Note shall be given as provided
in the Agreement.
9.7 Time of the Essence. It is expressly agreed that TIME IS OF THE
ESSENCE with respect to this Note.
9.8 Severability. In the event that any one or more of the provisions
of this Note shall for any reason be held to be invalid, illegal or
enforceable, in whole or in part, or in any respect, or in the event that
any one or more of the provisions of this Note operate, or would prospectively
operate, to invalidate this Note, then and in any of those events such
provision or provisions only shall be deemed null and void and shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain operative and in full force and effect and shall in no way
be affected, prejudiced or disturbed thereby.
9.9 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
NOTE, THE MORTGAGES, THE LEASE ASSIGNMENTS OR ANY OTHER LOAN DOCUMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER
PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN
DOCUMENTS OR IN ANY WAY RELATED TO THE PROPERTY ENCUMBERED BY THE MORTGAGES
OR THE LEASE ASSIGNMENTS (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND
OR CANCEL THIS NOTE, AND ANY CLAIMS OR DEFENSES ASSERTING THAT THIS NOTE WAS
FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE LENDER TO ACCEPT THIS NOTE.
9.10. Payment by Renewal. The promissory notes renewed and consolidated
hereby shall be marked "Cancelled by Renewal" and attached to this Note
pursuant to Section 201.09 of the Florida Statutes.
IN WITNESS WHEREOF, this Note has been executed under seal as of the
date first above written.
KOGER EQUITY, INC.
By: Victor A. Hughes, Jr.
Name: Victor A. Hughes, Jr.
Title: Senior Vice President
Attest:
James L. Stephens
Title:
(SEAL)
Exhibit 10(o)
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (the "Agreement") made this 9th
day of August, 1993 by and between Koger Equity, Inc., a Florida
corporation ("KE" or the "Company") and TCW Special Credits, a
California general partnership ("TCW Special Credits"), for
itself and, as general partner or investment advisor, on behalf
of Weyerhauser Company Master Pension Trust, TCW Special Credits
Fund III, The Common Fund for Bond Investments and TCW Special
Credits Trust (collectively, the "Shareholders")
W I T N E S S E T H:
WHEREAS, the Shareholders are holders of certain unsecured
debt of Koger Properties, Inc., a Florida corporation ("KPI"), as
debtor or debtor-in-possession under Chapter 11 of title 11 of
the United States Code in the United States Bankruptcy Court for
the Middle District of Florida, Tampa Division (the "Bankruptcy
Court"), case No. 91-12294-8P1 (the "KPI Bankruptcy Case");
WHEREAS, KE and KPI have filed with the Bankruptcy Court, as
joint proponents, a Third Amended and Restated Disclosure
Statement, (the "Disclosure Statement") relating to the Third
Amended and Restated Plan of Reorganization of KPI (the "Plan");
WHEREAS, the Bankruptcy Court approved the Disclosure
Statement on June 8, 1993;
WHEREAS, the Shareholders currently beneficially own 552,600
shares of the common stock, $.01 par value, of KE (the "Common
Stock") and, upon consummation of the Plan and the merger of KPI
with and into KE (the "Merger"), as contemplated by the Agreement
and Plan of Merger between KPI and KE attached as Exhibit F to
the Plan (the "Merger Agreement") will receive additional shares
of Common Stock;
WHEREAS, TCW Special Credits acts as general partner of or
investment advisor to each of the Shareholders and, as such, has
the authority to take certain actions on behalf of the
Shareholders and has or shares the power to vote or dispose of,
or to direct the voting or disposition of, the Shares (as defined
in Section 2.2 hereof) and will have or will share such power
with respect to the Plan Shares (as defined in Section 2.2
hereof);
WHEREAS, the Company and TCW Special Credits for itself and
on behalf of the Shareholders desire to enter into this
Agreement; and
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Representations and Warranties of the Company. The
Company represents and warrants as follows:
1.1. Authorization of Agreement; No Violations;
Consents. The execution, delivery and performance of this
Agreement by the Company has been duly authorized by its
Board of Directors. This Agreement has been duly and
validly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except that such
enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors'
rights generally. Neither the execution, delivery and
performance of this Agreement nor the consummation of the
transactions contemplated herein will, with or without the
giving of notice or the lapse of time, or both, conflict
with or result in any violation of or default under (a) any
provision of the articles of incorporation, or the bylaws,
of KE, (b) any note, bond, mortgage, indenture, lease,
agreement or other material instrument, permit, concession,
grant, franchise or license to which KE is a party or by
which any of their properties or assets may be bound, (c)
any judgment, order, decree, injunction, statute, rule,
permit, license or regulation applicable to KE, any of its
respective properties, or (d) which result in the
acceleration of any material obligation or the creation of
any material lien, charge or encumbrance upon any of the
assets of KE. No authorization, consent or approval of, or
declaration of, filing with or notice to any governmental
body or authority is necessary for the execution and
delivery of this Agreement by KE and neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated hereby require the consent of any
person or entity, other than consents which have been
obtained.
1.2. Exemption from Certain Provisions of Articles of
Incorporation. Pursuant to Article V(d) of the Company's
Articles of Incorporation, the Board of Directors of the
Company has determined that the ownership of up to the
higher of (i) 4,047,350 shares of Common Stock, as adjusted
for any subsequent stock splits, stock dividends or other
recapitalizations of the Company and (ii) twenty-three
percent (23%) of the then outstanding shares of Common Stock
of the Company (the "Maximum Amount") by the Shareholders,
The TCW Group, Inc., TCW Special Credits and any of their
Affiliates (as such term is defined under the Securities
Exchange Act of 1934 (the "Exchange Act")) is exempt from
the Limit (as defined in the Articles of Incorporation of
the Company), ownership, redemption and transfer
restrictions as set forth in the Articles of Incorporation
of the Company while owned by the Shareholders, The TCW
Group, Inc., TCW Special Credits or any of their Affiliates
and has determined that, based upon the representations and
warranties of TCW Special Credits, for itself and on behalf
of the Shareholders as set forth herein, such exemption
shall not jeopardize the qualification of the Company as a
real estate investment trust under the Internal Revenue Code
of 1986, as amended. TCW Special Credits, for itself and on
behalf of the Shareholders understands, acknowledges and
agrees that such exemption applies only to the Shareholders,
The TCW Group, Inc., TCW Special Credits or any of their
Affiliates and is limited to the shares held by the
Shareholders up to the Maximum Amount. The Company hereby
covenants and agrees that for a period of eight (8) years
following the effective date of the Merger, the Company
shall not revoke, rescind, alter or otherwise take any
action to limit or eliminate the exemption from the Limit
granted in this Agreement without the prior written consent
of TCW Special Credits.
1.3. Shareholder Rights Plan Amendment. The Common
Stock Rights Agreement dated as of September 30, 1990
between the Company and First Union National Bank, as
successor Rights Agent (the "Rights Agreement"), as of the
effective date of the Merger, will be amended to provide
that the beneficial ownership by the Shareholders, The TCW
Group, Inc., TCW Special Credits and their Affiliates of
shares of Common Stock of the Company up to the Maximum
Amount shall not cause the distribution of the Rights as
defined in the Rights Agreement. A true and correct copy of
the Rights Agreement, to be amended as contemplated hereby,
is attached hereto as Exhibit A. The Company hereby
covenants and agrees that for a period of eight (8) years
following the effective date of the Merger, the Company
shall not amend, alter or otherwise modify the Rights
Agreement or take any other action to limit or eliminate the
right of the Shareholders, The TCW Group, Inc. and any of
their Affiliates to acquire and maintain beneficial
ownership of shares of Common Stock of the Company of, in
the aggregate, up to the Maximum Amount without causing a
distribution of the Rights without the prior written consent
of TCW Special Credits.
2. Representations and Warranties of TCW Special Credits.
TCW Special Credits represents and warrants that it has the power
and authority under the terms and provisions of a partnership or
other written agreement with each of the Shareholders to enter
into this Agreement on behalf of the Shareholders and to make the
following representations and warranties on their behalf and
further represents and warrants that:
2.1. Authorization of Agreement; No Violation;
Consents. The execution, delivery and performance of this
Agreement by TCW Special Credits for itself and on behalf of
the Shareholders has been duly authorized and this Agreement
has been duly and validly executed and delivered by TCW
Special Credits for itself and on behalf of the Shareholders
and constitutes a valid and binding agreement of each of TCW
Special Credits and the Shareholders, enforceable in
accordance with its terms, except that such enforcement may
be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally.
Neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions
contemplated herein will, with or without the giving of
notice or the lapse of time, or both, conflict with or
result in any violation of or default under (a) any
provision of the articles of incorporation, partnership
agreement, bylaws or other governing document, of the
Shareholders, (b) any note, bond, mortgage, indenture,
lease, agreement or other material instrument, permit,
concession, grant, franchise or license to which the
Shareholders are a party or by which any of their properties
or assets may be bound, (c) any judgment, order, decree,
injunction, statute, rule, permit, license or regulation
applicable to TCW Special Credits or the Shareholders or any
of their respective properties, or (d) which result in the
acceleration of any material obligation or the creation of
any material lien, charge or encumbrance upon any of the
assets of TCW Special Credits or the Shareholders. No
authorization, consent or approval of, or declaration of,
filing with or notice to any governmental body or authority
is necessary for the execution and delivery of this
Agreement by TCW Special Credits for itself and on behalf of
the Shareholders and neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby require the consent of any person or
entity, other than consents which have been obtained.
2.2. Ownership of Common Stock. The Shareholders, as
of the date hereof, are the beneficial holders of 552,600
shares of Common Stock (the "Shares") in the amounts set
forth in Schedule I hereto, free and clear of all liens,
claims, charges and encumbrances. Other than the Shares,
and any shares of Common Stock to be received by the
Shareholders pursuant to the Plan (the "Plan Shares"),
neither TCW Special Credits nor the Shareholders have any
right, directly or indirectly to purchase or have any
interest in, any other shares of Common Stock. Except as
set forth in the Plan or Disclosure Statement, there are no
agreements restricting the transfer, assignment, pledge or
encumbrance of or affecting the rights of TCW Special
Credits or any Shareholder with respect to the Shares or
Plan Shares. The Shares and Plan Shares are the only shares
of Common Stock beneficially owned, within the meaning of
13(d) of the Exchange Act by TCW Special Credits, the
Shareholders or any of their respective Affiliates, as
defined under the Exchange Act.
2.3. Ownership of KPI Unsecured Debt. The Shareholders
are the beneficial holders of an aggregate principal amount
of $65,553,000 of unsecured debt of KPI, in the amounts set
forth in Schedule I hereto, free and clear of all liens,
claims, charges and encumbrances (the "KPI Debt"). Other
than the KPI Debt, neither TCW Special Credits nor the
Shareholders have any right, directly or indirectly, to
purchase or have any interest in any other indebtedness of
KPI. There are no agreements relating to the transfer,
assignment or encumbrance of or affecting the rights of TCW
Special Credits or any Shareholder with respect to the KPI
Debt.
3. Voting Agreement. TCW Special Credits has the power
and authority to vote or direct the voting of all Shares held by
the Shareholders and all KPI Debt. TCW Special Credits agrees to
vote or direct the voting of all Shares held by Shareholders in
favor of the Merger and Merger Agreement as provided in the
Company's proxy statement, to be considered at the Company's 1993
Annual Meeting. TCW Special Credits agrees to vote or direct the
Shareholders, as holders of KPI Debt, to vote in favor of the
Plan as provided in the Disclosure Statement.
4. Certificate. TCW Special Credits, for itself and on
behalf of the Shareholders, agrees to execute and deliver to KE,
on or before the date of the closing of the Merger, a
certificate, dated as of the closing, pursuant to which a duly
authorized representative or officer of each of the Shareholders
represents, warrants and certifies that neither TCW Special
Credits nor the Shareholders have any present plan or intention
to sell, exchange, or otherwise dispose of any of the Plan
Shares.
5. Notices.
5.1. All notices, requests, demands and other
communications which are required to be or may be given
under this Agreement shall be in writing and shall be deemed
to have been duly given when delivered in person or upon
receive when transmitted by telecopy or telex or after
dispatch by certified or registered first class mail,
postage prepaid, return receipt requested, or Federal
Express, to the party to whom the same is so given or made:
If to KE, to: Irvin H. Davis, President
Koger Equity, Inc.
3986 Boulevard Center Drive
Suite 101
Jacksonville, Florida 32207
With copies to: William F. McCarthy, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
and
Harold F. McCart, Jr., Esq.
Boling & McCart
76 South Laura Street
Suite 700
Jacksonville, Florida 32202
If to the Shareholders, to:
Thomas K. Smith, Jr.
TCW Special Credits
865 South Figueroa Street
Suite 1800
Los Angeles, California 90017
With copies to:
Jesse H. Austin, Esq.
Power, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
5.2. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto and supersedes
all prior agreements, representations, warranties,
statements, promises, and understandings, whether written or
oral, with respect to the subject matter hereof, and cannot
be changed or terminated orally. No party hereto shall be
bound by or charged with any written or oral agreements,
representations, warranties, statements, promises, or
understandings not specifically set forth in this Agreement.
5.3. Headings; Certain Terms. The section and other
headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this
Agreement or to affect the meaning or interpretation of this
Agreement.
5.4. Governing Law. This Agreement shall be construed
as to both validity and performance and enforced in
accordance with and governed by the laws of the State of
Florida.
5.5. Severability. If any term or provision of this
Agreement shall to any extent be invalid or unenforceable,
the remainder of this Agreement shall not be affected
thereby, and each term and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by
law. Upon the determination that any term or other
provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect their original intent
as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the
extent possible.
5.6. Public Announcements. KE and TCW Special Credits
shall cooperate in connection with all actions to publicize,
advertise, announce, or disclose to any governmental
authority or other third person the execution or terms of
this Agreement or the transactions contemplated hereby.
Except as required by the Bankruptcy Code or the federal
securities laws, neither party will make any public
disclosure, release or announcement without the prior
written consent of the other party.
5.7. Amendments. This Agreement may not be modified or
changed except by an instrument or instruments in writing
signed by each of KE and TCW Special Credits.
5.8. Section References. All references contained in
this Agreement to any section number are references to
sections of this Agreement unless otherwise specifically
stated.
5.9. Counterparts. This Agreement may be executed in
any number of counterparts, each of which, when executed,
shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement, or have caused this Agreement to be signed on their
behalf by an officer thereunto duly authorized, on the respective
dates stated below.
KOGER EQUITY, INC.
By: Victor A. Hughes
Title:
TCW SPECIAL CREDITS, a California
general partnership for itself and
on behalf of the Shareholders (as
defined herein)
By: TCW ASSET MANAGEMENT COMPANY,
Managing General Partner
By: Bruce Karsh
Name: Bruce A. Karsh
Title: Managing Director
By: Richard Masson
Name: Richard Masson
Title: Managing Director
<PAGE>
Schedule I
<TABLE>
FUNDHOLDERS
ICW SPECIAL CREDITS 8/5/93
<CAPTION>
Pre-Petition
Par Amount Accrued Interest Total Claim Shares
KPI 8.4% NOTES
<S> <C> <C> <C> <C>
- Weyerhauser Company Master
Pension Trust 5,400,000.00 315,648.65 5,715,648.65
- TCW Special Credits Fund III 10,640,000.00 621,944.74 11,261,944.74
- The Common Fund for Bond
Investments 160,000.00 9,352.55 169,352.55
KPI SR, UNSECURED BANK DEBT
- Weyerhauser Company Master
Pension Trust 6,734,530.00 119,424.27 6,853,954.27
- TCW Special Credits Fund III 25,181,210.00 419,987.13 25,601,197.13
- The Common Fund for Bond
Investments 2,330,680.00 36,600.87 2,367,280.87
- TCW Special Credits Trust 15,106,580.00 284,266.62 15,390,846.62
TOTAL KPI SR, UNSECURED CLAIMS
- Weyerhauser Company Master
Pension Trust 12,134,530.00 435,072.92 12,569,602.92
- TCW Special Credits Fund III 35,821,210.00 1,041,931.88 36,863,141.88
- The Common Fund for Bond
Investments 2,490,680.00 45,953.43 2,536,633.43
- TCW Special Credits Trust 15,106,580.00 284,266.62 15,390,846.62
KE COMMON STOCK
- Weyerhauser Company Master 101,900
Pension Trust
- TCW Special Credit Fund III 265,800
- The Common Fund for Bond
Investments 24,100
- TCW Special Credits Trust 160,800
TCW SPECIAL CREDITS FUNDS 65,553,000.00 1,807,224.84 67,360,224.84 552,600
</TABLE>
<PAGE>
Exhibit A
Amendment No. 1 to Rights Agreement
This amendment, dated as of August ___, 1993, amends the Common Stock
Rights Agreement dated as of September 30, 1990 (the "Rights Agreement"),
between Koger Equity, Inc., a Florida corporation (the "Company"), and First
Union National Bank, as successor Rights Agent (the "Rights Agent"). Terms
defined in the Rights Agreement and not otherwise defined herein are used
herein as so defined
W I T N E S S E T H:
WHEREAS, on September 30, 1990, the Board of Directors of the Company
authorized the issuance of Rights to purchase, on the terms and subject to the
provisions of the Rights Agreement, one share of the Company's Common Stock;
and
WHEREAS, on September 30, 1990, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for every share
of Common Stock of the Company outstanding on the Dividend Record Date and
authorized the issuance of one Right (subject to certain adjustments) for each
share of Common Stock of the Company issued between the Dividend Record Date
and the Distribution Date; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Continuing
Directors now unanimously desire to further amend certain provisions of the
Rights Agreement;
NOW, THEREFORE, the Rights Agreement is hereby amended as follows:
1. Section 1(v) is amended by replacing Section (v) in its entirety
with the following:
"(v) "Exempt Person" shall mean, collectively, TCW Special
Credits, a California general partnership, The TCW Group, Inc. and
their Affiliates, only so long as TCW Special Credits, a California
general partnership, The TCW Group, Inc. and their Affiliates are,
collectively, the Beneficial Owners of shares of Common Stock
outstanding in an amount not in excess of an aggregate of the higher
of (i) 23% of the shares of Common Stock then outstanding and (ii)
4,047,350 share of Common Stock, as adjusted for any stock splits,
stock dividends or other recapitalizations of the Company on or after
August , 1993."
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to the Rights Agreement to be duly executed as of the day and year
first above written.
KOGER EQUITY, INC.
By: ______________________________
Title:
Attest:
By: _____________________________
Secretary
FIRST UNION NATIONAL BANK
By: ______________________________
Title:
Exhibit 10(p)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of this the 9th day of August, 1993 by and between Koger
Equities, Inc., a Florida corporation, and TCW Special Credits, a California
general partnership ("TCW Special Credits"), for itself and, as general
partner or investment advisor, on behalf of TCW Special Credits Fund III,
Weyerhauser Company Master Pension Trust, The Common Fund for Bond Investments
and TCW Special Credits Trust (collectively, the "Shareholders").
This Agreement is entered into in connection with the Plan (as defined
below) which provides for the reorganization of Koger Properties, Inc., a
Florida corporation, through a merger of Koger Properties, Inc. into Koger
Equities, Inc.
The Company (as defined below) and TCW Special Credits, for itself and
on behalf of the Shareholders, are simultaneously herewith entering into a
Shareholders Agreement (the "Shareholders Agreement") providing, among other
things, that TCW Special Credits shall vote or direct the Shareholders to vote
for the Plan and the merger contemplated thereby. As a condition to its
willingness to enter into the Shareholders Agreement, TCW Special Credits has
requested that the Company grant certain registration rights as provided in
this Agreement.
To induce TCW Special Credits to enter into, and in consideration of
its entering into, the Shareholders Agreement, and for and in consideration of
the mutual covenants and agreements contained herein, the parties hereto
agree as follows:
1. Certain Definitions.
For purposes of this Agreement, the following terms have the following
meanings when used herein:
(a) "Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in New York, New York
are authorized by law, regulation or executive order to close.
(b) "Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(c) "Common Stock" means the Common Stock, par value $.01 per share,
of the Company.
(d) "Company" means Koger Equities, Inc., a Florida corporation, and
its successors and assigns.
(e) "Demand Registration" means any registration of Registrable
Securities effected pursuant to Section 3 hereof.
(f) "Effective Date" means the effective date of the Plan.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any similar successor federal statute), and the rules and
regulations thereunder, as in effect from time to time.
(h) "Initiating Holders" shall have the meaning ascribed to such term
in Section 3(a) hereof.
(i) "Holder" means any Person that owns Registrable Securities,
including such successors and assigns as acquire Registrable Securities,
directly or indirectly, from such Person. For purposes of this Agreement, the
Company may deem and treat the registered holder of a Registrable Security as
the Holder and absolute owner thereof.
(j) "Majority Registered Holders" means in the case of any registration
statement, the Holders of a majority of the Registrable Securities proposed to
be covered (or so covered) in such registration statement.
(k) "Person" means any individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated association,
joint venture, or other entity, or a government or any political subdivision
or agency.
(l) "Piggyback Registration" means any registration of Registrable
Securities effected pursuant to Section 4 hereof.
(m) "Plan" means the plan of reorganization of Koger Properties, Inc.,
as amended to date, filed with the Bankruptcy Court in Chapter 11 Case No.
91-12294-8P1 in the United States Bankruptcy Court for the Middle District of
Florida, Tampa Division and distributed to creditors pursuant to that order of
the Bankruptcy Court dated June 8, 1993 in said Chapter 11 Case approving the
Third Amended and Restated Disclosure Statement (the "Disclosure Statement").
(n) "Registrable Securities" means (i) the 552,600 shares of Common
Stock held by the Shareholders on the date hereof and the shares of Common
Stock to be issued to the Shareholders pursuant to the Plan, and (ii) any
securities issued or issuable in respect of or in exchange for any of the
shares of Common Stock referred to in clause (i) above by way of a stock
dividend or other distribution on the Common Stock, stock split or combination
of shares, recapitalization, reclassification, merger, consolidation or
exchange offer. For purposes of this Agreement, a Registrable Security ceases
to be a Registrable Security when (1) it has been effectively registered under
the Securities Act and sold or distributed to any Person pursuant to an
effective registration statement covering it, (2) it has been sold or
distributed to any Person pursuant to Rule 144, or (3) it has been sold or
distributed pursuant to an exemption from the registration requirements of the
Securities Act to any Person other than any investment fund for which TCW
Special Credits acts as manager, any partnership or other entity for which TCW
Special Credits acts directly or indirectly as a general partner or controlling
stockholder, any Person otherwise affiliated with TCW Special Credits, The TCW
Group, Inc. and its direct or indirect subsidiaries.
(o) "Registration" means any Demand Registration or Piggyback
Registration.
(p) "Rule 10b-6" means Rule 10b-6 promulgated by the Commission under
the Exchange Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
(q) "Rule 144", "Rule 145", "Rule 415" and "Rule 424" mean,
respectively, Rule 144, Rule 145, Rule 415 and Rule 424, each promulgated by
the Commission under the Securities Act, in each case as amended from time to
time, or any similar successor rule thereto that may be promulgated by the
Commission.
(r) "Securities Act" means the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
2. [RESERVED]
3. Demand Registrations.
(a) At any time after six months following the Effective Date, upon
written notice to the Company from one or more Holders (the "Initiating
Holders") of Registrable Securities holding in the aggregate the greater of
(i) 10% of the initial Registrable Securities and (ii) an amount of Registrable
Securities consisting of at least 250,000 shares of Common Stock or securities
issued or issuable in respect of or in exchange for such shares of Common Stock
by way of a stock dividend or other distribution on the Common Stock, stock
split or combination of shares, recapitalization, reclassification, merger or
exchange offer, requesting that the Company effect, pursuant to this Section 3,
the registration of any of such initiating Holders' Registrable Securities
under the Securities Act (which notice shall specify the Registrable Securities
so requested to be registered which amount of Registrable Securities to be so
registered shall be equal to or greater than 10% of the initial Registrable
Securities, the proposed amounts thereof and the intended method or methods of
disposition by such Initiating Holders (including whether or not the proposed
offering is to be underwritten)), the Company shall promptly (but in any event
within 15 days) give written notice of such requested registration to all
Holders, and thereupon the Company shall use its best efforts to effect the
registration under the Securities Act of:
(A) the Registrable Securities that the Initiating Holders have
requested the Company to register, for disposition in accordance with
the intended method or methods of disposition stated in their notice
to the Company; and
(B) all other Registrable Securities the Holders of which shall
have made a written request to the Company for registration thereof
(which request shall specify such Registrable Securities and the
proposed amounts thereof) within 15 days after the receipt of such
written notice from the Company, as expeditiously as possible (but in
any event shall file such registration statement within 45 days of the
receipt of such request), all to the extent requisite to permit the
disposition by Holders of the securities then constituting Registrable
Securities so to be registered.
(b) Frequency; Duration. The Company is obligated to effect only four
registrations pursuant to this Section 3 with respect to all Holders.
Notwithstanding the foregoing, the Company shall not be required to effect a
Demand Registration pursuant to this Section 3: (i) if it shall have so
effected a Demand Registration during the previous seven months; (ii) if the
Initiating Holders shall have requested such Demand Registration after the
eighth anniversary of the Effective Date; or (iii) during the period starting
with the date 30 days prior to the Company's good faith estimate of the date
of filing of, and ending on the date 90 days following the effective date of,
a registration statement pertaining to an underwritten public offering for the
account of the Company with respect to which Holders have piggyback
registration rights pursuant to Section 4 hereof; provided, however, that a
Demand Registration shall not be deemed to have been effected for purposes of
Section 3(b)(i) if the applicable registration statement has not been declared
effective and kept effective until the earlier of (i) four months following
the date on which such registration statement was declared effective and (ii)
the sale pursuant to such registration statement of the Registrable Securities
covered thereby, and further, provided, that in the event a request for
registration is refused pursuant to clause (iii) above, if the Company then
elects not to file a registration statement or, if a registration statement is
filed, the Company elects not to complete the proposed offering, the Company
shall notify in writing the Holders whose request for registration has been
refused pursuant to clause (iii) above, and such Holders shall have the right,
within 10 days after receiving written notice of the Company's election to
request the Company to effect the registration of Registrable Securities for
the account of Holders, and such registration shall be considered a Demand
Registration under Section 3 hereof.
(c) Right to Delay Registration. The Company shall have the right to
delay the filing of a registration statement required to be filed under this
Section 3 if the Company shall finish the Initiating Holders a certificate
signed by the President of the Company (the "Certificate") (i) stating that
in the good faith judgment of a majority of the disinterested members of the
Board of Directors of the Company an undisclosed material event has occurred
and is continuing or is likely to occur within 90 days the public disclosure
of which would have a material adverse effect on the Company or on a proposed
material transaction involving the Company or a substantial amount of its
assets and (ii) describing in reasonable detail the undisclosed material event.
The filing of the registration statement may be delayed by the Company
pursuant to this Section 3(c) until such time as the undisclosed material event
referred to in the Certificate shall have been publicly disclosed or shall
have ceased to be material but in no event more than 90 days after receipt of
the demand registration request from the Initiating Holders; provided, however,
that the Company may not utilize the right set forth in this Section 3 (c) more
than once in any 24-month period; and further, provided, however, that if,
following the receipt of the Certificate the Initiating Holders elect to
withdraw their registration request, the last proviso of Section 7 hereof
(relating to payment of registration expense or forfeiture of a Demand
Registration right upon withdrawal of demand registration request) shall not
apply to such withdrawal.
(d) Inclusion of Other Securities. The Company may include in a Demand
Registration securities held by other Persons who have piggyback registration
rights pursuant to written agreements with the Company. If any securities other
than Registrable Securities are included, Registrable Securities shall have
absolute priority over securities included by the Company at the request of
such other Persons. The Shareholders hereby acknowledge and recognize that if
any Registrable Securities are included in a registration statement filed by
the Company pursuant to demand registration rights granted by the Company to
Persons other than the Holders, the Company may provide in the appropriate
agreement that such other Persons' securities shall have absolute priority
over Registrable Securities requested by Holders to be included, pursuant to
Section 4 hereof, in such other Persons' demand registration.
4. Piggyback Registrations.
(a) Effective Registration. If, but without any obligation to do so,
the Company proposes to file a registration statement under the Securities Act
with respect to any class of equity securities (other than in connection with
the registration of equity securities issued or issuable pursuant to an
employee stock option, stock purchase, stock bonus or similar plan or dividend
reinvestment plan or pursuant to a merger, exchange offer or transaction of
the type specified in Rule 145(a) under the Securities Act), including, but
not limited to, a registration statement pursuant to demand registration rights
granted by the Company to Persons other than the Holders, at any time on or
prior to the eighth anniversary of the Effective Date, then the Company shall
give written notice of such proposed filing to the Holders at least 15 days
before the anticipated filing date, and such notice shall offer the Holders
the opportunity to register such amount of Registrable Securities as each such
Holder may request. The Company shall use its reasonable efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit the inclusion therein of any Registrable Securities the Holders of which
request, within 10 days after receiving written notice of the proposed filing
from the Company, such inclusion, on the same terms and conditions as any
similar securities of the Company so included. Any Holder's request for such
inclusion may be withdrawn, in whole or in part, at any time prior to five days
prior to the effective date of the registration statement for such offering.
The Company shall be under no obligation to complete any offering of its
securities it proposes to make under this Section 4 and shall incur no
liability to any Holder for its failure to do so except for any obligation it
may have under Section 3(b) hereof.
(b) Cut-Backs. Notwithstanding the provisions of Section 4(a) hereof,
if the managing underwriter or underwriters of a proposed underwritten offering
as described in such Section 4(a) advise in writing the Holders requesting
inclusion of their Registrable Securities that the total amount or kind of
securities that they and any other Persons seek to include in such offering
would materially and adversely affect the success of such offering, then the
amount or kind of securities, including Registrable Securities, to be offered
for the accounts of Holders and of Persons exercising piggyback registration
rights pursuant to written agreements with the Company shall be reduced pro
rata to the extent necessary to reduce the total amount of securities,
including Registrable Securities, to be included in such offering to that
recommended by such managing underwriter or underwriters (which amount may be
zero).
5. Holdback Agreements.
(a) Restrictions on Sales by Holders of Registrable Securities. To the
extent not inconsistent with applicable law, each Holder of Registrable
Securities that is timely notified in writing by the managing underwriter or
underwriters of any equity securities or securities convertible into or
exchangeable for equity securities being registered in an underwritten
offering (other than pursuant to an employee stock option, stock purchase,
stock bonus or similar plan, or dividend reinvestment plan pursuant to a
merger, exchange offer or a transaction of the type specified in Rule 145(a)
under the Securities Act or pursuant to a "shelf" registration), shall not
effect any sale or distribution (including a sale pursuant to Rule 144) of any
Registrable Securities that are similar to any such securities or any
Registrable Securities convertible into or exchangeable or exercisable for any
such securities, during the 10-day period prior to, and during the 90-day
period beginning on, the effective date of the applicable registration
statement, except as part of such registration, without the prior written
consent of such underwriters.
(b) Restrictions on Sales by the Company. The Company shall not effect
any sale of any securities of the Company similar to any Registrable Securities
being offered in an underwritten offering under a registration statement filed
pursuant to Section 3 hereof or any securities of the Company convertible into
or exchangeable or exercisable for any such Registrable Securities, during the
10-day period prior to, and during the 90 day period beginning on, the
effective date of such a registration statement, except pursuant to an employee
stock option, stock purchase, stock bonus or similar plan or dividend
reinvestment plan or pursuant to a merger, exchange offer or a transaction
specified in Rule 145(a) under the Securities Act.
6. Registration Procedures.
(a) Company Procedures. Whenever the Company is required by this
Agreement to effect the registration of any Registrable Securities under the
Securities Act pursuant to a registration statement, the Company shall use its
best efforts to effect each such registration to permit the sale of such
Registrable Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall, as soon as
practicable:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter use its best
efforts to cause such registration statement to be declared effective as soon
as practicable and to remain continuously effective for the time period
required by this Agreement to the extent permitted under the Securities Act,
provided that as soon as practicable but in no event later than three Business
Days before filing such registration statement, any related prospectus or any
amendment or supplement thereto, other than any amendment or supplement made
solely as a result of incorporation by reference of documents filed with the
Commission subsequent to the filing of such registration statement, the
Company shall furnish to the Holders of the Registrable Securities covered by
such registration statement and the underwriters, if any, copies of all such
documents proposed to be filed; the Company shall not file any registration
statement or amendment thereto or any prospectus or any supplement thereto
(other than any amendment or supplement made solely as a result of
incorporation by reference of documents filed with the Commission subsequent
to the filing of such registration statement) to which the managing
underwriters of the applicable offering, if any, or the Majority Registered
Holders shall have reasonably objected in writing within two Business Days
after receipt of such documents to the effect that such registration statement
or amendment thereto or prospectus or supplement thereto does not comply in all
material respects with the requirements of the Securities Act (provided that
the foregoing shall not limit the right of any Holder whose Registrable
Securities are covered by a registration statement to reasonably object within
two Business Days after receipt of such documents, to any particular
information that is to be contained in such registration statement, amendment,
prospectus or supplement and relates specifically to such Holder, including,
without limitation, any information describing the manner in which such Holder
acquired such Registrable Securities and the intended method or methods of
distribution of such Registrable Securities), and if the Company is unable to
file any such document due to the objections of such underwriters or such
Holders, the Company shall use its best efforts to cooperate with such
underwriters and Holders to prepare, as soon as practicable, a document that
is responsive in all material respects to the reasonable objections of such
underwriters and Holders;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be necessary
to keep such registration statement continuously effective and current for the
period required by this Agreement to the extent permitted under the Securities
Act; and cause each related prospectus to be supplemented by any prospectus
supplement as may be required, and as so supplemented to be filed pursuant to
Rule 424; and otherwise comply with the provisions of the Securities Act as may
be necessary to facilitate the disposition of all Registrable Securities
covered by such registration statement during the applicable period in
accordance with the intended method or methods of disposition by the selling
Holders thereof set forth in such registration statement or such prospectus or
prospectus supplement;
(iii) notify the Holders and the managing underwriters, if any,
of the applicable offering (providing, if requested by any such Persons,
confirmation in writing) as soon as practicable after becoming aware of: (A)
the filing of any prospectus or prospectus supplement or the filing or
effectiveness (or anticipated date of effectiveness) of such registration
statement or any post-effective amendment thereto; (B) any request by the
Commission for amendments or supplements to such registration statement or the
related prospectus or for additional information; (C) the issuance by the
Commission of any stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose; (D) the
receipt by the Company of any notification with respect to the suspension of
the qualification or registration (or exemption therefrom) of any Registrable
Securities for sale in any jurisdiction in the United States or the initiation
or threatening of any proceeding for such purposes; or (E) the happening of any
event that makes any statement made in such registration statement or in any
related prospectus, prospectus supplement, amendment or document incorporated
therein by reference untrue in any material respect or that requires the
making of any changes in such registration statement or in any such prospectus,
supplement, amendment or other such document so that it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein (in the case
of any prospectus in the light of the circumstances under which they were made)
not misleading;
(iv) make every reasonable effort to obtain the withdrawal of
any order or other action suspending the effectiveness of any such
registration statement or suspending the qualification or registration (or
exemption therefrom) of the Registrable Securities for sale in any
jurisdiction;
(v) if reasonably requested by the managing underwriters, if
any, of the applicable offering, or by the Majority Registered Holders, as
soon as practicable incorporate in a prospectus supplement or post-effective
amendment such information as such underwriters or the Majority Registered
Holders, as the case may be, agree should be included therein relating to the
sale and offering of the applicable Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being sold to any underwriters, the purchase price being paid therefor by any
such underwriters and any other term of the offering of the Registrable
Securities; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable following receipt of notice of
the matters to be incorporated therein;
(vi) as soon as practicable after filing such documents with
the Commission, furnish to the Holders and each of the underwriters, if any,
without charge, at least one manually signed or conformed copy of such
registration statement and any post-effective amendment thereto, including
financial statements and schedules; and as soon as practicable after the
request of any Holder or underwriter, furnish to such Holder or underwriter,
as the case may be, at least one copy of any document incorporated by reference
in such registration statement or in any related prospectus, prospectus
supplement or amendment, together with all exhibits thereto (including those
previously furnished or incorporated by reference);
(vii) deliver to the Holders and to each of the underwriters,
if any, without charge, as many copies of the prospectus or prospectuses
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; subject to Section 6(b)(i) hereof, the
Company consents to the use of any such prospectus or any amendment or
supplement thereto by the Holders and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by any such
prospectus or any amendment or supplement thereto;
(viii) use its best efforts to register or qualify the
securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdiction or
to subject itself to taxation in any such jurisdiction or to consent to any
material condition which is not reasonable in the judgment of the Board of
Directors of the Company;
(ix) cooperate with Holders participating in such registration
and the underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing the Registrable Securities to be sold; and enable
such Registrable Securities to be in such denominations and registered in such
names as the underwriters, if any, may request as provided in the underwriting
agreement;
(x) as soon as practicable after the occurrence of any event
described in Section 6(a)(iii)(E) hereof, prepare a supplement or post-
effective amendment to such registration statement or to the related prospectus
or any document incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading; if any event described in Section
6(a)(iii)(B) hereof occurs, use its best efforts to cooperate with the
Commission to prepare, as soon as practicable, any amendment or supplement to
such registration statement or such related prospectus and any other additional
information, or to take other action that may have been requested by the
Commission;
(xi) use its best efforts to cause all Common Stock
constituting Registrable Securities covered by such registration statement to
be listed on each securities exchange (or quotation system operated by a
national securities association) on which the Common Stock of the Company is
then listed (or included), if so requested by the Majority Registered Holders
or the underwriters, if any, and enter into customary agreements including, if
necessary, a listing application in customary form, and provide a transfer
agent for such Registrable Securities no later than the effective date of such
registration statement; use its best efforts to cause any other Registrable
Securities covered by such registration statement to be listed (or included)
on each securities exchange (or quotation system operated by a national
securities association) on which securities of the same class and series, if
any, are then listed (or included) (or on any exchange or quotation system on
which any Person other than a Holder shall have the right to have securities
of the same class and series, if any, listed or included), if so requested by
the Majority Registered Holders or the underwriters, if any, and enter into
customary agreements including, if necessary, a listing application in
customary form, and, if necessary, provide a transfer agent for such securities
no later than the effective date of such registration statement;
(xii) provide a CUSIP number for the Registrable Securities
no later than the effective date of such registration statement;
(xiii) enter into customary agreements (including, in the case
of an underwritten offering, an underwriting agreement in customary form with
the managing underwriters with respect to issuers of similar market
capitalization and reporting and financial histories) and take all such other
reasonable actions in connection therewith in order to expedite or facilitate
the disposition of the Registrable Securities included in such registration
statement and, in the case of an underwritten offering: (A) make
representations and warranties to each of the underwriters, in such form,
substance and scope as are customarily made to the managing underwriters by
issuers of similar market capitalization and reporting and financial histories
and confirm the same to the extent customary if and when requested; (B) obtain
opinions of counsel to the Company and updates thereof addressed to each
Holder of Registrable Securities participating in such offering and to each of
the underwriters, such opinions and updates to be in customary form and
covering the matters customarily covered in opinions obtained in underwritten
offerings by the managing underwriters for issuers of similar market
capitalization and reporting and financial histories; (C) obtain "comfort"
letters and updates thereof from the Company's independent certified public
accountants addressed to each Holder of Registrable Securities participating
in such offering and to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"comfort" letters to the managing underwriters in connection with underwritten
offerings by them for issuers of similar market capitalization and reporting
and financial histories; (D) provide, in the underwriting agreement to be
entered into in connection with such offering, indemnification in such form,
substance and scope as are customarily provided by issuers of similar market
capitalizations and reporting and financial histories; and (E) deliver such
customary documents and certificates as may be reasonably requested by the
Majority Registered Holders and the managing underwriters to evidence
compliance with clause (A) of this paragraph (xiv) and with any customary
conditions contained in the underwriting agreement entered into by the Company
in connection with such offering;
(xiv) in the case of any non-underwritten offering: (A) obtain
an opinion of counsel to the Company at the time of the sale of Registrable
Securities covered by such registration statement) addressed to each Holder of
any Registrable Securities covered by such registration statement, covering
matters that are no more extensive in scope than would be customarily covered
in opinions obtained in underwritten offerings by issuers with similar market
capitalization and reporting and financial histories; (B) obtain a "comfort"
letter from the Company's independent certified public accountants at the time
of sale of Registrable Securities covered by such registration statement and,
upon the request of the Majority Registered Holders, updates thereof, in each
case addressed to each Holder of Registrable Securities participating in such
offering and covering matters that are no more extensive in scope than would
be customarily covered in "comfort" letters and updates obtained in
underwritten offerings by issuers with similar market capitalization and
reporting and financial histories; and (C) deliver a certificate of a senior
executive officer of the Company at the time of sale of Registrable Securities
covered by such registration statement such certificates to cover matters no
more extensive in scope than those matters customarily covered in officers'
certificates delivered in connection with underwritten offerings by issuers
with similar market capitalization and reporting and financial histories;
(xv) make available, for inspection by the Holders of the
Registrable Securities included in such registration, any underwriter
participating in any disposition of Registrable Securities pursuant to such
registration statement, and any attorney, accountant or other representative
retained by such selling Holders or by any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such underwriter, attorney,
accountant or other representative in connection with such registration;
(xvi) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission relating to such
registration and the distribution of the securities being offered (including,
without limitation, Rule 1Ob-6 and make generally available to its security
holders earning statements satisfying the provisions of Section 1l(a) of the
Securities Act, no later than as provided in the underwriting agreement in an
underwritten offering, or, if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of such registration statement, which earning
statements shall cover the 12-month periods thereafter;
(xvii) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. and in the
performance of any customary or required due diligence investigation by any
underwriter; and
(xviii) use its best efforts to take all other reasonable steps
necessary and appropriate to effect such registration in the manner
contemplated by this Agreement.
(b) Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Holders shall furnish to the Company such information regarding
themselves or the Registrable Securities held by them, and the intended method
of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
(c) Holder Procedures.
(i) Each Holder agrees that upon receipt of any notice from
the Company of the happening of any event described in Section 6(a) paragraphs
(iii)(B), (iii)(C), (iii)(D) or (iii)(E) hereof, such Holder shall forthwith
discontinue disposition of any Registrable Securities (but, in the case of an
event described in Section 6(a)(iii)(D), in the affected jurisdiction or
jurisdictions only) covered by the affected registration statement or
prospectus until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6(a) paragraphs (iii) or (xi) hereof
or until such Holder is (it being agreed by the Company that the underwriters,
if any, shall also be) advised in writing (the "Advice") by the Company that
the use of the applicable prospectus may be resumed. If the Company shall have
given any such notice during a period when a Demand Registration is in effect,
the four-month period mentioned in Section 3(b) hereof, shall be extended by
the number of days from and including the date of the giving of such notice to
and including the date when each Holder of Registrable Securities included in
such Registration shall have received the copies of the supplemented or amended
prospectus contemplated by Section 6(a) paragraphs (iii) or (xi) hereof or the
Advice, as the case may be.
(ii) In connection with any underwritten public offering of
Registrable Securities pursuant to a Demand Registration, the managing
underwriter of such offering shall be an investment banking firm selected by
the Majority Registered Holders and shall be reasonably acceptable to the
Company.
7. Registration Expenses.
All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with
blue sky qualifications or registrations (or the obtaining of exemptions
therefrom) of the Registrable Securities), printing expenses (including
expenses of printing prospectuses), messenger and delivery expenses, internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees of the Company performing legal or accounting duties),
fees and disbursements of its counsel and its independent certified public
accountants (including the expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance),
reasonable fees and expenses of any special experts retained by the Company
in connection with any registration hereunder, reasonable fees and expenses of
other Persons retained by the Company, reasonable fees and expenses of one
counsel for the Holders, selected by the Majority Registered Holders, incurred
in connection with each registration hereunder (all such expenses being herein
referred to as "Registration Expenses"), shall be borne by the Company;
provided that Registration Expenses shall not include any underwriting
discounts, commissions or fees attributable to the sale of the Registrable
Securities, provided, further, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 3
if the registration request is subsequently withdrawn at any time at the
request of the Majority Registered Holders (in which case all participating
Holders shall bear such expenses), unless the Majority Registered Holders
agree to forfeit their right to one Demand Registration pursuant to Section 3.
8. Indemnification; Contribution.
(a) Indemnification by the Company. In the event any Registrable
Securities are included in a registration statement under this Agreement, the
Company shall indemnify, to the full extent permitted by law, each Holder of
Registrable Securities, its officers, directors, employees and agents, each
Person who controls such Holder (within the meaning of the Securities Act) and
any investment adviser thereof or agent therefor, against all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation
and legal expenses) arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any registration statement covering
any Registrable Securities, any related prospectus or preliminary prospectus,
or any amendment or supplement thereto, or any omission or alleged omission to
state in any thereof a material fact required to be stated therein or necessary
to make the statements therein (in the case of a prospectus or prospectus
supplement, in light of the circumstances under which they were made) not
misleading unless such untrue statement or alleged untrue statement or omission
or alleged omission was contained in a preliminary prospectus and corrected in
a final or amended prospectus and the seller failed to deliver a copy of the
final or amended prospectus at or prior to the confirmation of the sale of the
Registrable Securities to the persons asserting any such loss, claim, damage or
liability in the case where such delivery by the selling Holder is required by
the Securities Act, except in each case insofar, but only insofar, as the same
arises out of or is based upon an untrue statement or alleged untrue statement
of a material fact or an omission or alleged omission to state a material fact
in such registration statement, prospectus, preliminary prospectus, amendment
or supplement, as the case may be, made or omitted, as the case may be, in
reliance upon and in conformity with written information furnished to the
Company by such Holder expressly for use therein; provided, however, that in
no event shall the disability of any holder for indemnification under this
Section 8(b) exceed the proceeds received by such holder from the sale of
Registrable Securities under the applicable registration statement. This
indemnity is in addition to any liability that the Company may otherwise have.
The Company shall also indemnify any underwriters of the Registrable
Securities, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution and their officers and
directors and each Person who controls such underwriters or other Persons
(within the meaning of the Securities Act) to the extent provided in the
applicable underwriting agreement.
(b) Indemnification by Holders of Registrable Securities. In connection
with any registration statement covering Registrable Securities, each Holder
any of whose Registrable Securities are covered thereby shall furnish to the
Company in writing such information and affidavits with respect to such Holder
as the Company reasonably requests for use in connection with such
registration statement, any related prospectus or preliminary prospectus, or
any amendment or supplement thereto, and shall indemnify, to the full extent
permitted by law, the Company, the Company's directors, officers, employees and
agents, each Person who controls the Company (within the meaning of the
Securities Act) and any investment adviser thereof or agent therefor, against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and legal expenses) arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in any
registration statement covering any Registrable Securities, any related
prospectus or preliminary prospectus, or any amendment or supplement thereto,
or any omission or alleged omission to state in any thereof a material fact
required to be stated therein or necessary to make the statements therein (in
the case of a prospectus or prospectus supplement, in light of the
circumstances under which they were made) not misleading, in each case to the
extent, but only to the extent, that the same arises out of or is based upon
an untrue statement or alleged untrue statement of a material fact or an
omission or alleged omission to state a material fact in such registration
statement or in such related prospectus, preliminary prospectus, amendment or
supplement, as the case may be, made or omitted, as the case may be, in
reliance upon and in conformity with written information furnished to the
Company by such Holder expressly for use therein; provided, however, that in
no event shall the liability of any Holder for indemnification under this
Section 8(b) exceed the proceeds received by such Holder from the sale of
Registrable Securities under the applicable registration statement. This
indemnity is in addition to any liability that a Holder may otherwise have.
Each Holder participating in an offering of Registrable Securities shall, if
requested by the managing underwriter or underwriters, of such offering, also
indemnify any underwriters of such Registrable Securities, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution of such Registrable Securities and their officers and
directors and each Person who controls such under or other Persons (within the
meaning of the Securities Act) to the extent provided in the applicable under
writing agreement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification under this Section 8 agrees to give prompt written notice to
the indemnifying party after the receipt by such Person of any written notice
of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such Person will claim indemnification
or contribution pursuant to this Agreement and the indemnifying party shall
have the right to participate in, and, unless in the reasonable judgment of
such indemnified party a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to such claim,
permit the indemnifying party to assume the defense of such claim with counsel
reasonably and mutually satisfactory to the parties. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a claim, it shall
not be obligated to pay the reasonable fees and expenses of more than one
counsel with respect to such claim, unless in the reasonable judgment of
counsel to such indemnified party, expressed in a writing delivered to the
indemnifying party, a conflict of interest may exist between such indemnified
party and any other indemnified party with respect to such claim, in which
event the indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel or counsels (which shall be limited to one
counsel per indemnified party). The indemnifying party shall not be subject to
any liability for any settlement made without its consent, which consent shall
not be unreasonably withheld. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 8 to the extent of such prejudice.
(d) Contribution.
(i) If the indemnification provided for in this Section 8 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the actions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations; provided, however, that in no
event shall the liability of any Holder for contribution under this Section
8(d) exceed the proceeds received by such Holder from the sale of Registrable
Securities under the applicable registration statement. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 8(c) hereof, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(iii) If indemnification is available under this Section 8,
the indemnifying parties shall indemnify each indemnified party to the full
extent provided in Section 8(a) and Section 8(b) hereof without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 8(d).
9. Participation in Underwritten Registrations
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay such Person's pro rata portion of all
underwriting discount and commissions.
10. Cooperation with the Company.
Each Holder by the acceptance of Registrable Securities agrees to use
its best efforts to cooperate with the Company in all reasonable respects in
connection with the preparation and filing of Registrations hereunder in which
such Registrable Securities are included or requested to be included.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter enter
into any agreement with respect to any of its securities that contains
provisions more favorable in any material respect to the holders thereof than
the provisions contained in this Agreement without providing for the granting
of comparable rights to the Holders in this Agreement or that contains
provisions that conflict with the provisions hereof in any material respect.
TCW Special Credits, for itself and on behalf of the Shareholders, hereby
acknowledges and agrees, however, that the Company may grant to other Persons
registration rights, and that if such registration rights are granted, except
as otherwise specifically provided herein, the registration rights granted to
such Persons shall be pari passu with the registration rights of the Holders
as provided herein.
(b) Remedies. Each Holder of Registrable Securities, in addition to
being entitled to exercise all rights in an action at law, including recovery
of damages, shall be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the company shall have obtained the prior written consent of (i) the
Holders of a majority of the securities then constituting Registrable
Securities and (ii) each Holder materially and adversely affected by such
amendment, modification, supplement, waiver or departure.
(d) Notices. All notices, requests, waivers, releases, consents, and
other communications required or permitted by this Agreement (collectively,
"Notices") shall be in writing. Notices shall be deemed sufficiently given for
all purposes under this Agreement when delivered in person, when dispatched by
telegram or (upon written confirmation of receipt) by electronic facsimile
transmission or (upon written confirmation of receipt), when dispatched by a
nationally recognized overnight courier service, or five Business Days after
being deposited in the mail, postage prepaid, if mailed. All Notices shall be
delivered as follows:
(i) if to a Holder of Registrable Securities, at the address
indicated on Company's registrar relating to such securities or at such other
address as such Holder may have furnished to the Company in writing; and
(ii) if to the Company, at:
Koger Equities, Inc.
3986 Boulevard Center Drive
Suite 101
Jacksonville, Florida 32207
Attention: Victor Hughes
Telephone Number: (904) 346-1409
Fax Number: (904) 346-1413
with a copy to:
William F. McCarthy, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Telephone Number: (617) 951-7000
Fax Number: (617) 951-7050
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties
hereto, including any successors by merger to the Company.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings: Construction. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. Unless the context otherwise requires, all references to
Sections are to Sections of this Agreement, "or" is inclusively disjunctive,
and words in the singular include the plural and vice versa. In computing any
period of time specified in this Agreement, the date of the act or event from
which such period of time is to be measured shall be included, any such period
shall expire at 5:00 p.m., New York City time, on the last day of such period,
and any such period denominated in months shall expire on the date in the last
month of such period that has the same numerical designation as the date of
the act or event from which such period is to be measured; provided, however,
that if there is no date in the last month of such period that has the same
numerical designation as the date of such act or event, such period shall
expire on the last day of the last month of such period.
(h) Certain Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, the Board of Directors of the Company may make
or provide for such adjustments in the numbers of shares of Common Stock or
other Registrable Securities specified in any other provision of this Agreement
specifying a number or percentage of Registrable Securities, as the Board may
determine after consultation with TCW Special Credits on behalf of the
Shareholders (or, if TCW Special Credits and the Shareholders are no longer
Holders, Holders holding a majority of the securities then constituting
Registrable Securities), is equitably required to prevent diminution or
enlargement of the rights of Holders that otherwise would result from any stock
dividend, stock split, combination of shares, recapitalization, or other
similar change in the capital structure of the Company.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida, without regard
to the principles of conflicts of laws thereof.
(j) Severability. If one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of the remaining provisions contained herein shall not be in
any way affected or impaired thereby, and the provision held to be invalid,
illegal or unenforceable shall be reformed to the minimum extent necessary,
and in a manner as consistent with the purposes thereof as is practicable, so
as to render it valid, legal and enforceable, it being intended that all of
the rights and privileges of the Holders hereunder shall be enforceable to the
fullest extent permitted by law.
(k) Agreement. This Agreement is intended by the Company and TCW
Special Credits to be a final expression thereof and is intended to be a
complete and exclusive statement of the agreement and understanding of the
Company and TCW Special Credits, for itself and on behalf of the Shareholders,
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
among the Company and any Holders with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
KOGER EQUITIES, INC.
By: Victor A. Hughes
Name: Victor A. Hughes
Title: CFO and Sr. Vice President
TCW SPECIAL CREDITS, a California
general partnership, for itself
and on behalf the Shareholders
(as defined herein)
By: TCW ASSET MANAGEMENT
COMPANY, its managing general
partner
By: Bruce A. Karsh
Name: Bruce A. Karsh
Title: Managing Director
Richard Masson
Name: Richard Masson
Title: Managing Director
Exhibit 10(q)(1)
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
THIS AGREEMENT made this 3 day of August, 1993, effective as of the
1st day of June 1993, by and between THE KOGER PARTNERSHIP, LTD., a Florida
limited partnership (together with all successors and permitted assigns
thereof hereunder, the "Owner"), and KOGER PROPERTIES, INC., a Florida
corporation (together with all successors and permitted assigns thereof
hereunder, the "Manager"). Pursuant to the provisions of Paragraph 17(a)
hereof, Koger Management, Inc., a Florida corporation and a wholly owned
subsidiary of the Manager ("KMI"), has executed this Agreement as an Approved
Delagee (as such term is defined in Paragraph 17(b) hereof).
W I T N E S S E T H:
WHEREAS, the Owner has been organized and exists pursuant to an
agreement of limited partnership, dated originally as of November 2, 1976 and
amended and restated from time to time thereafter, under which the Manager
serves as Managing General Partner;
WHEREAS, on September 25, 1991 (the "Petition Date"), each of Owner
and the Manager filed voluntary petitions for relief under chapter 11 of title
11 of the United States Code, 11 U.S.C. sections 101 et seq. (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Middle District of
Florida, Tampa Division (the "Bankruptcy Court");
WHEREAS, the Owner and the Manager have previously entered into a
Management Agreement (the "Agreement") dated as of December 29, 1976, and
amended as of February 16, 1978, February 1, 1979, March 31, 1980, June 30,
1980, April 30, 1981, March 31, 1982, November 23, 1982, April 15, 1983,
October 1, 1984, December 1, 1985, December 31, 1986, January 1, 1988 and
December 31, 1989, pursuant to which the Manager provides managerial services
for and on behalf of the Owner in connection with the management of the
properties owned by the Owner; and
WHEREAS, pursuant to the Owner's Third Amended and Restated Plan of
Reorganization, dated as of October 28, 1992, as confirmed by the Bankruptcy
Court (the "Plan"), and in connection with the consummation of the transactions
contemplated thereby, the Owner and the Manager desire to further amend and
restate the Agreement in its entirety;
NOW THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the Owner and the Manager hereby agree to amend and restate the
Agreement, as previously amended, as follows:
1. Appointment of Manager. The Owner hereby appoints the Manager to
serve as the Owner's exclusive agent for the leasing, management and
operation of all real estate properties and interests described on Schedule 1
attached hereto, as the same may be amended by addition or deletion from time
to time in accordance with the terms of this Agreement (collectively, the
"Properties").
2. Term of Appointment. The term of appointment hereunder shall be
for an initial term of five (5) years from June 1, 1993 (the "Effective Date"),
and thereafter shall be extended for additional one (1) year periods unless
terminated by either party to this Agreement by written notice given at least
ninety (90) days prior to the expiration of the initial term or any extended
term, unless sooner terminated pursuant to the provisions of Paragraph 11
hereof.
3. Acceptance by the Manager. The Manager hereby accepts its
appointment as Manager pursuant to all the terms, conditions and limitations
of this Agreement.
4. Services of the Manager.
(a) Scope of Services. Subject to the terms of Paragraph 11 hereof,
during the term of this Agreement the Manager shall perform the following
duties with respect to the Properties. Subject to the limitations on the scope
of the Manager's obligations hereunder regarding the availability of funds in
respect of such performance set forth in subparagraph (c) of this Paragraph 4
and Paragraph 5 hereof, the Manager shall be an agent of the Owner to perform
acts in the area of its appointment at the Owner's direction and in such
capacity shall in good faith use its best efforts to implement or cause to be
implemented all decisions approved by the Owner in the areas of its
appointment and shall conduct or cause to be conducted the ordinary and usual
business and affairs of the Owner in the areas of its appointment and shall;
(i) Take action reasonably necessary to protect and preserve
the titles and interests of the Owner with respect to the Properties.
(ii) Cause to be paid all taxes, assessments and other such
approved impositions applicable to the Properties and cause appropriate
escrows therefor to be maintained in accordance with the terms of the
Plan, each with funds provided by the Owner.
(iii) Use its best efforts to lease and keep leased to
desirable and creditworthy tenants all space held for lease at
generally prevailing market rates in the area where each real estate
property subject to this Agreement is located. The general form of
lease to be utilized by the Manager shall be in a form acceptable to
and approved by the Owner from time to time.
(iv) Promote such leasing by such use of advertising, floor
plans, circulars, promotional aids and campaigns and economic
surveys, as it deems advisable.
(v) Respond appropriately to all inquiries relating to leases
and lease renewals, including those referred to it by the Owner. All
negotiations connected therewith shall be conducted by the Manager or
under its direction.
(vi) Execute as agent for the Owner and on behalf of the Owner,
all leases, lease renewals, cancellations, amendments, or modifications
for any of Properties and deliver to the Owner executed counterparts of
all leases and lease renewals, and any amendments, cancellations or
modifications thereto, after execution thereof.
(vii) Use its best efforts to collect rent and other income
from the Properties. The Manager shall have the right, with the
approval of the Owner, to compromise claims for such rent and other
income, and, with the approval of and at the expense of the Owner,
may institute legal proceedings in its own name or in the name of
the Owner to collect the same, to oust or dispossess tenants or others
occupying such Properties, and otherwise to enforce the rights of the
Owner with respect thereto.
(viii) On behalf of the Owner, provide or cause to be provided
all services required to be provided to tenants under the leases, and
any additional services provided to tenants, and do such other things
as shall be reasonably necessary or advisable for the proper
maintenance and operation of the Properties. The Manager shall monitor
the quality, consistency, promptness and cost of all required and
customary services furnished to tenants. Contracts for services,
including, but not limited to, janitorial service, lawn and landscaping
care and pest control services, may be in the name of the Manager,
provided that each such service contract: (i) is assignable to the
Owner or the Owner's nominee; (ii) unless waived by the Owner, includes
a provision for cancellation by the Manager or its assignee upon thirty
(30) days notice; and (iii) requires that the contracting party furnish
evidence of insurance in amount and coverage reasonably acceptable to
the Owner.
(ix) Select, employ, supervise, and discharge such employees
as the Manager deems necessary for the leasing, operation and
maintenance of the Properties. All such persons shall be the employees
of the Manager and not of the Owner and it shall be the sole
responsibility of the Manager to comply with all applicable laws and
regulations pertaining to wages, hours, working conditions,
unemployment compensation, and other employer-employee related
subjects. Subject to the provisions of Paragraph 5(b) hereof as to
Tenant Service Representatives (as such term is therein defined) and
the costs of certain employee incentive plans, the expense of salaries,
social security contributions, taxes, unemployment taxes, workman's
compensation and disability insurance and other forms of insurance and
all other employment costs directly attributable to the employment of
persons employed in the leasing, maintenance, operation and improvement
of the Properties shall be borne by the Manager.
(x) On behalf of the Owner, promptly pay real estate taxes,
personal property taxes, water, sewer, and other utility charges and
assessments of every nature with respect to the Properties. The
Manager shall also defend against or seek revision of or appeal from
any assessment or charge which the Owner or the Manager deems improper
and all such actions shall be taken in the name of the Owner or the
Manager and at the Owner's expense. The Manager may employ such experts
in connection with such actions as it may deem advisable and may also
pay on behalf of the Owner and with funds provided thereby any such
assessment or charge under protest and seek refunds and compromise or
settle any claim or proceeding with respect thereto.
(xi) On behalf of the Owner and with funds provided thereby,
effect such improvements, including capital and tenant-related
improvements, as are deemed reasonably necessary or desirable in the
normal and ordinary operation of the Properties. The foregoing shall
not require the Manager to effect extraordinary, non-recurring capital
improvements in respect of any of the Properties, such as, improvements
as may be related to a substantial loss or destruction of any of the
Properties, by casualty or otherwise.
(xii) Purchase such insurance as may be necessary to protect
the interests of the Owner with funds provided thereby, including,
but not limited to, replacement cost fire and extended coverage,
public liability, and flood and loss of rental income insurance. The
Owner and the Manager shall be named as co-insureds, as their
respective interests may appear, in such policies of insurance and
the Owner shall approve in advance the identity of each such insurer.
Owner shall be solely responsible for all, or its allocated portion,
of any deductible attributable to any loss incurred in connection with
the ownership or operation of the Properties.
(xiii) Comply with all building codes, zoning and licensing
requirements (including real estate management and brokerage
requirements) and other requirements of the duly constituted
governmental authorities having jurisdiction with respect to the
Properties. The Manager may appeal from any requirement it deems
unwarranted and may compromise or settle any dispute regarding any such
requirements.
(xiv) Enlist the services of real estate brokers or agents in
the performance of its duties hereunder to the extent deemed necessary
or desirable.
(xv) Have inserted in all material agreements and documents
prepared or executed by it on behalf of the Owner, other than leases
of real estate property executed in the normal course of business, a
provision that the general partners and limited partners of the Owner
shall not be personally liable thereunder.
(xvi) Retain or employ or terminate the employment of and
coordinate the services of all accountants, attorneys and other
persons necessary or appropriate to carry out the business of the
Owner in the leasing, operation and management of the Properties. The
payment of the fees and other compensation of accountants, attorneys,
and other independent contractors performing services for the Owner
shall be at the sole expense of the Owner. The Manager shall terminate
the services of any one or more of such persons upon receipt of a
written request from the Owner.
(xvii) Perform incidental and necessary business functions
and acts in order to operate and be a manager of the business and
affairs of the Owner as to the Properties in accordance with, and as
limited by, the New Partnership Agreement and this Agreement.
(xviii) The Manager shall make every reasonable effort to
comply with all laws, ordinances, orders, rules, regulations, and
requirements of all federal, state, and municipal governments, courts,
agencies, and authorities as may be applicable to any of the
Properties and the leasing, operation and management thereof.
(b) Operations Consistent with Plan. Subject to the provisions of
subparagraph (c) of this Paragraph 4, prior to the repayment in full of all of
the Owner's obligations in respect of Plan Indebtedness, the business and
affairs of the Owner shall be managed consistent with the terms of the Plan
and the applicable provisions of such indebtedness.
(c) Availability of Funds. Subject to the terms of Paragraph 5 hereof
as to any cost or expense required to be borne by the Manager hereunder, the
performance of each obligation of the Manager hereunder which shall require
the expenditure of funds is expressly conditioned upon the availability of
sufficient funds to be provided by the Owner. Except for clause (ix) of
subparagraph (a) hereof solely as to Tenant Service Representatives, no
provision of this Agreement requires, nor shall be deemed to require, the
Manager to advance any funds on behalf of the Owner or otherwise in connection
with the leasing, management or operation of the Properties. To the extent
any such funds are advanced to the Owner by the Manager, the Owner shall
reimburse the Manager therefor consistent with the provisions of Paragraph 12
hereof.
5. Allocation of Costs and Expenses.
(a) Generally. Each of the Owner and the Manager acknowledge and agree
that (i) the Owner, and not the Manager, shall be responsible for and shall
bear all the Operating Costs (as hereinafter defined) and (ii) the Manager,
and not the Owner, shall be responsible for and shall bear all the Overhead
Costs (as hereinafter defined). Notwithstanding the foregoing, but subject to
Paragraph 4(c) hereof, the Manager shall be responsible for the payment of
Operating Costs solely to the extent which funds are made available therefor
by the Owner.
(b) Operating Costs. For the purposes of this Agreement, Operating
Costs means:
(i) any of the types of costs or expenses paid or incurred in
respect of the operation and management of the Properties which have
historically been classified or treated for accounting purposes as
company or property-specific costs or expenses as respects the Owner,
including, without limitation, (1) janitorial costs and expenses,
including the costs and expenses of trash disposal, removal and
recycling, (2) repairs, (3) real estate taxes, personal property taxes,
electric, gas, water, sewer and other utility charges and similar
assessments, (4) insurance costs and expenses, including, but not
limited to, replacement cost fire and extended coverage, public
liability, and flood and loss of rental income insurance, but excluding
employee-related insurance costs (except to the extent that such costs
and expenses relate to the employment of Tenant Service Representatives
(as defined below)), (5) grounds, mechanical and general maintenance
costs and expenses, including pest control services, (6) subject to
Paragraph 6 hereof, out-of-pocket fees and expenses of attorneys,
accountants and other experts or professionals retained by or on behalf
of the Owner (other than those relating to the lease or re-lease of
any of the Properties and not including the Manager, any Affiliate
thereof or any employee of any of the foregoing); (7) security and
related services expenses and (8) bank service charges;
(ii) employee costs or expenses paid or incurred in respect of
the Manager's employment of on-site building operations or tenant
service supervisors, including those now referred to as tenant service
representatives (collectively, the "Tenant Service Representatives"),
which in no event shall include any (1) officer or director of the
Manager, (2) employee of the Manager other than an employee which works
principally on the site of, and the duties of which relate principally
to, the subject Properties, (3) general or operations manager, (4)
employee of the Manager engaged principally in the leasing or
re-leasing of the Properties, (5) clerical or secretarial staff or
(6) employee of the Manager engaged principally in the supervision of
tenant or capital improvements to the Properties; and
(iii) a pro rata portion of the costs of an operating
management incentive program implemented by the Manager in respect of
the Properties, provided that such plan will cover (A) all of the
properties owned by the Manager and (B) a majority of the properties
which are managed by the Manager for the benefit of others and,
provided, further, that the Owner may opt-out of any such incentive
program with prior written notice to the Manager given not less than
thirty (30) days in advance of any June 30 following the date hereof.
(c) Overhead Costs. For the purposes of this Agreement, Overhead
Costs means:
(i) any of the types of costs or expenses paid or incurred in
respect of the leasing, operation and management of the Properties
which have historically been classified or treated for accounting
purposes as general and administrative or overhead costs or expenses,
as respects the Owner, and are not specifically included as an
Operating Cost pursuant to subparagraph (b) above, including, without
limitation (1) bank service charges, (2) subject to Paragraph 6 hereof,
postage and printing costs, (3) automobile and other vehicle-related
costs (except as respects Tenant Service Representatives), (4)
directors fees, (5) office supplies, (6) management information
services, (7) temporary help (except as respects Tenant Service
Representatives), (8) telephone, (9) travel, (10) business meals/
entertainment, (11) design and production, (12) audio/visual
production, (13) photography, (14) special promotions, (15) donations,
(16) employee education and (17) public relations;
(ii) any and all of the costs and expenses relating to any
employee of the Manager other than a Tenant Service Representative;
and
(iii) advertising costs and expenses and commissions paid to,
or incurred by, third parties in connection with the lease or re-lease
of the Properties.
Each of the Owner and the Manager acknowledge and agree that the foregoing
constitutes an allocation of the costs and expenses to be incurred in respect
of the ownership, leasing, operation and maintenance of the Properties. The
Owner may incur, for its own account, additional costs and expenses other than
in respect of the leasing, operation and management of the Properties, which
costs and expenses shall be borne solely by the Owner and shall not be deemed
to constitute Overhead Costs. All of the costs of building or property
improvements, other than the costs and expenses relating to employees of the
Manager as shall supervise and oversee such normal and ordinary capital
improvements, shall be borne solely by the Owner and shall not be deemed to
constitute Overhead Costs.
6. Books, Records and Accounting. The Manager shall provide to the
Owner, at the Manager's sole cost and expense, the information necessary to
maintain complete, accurate and separate books and records in connection with
all of the Properties and to prepare all reports, certificates and filings
required under the terms of the Plan. Any such books and records shall remain
the sole property of the Owner. Notwithstanding the foregoing, the Owner shall
continue to be responsible for the costs and expenses of its independent
certified public accountants (insofar as such costs relate solely to the
performance of usual and customary audit services and not to the duties of the
Manager set forth in the first sentence of this Paragraph 6) as well as any and
all costs of compliance with the federal securities laws and partner
communications, including all postage and printing costs related thereto. All
books and records required in order to provide such information shall be
maintained in accordance with generally accepted accounting principles. The
Manager shall impose such control over its own accounting and financial
transactions as is reasonably necessary to protect the Owner's assets from
theft, error, or fraudulent activity on the part of the Manager's employees
or any other agents or contractors employed or retained by the Manager on
behalf of the Owner.
7. Budgets. In conformity with the budget policy of the Owner, the
Manager shall prepare and submit annually to the Owner for its approval leasing
projections, a proposed capital budget and a proposed operating budget for
each office building managed and operated pursuant to this Agreement. The Owner
will consult with the Manager in order to agree on the capital budget and
operating budget for any budgetary year. If the Owner has not approved the
operating budget for any budgetary year prior to the commencement of such year,
the Manager will operate under the previous budgetary year's operating budget,
as adjusted for actual operations and for the addition of Properties, during
such year until agreement is reached. The Manager will use reasonable
diligence and employ all reasonable efforts to ensure that the costs of
maintaining and operating any office building managed and operated pursuant to
this Agreement shall not exceed the approved budget amounts either in total or
in any one accounting category. The Manager, on request, shall explain in
detail to the Owner any material budget variances.
8. Bank Accounts. The Manager shall deposit all monies received by
the Manager or its affiliate or agent from the leasing, management or
operation of any of the Properties, to the credit of the Owner in an account
or accounts in such banks or other financial institutions and in a manner as
directed or approved by the Owner and each of such accounts shall bear a
designation which will readily identify the source of such funds and the
Owner's ownership thereof. All such monies shall at all times remain the
property of the Owner and each account into which such monies are deposited
shall bear designations to show the Owner's ownership. The Owner shall be an
independent signatory as to each such account. The Manager will not commingle
the funds of any other person with those of the Owner.
9. Disbursements. Any monies held hereunder in any account for the
benefit of the Owner, may be disbursed by the Manager on behalf of the Owner
in order to fund the Operating Costs, the management fee described in
Paragraph 12 hereof and all other direct costs and expenses of maintaining and
operating the Properties other than Overhead Costs.
10. Specific Restrictions on Manager.
(a) General. Subject to Paragraphs 4 and 5 hereof, the Manager, in the
performance of its management duties under this Agreement, shall fulfill and
carry out the obligations known to and imposed upon the Owner or the real
estate properties and interests of the Owner and managed by the Manager under
this Agreement, by leases, mortgages, deeds of trust and other agreements to
which the Owner is a party or any of the Owner's real estate properties or
interests is subject. The Manager shall immediately deliver to the Owner any
notice or communication from the holder of any of such leases, mortgages, deeds
of trust and other agreements that a default or breach thereof has occurred or
that any of the obligations of the Owner of any such agreements is not being
fulfilled or carried out as contemplated therein.
(b) Other Management Agreements. Manager agrees that during the term
of this Agreement, except as pursuant to one or more management arrangements
in effect as of the date hereof, without the prior written consent of the Owner
obtained in the manner set forth in Paragraph 20 hereof, Manager shall not
provide or offer to provide, in respect of any office property located in an
office center in which any of the Properties is also located (a "Subject
Center"), management services substantially similar to the management services
provided under this Agreement on terms materially less favorable in the
aggregate to the Manager than the terms of this Agreement.
(c) Competition. During the term of this Agreement, the Manager will
have access to certain confidential information regarding the Owner and the
Properties and will be offering space for rental in buildings not owned by
the Owner at the same time that it will be offering office space in buildings
owned by the Owner. When such buildings are located in the same office center,
the Manager will use its best efforts to fully lease the space available in
buildings owned by the Owner at then-current market rates contingent upon the
needs of a tenant or prospective tenant and the availability of space desired
by such tenant or prospective tenant.
11. Termination.
(a) Termination Generally. It is understood and agreed that either
party shall have the right, in its sole discretion, at any time to terminate
this Agreement upon the occurrence of any of the following events:
(i) By the Manager or the Owner, if the existence of the Owner,
as a partnership, is terminated or the Owner is otherwise dissolved;
(ii) By the Manager or the Owner, if the Manager shall cease
to be the Managing General Partner of the Owner, other than by virtue
of a permitted assignment of this Agreement, provided, however, that
written notice of such termination shall be provided within thirty (30)
days following the date upon which the Manager shall so cease to be the
Managing General Partner and such termination shall not be effective
earlier than ninety (90) days following the date upon which such notice
is delivered;
(iii) As to any of the Properties, upon the sale or other
disposition thereof by the Owner, and provided that the Manager shall
have the right to terminate this Agreement (an "Optional Termination")
in the event that this Agreement is partially terminated pursuant to
subparagraph (c) below, solely as to terminations relating to "Cause"
as defined in (iv) of subparagrah (b) hereof, as to more than three of
the following office centers: Tampa, Miami, Richmond West End, Norfolk
East and Raleigh Glenwood; and provided, further, that written notice
of such Optional Termination shall be given by the Manager within
thirty days following the date upon which a subject partial termination
is effective and such termination by the Manager shall not be effective
earlier than ninety (90) days following the date upon which such notice
is delivered;
(iv) Subject to subparagraphs (b) and (c) hereof, by the
Owner, for "Cause" as defined below; or
(v) Subject to subparagraphs (b) and ( ) hereof, by the
Owner, in the event the Manager shall breach any obligation or duty of
the Manager under this Agreement, without regard as to whether any such
breach constitutes negligence, gross negligence or otherwise satisfies
any other such standard, and such failure leads, or, if uncured, could
reasonably lead to, a material loss to the Owner or a material
impairment in the value of one or more of the Properties, and if any
such failure is not cured by avoiding such loss or impairment within
thirty (30) days after receipt of notice by the Manager from the Owner
specifying such default.
A termination or failure to terminate pursuant to any provision of this
Paragraph 11 shall not preclude or prejudice any other right or claim that
either the Owner or the Manager may have against the other because of the act
or failure to act which gives rise to the right for termination. Termination
of the Agreement shall not terminate the provisions of Paragraphs 12(c) or 15
hereof, which provisions shall not be terminated or otherwise modified or
affected by any termination of this Agreement (whether such termination is as
to any specific office park or as to the Agreement generally).
(b) Definition of "Cause". For purposes of this Paragraph 11, the
occurrence of any of the following events shall constitute "Cause":
(i) the dissolution, liquidation or termination of the
existence of the Manager or the filing hereafter by the Manager of a
voluntary proceeding under federal or state bankruptcy or creditors
laws or the filing by a third party of any involuntary bankruptcy or
insolvency proceeding, if such proceeding is not objected to by the
Manager within sixty (60) days after the filing thereof;
(ii) any principal executive officer or other person given
responsibility by the Manager for the performance of its duties under
this Agreement is convicted of, or pleads guilty or nolo contendere
in respect of, a crime involving moral turpitude in connection with
the duties of the Manager under this Agreement, including without
limitation, embezzlement, fraud, conversion of funds or property, or
other similar type crime;
(iii) fraud, bad faith or gross negligence arising out of or
relating to the performance of the obligations of the Manager under
this Agreement; or
(iv) for the purposes of partial termination of this Agreement
as described in subparagraph (c) below, and solely as to a specified
office park (a "Subject Park"), (1) the Office Park NOI (as such term
is defined below) as to such Subject Park shall, for a period of two
consecutive fiscal quarters, each of which commences on or after the
Commencement Date, constitute 80% or less of the NOI Index Amount (as
such term is defined below) in respect of such Subject Park and (2)
within ninety (90) days of the delivery of a written notice by the
Owner as to the occurrence of the condition described in clause (1)
above, holder(s) of Restructured Mortgage Notes and/or notes evidencing
the Reorganization Loan, Tax Loan and Converted Loan (as such terms are
defined in the certain Confirmation Loan Agreement, dated as of
June 1, 1993, between TKP, American Security Bank, N.A. (individually
and as administrative agent), Barnett Banks, Inc., First Union
National Bank of Florida, and Wachovia Bank of North Carolina,
N.A. (the "Reorganization Financing Facility")), holding not less than
75% of the aggregate principal amount then outstanding of such notes,
taken in the aggregate, as are collateralized by Properties located in
the Subject Park shall have executed termination certificates
(collectively, the "Termination Notice"), which certificates shall have
been delivered to each of the Owner, the Manager and the Alternate
General Partner of the Owner. Each of such termination certificates
shall be executed by an officer of such holder and shall assert a
partial termination of this Agreement as to such Subject Park. For
purposes of clause (1) of the foregoing the terms: (A) "Commencement
Date" shall mean the first day of the fiscal quarter which commences
immediately after the end of the Measurement Period (as defined below);
(B) "Office Park NOI" shall mean, as to any Subject Park in any fiscal
quarter, the excess of Gross Revenues over Operating Expenses (as such
terms are defined below) each in respect of such park for such quarter;
(C) "NOI Index Amount" shall mean, as to any Subject Park, one-half of
the aggregate Office Park NOI as to such Subject Park for the
Measurement Period (as defined below); (D) Gross Revenues shall mean,
as to each Subject Park in any fiscal quarter, the sum of all
collections derived from the operation of each of the Properties
comprising such Subject Park in such fiscal quarter. Such collections
shall include base rents, contractual tenant reimbursements and pass-
through charges, as well as interest on escrow balances to the extent
that such interest is the property of the Owner; (E) "Operating
Expenses" shall mean the aggregate amount of bona fide expenses
actually incurred by TKP for the applicable time period in the
operation of the Properties comprising the Subject Park. Such expenses
shall include, without limitation: the management fees paid hereunder,
escrow installments for ad valorem real estate taxes, costs incurred
under maintenance service contracts, insurance premiums, utility
expenses, reasonable and customary legal fees associated with property
operations and leasing, accounting and other professional fees relating
to the operation of the premises and any other customary and reasonable
bona fide expenses actually paid to third parties and related to the
ordinary operation of the premises. Excluded from the calculation of
Operating Expenses shall be non-cash charges for depreciation or other
amortized items, and payments of principal or other amounts paid under
any notes or mortgages relating to the premises. For the purposes of
computing Operating Expenses, no fees (other than the management fee
hereunder), commissions, management or accounting overhead allocations
charges, expenses or other amounts paid to KPI, any affiliated entity
or employee, agent, or independent contractor of an affiliated entity
shall constitute an Operating Expense; and (F) subject to the exception
described below in respect of the Owner's Richmond West Office Park,
"Measurement Period" shall mean (I) if the Effective Date occurs less
than 45 days after the beginning of a fiscal quarter, the fiscal
quarter in which the Effective Date occurs and the next following
fiscal quarter and (II) if the Effective Date occurs more than 45 days
after the beginning of a fiscal quarter, the two fiscal quarters
immediately following the fiscal quarter in which the Effective Date
occurs. Office Park NOI shall be computed on a cash basis, with
allocations of Operating Costs effected to normalize large, periodic
lump-sum payments for real estate taxes, insurance, maintenance or
other similar items. The Measurement Period in respect of the Owner's
Richmond West office park will not commence until July 1, 1993.
Accordingly, the Commencement Date in respect of such office park shall
be January 1, 1994.
For the purposes of clause (2) of the foregoing, the notes
evidencing the Reorganization Loan, Tax Loan and Converted Loan (as
such terms are defined in the Reorganization Financing Facility) will
be deemed collateralized by Properties located in a Subject Park solely
to the extent determined by an allocation of the then-outstanding
principal amount of such notes, which allocation shall be based on
relative fair values of the property collateralizing such notes as
determined by appraisals procured in connection with the funding of the
Reorganization Financing Facility.
Any partial termination of this Agreement shall become
effective 45 days subsequent to the date upon which the related
Termination Notice is delivered to the Manager, unless, with the prior
written consent of the Manager, such notice is earlier revoked by
creditors holding not less than 75% of the aggregate principal amount
then-outstanding of the Restructured Mortgage Notes and/or notes
evidencing the Reorganization Loan, Tax Loan and Converted Loan (as
such terms are defined in the Reorganization Financing Facility), taken
in the aggregate, as are collateralized by Properties located in the
Subject Park. Revocation of the termination notice shall not become
effective unless, within the above-specified 45-day period, such
holders shall have delivered revocation certificates to each of the
Owner, the Manager, and the Alternate General Partner of the Owner,
each of which termination certificates shall be executed by an officer
of such holder and shall assert a revocation of the Termination Notice.
No partial termination of the provisions of this Agreement shall be
permitted if the condition described in clause (1) above occurred
principally due to the occurrence of a casualty or natural disaster in
respect of one or more buildings located in the Subject Park if and to
the extent that such casualty or natural disaster has the effect of
rendering vacant a material portion of the space in such building or
buildings for a period in excess of thirty (30) days, for such time as
such condition shall continue, but in respect of any casualty, for not
longer than six months following the occurrence thereof.
(c) Partial Termination. Notwithstanding the provisions of Paragraphs
1, 3 and 4 hereof as to the scope of the services to be provided hereunder,
the terms of this Agreement may be terminated by the Owner pursuant to the
terms of clauses (iv) and (v) of subparagraph (a) above, and by the Manager
pursuant to the terms of clause (iii) of subparagraph (a) above, as to one or
more of the office centers managed by the Manager hereunder (a "Partial
Termination"). Following any Partial Termination, the terms of this Agreement
shall continue in effect as to any of the Properties which is not the subject
of such Partial Termination or a previous Partial Termination, provided,
however, that the termination of this Agreement as to all office centers in
which the Owner owns buildings shall constitute a termination of this
Agreement in its entirety. Any such Partial Termination may be effected only
upon sixty (60) days prior written notice to the Manager.
(d) Books and Records. Promptly as practicable following any
termination of this Agreement, the books and records pertaining to the
Properties shall be promptly provided to the Owner, provided, however, that
(i) the Manager shall be entitled to retain copies of such books and records
and (ii) as to any Partial Termination, the Manager may provide to the Owner
copies of all of the material books and records relating to the Subject Park(s)
and retain the originals thereof to the extent that such books and records
relate to properties owned by the Manager.
12. Compensation. The Manager shall receive compensation, equal to
nine percent (9.0%) of any Gross Rental Income from the Properties, together
with the monthly reimbursement of expenses incurred by the Manager on behalf
of the Owner, to the extent expressly contemplated under this Agreement (the
"Compensation").
(a) Gross Rental Income Defined. For purposes of this Agreement,
"Gross Rental Income" is defined as the aggregate of all rents, revenues and
income from any of the Properties (but not the proceeds of any sale or
refinancing of, or condemnation or casualty in respect of, any of the
Properties, except to the extent to which such proceeds represent the recovery
of lost rental income), including fixed rents and, as may be adjusted by any
lease, any percentage rent, any rent for use of personal property supplied or
owned by the Owner and any amount paid by a tenant as additional rent
resulting from an increase in operating expenses, ad valorem property taxes
or insurance premiums or other similar cost, and including further any amounts
received from concessions located on or in any of the Properties, including
fees and commissions from vending machines and pay telephones.
(b) Exclusions from Gross Rental Income. Notwithstanding the foregoing,
Gross Rental Income shall not include:
(i) the proceeds of any sale or other disposition of any of
the Properties;
(ii) the amount of any returnable security deposits paid by
any tenant or occupant except as forfeited, or the amount of advance
rental payments made by any tenant or occupant except as earned;
(iii) the amount of any sales or use taxes paid by any tenant
or occupant;
(iv) the proceeds paid by any insurance coverage as a result
of any fire or other casualty losses or damages except that portion of
the proceeds of any general insurance or damages paid to the Owner for
the loss of rental income; and
(v) any other amounts received in respect of the Properties
not included in Gross Rental Income pursuant to the provisions of
subparagraph (a) hereof.
(c) Payments Following Termination. In the event of the termination of
this Agreement (whether such termination is as to any specific office park or
as to the Agreement generally), any compensation payable hereunder shall be
prorated to the effective date of the termination to compensate the Manager
for its services to the date of such termination. The termination of this
Agreement by either party shall not relieve the Owner of its obligation to
reimburse to the Manager any expenses incurred by the Manager under this
Agreement prior to the date of such termination.
(d) Office Space. The Owner shall furnish to the Manager for its use
under this Agreement reasonable full service office space in each office
center where Properties are located.
(e) Payment. The Compensation under this Agreement shall be paid to
the Manager monthly, provided, however, that:
(1) If the Manager, its successor or assign, or any
person owning all of the equity of KPI or such successor
or assign, shall elect to be classified as a "real estate
investment trust" within the meaning of Section 856 of the
Internal Revenue Code of 1986, as amended (the "Code"),
then the amount of Compensation that shall be payable in
any calendar year shall not exceed, in the aggregate, the
amount that the Manager, its successor or assign, informs
the Owner in writing that it may receive in that calendar
year without violating the 95 percent gross income
limitation of Section 856(c) of the Code.
(2) Any Compensation otherwise payable hereunder that are not
paid to the Manager pursuant to section 12(e)(1) of this
Agreement (the "Excess Amount") shall be deposited in an
interest-bearing bank account in a depository reasonably
satisfactory to KPI and shall not be withdrawn or pledged
as collateral by Owner prior to the time that such Excess
Amount becomes payable or the payment obligation terminates
pursuant to this section 12(e).
(3) Excess Amounts shall become payable in each succeeding
month immediately before, and under the same terms as, the
Compensation payable under this section 12(e); provided,
however, that the Owner's obligation to make any payments
of any such Excess Amount shall terminate seven (7) years
from the date of the monthly payment giving rise to such
Excess Amount.
13. Performance of Duties. The Manager shall give the Owner the benefit
of its best judgment and efforts in performing its obligations under this
Agreement and shall not be liable for any act or omission whatsoever for its
negligence or error in judgment, except in respect of (i) its willful
misfeasance, bad faith, or gross negligence in the performance of its duties
under this Agreement or (ii) for the breach of a material provision of this
Agreement.
14. Bonding of Certain Employees. If required in writing by the Owner,
the Manager shall carry and maintain in force, on such employees of the
Manager who handle or are responsible for the handling of money of the Owner,
fidelity bond or bonds or comprehensive crime insurance in such amounts and
with such sureties as approved by the Owner. The premium therefor shall be an
expense of, and shall be paid by, the Owner.
15. Indemnification. The Owner shall indemnify and hold harmless the
Manager from and against any and all liabilities, claims, damages, costs, and
expenses, including attorneys fees and expenses, to which the Manager may
become subject by reason of or arising out of the performance or non-
performance of the duties of the Manager, including, without limitation,
environmental-related liabilities or obligations and liabilities or obligations
relating to the Americans with Disabilities Act of 1990, except those which
may be incurred by the Manager by reason of its willful misfeasance, bad
faith, gross negligence in the performance by the Manager of its duties under
this Agreement or material breach thereby of its obligations hereunder. The
Manager shall indemnify and hold harmless the Owner from and against any and
all liabilities, claims, damages, costs, and expenses, to which the Owner may
become subject by reason of or arising out of the performance or non-
performance of the duties of the Manager incurred by the Owner by reason of the
willful misfeasance, bad faith, or gross negligence of the Manager in the
performance of its duties under this Agreement.
16. Applicable Law. This Agreement is executed in the State of Florida
and it shall be construed and enforced in accordance with the internal laws of
the State of Florida.
17. Successors and Assigns.
(a) Binding on Successors and Assigns. This Agreement shall be binding
on the parties hereto, their successors and assigns.
(b) Delegation to Affiliates. The Manager may delegate its rights,
obligations and duties to any entity that has a demonstrated capability to
provide real property management services (an "Approved Delagee"), provided
that written notice of such delegation is given to the Owner and that no such
assignment shall relieve the Manager of its obligation and duty to ensure the
performance of the obligations and duties required to be performed by the
Manager under this Agreement. Each of the parties hereto acknowledges and
agrees that KMI satisfies the criteria set forth in the immediately preceding
sentence and that KMI constitutes an Approved Delagee hereunder. By execution
and delivery of this Agreement, (i) the Manager does hereby assign to KMI all
of the duties and obligations of the Manager hereunder and KMI does hereby
accept such assignment and (ii) the Owner hereby consents to the performance
of the duties and obligations of the Manager hereunder by KMI.
(c) Assignment. Notwithstanding the foregoing, the Manager may assign
its rights and obligations and duties, and such assignment shall relieve the
Manager of its duties and obligations hereunder and any duty to assure the
performance of the obligations and duties required to be performed by the
Manager under this Agreement if, and only if, (i) written notice of such
assignment is given to the Owner and (ii) such assignment is either (A)
effected in connection with the consummation of a plan of reorganization in
respect of the Manager's chapter 11 case and results in a continuation in
substance of the current operating management of the Properties or (B) results
in management of the Properties by a property manager having substantial
experience or expertise in the management of commercial real properties similar
to the Properties, the identity of which manager is approved, (y) as to any
Subject Park, by holder(s) of Restructured Mortgage Notes and notes evidencing
the Reorganization Loans, Tax Loans and Converted Loans (as such terms are
defined in the Reorganization Financing Facility) holding not less than 75% of
the aggregate principal amount then-outstanding of such notes, taken in the
aggregate, as are collateralized by Properties located in such Subject Park,
which consent shall not be withheld unreasonably or (z) as to assignment of
this Agreement generally, approved by holder(s) of Restructured Mortgage Notes
and notes evidencing the Reorganization Loans, Tax Loans and Converted Loans
holding not less than 75% of the aggregate principal amount then-outstanding of
such notes, taken in the aggregate, which consent shall not be withheld
unreasonably. For the purposes of clause (B)(y), of the foregoing, the notes
evidencing the Reorganization Loans, Tax Loans and Converted Loans will be
deemed collateralized by Properties located in a Subject Park solely to the
extent determined by an allocation of the then-outstanding principal amount of
such notes, which allocation shall be based on relative fair values of the
property collateralizing such notes as determined by appraisal procured in
connection with the funding of the Reorganization Financing Facility.
18. Notices. All notices, consents, requests, and other communications
provided for or permitted to be given pursuant to this Agreement shall be in
writing and shall be personally delivered, sent by certified mail, postage
prepaid, or delivered by overnight delivery service to either party at the
following respective addresses:
The Owner:
The Koger Partnership, Ltd.
c/o Koger Properties, Inc.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attention: Chief Operating Officer
with a copy to: Newleaf-KP Services Corporation
2814 New Spring Road
Suite 330
Atlanta, Georgia 30339
The Manager:
Koger Properties, Inc.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attention: Chief Operating Officer
with a copy to: Newleaf-KP Services Corporation
2814 New Spring Road
Suite 330
Atlanta, Georgia 30339
Either party may at any time give notice in writing to the other party of a
change of its address for the purposes of this Paragraph 18.
19. Waiver. The failure by either party to insist upon the strict
performance of any of the terms and provisions of this Agreement or to exercise
any right, remedy, or election herein provided or permitted by law shall not
constitute or be construed as a waiver or relinquishment for the future of
such term, provision, right, remedy, or election, but the same shall continue
in full force and effect. No term or provision of this Agreement shall be
deemed to have been waived by either party unless such waiver is in writing,
signed by such party.
20. Consents and Approvals. The Owner's consents and approvals may be
given from time to time by representatives of the Owner designated as such by
notice to the Manager. As to any matter requiring the Owner's consent or
approval, the Owner shall not unreasonably withhold or delay in granting such
consent or approval. Notwithstanding the foregoing, Owner agrees that it shall
not consent to any (i) extension of the term of this Agreement contemplated by
Paragraph 2 hereof or material amendment to, or modification of, the terms of
this Agreement, each without the prior consent of holder(s) of Restructured
Mortgage Notes and notes evidencing the Reorganization Loan, Tax Loan and
Converted Loan (as such terms are defined in the Reorganization Financing
Facility) holding not less than 75% of the aggregate principal amount then-
outstanding of such notes, taken in the aggregate, which approval shall not be
withheld unreasonably, or (ii) to any of the matters contemplated in Paragraph
10(b) hereof, unless, in respect of such matter, it shall have received the
consent of holder(s) of Restructured Mortgage Notes and notes evidencing the
Reorganization Loan, Tax Loan and Converted Loan (as such terms are defined
in the Reorganization Financing Facility) holding not less than 75% of the
aggregate principal amount then-outstanding of such notes, taken in the
aggregate, as are collateralized by Properties located in the Subject Center
(as such term is used in Paragraph 10(b) hereof), which approval shall not be
withheld unreasonably. For the purposes of the foregoing, the notes evidencing
the Reorganization Loan, Tax Loan and Converted Loan (as such terms are
defined in the Reorganization Financing Facility) will be deemed collateralized
by Properties located in a Subject Park solely to the extent determined by an
allocation of the then-outstanding principal amount of such notes, which
allocation shall be based on relative fair values of the property
collateralizing such notes as determined by appraisal procured in connection
with the funding of the Reorganization Financing Facility.
21. Intended Beneficiaries. Each of the parties hereto acknowledges
and agrees that, solely as to the agreements and covenants set forth in the
penultimate sentence of Paragraph 20 hereof, the next following sentence of
this Paragraph 21 and Paragraph 22 hereof (and not as to any other provisions
of this Agreement), each of the holders of the Owner's Restructured Mortgage
Notes and notes evidencing the Reorganization Loan, Tax Loan and Converted
Loan (as such terms are defined in the Reorganization Financing Facility) is
an intended beneficiary of the terms of this Agreement and that each of such
Holders shall be entitled to enforce such agreements and covenants against any
of the parties hereto, including, without limitation, the Owner. Without any
prejudice in respect of the Manager's right to assert that no such cause to
terminate exists, each of the parties hereto acknowledges and agrees that the
Owner's rights, if any, to deliver a notice of breach and to take other actions
to terminate this Agreement pursuant to Paragraphs ll(a)(iv) and (v) hereof as
to any Subject Center may, after reasonable demand is made upon the Owner to
assert such rights, be asserted, solely as to the Subject Center (and not as
to any other Properties) by holder(s) of Restructured Mortgage Notes and notes
evidencing the Reorganization Loans, Tax Loans and Converted Loans (as such
terms are defined in the Reorganization Financing Facility) holding not less
than 75% of the aggregate principal amount then-outstanding of such notes,
taken in the aggregate, as are collateralized by Properties located in the
Subject Center. For the purposes of the foregoing, the notes evidencing the
Reorganization Loan, Tax Loan and Converted Loan (as such terms are defined
in the Reorganization Financing Facility) will be deemed collateralized by
Properties located in a Subject Park solely to the extent determined by an
allocation of the then-outstanding principal amount of such notes, which
allocation shall be based on relative fair values of the property
collateralizing such notes as determined by appraisal procured in connection
with the funding of the Reorganization Financing Facility.
22. Arbitration. Any dispute, controversy or claim arising out of or
relating to an actual or claimed breach of this Agreement as to one or more
office centers of the Owner, which dispute, controversy or claim is initiated
by an action taken pursuant to the terms of Paragraph 21 hereof by any of the
holders of Restructured Mortgage Notes or the notes evidencing the
Reorganization Loan and Tax Loan (or both), shall be submitted to three
arbitrators, one to be chosen by each party and the third by the two thus
chosen, or, should either party fail to appoint an arbitrator within fifteen
(15) days of written request from the other party to do so, the requesting
party may appoint two arbitrators, which shall then appoint a third arbitrator.
The third arbitrator shall act as presiding arbitrator of the tribunal. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association then in effect, provided, however, that such arbitral
proceeding shall be conducted in no event later than thirty (30) days following
the date upon which all such arbitrators have been appointed, with a decision
to be rendered not later than thirty (30) days following the completion of
such proceeding. The decision in writing of any two arbitrators, when filed
with the parties hereto, shall be final and binding. Judgment may be entered
upon the final decision of the arbitrators in any court having jurisdiction.
Said arbitration shall take place in New York City, New York. The costs of the
arbitration shall be borne by the unsuccessful party as determined by the
arbitrators.
23. Complete Agreement. This Agreement amends and restates and
supersedes and takes the place of any and all previous communications between
the parties hereto relating to the matters covered hereby, and constitutes the
sole and complete agreement between them.
24. Amendments. Except as otherwise provided herein any and all
amendments, additions and deletions to this Agreement must be in writing and
executed by both parties hereto.
25. Severability. If any provision of this Agreement or its
application to any party or circumstance shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder hereof shall not be affected thereby and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE KOGER PARTNERSHIP, LTD.,
by its general partner,
Koger Properties, Inc.
By: Jack H. Chambers
President
KOGER PROPERTIES, INC.
By: Jack H. Chambers
President
KOGER MANAGEMENT, INC.,
pursuant to Paragraph 17(a)
hereof
By: James M. Lawrence
President
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc.,
Managing General Partner of The Koger Partnership, Ltd. on behalf of The
Koger Partnership. He personally appeared before me, is personally known to me
and did not take an oath.
(SEAL) (NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc.,
a Florida corporation on behalf of Koger Properties, Inc. He personally
appeared before me, is personally known to me and did not take an oath.
(SEAL) (NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by James M. Lawrence as President of Koger Management, Inc.
on behalf of Koger Management, Inc. He personally appeared before me, is
personally known to me and did not take an oath.
(SEAL) (NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
<PAGE>
SCHEDULE 1
THE KOGER PARTNERSHIP, LTD.
BUILDINGS, NUMBERS
NAMES AND ADDRESSES
Center Bldg Name Building # Address
Miami Dayton 0401 8301 N. W. 53rd Street
Miami Richmond 0402 8420 N. W. 52nd Street
Miami Albany 0403 8400 N. W. 52nd Street
Miami Monterey 0404 8410 N. W. 53rd Terrace
Miami Cleveland 0405 8245 N. W. 53rd Street
Miami Koger 0406 8675 N. W. 53rd Street
Miami Augusta 0407 8685 N. W. 53rd Terrace
Miami Savannah 0408 8525 N. W. 53rd Terrace
Miami Palm Coast 0409 5225-5255 N. W. 87th Avenue
Miami Athens 0410 8405 N. W. 53rd Street
Miami Charleston 0411 8600 N. W. 53rd Terrace
Miami Rochester 0412 8390 N. W. 53rd Street
Miami Portland 0413 5200 N. W. 84th Avenue
Miami Phoenix 0414 8400 N. W. 53rd Street
Miami Columbus 0415 5205 N. W. 84th Avenue
Miami Macon 0416 8401 N. W. 53rd Terrace
Miami Flint 0417 8395 N. W. 53rd Street
Miami Billings 0418 8375 N. W. 53rd Street
Miami Manchester 0419 8355 N. W. 53rd Street
Miami Seattle 0420 8325 N. W. 53rd Street
Miami Springfield 0421 8125 N. W. 53rd Street
Miami Scranton 0422 8075 N. W. 53rd Street
Miami Plaza 0423 7905 N. W. 53rd Street
Miami Covington 0424 8070 N. W. 53rd Street
Miami Concord 0425 8120 N. W. 53rd Street
Miami Spokane 0427 8350 N. W. 52nd Terrace
Miami Trenton 0428 8300 N. W. 53rd Street
Miami Denver 0429 7950 N. W. 53rd Street
Tampa Kogerama 0201 5445 Mariner Street
Tampa Bay Center 0202 5444 Bay Center Drive
Tampa Intrepid 0203 5440 Mariner Street
Tampa Mariner 0204 5415 Mariner Street
Tampa Ranger 0205 101 South Hoover
Tampa Triton East 0206 5420 Bay Center Drive
Tampa Triton West 0207 5422 Bay Center Drive
Tampa Mills 0208 5410 Mariner Street
Tampa Koger 0209 5600 Mariner Street
Tampa Vanguard 0210 110 South Hoover
Tampa Weatherly 0211 106 South Hoover
Tampa Atlantic 0212 5430 Bay Center Drive
Tampa Tarpon 0213 5426 Bay Center Drive
Tampa Balboni 0214 5601 Mariner Street
Tampa Orion 0215 5340 West Kennedy Boulevard
SCHEDULE 1
THE KOGER PARTNERSHIP, LTD.
BUILDINGS, NUMBERS
NAMES AND ADDRESSES
Center Bldg Name Building # Address
Norfolk East Lynnhaven 1101 6363 Center Drive
Norfolk East Kogerama 1102 6378 Center Drive
Norfolk East Linkhorn 1103 6345 Center Drive
Norfolk East Chesapeake 1104 410 N. Center Drive
Norfolk East Koger 1105 6350 Center Drive
Norfolk East Albemarle 1106 400 N. Center Drive
Norfolk East Shenandoah 1107 420 N. Center Drive
Norfolk East Nansemond 1108 6387 Center Drive
Norfolk East York 1109 6340 Center Drive
Norfolk East James 1110 425 N. Center Drive
Norfolk East Potomac 1111 6320 N. Center Drive
Norfolk East Rappahannock 1112 6330 N. Center Drive
Norfolk East Maury 1113 6300 Center Drive
Norfolk East Nottaway 1114 6379 Center Drive
Norfolk East Rivanna 1115 6315 N. Center Drive
Norfolk East Warwick 1116 6353 Center Drive
Norfolk East Elizabeth 1117 6333 Center Drive
Norfolk East Gloucestcr 1118 814 Kempsville Road
Norfolk West Smithfield 5202 6160 Kempsville Circle
Richmond West-End Kogerama 1001 1501 Santa Rosa Road
Richmond West-End Randolph 1002 1500 Forest Avenue
Richmond West-End Preston 1003 1600 Forest Avenue
Richmond West-End Jefferson 1004 8100 Three Chopt Road
Richmond West-End Nelson 1005 1503 Santa Rosa Road
Richmond West-End Koger 1006 8001 Franklin Farms Drive
Richmond West-End Page 1007 8000 Franklin Farms Drive
Richmond West-End Lee 1008 8004 Franklin Farms Drive
Richmond West-End Blair 1009 8007 Discovery Drive
Richmond West-End Ratcliffe 1010 1602 Rolling Hills Drive
Richmond West-End Tyler 1011 1603 Santa Rosa Road
Richmond West-End Spotswood 1012 8003 Franklin Farms Drive
Richmond West-End Almond 1013 1610 Forest Avenue
Richmond West-End Dale 1014 1504 Santa Rosa Road
Richmond West-End Wythe 1015 1604 Santa Rosa Road
Richmond West-End Surry 1016 1601 Rolling Hills Drive
Richmond West-End Culpeper 1017 1606 Santa Rosa Road
Richmond West-End Campbell 1018 8002 Discovery Drive
Richmond West-End Harrison 1019 8006 Discovery Drive
<PAGE>
SCHEDULE 1
THE KOGER PARTNERSHIP, LTD.
BUILDINGS, NUMBERS
NAMES AND ADDRESSES
Center Bldg Name Building # Address
Raleigh Crossroads Yancey 4101 5540 Centerview Drive
Raleigh Glenwood Kogerama 1201 3301 Womans Club Drive
Raleigh Glenwood Alleghany 1202 3701 National Drive
Raleigh Glenwood McDowell 1203 3717 National Drive
Raleigh Glenwood Wake 1204 3203 Womans Club Drive
Raleigh Glenwood Chatham 1206 3716 National Drive
Raleigh Glenwood Caswell 1207 3700 National Drive
Raleigh Glenwood Cumberland 1208 3739 National Drive
Raleigh Glenwood Northampton 1209 3725 National Drive
Raleigh Glenwood Camden 1210 3724 National Drive
Raleigh Glenwood Dare 1211 3733 National Drive
Exhibit 10(q)(2)
FIRST AMENDMENT
to
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
THIS AGREEMENT made this 21st day of December, 1993, by and between
THE KOGER PARTNERSHIP, LTD., a Florida limited partnership (together with all
successors and permitted assigns thereof hereunder, the "Owner"), and KOGER
PROPERTIES, INC., a Florida corporation (together with all successors and
permitted assigns thereof hereunder, the "Manager").
WHEREAS, the Owner and the Manager previously entered into an Amended
and Restated Management Agreement dated August 3, 1993 (the "Agreement"),
pursuant to which the Manager provides managerial services for and on behalf
of the Owner in connection with the management of the properties owned by the
Owner; and
WHEREAS, the Owner and the Manager desire to further amend the
Agreement pursuant to Section 24 of the Agreement;
NOW THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the Owner and the Manager hereby agree to amend Section 12(e)(3)
of the Agreement so that such section shall hereinafter read in its entirety
as follows:
(3) Excess Amounts shall become payable in each succeeding
month immediately before, and under the same terms as,
the Compensation payable under this section 12(e);
provided, however, that the Owner's obligation to make any
payments of any such Excess Amount shall terminate three
(3) years from the date of the monthly payment giving rise
to such Excess Amount.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE KOGER PARTNERSHIP, LTD., KOGER PROPERTIES, INC.
by its general partner,
Koger Properties, Inc.
By: Jack H. Chambers
President
By:
President
KOGER MANAGEMENT, INC.,
pursuant to Paragraph 17(a) of
the Agreement
By: James M. Lawrence
President
Exhibit 10(q)(3)
TKP CO-MANAGEMENT AGREEMENT
THIS AGREEMENT made as of the 21st day of December, 1993, by and
between THE KOGER PARTNERSHIP, LTD., a Florida limited partnership (together
with all successors and permitted assigns thereof hereunder, the "Owner"),
Koger Equity, Inc., a Florida corporation (together with all successors and
permitted assigns thereof hereunder, the "Co-Manager") and Southeast
Properties Holding Corporation, Inc. ("Southeast"), a Florida corporation, a
wholly owned subsidiary of the Co-Manager in connection with the consummation
of the Third Amended and Restated Plan of Reorganization (the "Plan") for
Koger Properties, Inc. ("KPI"). Capitalized terms used herein and not
defined shall have the meanings ascribed thereto in the Plan.
W I T N E S S E T H:
WHEREAS, the Owner has been organized and exists pursuant to an
agreement of limited partnership, dated originally as of November 2, 1976 and
amended and restated from time to time thereafter, under which KPI now serves
as Managing General Partner;
WHEREAS, on September 25, 1991 (the "Petition Date"), each of Owner and
KPI filed voluntary petitions for relief under chapter 11 of title 11 of the
United States Code, 11 U.S.C. sections 101 et seq. (the "Bankruptcy Code") in
the United States Bankruptcy Court for the Middle District of Florida, Tampa
Division (the "Bankruptcy Court");
WHEREAS, the Owner and KPI previously entered into a Management
Agreement, dated initially as of December 29, 1976 and amended and restated
from time to time thereafter (the "Management Agreement"), pursuant to which
KPI has provided managerial services for and on behalf of the Owner in
connection with the management of the properties owned thereby;
WHEREAS, pursuant to the Owner's Third Amended and Restated Plan of
Reorganization, dated as of October 28, 1992, as confirmed by the Bankruptcy
Court (the "TKP Plan"), and in connection with the consummation of the
transactions contemplated thereby, the Management Agreement was further
amended and restated (the "Amended Management Agreement");
WHEREAS, pursuant to the Plan, and in accordance with the terms of the
Amended Management Agreement, all of KPI's right, title and interest to, and
liabilities and obligations under, the Amended Management Agreement have been
transferred and assigned to Southeast as part of the Southeast Assets; and
WHEREAS, KPI, in accordance with the Plan, has been merged with and
into the Co-Manager (the "Merger");
WHEREAS, each of the Owner and Southeast desire to engage the Co-Manager
on the terms and conditions set forth herein to assist in the management of
the office properties owned by the Owner and Southeast by assigning and
delegating certain specified rights, duties and obligations of Southeast
under the Amended Management Agreement to the Co-Manager specifically as
provided herein, solely to the extent expressly provided herein, and the
Co-Manager desires to perform such services on the terms and conditions
set forth herein;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Owner, Southeast and the Co-Manager hereby agree as follows:
1. Appointment of the Co-Manager. Subject to Section 3 hereof, the
Owner hereby appoints the Co-Manager to serve as the Owner's exclusive agent
for the leasing, management and operation of all real estate properties and
interests described on Schedule 1 attached hereto, as the same may be amended
by addition or deletion from time to time by agreement between Southeast and
the Co-Manager and otherwise in accordance with the terms of this Agreement
(collectively, the "Properties"). Southeast hereby consents to such
appointment.
2. Delegation to the Co-Manager. Subject to Section 3 hereof and
pursuant to Paragraph 17(b) of the Amended Management Agreement, Southeast
hereby delegates to the Co-Manager the performance of the rights, obligations
and duties under or pursuant to the Amended Management Agreement as are
expressly specified herein. The Owner hereby consents to such delegation by
Southeast and the performance by the Co-Manager of such of Southeast's
obligations or duties under the Amended Management Agreement as are expressly
specified herein.
3. Limitations on Appointment of, and Delegation to, the Co-Manager.
(a) Generally. The obligations of the Co-Manager hereunder are
specifically and exclusively limited to those related to the operating
management of the Properties as provided herein. Without limitation of the
foregoing, the Co-Manager is not hereunder obligated, and shall in no event
be construed hereunder to have accepted any liability or obligation, whether
contractual, fiduciary, legal, equitable or other, in respect of the general
management of Southeast or the Owner or under the Amended Management Agreement,
including, without limitation, any decisions in respect of the sale of any of
the Properties and any matter, fact or circumstance relating or pertaining to
the general financial affairs of Southeast or the Owner or the liabilities or
obligations thereof, whether under the TKP Plan or otherwise. The Co-Manager
shall owe no liability, duty or obligation, fiduciary or otherwise, hereunder
to any of the creditors, partners, stockholders or other interestholders of
the Owner and shall in no event be liable thereto in respect of any act by, or
omission of, the Co-Manager in respect of the performance or non-performance
of its obligations hereunder.
(b) Approval of Assignment under the Plan; Obligations of the
Co-Manager Limited to this Agreement. The Owner hereby approves the
assignment to Southeast of all of KPI's rights, duties and obligations under
the Amended Management Agreement and waives any right to assert any claim
against the Co-Manager or any of its assets or properties arising out of the
Amended Management Agreement. The obligations of the Co-Manager to the Owner
and Southeast in respect of the Properties shall be limited solely to the
obligations expressly specified herein. The Co-Manager shall have no
liability or obligation in respect of Reorganized TKP and the management of
the Properties other than as set forth herein.
4. Term of Appointment and Delegation.
(a) Generally. The term of appointment and delegation hereunder
shall be for an initial term of five (5) years from the Effective Date, and
thereafter shall be extended for additional one (1) year periods, unless
earlier terminated by either party to this Agreement by written notice given
at least ninety (90) days prior to the expiration of the initial term or any
extended term or unless sooner terminated pursuant to the provisions of clause
(b) of this Section 4.
(b) Early Termination. This Agreement may be terminated on a partial
basis as to one or more office centers comprising the Properties upon thirty
(30) days written notice following a Partial Termination under Paragraphs 11(b)
(iv) and 11(c) of the Amended Management Agreement. The Co-Manager shall, as
to this Agreement, have each of the early termination rights provided to the
Manager (as such term is used in the Amended Management Agreement) under
Paragraph 11(a) of the Amended Management Agreement and each of Southeast and
the Owner shall, as to this Agreement, acting jointly, have each of the early
termination rights provided to the Owner (as such term is used in the Amended
Management Agreement) under Paragraph 11(a) of the Amended Management
Agreement.
(c) Books and Records. Promptly as practicable following any
termination of this Agreement, the books and records pertaining to the
Properties in the possession of the Co-Manager shall be promptly provided to
Southeast and the Owner, provided, however, that (i) the Co-Manager shall be
entitled to retain copies of such books and records and (ii) as to any Partial
Termination, the Co-Manager may provide to Southeast and the Owner copies of
all of the material books and records relating to the Subject Park(s) and
retain the originals thereof to the extent that such books and records relate
to properties owned by the Co-Manager.
5. Acceptance by the Co-Manager. The Co-Manager hereby accepts its
appointment as Co-Manager and the delegation under the Amended Management
Agreement pursuant to all the terms, conditions and limitations of this
Agreement.
6. Compensation.
(a) Management Fees and Expenses. The Co-Manager shall receive
compensation, payable monthly, equal to nine percent (9%) of any Gross Rental
Income from the Properties, together with the monthly reimbursement of expenses
incurred by the Co-Manager on behalf of the Owner or Southeast on the same
basis as contemplated by the Amended Management Agreement. In addition, the
Owner shall furnish to the Co-Manager for its use under this Agreement
reasonable full service office space in each office center where Properties
are located. For the purposes of the foregoing, the parties hereto agree that
(i) the definition of Gross Rental Income for purposes of this Agreement shall
be the same as the definition set forth in Paragraphs 12(a) and 12(b) of the
Amended Management Agreement, (ii) the Co-Manager shall be reimbursed for the
full amount of any Operating Costs (as such term is defined in Paragraph 5(b)
of the Amended Management Agreement) incurred by the Co-Manager in the
performance of its duties hereunder (whether in respect of Properties owned by
Southeast or the Owner) provided that the Co-Manager shall be responsible for
payment of Operating Costs solely to the extent which such funds are made
available therefor by the Owner or Southeast and which reimbursements shall
be reimbursable by the Owner to the Co-Manager pursuant to Paragraph 5(a) of
the Amended Management Agreement or by Southeast, and (iii) the Co-Manager
shall bear, and shall not be reimbursed by either Southeast or the Owner, for
the amount of Overhead Costs incurred thereby (as such term is defined in
Paragraph 5(c) of the Amended Management Agreement).
(b) Allocation of Costs. Each of Southeast, the Owner and the
Co-Manager acknowledge and agree that the foregoing constitutes an allocation
of the costs and expenses to be incurred in respect of the ownership, leasing,
operation and maintenance of the Properties. The Owner or Southeast, as the
case may be, may incur, for its own account, additional costs and expenses
other than in respect of the leasing, operation and management of the
Properties, which costs and expenses shall be borne solely by the Owner or
Southeast, as the case may be, and shall not be deemed to constitute Overhead
Costs. All of the costs of building or property improvements shall be borne
solely by the Owner and shall not be deemed to constitute Overhead Costs,
provided, however, that the Co-Manager shall not be entitled, by virtue of
the foregoing, to allocate any portion of the costs described in clause (ii)
of Paragraph 5(c) of the Amended Management Agreement as may be incurred by
the Co-Manager.
7. Services of the Co-Manager.
(a) Scope of Services in Respect of Properties. Subject to the terms
of Paragraphs 3 and 4 hereof, during the term of this Agreement the Co-Manager
shall perform the following duties with respect to the Properties. Subject to
the limitations on the scope of the Co-Manager's obligations hereunder
regarding the availability of funds in respect of such performance set forth
in subparagraph (b) of this Paragraph 7 and Paragraph 8 hereof, the Co-Manager
shall be an agent of Southeast and the Owner to perform acts in the area of its
appointment at the Owner's direction and in such capacity shall in good faith
use its best efforts to implement or cause to be implemented all decisions
approved by Southeast and the Owner in the areas of its appointment and shall
conduct or cause to be conducted the ordinary and usual business and affairs
of the Properties in the areas of its appointment and shall;
(i) Take action reasonably necessary to protect and preserve the
titles and interests of each of the Owner and Southeast respectively, with
respect to the Properties.
(ii) Cause to be paid all taxes, assessments and other such approved
impositions applicable to the Properties and cause appropriate escrows
therefor to be maintained in accordance with the terms of the Plan, each with
funds provided by the Owner or Southeast, as the case may be.
(iii) Use its best efforts to lease and keep leased to desirable and
creditworthy tenants all space held for lease at generally prevailing market
rates in the area where each real estate property subject to this Agreement is
located. The general form of lease to be utilized by the Co-Manager shall be
in a form acceptable to and approved by the Owner or Southeast, as the case
may be, from time to time.
(iv) Promote such leasing by such use of advertising, floor plans,
circulars, promotional aids and campaigns and economic surveys, as it deems
advisable.
(v) Respond appropriately to all inquiries relating to leases and
lease renewals, including those referred to it by the Owner or Southeast, as
the case may be. All negotiations connected therewith shall be conducted by
the Co-Manager or under its direction.
(vi) Execute as agent for the Owner or Southeast, as the case may be,
and on behalf of the Owner, all leases, lease renewals, cancellations,
amendments, or modifications for any of Properties and deliver to the Owner
executed counterparts of all leases and lease renewals, and any amendments,
cancellations or modifications thereto, after execution thereof.
(vii) Use its best efforts to collect rent and other income from the
Properties. The Co-Manager shall have the right, with the approval of the
Owner, or Southeast, as the case may be, to compromise claims for such rent
and other income, and, with the approval of and at the expense of the Owner
or Southeast, as the case may be, may institute legal proceedings in its own
name or in the name of the Owner or Southeast, as the case may be, to collect
the same, to oust or dispossess tenants or others occupying such Properties,
and otherwise to enforce the rights of the Owner or Southeast, as the case may
be, with respect thereto.
(viii) On behalf of the Owner or Southeast, as the case may be,
provide or cause to be provided all services required to be provided to
tenants under the leases, and any additional services provided to tenants, and
do such other things as shall be reasonably necessary or advisable for the
proper maintenance and operation of the Properties. The Co-Manager shall
monitor the quality, consistency, promptness and cost of all required and
customary services furnished to tenants. Contracts for services, including,
but not limited to, janitorial service, lawn and landscaping care and pest
control services, may be in the name of the Co-Manager, provided that each
such service contract: (i) is assignable to the Owner or Southeast or the
Owner's nominee, as the case may be; (ii) unless waived by the Owner or
Southeast, as the case may be, includes a provision for cancellation by the
Co-Manager or its assignee upon thirty (30) days notice; and (iii) requires
that the contracting party furnish evidence of insurance in amount and
coverage reasonably acceptable to the Owner or Southeast, as the case may be.
(ix) Select, employ, supervise, and discharge such employees as the
Co-Manager deems necessary for the leasing, operation and maintenance of the
Properties. All such persons shall be the employees of the Co-Manager and not
of the Owner or Southeast and it shall be the sole responsibility of the
Co-Manager to comply with all applicable laws and regulations pertaining to
wages, hours, working conditions, unemployment compensation, and other
employer-employee related subjects. Subject to the exceptions set forth in
Paragraph 5(b) of the Amended Management Agreement in respect of Tenant
Service Representatives and the costs of certain employee incentive plans, the
expense of salaries, social security contributions, taxes, unemployment taxes,
workman's compensation and disability insurance and other forms of insurance
and all other employment costs directly attributable to the employment of
persons employed in the leasing, maintenance, operation and improvement of the
Properties shall be borne by the Co-Manager.
(x) On behalf of the Owner or Southeast, as the case may be, promptly
pay real estate taxes, personal property taxes, water, sewer, and other utility
charges and assessments of every nature with respect to the Properties. The
Co-Manager shall also defend against or seek revision of or appeal from any
assessment or charge which the Owner or Southeast or the Co-Manager deems
improper and all such actions shall be taken in the name of the Owner,
Southeast or the Co-Manager and at the Owner's or Southeast's expense. The
Co-Manager may employ such experts in connection with such actions as it may
deem advisable and may also pay on behalf of the Owner or Southeast and with
funds provided thereby any such assessment or charge under protest and seek
refunds and compromise to settle any claim or proceeding with respect thereto.
(xi) On behalf of the Owner or Southeast, as the case may be, and with
funds provided therefrom, effect such improvements, including capital and
tenant-related improvements, as are deemed reasonably necessary or desirable
in the normal and ordinary operation of the Properties. The foregoing shall
not require the Co-Manager to effect extraordinary, non-recurring capital
improvements in respect of any of the Properties, such as, improvements as may
be related to a substantial loss or destruction of any of the Properties, by
casualty or otherwise.
(xii) Purchase such insurance as may be necessary to protect the
interests of Southeast and the Owner with funds provided thereby, including,
but not limited to, replacement cost fire and extended coverage, public
liability, and flood and loss of rental income insurance. The Owner,
Southeast and the Co-Manager may be named as co-insureds, as their respective
interests may appear, in such policies of insurance and the Owner or Southeast,
as the case may be, shall approve in advance the identity of each such
insurer. Owner or Southeast, as the case may be, shall be solely responsible
for all, or its respective allocated portion, of any deductible attributable
to any loss incurred in connection with the ownership or operation of the
Properties.
(xiii) Comply with all building codes, zoning and licensing
requirements (including real estate management and brokerage requirements)
and other requirements of the duly constituted governmental authorities having
jurisdiction with respect to the Properties. The Co-Manager may appeal from
any requirement it deems unwarranted and may compromise or settle any dispute
regarding any such requirements.
(xiv) Enlist the services of real estate brokers or agents in the
performance of its duties hereunder to the extent deemed necessary or
desirable.
(xv) Have inserted in all material agreements and documents prepared
or executed by it on behalf of the Owner, other than leases of real estate
property executed in the normal course of business, a provision that the
general partners and limited partners of the Owner shall not be personally
liable thereunder.
(xvi) Retain or employ or terminate the employment of and coordinate
the services of all accountants, attorneys and other persons necessary or
appropriate to carry out the business of the Owner or Southeast, as the case
may be, in the leasing, operation and management of the Properties. The
payment of the fees and other compensation of accountants, attorneys, and other
independent contractors performing services for the Owner shall be at the sole
expense of the Owner or Southeast, respectively. The Co-Manager shall
terminate the services of any one or more of such persons upon receipt of a
written request from the Owner or Southeast, as the case may be.
(xvii) Perform incidental and necessary business functions and acts
in order to operate and be a manager of the Properties in accordance with this
Agreement.
(xviii) The Co-Manager shall make every reasonable effort to comply
with all laws, ordinances, orders, rules, regulations, and requirements of
all federal, state, and municipal governments, courts, agencies, and
authorities as may be applicable to any of the Properties and the leasing,
operation and management thereof.
(b) Availability of Funds. Subject to the terms of Section 6 hereof
as to any cost or expense required to be borne by the Co-Manager hereunder,
the performance of each obligation of the Co-Manager hereunder which shall
require the expenditure of funds is expressly conditioned upon the availability
of sufficient funds to be provided by the Owner or Southeast, as the case may
be. Except costs in respect of Tenant Service Representatives, no provision
of this Agreement requires, nor shall be deemed to require, the Co-Manager to
advance any funds on behalf of the Owner or Southeast or otherwise in
connection with the leasing, management or operation of the Properties. To
the extent any such funds are advanced to the Owner or Southeast by the
Co-Manager, the Owner or Southeast, as the case may be, shall reimburse the
Co-Manager therefor consistent with the provisions of Section 6 hereof.
8. Books, Records and Accounting. The Co-Manager shall provide to
the Owner and Southeast, at the Co-Manager's sole cost and expense, the
information necessary to maintain complete, accurate and separate books and
records in connection with all of the Properties and to prepare all reports,
certificates and filings relating specifically and expressly to the leasing,
operation and management of the Properties and not with respect to any other
matters, including, without limitation, the general business or finances of
Southeast or the Owner. Any such books and records shall remain the property
of the Owner and Southeast, as the case may be. Notwithstanding the foregoing,
as between Southeast and the Owner, on the one hand, and the Co-Manager, on the
other hand, Southeast and the Owner shall continue to be solely responsible
for all the costs and expenses not directly related to the leasing, operation
and management of the Properties, including, without limitation, its
respective independent certified public accountants as well as any and all
costs of compliance with the federal and state securities laws and partner
communications, including all postage and printing costs related thereto. All
books and records required by the Co-Manager in order to provide such
information shall be maintained in accordance with generally accepted
accounting principles.
9. Budgets. In conformity with the budget policy of the Owner, the
Co-Manager shall prepare and submit annually to the Owner or Southeast, as
the case may be, for its approval leasing projections, a proposed capital
budget and a proposed operating budget for each office building managed and
operated pursuant to this Agreement. The Owner or Southeast, as the case may
be, will consult with the Co-Manager in order to agree on the capital budget
and operating budget for any budgetary year. If the Owner or Southeast, as
the case may be, has not approved the operating budget for any budgetary year
prior to the commencement of such year, the Co-Manager will operate under the
previous budgetary year's operating budget, as adjusted for actual operations
and for the addition of Properties, during such year until agreement is
reached. The Co-Manager will use reasonable diligence and employ all
reasonable efforts to ensure that the costs of maintaining and operating any
office building managed and operated pursuant to this Agreement shall not
exceed the approved budget amounts either in total or in any one accounting
category. The Co-Manager, on request, shall explain in detail to the Owner or
Southeast, as the case may be, any material budget variances.
10. Bank Accounts. The Co-Manager shall deposit all monies received
by the Co-Manager or its affiliate or agent from the leasing, management or
operation of any of the Properties, to the credit of the Owner or Southeast,
as the case may be, in an account or accounts in such banks or other financial
institutions and in a manner as directed or approved by the Owner or
Southeast, as the case may be, and each of such accounts shall bear a
designation which will readily identify the source of such funds and the
ownership thereof. All such monies shall at all times remain the property of
the Owner or Southeast, as the case may be, and each account into which such
monies are deposited shall bear designations to show the appropriate
ownership. Southeast shall be an independent signatory as to each such
account. The Co-Manager will not commingle the funds of any other person
with those of the Owner or Southeast.
11. Disbursements. Any monies held hereunder in any account for the
benefit of the Owner or Southeast may be disbursed by the Co-Manager on behalf
of the Owner or Southeast in order to fund the Operating Costs, the management
fee described in Section 6 hereof and all other direct costs and expenses of
maintaining and operating the Properties other than Overhead Costs.
12. Specific Restrictions on the Co-Manager.
(a) General. Subject to the terms of this Agreement hereof, the
Co-Manager in the performance of its management duties under this Agreement,
shall fulfill and carry out the obligations known to and imposed upon the
Owner or Southeast or the real estate properties and interests of the Owner
and managed by the Co-Manager under this Agreement, by leases, mortgages,
deeds of trust and other agreements to which the Owner or Southeast is a party
or any of the Owner's real estate properties or interests is subject. To
Co-Manager shall immediately deliver to the Owner or Southeast any notice or
communication from the holder of any of such leases, mortgages, deeds of
trust and other agreements that a default or breach thereof has occurred or
that any of the obligations of the Owner or Southeast of any such agreements
is not being fulfilled or carried out as contemplated therein. The foregoing
shall not mandate any expenditure of funds by the Co-Manager except as may
otherwise be required to be made thereby under the terms of this Agreement.
(b) Competition. During the term of this Agreement, the Co-Manager
will have access to certain confidential information regarding the Owner,
Southeast and the Properties and will be offering space for rental in
buildings not owned by the Owner or Southeast at the same time that it will be
offering office space in buildings owned by the Owner or Southeast. When such
buildings are located in the same office center, the Co-Manager will use its
best efforts to fully lease the space available in buildings owned by the
Owner or Southeast at then-current market rates contingent upon the needs of a
tenant or prospective tenant and the availability of space desired by such
tenant or prospective tenant. Notwithstanding the foregoing, this Agreement
shall not restrict or otherwise limit the Co-Manager's ability to lease space
available in buildings owned by the Co-Manager.
13. Performance of Duties. The Co-Manager shall give the Owner and
Southeast the benefit of its best judgment and efforts in performing its
obligations under this Agreement and shall not be liable for any act or
omission whatsoever for its negligence or error in judgment, except in respect
of (i) its willful misfeasance, bad faith, or gross negligence in the
performance of its duties under this Agreement or (ii) for the breach of a
material provision of this Agreement.
14. Bonding of Certain Employees. If required in writing by the Owner
or Southeast, the Co-Manager shall carry and maintain in force, on such
employees of the Co-Manager who handle or are responsible for the handling of
money of the Owner or Southeast, fidelity bond or bonds or comprehensive crime
insurance in such amounts and with such sureties as reasonably approved by the
Owner or Southeast. The premium therefor shall be an expense of, and shall be
paid by, the Owner or Southeast, as the case may be.
15. Indemnification. The Owner and Southeast, severally and not
jointly, shall indemnify and hold harmless the Co-Manager from and against any
and all liabilities, claims, damages, costs, and expenses, including attorneys'
fees and expenses, to which the Co-Manager may become subject by reason of or
arising out of the performance or non-performance of the duties of the
Co-Manager, including, without limitation, environmental-related liabilities
or obligations and liabilities or obligations relating to the Americans with
Disabilities Act of 1990, except those which may be incurred by the Co-Manager
by reason of its willful misfeasance, bad faith, gross negligence in the
performance by the Co-Manager of its duties under this Agreement or material
breach thereby of its obligations hereunder. The Co-Manager shall indemnify
and hold harmless the Owner from and against any and all liabilities, claims,
damages, costs, and expenses, to which the Owner may become subject by reason
of or arising out of the performance or non-performance of the duties of the
Co-Manager incurred by the Owner by reason of the willful misfeasance, bad
faith, or gross negligence of the Co-Manager in the performance of its duties
under this Agreement.
16. Applicable Law. This Agreement is executed in the State of
Florida and it shall be construed and enforced in accordance with the internal
laws of the State of Florida.
17. Successors and Assigns.
(a) Binding on Successors and Assigns. This Agreement shall be
binding on the parties hereto, their successors and assigns.
(b) Delegation to Affiliates. The Co-Manager may delegate its rights,
obligations and duties to any entity that has a demonstrated capability to
provide real property management services (an "Approved Delagee"), provided
that written notice of such delegation is given to the Owner and Southeast and
that no such assignment shall relieve the Co-Manager of its obligation and
duty to ensure the performance of the obligations and duties required to be
performed by the Co-Manager under this Agreement.
(c) Assignment. Notwithstanding the foregoing, the Co-Manager may
assign its rights and obligations and duties, and such assignment shall
relieve the Co-Manager of its duties and obligations hereunder and any duty to
assure the performance of the obligations and duties required to be performed
by the Co-Manager under this Agreement if, and only if: (i) written notice of
such assignment is given to the Owner and (ii) such assignment results in
management of the Properties by a property manager having substantial
experience or expertise in the management of commercial real properties
similar to the Properties, the identity of which manager is approved by the
Owner, as to any specified office park (a "Subject Park"), by holder(s) TKP's
obligations as described in clauses (c)(ii)(B)(y) or (z) of Paragraph 17 of
the Amended Management Agreement.
18. Notices. All notices, consents, requests, and other
communications provided for or permitted to be given pursuant to this
Agreement shall be in writing and shall be personally delivered, sent by
certified mail, postage prepaid, or delivered by overnight delivery service to
either party at the following respective addresses:
The Owner:
The Koger Partnership, Ltd.
c/o Managing General Partner
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attention: Chief Operating Officer
The Co-Manager:
Koger Equity, Inc.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attention: Chief Operating Officer
with a copy to: William F. McCarthy, Esq.
Ropes & Gray
One International Place
Boston, MA 02110-2624
Either party may at any time give notice in writing to the other party of a
change of its address for the purposes of this Paragraph 18.
19. Waiver. The failure by either party to insist upon the strict
performance of any of the terms and provisions of this Agreement or to
exercise any right, remedy, or election herein provided or permitted by law
shall not constitute or be construed as a waiver or relinquishment for the
future of such term, provision, right, remedy, or election, but the same shall
continue in full force and effect. No term or provision of this Agreement
shall be deemed to have been waived by either party unless such waiver is in
writing, signed by such party.
20. Consents and Approvals. The consents and approvals of the Owner
and Southeast may be given from time to time by representatives of the Owner
or Southeast, as the case may be, designated as such by notice to the
Co-Manager. As to any matter requiring the consent or approval of the Owner
or Southeast, the Owner or Southeast, as the case may be, shall not
unreasonably withhold or delay in granting such consent or approval.
21. Complete Agreement. This Agreement amends and restates and
supersedes and takes the place of any and all previous communications between
the parties hereto relating to the matters covered hereby, and constitutes the
sole and complete agreement between them.
22. Amendments. Except as otherwise provided herein any and all
amendments, additions and deletions to this Agreement must be in writing and
executed by all parties hereto.
23. Severability. If any provision of this Agreement or its
application to any party or circumstance shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder hereof shall not be affected thereby and each provision hereof
shall be valid and shall be enforced to the fullest extent permitted by law.
24. No Partnership. By its performance of this Agreement the sole
relationship of the Co-Manager to each of the Owner and Southeast shall be
that of an independent contractor and agent only. This Agreement does not
create any employer-employee, joint venture or partnership relationship
between, on the one hand, Co-Manager and, on the other hand, the Owner or
Southeast.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE KOGER PARTNERSHIP, LTD.,
by its general partner,
Koger Properties, Inc.,
debtor and debtor-in-possession
By:James H. Chambers
President
KOGER EQUITY, INC.
By: Irvin H. Davis
President
SOUTHEAST PROPERTIES HOLDING
CORPORATION, INC.
By: Irvin H. Davis
President
Exhibit 10(q)(4)
DELEGATION OF DUTIES
UNDER TKP CO-MANAGEMENT AGREEMENT
THIS DELEGATION is made as of the 21st day of December, 1993
by Koger Equity, Inc., a Florida corporation ("KE") to its wholly
owned subsidiary, Koger Real Estate Services, Inc., a Florida
corporation ("KRES").
WHEREAS, pursuant to the Third Amended and Restated Plan of
Reorganization of Koger Properties, Inc., a Florida corporation
("KPI") dated as of April 30, 1993, as confirmed by order of the
United States Bankruptcy Court of the Middle District of Florida
Tampa Division on December 8, 1993, Koger Equity, Inc., a Florida
corporation ("KE"), Southeast Properties Holding Corporation,
Inc., ("Southeast") and The Koger Partnership, Ltd., a Florida
limited partnership ("TKP"), have entered into a Co-Management
Agreement dated as of December 21, 1993 (the "Co-Management
Agreement");
WHEREAS, pursuant to the Co-Management Agreement, Southeast
has delegated to KE the performance of the rights, obligations,
and duties under or pursuant to the Amended Management Agreement
dated August 31, 1993 between KPI and TKP (the "Amended
Management Agreement") relating to the leasing, management, and
operation of all real estate properties and interests owned by
the Partnership;
WHEREAS, KRES is a wholly owned subsidiary of KE formed for
the purpose of leasing, selling, buying, advertising,
negotiating, and offering real property and interests therein, to
third parties for compensation in compliance with the licensing
laws of the several states in which the Partnership owns real
property;
WHEREAS, pursuant to the provisions of Section 17(b) of the
Co-Management Agreement, KE desires to delegate its rights,
obligations, and duties to any entity to with a demonstrated
ability to perform the duties described in the Co-Management
Agreement;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, KE and KRES hereby agree as
follows:
1. Delegation. (a) In order to comply with and conform to
the requirements in certain states which require that all
activities relating to advertising, negotiating, and offering
real property and interests therein for sale or lease be
conducted by licensed real estate brokers, KE as Co-Manager under
the Co-Management Agreement does hereby assign to KRES all of its
rights, obligations and duties under the Co-Management Agreement
which must be conducted by a licensed real estate broker, but
none other.
(b) KE further delegates and assigns to KRES all
compensation payable for brokerage and leasing services during
the term of this Delegation.
2. Retention of Rights and Obligations of KE. Except as
expressly provided in this agreement, KE shall retain all rights,
title and interest to and liabilities and obligations under the
Co-Management Agreement.
3. Notice to TKP. Notice to TKP and Southeast of the
delegation by KE to KRES hereunder shall provided by mailing a
copy of this agreement to TKP in accordance with Sections 17(b)
and 18 of the Co-Management Agreement.
KOGER EQUITY, INC.
By: Victor A. Hughes, Jr.
Title: Senior Vice President and
Chief Financial Officer
KOGER REAL ESTATE SERVICES, INC.
By: Victor A. Hughes, Jr.
Title: President
Exhibit 10(r)(1)
INCENTIVE FEE AGREEMENT
THIS AGREEMENT is made this 3rd day of August 1993, effective as of
the 1st day of June 1993, by and between THE KOGER PARTNERSHIP, LTD., a
Florida limited partnership ("TKP") and KOGER PROPERTIES, INC., a Florida
corporation ("KPI").
W I T N E S S E T H:
WHEREAS, TKP is a Florida limited partnership in respect of which KPI
serves as Managing General Partner; and
WHEREAS, on September 25, 1991 (the "Petition Date"), each of TKP and
KPI filed voluntary petitions for relief under chapter 11 of title 11 of the
United States Code, 11 U.S.C. sections 101 et seq.; and
WHEREAS, TKP's Third Amended and Restated Plan of Reorganization, dated
as of October 28, 1992 (the "Plan"), requires that TKP and KPI enter into an
incentive agreement under which KPI may receive certain fees relating to sales
and refinancings of various of TKP's office properties.
NOW THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt, adequacy and sufficiency of which are
hereby acknowledged, TKP and KPI hereby agree as follows:
1. Definitions. For the purposes of this Agreement, the capitalized
terms set forth below shall have the following meanings. Capitalized terms used
herein and not herein defined shall have the meanings ascribed to such terms
in the Plan.
Affiliate (or any derivative thereof), in respect of a Person, means
another Person directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person. For
purposes of this definition, the term "control" and its derivative forms refer
to the ownership or control of securities of any Person ordinarily (and not
merely upon the happening of an event of default, an event of noncompliance or
other similar event) having the right to cause the election of a majority of
such Person's board of directors or analogous governing body.
Covered Transaction means either of the following: (i) the Disposition
by TKP of its interest in one or more of its office properties or (ii)
repayment in full of any of the Plan Indebtedness effected as part of a
refinancing or refunding by TKP of such obligations, irrespective of the source
of such refinancing.
Disposition means any sale, lease, sale/leaseback, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
TKP and any Subsidiary thereof which has the effect of conveying all or a
substantial portion of TKP's right, title and interest in any of the real
property owned by TKP to a Person other than a Subsidiary of TKP.
Fee Percentage means in respect of (a) Covered Transactions consummated
on or before the fourth anniversary of the Effective Date, fifteen (15)
percent, (b) Covered Transactions consummated after the fourth anniversary of
the Effective Date, but on or before the sixth anniversary of the Effective
Date, five (5) percent, and (c) Covered Transactions consummated after the
sixth anniversary of the Effective Date, zero (O) percent.
Net Proceeds, in respect of any Covered Transaction, means the excess,
if any, of (a) the gross cash proceeds realized by TKP in respect of any (i)
Disposition, other than a taking by condemnation, (ii) a refinancing or
refunding of secured indebtedness of TKP or (iii) an additional secured
financing in respect of any of the real property owned by the TKP (other than
as required to effect tenant or capital improvements in respect of such
property), over (b) the sum of (i) the aggregate principal amount of
indebtedness then outstanding, plus any accrued and unpaid interest or other
amounts in respect thereof, to the extent such amounts are (A) secured by
consensual mortgage liens or, in the case of Plan Indebtedness related to a
Tax Claim, liens securing same in respect of real property which is the subject
of such Covered Transaction in the case such transaction is pursuant to clause
(a)(i) or (a)(iii) above and (B) required to be repaid or refunded and is
repaid or refunded in connection with such transaction and, (ii) the reasonable
out-of-pocket costs incurred by TKP in connection with such transaction,
including, without limitation, attorneys' fees, brokerage commissions (which
shall not in the case of brokerage commissions payable to Affiliates of TKP,
exceed three percent (3%) of the amount referred to in clause (a) above) and
similar costs and expenses, provided, however, that the proceeds of any Covered
Transaction which are non-cash proceeds shall be deemed to constitute Net
Proceeds only if, when and to the extent that, amounts of cash are ultimately
realized thereon. Net Proceeds may be further reduced by contributions to the
working capital of TKP as described in clause (iv) of the definition of the
term "Net Capital Transaction Proceeds" set forth in the documents included in
Exhibit L to the Plan.
For the purposes of clause (b)(i) of the foregoing, amounts
attributable to indebtedness collateralized by more than one office property
of the Debtor shall, as to each such property, be reflected based upon the
lesser of (i) the release price of such indebtedness in respect of such
property and (ii) the aggregate amount of such indebtedness actually repaid
in connection with consummation of the subject Covered Transaction.
Subsidiary means, as to TKP, a corporation (or other business entity)
the majority of the voting stock (or other voting equity interests) of which
is directly or indirectly owned by TKP.
2. Incentive Fees. Following the Effective Date, and subject to Section
3 hereof, TKP shall pay to KPI fees (the "Fees") in respect of each Covered
Transaction equal to the product of (i) the Net Proceeds in respect of such
transaction and (ii) the Fee Percentage.
3. Payments. TKP shall pay all Fees to KPI as follows:
3.1 The first $5 million of Fees shall not be currently payable to
KPI, but shall instead be deposited into an account subject to
the terms of the Limited Recourse Guaranty and Security
Agreement (the "Guarantee") in favor of a designated agent for
the holders of the Basic Restructured Mortgage Notes (the
"Noteholders Agent"), as additional collateral for the repayment
of the obligations represented by the Basic Restructured
Mortgage Notes.
3.1.1. Any Fees in excess of $5 million shall not be subject to
this Section 3.1, and shall become payable to KPI under
the terms of Section 3.2 hereof.
3.1.2. Any Fees, deposited into an account pursuant to the
Guarantee, that are subsequently released from such
account pursuant to the Guarantee shall immediately
become payable to KPI under the terms of section 3.2
hereof.
3.2 Subject to Section 3.1 of this Agreement, TKP shall pay all Fees
to KPI in immediately available funds within five business days
following consummation of the Covered Transaction to which such
fees relate; provided, however, that:
3.2.1. If KPI, its successor or assign, or any person owning all
of the equity of KPI or such successor or assign, shall
elect to be classified as a "real estate investment
trust" within the meaning of Section 856 of the Internal
Revenue Code of 1986, as amended (the "Code"), then the
amount of the Fee that shall be payable pursuant to this
Section 3.2 in any calendar year shall not exceed, in the
aggregate, the amount that KPI, its successor or assign,
informs TKP in writing that it may receive in that
calendar year without violating the 95 percent gross
income limitation of Section 856(c) of the Code.
3.2.2. Any Fees otherwise payable hereunder that are not paid
to KPI pursuant to section 3.2.1 of this Agreement (the
"Excess Amount") shall be deposited in an interest-
bearing bank account in a depository reasonably
satisfactory to KPI and shall not be withdrawn or pledged
as collateral by Owner prior to the time that such Excess
Amount becomes payable or the payment obligation
terminates pursuant to this section 3.2.
3.2.3. Excess Amounts shall become payable in each succeeding
calendar year immediately before, and under the same
terms as, the Fees payable under this section 3.2;
provided, however, that the Owner's obligation to make
any payments of any such Excess Amount shall terminate
seven (7) years after the date such Fees would have been
payable under this Section 3.2 notwithstanding Section
3.2.1.
4. Term of Agreement. This Agreement shall become effective on the
Effective Date and shall remain in effect for so long as KPI shall remain
Managing General Partner of TKP. The termination of this Agreement shall not
relieve TKP of the obligation to pay Fees in respect of Covered Transactions
consummated prior to the termination of this Agreement.
5. Further Assurances. KPI and TKP agree to promptly execute and
deliver such further documents and do such other acts and things as the
Noteholders' Agent may reasonably request from time to time in order to more
fully effect the purposes of this Agreement.
6. Indemnification. TKP shall indemnify and hold harmless KPI from and
against any and all liabilities, claims, damages, costs, and expenses,
including attorneys' fees and expenses, to which KPI may become subject by
reason of or arising out of the performance or non-performance of the duties
of KPI under this Agreement, except those which may be incurred by KPI by
reason of its willful misfeasance, bad faith, or gross negligence in the
performance by KPI of its duties under this Agreement. KPI shall indemnify and
hold harmless TKP from and against any and all liabilities, claims, damages,
costs, and expenses, to which TKP may become subject by reason of or arising
out of the performance or non-performance of the duties of KPI incurred by TKP
by reason of the willful misfeasance, bad faith, or gross negligence of KPI in
the performance of its duties under this Agreement.
7. Applicable Law. This Agreement is executed in the State of Florida
and it shall be construed and enforced in accordance with the internal laws of
the state of Florida.
8. Successors and Assigns. This Agreement shall be binding on the
parties hereto, their successors and assigns. KPI may delegate its obligations
hereunder and assign any of its rights hereunder to any entity which is a
permitted assignee of KPI under Section 17(c) of the Amended and Restated
Management Agreement, dated August 3, 1993, effective as of June 1, 1993,
between TKP and KPI, provided, however, that written notice of such assignment
shall be provided to TKP and the Noteholders' Agent (as such term is defined in
Paragraph 3 hereof) and provided, further, that any such assigner shall
undertake all of KPI's liabilities and obligations under the Limited Recourse
Guaranty and Security Agreement of even date herewith.
9. Notices. All notices, consents, requests, and other communications
provided for or permitted to be given pursuant to this Agreement shall be in
writing and shall be personally delivered, sent by certified mail, postage
prepaid, or delivered by overnight delivery service to either party and the
Noteholders' Agent at the following respective addresses:
TKP:
The Koger Partnership, Ltd.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attention: Chief Executive Officer
KPI:
Koger Properties, Inc.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attention: Chief Executive Officer
Noteholders' Agent:
Coopers & Lybrand
5959 Blue Lagoon Drive, Fourth Floor
Miami, FL 33126
Attention: Mr. Harvey Goldman
Either party may at any time give notice in writing to the other party of a
change of its address for the purposes of this Section 9.
10. Waiver. The failure by either party to insist upon the strict
performance of any of the terms and provisions of this Agreement or to exercise
any right, remedy, or election herein provided or permitted by law shall not
constitute or be construed as a waiver or relinquishment for the future of
such term, provision, right, remedy, or election, but the same shall continue
in full force and effect. No term or provision of this Agreement shall be
deemed to have been waived by either party unless such waiver is in writing,
signed by such party.
11. Complete Agreement. This Agreement amends and restates and
supersedes and takes the place of any and all previous communications between
the parties hereto relating to the matters covered hereby, and constitutes the
sole and complete agreement between them.
12. Amendments. Except as otherwise provided herein any and all
amendments, additions and deletions to this Agreement must be in writing and
executed by both parties hereto.
13. Severability. If any provision of this Agreement or its application
to any party or circumstance shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder hereof
shall not be affected thereby and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE KOGER PARTNERSHIP, LTD.,
By: Koger Properties, Inc.
Managing General Partner,
By: Jack H. Chambers
President
KOGER PROPERTIES, INC.,
By: Jack H. Chambers
President
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc.,
Managing General Partner of The Koger Partnership, Ltd. on behalf of The Koger
Partnership, Ltd. He personally appeared before me, is personally known to me
and did not take an oath.
Notary: Sue J. Wakeman
(NOTARIAL SEAL) Print Name: Sue J. Wakeman
SUE J. WAKEMAN Notary Public, State of Florida
MY COMMISSION # CC 205882 EXPIRES My commission expires: June 4, 1996
June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc., a
Florida corporation on behalf of Koger Properties, Inc. He personally appeared
before me, is personally known to me and did not take an oath.
Notary: Sue J. Wakeman
(NOTARIAL SEAL) Print Name: Sue J. Wakeman
SUE J. WAKEMAN Notary Public, State of Florida
MY COMMISSION # CC 205882 EXPIRES My commission expires: June 4, 1996
June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
Exhibit 10(r)(2)
FIRST AMENDMENT
to
INCENTIVE FEE AGREEMENT
THIS AGREEMENT made this 21st day of December, 1993, by and between
THE KOGER PARTNERSHIP, LTD., a Florida limited partnership ("TKP") and KOGER
PROPERTIES, INC., a Florida corporation ("KPI").
WHEREAS, the TKP and KPI previously enter into an Incentive Fee
Agreement dated August 3, 1993 (the "Agreement"), pursuant to which KPI may
receive certain fees relating to sales and refinancings of various of TKP's
office properties; and
WHEREAS, TKP and KPI desire to amend the Agreement pursuant to
Section 12 thereof;
NOW THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, TKP and KPI hereby agree to amend Section 3.2.3 of the Agreement
so that such section shall hereinafter read in its entirety as follows:
Excess Amounts shall become payable in each succeeding
calendar year immediately before, and under the same terms as,
the Fees payable under this section 3.2; provided, however,
that TKP's obligation to make any payments of any such Excess
Amount shall terminate three (3) years from the date such Fees
would have been payable under this Section 3.2 notwithstanding
Section 3.2.1.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE KOGER PARTNERSHIP, LTD.,
by its general partner,
Koger Properties, Inc.
By: Jack H. Chambers
President
KOGER PROPERTIES, INC.
By: Jack H. Chambers
President
Exhibit 10(s)
LIMITED RECOURSE GUARANTY AND SECURITY AGREEMENT
This LIMITED RECOURSE GUARANTY AND SECURITY AGREEMENT (the "Agreement") is
made this 3rd day of August 1993, effective as of the 1st day of June 1993, by
The Koger Partnership, Ltd., a Florida limited partnership ("TKP") and Koger
Properties, Inc., a Florida corporation ("KPI"), and a debtor and debtor-
in-possession, in favor of the holders of the Basic Restructured Mortgage
Notes identified on Schedule 1 hereto (the "Senior Noteholders") and Coopers
& Lybrand, the entity designated by the Senior Noteholders to act as agent
hereunder (the "Noteholders' Agent").
Recitals
WHEREAS, KPI now serves as the Managing General Partner of TKP; and
WHEREAS, on September 25, 1991, each of TKP and KPI filed a voluntary
petition for relief under chapter 11 of the United States Bankruptcy Code with
the Bankruptcy Court for the Middle District of Florida (the "Bankruptcy
Court"); and
WHEREAS, pursuant to the Third Amended and Restated Plan of
Reorganization of The Koger Partnership, Ltd., Dated As Of October 28, 1992
(the "TKP Plan") and the terms of a certain Amended and Restated Management
Agreement, dated of even date herewith (the "Management Agreement"), KPI will
serve as TKP's agent for the management and operation of TKP's real estate
properties; and
WHEREAS, pursuant to the terms of the TKP Plan, TKP and KPI also have
entered into a certain Incentive Fee Agreement, dated of even date herewith
(the "Incentive Fee Agreement"), pursuant to which KPI may be entitled to
receive certain fees (the "Incentive Fees") in respect of certain sales and
refinancings of TKP's office properties, the amount of which fees will be
determined based upon the timing of such transactions and the net proceeds
realized thereby; and
WHEREAS, the Basic Restructured Mortgage Notes (as such term is defined
in the TKP Plan) which are to be distributed to the Senior Noteholders
pursuant to the TKP Plan are each secured by mortgage interests in certain
office properties owned by TKP and constitute full recourse obligations of TKP,
but without recourse to any General Partner therein, except to the extent of
the pledge by KPI of certain amounts to be paid under the Incentive Fee
Agreement as provided herein; and
WHEREAS, as a condition to their consent to the terms the Plan and in
consideration for their agreement to the treatment therein provided for Class
lA Claims, KPI and TKP have agreed to provide additional collateral to secure
the payment of obligations represented by the Basic Restructured Mortgage Notes
(and no other obligations of TKP or Reorganized TKP, including, without
limitation any of the New Secured Notes which may be issued thereby in respect
of any deficiency in any Mortgage Claim) in an amount up to, but in no event
exceeding, the first five million dollars ($5,000,000) of the Incentive Fees
required to be paid by TKP under the terms of the Incentive Fee Agreement; and
WHEREAS, in the event of certain terminations of the Incentive Fee
Agreement, and certain other circumstances, TKP has agreed to make additional
deposits to the collateral for the repayment of the Basic Restructured
Mortgage Notes; and
WHEREAS, all parties hereto acknowledge and agree that the agreements
contained herein do not, are not intended to and shall in no event be deemed
or construed to in any way enlarge, change, modify or amend the non-recourse
character of the Basic Restructured Mortgage Notes as the same pertains to any
General Partner in TKP, or any of the assets or property of any such General
Partner, except solely as respects the pledge hereunder of the first five
million dollars ($5,000,000) of the Incentive Fees reuired to be paid by TKP
under the terms of the Incentive Fee Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Agreement
1. Definitions. Unless otherwise defined herein, capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
TKP Plan. The defined terms set forth below shall have the following meanings:
1.1 Application Event shall mean the earliest date upon which any of
the following conditions shall occur and be continuing:
(a) all collateral granted by TKP to secure the Basic Restructured
Mortgage Notes has been sold, refinanced or otherwise disposed of
and all proceeds thereof distributed to the Senior Noteholders or
otherwise applied to the reduction of amounts outstanding under the
Basic Restructured Mortgage Notes and, following such distribution,
Senior Noteholders have not been paid in full in respect of the
obligations represented by the Basic Restructured Mortgage Notes;
or
(b) the final maturity of each of the obligations represented by the
Basic Restructured Mortgage Notes has occurred and the amount of
any such unpaid indebtedness under any Basic Restructured Mortgage
Note then outstanding shall have been finally determined, in
accordance with Section 6(a) and (b) hereof, to exceed the value of
the properties collateralizing such unpaid obligation; provided,
however, that, solely for purposes of this definition, unless the
final maturity of each and all of the Basic Restructured Mortgage
Notes shall have been extended, each of such obligations shall be
deemed to have finally matured on the seventh anniversary of the
Effective Date.
1.2 Approved Bank shall mean a commercial banking institution that (i)
is a member of the U.S. Federal Reserve System, (ii) has a combined capital and
surplus and undivided profits of not less than U.S. $200,000,000 and (iii) is
not a creditor of either KPI or TKP.
1.3 Bankruptcy Code shall mean the Bankruptcy Reform Act of 1978, as at
any time amended, or any substitute or successor legislation relating to the
same general subject matter.
1.4 Bankruptcy Event shall mean, as to any person, any event by which
(i) such person applies for, consents to, or there shall be appointed a
receiver, liquidator, or trustee of such person or any of its properties and/or
assets; (ii) a petition in bankruptcy, an insolvency proceeding, or a petition
for reorganization is filed against such person if same is not withdrawn,
dismissed, cancelled, or terminated within 60 days of the filing of such
petition or proceeding; (iii) such person is adjudicated bankrupt or insolvent
(without regard to any grace period); (iv) such person files or consents to the
filing of any petition in bankruptcy or commences or consents to the
commencement of any proceeding under the Bankruptcy Code; (v) such person
admits in writing the inability to pay its debts generally as they become due
or consents to the appointment of a receiver, trustee or liquidator of such
person; or (vi) such person causes or institutes any proceeding for, or there
shall occur the dissolution or termination of such person unless a
reinstatement occurs within ten (10) days after such dissolution or
termination.
1.5 Effective Date shall mean June 1, 1993.
1.6 Final Release Event shall mean the earliest date on which all fees
and expenses incurred by the Noteholders' Agent in connection with this
Agreement are paid and any of the following occurs:
(a) all of TKP's obligations in respect of each of the Basic
Restructured Mortgage Notes are paid in full; or
(b) the aggregate amount of the Proceeds Collateral (i) equals the
Guarantee Amount and (ii) is applied to the repayment of amounts
outstanding in respect of the Basic Restructured Mortgage Notes
pursuant to the provisions of Section 6 of this Agreement.
1.7 Guarantee Amount shall mean, as of any specified date, the excess
of the (i) lesser of (1) $5,000,000.00 and (2) the product of (A) .375 and (B)
the aggregate principal amount of all of the Basic Restructured Mortgage Notes
then-outstanding, together with the amount of all accrued unpaid interest
thereon over (ii) as of such date, the aggregate amount of payments made from
the Proceeds Collateral and applied to repay amounts of the Basic Restructured
Mortgage Notes.
1.8 Initial Collateral shall mean any and all rights of KPI in and
under the Incentive Fee Agreement (other than KPI's right to indemnification
pursuant to Paragraph 6 thereof), whether earned or unearned, and any proceeds,
products, profits or other distributions to KPI in respect thereof, including,
without limitation, the Proceeds Collateral. All rights and obligations in and
to the Initial Collateral granted pursuant hereto are subject to the provisions
of Section 5(a) hereof.
1.9 Initial Deposit Date shall mean the date on which funds are first
paid by TKP into the Proceeds Account pursuant to Section 3 hereof.
1.10 Interim Release Date shall mean the ninety-first day following the
first date upon which the aggregate amount of the Proceeds Collateral shall
exceed the Guarantee Amount.
1.11 Proceeds Collateral shall mean all of the amounts paid to the
Noteholders' Agent for deposit into the Proceeds Account pursuant to the terms
of Section 7 hereof, plus all amounts of net investment income earned or
accrued in respect of such amounts, net of any expenses of establishing or
maintaining the Proceeds Account, which such costs and expenses shall, in
accordance with the provisions of Section 7 hereof, be paid from the amounts
so deposited in the Proceeds Account. In no event shall the Proceeds Collateral
exceed the Guarantee Amount.
1.12 Proceeds Account means the account established by the Noteholders'
Agent pursuant to the provisions of Section 7 hereof.
2.1 Limited Guarantee. Subject to the terms and conditions set forth
herein, including, without limitation, Section 2.2 hereof, KPI hereby
absolutely and unconditionally guarantees to the Senior Noteholders and their
successors, endorsees, transferees and assigns the full and prompt payment of
all amounts due under the Basic Restructured Mortgage Notes when due (whether
at stated maturity, upon acceleration or otherwise), with recourse strictly
and absolutely limited in accordance with Section 5 of this Agreement.
2.2 Limitations on Guarantee. Notwithstanding the foregoing provisions
of Section 2.1 hereof:
(a) Subject to the provisions of the final sentence of Section 9(b)
hereof, KPI shall have no obligation to make any payment hereunder
unless an Application Event shall have occurred and be continuing.
(b) Under no circumstances shall KPI, or any successor, assignee or
transferee thereof be required to make any payment under or in
respect of the guarantee granted hereunder other than by an
application of the Proceeds Collateral. Notwithstanding anything
herein to the contrary, or any provision of any applicable law,
including, without limitation, section llll(b) of the Bankruptcy
Code, the agreements of KPI contained herein shall not be deemed,
interpreted or construed as creating, and shall not create, any
liability or obligation of KPI for the payment of any money
hereunder, other than as by satisfaction from the Proceeds
Collateral.
3. No Waiver, Etc. At any time and from time to time, without the
consent of or notice to KPI, without incurring any liability to KPI, and
without impairing or releasing the obligations of KPI under this Agreement,
the Noteholders' Agent or the Senior Noteholders, as the case may be, may do
any of the following:
(a) Change or extend the manner, place or terms of payment of or
renew or alter all or any portion of the Basic Restructured
Mortgage Notes;
(b) Take any action under or in respect of the Basic Restructured
Mortgage Notes or any other relevant documents in the exercise of
any remedy, power or privilege contained therein or available to
the Noteholders' Agent or the Senior Noteholders at law, equity or
otherwise, or waive or refrain from exercising any such remedies,
powers or privileges;
(c) Amend or modify in any respect the Basic Restructured Mortgage
Notes or any of the other relevant documents;
(d) Extend or waive the time for TKP's or any other person's or party's
performance of, or compliance with, any term, covenant or agreement
on its part to be performed or observed under the Basic
Restructured Mortgage Notes or any other relevant documents, or
waive such performance or compliance or consent to a failure of or
departure from such performance or compliance;
(e) Sell, exchange, release, dispose of or otherwise deal with any
property pledged, mortgaged or conveyed, or in which the
Noteholders' Agent or any of the Senior Noteholders has been
granted a lien or security interest, to secure the Basic
Restructured Mortgage Notes; and
(f) Release TKP, any surety or any other person which may be liable
in any manner for the payment and collection of any amounts owed
by TKP to the Senior Noteholders while continuing to hold KPI
liable.
4. Grant of Security Interests. (a) Subject to the provisions of
Sections 2.2 and 5 hereof, KPI hereby grants to the Noteholders' Agent, as
agent for the holders of the Basic Restructured Mortgage Notes and as
additional collateral for the full and prompt payment of the obligations
represented by the Basic Restructured Mortgage Notes, a security interest in
the Initial Collateral and hereby unconditionally transfers and assigns to the
Noteholders' Agent all rights to payments of any kind arising out of, under,
or in connection with the Incentive Fee Agreement (other than KPI's right to
indemnification under Paragraph 6 thereof). To the extent permitted by
applicable law, KPI hereby appoints the officers and employees of the
Noteholders' Agent, or any other person the Noteholders' Agent may duly
designate, as KPI's attorney-in-fact to execute on behalf of KPI any financing
statements reasonably required to perfect the collateral interests granted
hereby.
(b) The Noteholders' Agent, as agent for the holders of the Basic
Restructured Mortgage Notes, hereby grants to KPI, as additional collateral
for the full and prompt performance of the obligations of the Noteholders'
Agent hereunder, including the performance of the obligations thereof under
Sections 6(c) and 9 hereof, a security interest in the Proceeds Collateral.
To the extent permitted by applicable law, the Noteholders' Agent hereby
appoints the officers and employees of KPI, or any other person as KPI may
duly designate, as the Noteholders' Agent's attorney-in-fact to execute on
behalf thereof any financing statements reasonably required to perfect the
collateral interests granted hereby.
5. Limitation of Collateral Interest. (a) It is expressly understood
that this Agreement and the covenants, agreements and guarantees of KPI set
forth herein may be enforced solely by recourse to, and enforcement against,
the Proceeds Collateral and in no event in an amount to exceed the Guarantee
Amount. Notwithstanding any of the provisions of this Agreement or otherwise
applicable law, including, without limitation, section llll(b) of the
Bankruptcy Code, to the contrary, this Agreement and the liabilities and
obligations of KPI hereunder may in no event be enforced by execution upon, or
foreclosure of, (i) any of the Initial Collateral other than the Proceeds
Collateral or (ii) any of the other assets or property of KPI, Reorganized KPI
or any other successor thereto or transferee thereof. Notwithstanding the
foregoing, the Noteholders' Agent shall be entitled to seek specific
performance by KPI and TKP of each of its duties and obligations hereunder.
(b) Upon the occurrence of the Interim Release Date:
(i) the collateral interest described in Section 4(a) hereof
shall, automatically and without the action or consent of any person,
including, without limitation, TKP, KPI, the Noteholders' Agent and
any of the Senior Noteholders, or any of the successors, assignees or
transferees of any of the foregoing, be deemed to be rescinded,
discontinued and otherwise terminated as to all of the Initial
Collateral other than the Proceeds Collateral; and
(ii) the Noteholders' Agent shall notify TKP in writing that
the assignment of the proceeds under the Incentive Fee Agreement has
terminated and that all future payments under the Incentive Fee
Agreement shall be paid over to KPI.
6. Application of Collateral. (a) Upon the occurrence of an Application
Event, the Noteholders' Agent shall apply the Proceeds Collateral first to the
repayment of any fees and expenses incurred by the Noteholders' Agent in
connection with this Agreement and second to the repayment of then outstanding
obligations under the Basic Restructured Mortgage Notes on a pro rata basis
(based upon relative deficiency amounts) and in the order of application of
proceeds specified in the Basic Restructured Mortgage Notes.
(b) Upon the occurrence of an Application Event, the relative amounts
of the collateral deficiencies, if any, which shall serve as the basis for
apportionment of the Proceeds Collateral shall be determined by (i) agreement
among on the one hand, Reorganized TKP and Reorganized KPI and, on the other
hand, the Noteholders' Agent and the Senior Noteholders or (ii) if no such
agreement can be reached promptly following the occurrence of an Application
Event, by (A) the Alternate General Partner, if the same shall then have
succeeded KPI and be serving as the Managing General Partner of Reorganized
TKP or (B) if the Alternate General Partner shall not have succeeded KPI and
be serving as the Managing General Partner of Reorganized TKP, or shall
otherwise be unwilling or unable to determine the relative amounts of such
collateral deficiencies, if any, by (I) a single arbitrator in a single
arbitral proceeding, the identity of which arbitrator shall be determined
jointly by Reorganized KPI and the Noteholders' Agent, or (II) if Reorganized
KPI and the Noteholders' Agent are unable to jointly determine the identity of
such arbitrator, the matter shall be submitted to three arbitrators, one to be
chosen by each party and the third by the two thus chosen, or, should either
party fail to appoint an arbitrator within fifteen (15) days of written request
from the other party to do so, the requesting party may appoint two
arbitrators, which shall then appoint a third arbitrator. The third arbitrator
shall act as presiding arbitrator of the tribunal. The arbitration shall be
conducted in accordance with the rules of the American Arbitration Association
then in effect, provided, however, that such arbitral proceeding shall be
conducted in no event later than thirty (30) days following the date upon which
all such arbitrators have been appointed, with a decision to be rendered not
later than thirty (30) days following the completion of such proceeding. The
decision in writing of the arbitrator(s), when filed with the parties hereto,
shall be final and binding. Judgment may be entered upon the final decision
of the arbitrator(s) in any court having jurisdiction. Said arbitration shall
take place in New York City, New York. The costs of the arbitration shall be
borne as determined by the arbitrator(s).
(c) Following such application of the Proceeds Collateral, the
Noteholders' Agent will pay an amount equal to the difference between the
aggregate amount of the Proceeds Collateral and the amount so applied to the
repayment of such fees, expenses and obligations under the Basic Restructured
Mortgage Notes to KPI, or, if any amounts were contributed to the Proceeds
Collateral by TKP pursuant to the provisions of Section 13 hereof, to KPI and
TKP in proportion to their relative contributions to the aggregate amount of
the Proceeds Collateral.
7. Proceeds Account Payments and Expenses. By its execution hereof, and
prior to the occurrence of the Interim Release Date, KPI hereby irrevocably
directs TKP to pay over all amounts due and owing to KPI under the Incentive
Fee Agreement to the Noteholders' Agent, in accordance with payment
instructions to be received from the Noteholders' Agent from time to time.
The Noteholders' Agent, by its execution hereof, agrees to establish an
account for the sole benefit of the Senior Noteholders (the "Proceeds
Account"), to promptly deposit in the Proceeds Account all amounts received
from TKP pursuant to the immediately preceding sentence or the provisions of
Section 13 hereof and to hold such amounts subject to disbursement pursuant
to the terms of this Agreement. Funds deposited in the Proceeds Account shall
be invested by the Noteholders' Agent in accordance with the provisions of
Section 11 hereof. Except as otherwise set forth in Section 8 hereof, all
fees, costs and expenses of maintaining the Proceeds Account shall be borne
by and paid from the Proceeds Collateral to the extent possible and neither
KPI nor TKP shall otherwise be required to bear any portion of any such
fees, costs or expenses.
8. Compensation of Noteholders' Agent. The Noteholders' Agent shall
receive from TKP an initial fee of ten thousand dollars ($10,000.00), payable
upon execution of this Agreement. Thereafter, the Noteholders Agent shall be
entitled to reimbursement for its reasonable fees and expenses incurred in the
performance of its duties hereunder. Such fees and costs shall be calculated
and billed at the hourly rates then in effect for any employee or
representative of the Noteholders' Agent performing services pursuant to this
Agreement, and such amounts may be deducted by the Noteholders' Agent from the
Proceeds Account on a monthly basis, following the submission of detailed
invoices to TKP and KPI reflecting the basis for such fees and costs. TKP shall
also be required to advance up to an additional ten thousand dollars
($10,000.00) to the Noteholders' Agent upon request for the payment of
reasonable costs and expenses which may be incurred by the Noteholders' Agent
pending establishment of the Proceeds Account. In the event that such an
advance is made, the Noteholders' Agent shall reimburse TKP for such advance
from the first deposits made to the Proceeds Account pursuant to this Agreement
and the Incentive Agreement.
9. Interim Payments to KPI from the Proceeds Account. Any balance of
the Proceeds Account in excess of the Guarantee Amount shall be paid to KPI
(or, if any amounts were contributed to the Proceeds Collateral by TKP pursuant
to the provisions of Section 13 hereof, to KPI and TKP in proportion to their
relative contributions to the aggregate amount of the Proceeds Collateral) at
the direction of KPI within five (5) business days after the last day of any
calendar month which ends after the Initial Deposit Date.
10. Retention of Funds Received. (a) Each of TKP and KPI understands
and acknowledges that any funds received by the Noteholders' Agent will
constitute property of the holders of the Basic Restructured Mortgage Notes,
and that neither TKP nor KPI will have any interest in such funds whatsoever
except solely as expressly provided in Section 4(b) hereof. To the extent that
it is determined that any such funds constitute property of KPI, however, KPI
hereby grants to the Noteholders' Agent a security interest in such funds.
(b) In no event shall either TKP or KPI be required to return, repay,
remit, distribute or share with the Noteholders' Agent or any current or future
holder of any Basic Restructured Mortgage Notes or any other Person, including,
without limitation, any of their respective successors or assigns, all or any
portion of any payment or distribution of any portion of the Proceeds
Collateral which is paid in accordance with the terms of Sections 6 or 8
hereof; provided, however, that, without prejudice hereunder as to any claim
against TKP, KPI shall promptly turn over to the Noteholders' Agent any amount
which it receives which amount should have been paid to the Noteholders' Agent
pursuant to the provisions of Section 7 hereof.
11. Investment of Funds. The Noteholders' Agent shall invest any funds
received pursuant to this Agreement in its discretion in any of the following:
(a) direct obligations of, or obligations fully guaranteed by, the
United States of America or any agency thereof;
(b) bonds, debentures, notes, or other evidences of indebtedness issued
by any of the following agencies: Federal Farm Credit System;
Federal Home Loan Bank System; Export-Import Bank of the United
States; Federal National Mortgage Association; Government National
Mortgage Association; Federal Financing Bank, or any agency or
instrumentality of the Federal Government which shall be
established for the purpose of acquiring the obligations of any of
the foregoing or otherwise providing financing therefor; and
(c) direct and general obligations of, or obligations unconditionally
guaranteed by, any state of the United States or political
subdivision of such state but only if (A) the payment of the
principal of and interest on which are secured by a pledge of the
full faith and credit of such state or political subdivision of
such state, respectively, and (B) at the time of their purchase
under this Agreement, such obligations are rated in any of the two
highest rating categories by a nationally recognized bond rating
service.
12. Bankruptcy Code Protection Waived. In any pending or subsequent
Bankruptcy Event with respect to KPI or TKP, each of KPI and TKP hereby waives
any and all protection that may be provided by the Bankruptcy Code with respect
to the Proceeds Collateral, including, without limitation, the automatic stay
provided under section 362(a) of the Bankruptcy Code and the benefits of
sections 544, 547, 548 and 550 of the Bankruptcy Code.
13. Additional Contributions to Proceeds Collateral by TKP. (a) In the
event that the Incentive Fee Agreement shall be terminated prior to the
occurrence of the Interim Release Date, TKP hereby agrees that it shall make
additional contributions to the Proceeds Collateral at the times and in the
amounts which it would otherwise be required to pay to the Noteholders' Agent
hereunder but for the termination of the Incentive Fee Agreement. TKP shall
make such additional contributions to the Proceeds Collateral until such time
as the aggregate amount of the contributions made to the Proceeds Collateral
shall equal the Guarantee Amount, and TKP shall have no additional liability
or obligation to make any such additional contributions thereafter.
(b) If any reduction in computing the aggregate of Net Proceeds is
made, which reduction is described in the last sentence of the definition of
such term set forth in the Incentive Fee Agreement, TKP shall, as to each such
deduction make an additional contribution to the Proceeds Collateral equal to
the lesser of (i) $225,000 and (ii) the amount of such deduction.
14. Release of Security Interest. On the ninety-first (91st) day
following a Final Release Event, so long as a Bankruptcy Event has not
occurred with respect to KPI, the Noteholders' Agent will take such steps as
are necessary to effectuate a release of the security interest granted to the
Noteholders' Agent pursuant to this Agreement, including the recording (at
KPI's sole expense) of any necessary termination statements.
15. No Modification, Etc. Until an Interim Release Date has occurred,
each of TKP and KPI agree not to effect any modification of the terms of the
Incentive Fee Agreement other than (i) a modification solely effective as to
Sections 9 through 13 thereof; (ii) a modification which has the sole effect
of extending the duration of the Incentive Fee Agreement or increasing the
Incentive Fees or both, or (iii) a modification which is approved in writing,
in advance, by the Noteholders' Agent (which shall act upon the instructions
of the Senior Noteholders, as such holders may, among themselves, deem
appropriate), which consents shall not be unreasonably withheld and which
instructions shall be reasonably given. KPI may not assign its obligations
hereunder with an express assumption thereby of such obligations.
16. Subrogation; Retention of Rights Under Incentive Fee Agreement.
(a) KPI shall not exercise any rights which it may have acquired by way of
subrogation to rights of the holders of Basic Restructured Mortgage Notes under
this Agreement, by any payment made hereunder or otherwise.
(b) The provisions of this Agreement are intended solely for the
purpose of defining the relative rights of holders of Basic Restructured
Mortgage Notes and KPI in respect of the Proceeds Collateral and Initial
Collateral. Nothing contained in this Agreement is intended to or shall (i)
impair, as between TKP and KPI, the obligation of TKP hereunder and pursuant
to the Incentive Fee Agreement to pay the Incentive Fees, which obligation is
absolute and unconditional; (ii) affect the relative priority of KPI in
respect of the Proceeds Collateral and any other current or future creditors
of TKP (other than holders of the Basic Restructured Mortgage Notes), (iii)
prevent KPI from exercising all remedies otherwise permitted by applicable
law upon any default by TKP of any of its oblgations under the Incentive Fee
Agreement or (iv) prejudice in any way KPI's rights in respect of any other
obligation of TKP, including KPI's rights to receive, in accordance with the
provisions of Section 8 hereof, any portion of the amounts contained in the
Proceeds Account which do not constitute Proceeds Collateral. Following the
occurrence of any Application Event and the application of all or any part of
the Proceeds Collateral to repay amounts owing in respect of the Basic
Restructured Mortgage Notes, KPI shall retain all of its rights to assert
against TKP the full amount of all liabilities and obligations of TKP under
the Incentive Fee Agreement which were not paid to KPI by virtue of such
application.
17. No Assumption of Obligation by Noteholders' Agent. By virtue of its
execution of this Agreement or any related agreement and its service as an
agent of the Senior Noteholders, the Noteholders' Agent has not assumed, and
shall in no event be deemed to have or be entitled to assume, any of the
rights, duties or obligations of TKP, KPI or any Partner therein under any of
the Management Agreement, the New Partnership Agreement or the Incentive Fee
Agreement.
18. Further Assurances. At any time upon the request of the
Noteholders' Agent or KPI, the Noteholders' Agent or KPI, as the case may be,
shall, at its own expense, execute, acknowledge and deliver any further
assignments, conveyances, transfers or other assurances, documents or
instruments as may be reasonably requested by the other such party hereto in
order to more fully accomplish and effectuate the intent of this Agreement.
19. Notices. All notices, consents, requests and other communications
provided for or permitted to be given pursuant to this Agreement shall be in
writing and shall be personally delivered, sent by certified mail, postage
prepaid, or delivered by overnight delivery service to the parties hereto at
the followlng respective addresses:
TKP:
The Koger Partnership, Ltd.
3986 Boulevard Center Drive
Jacksonvilie, FL 32207
Attention: Chief Executive Officer
KPI:
Koger Properties, Inc.
3986 Boulevard Center Drive
Jacksonville, FL 32207
Attention: Chief Executive Officer
Noteholders' Agent:
Coopers & Lybrand
5959 Blue Lagoon Drive, Fourth Floor
Miami, FL 33126
Attention: Mr. Harvey Goldman
Each party may at any time give notice in writing to the other parties
of a change of address for purposes of this Section.
20. Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Florida.
21. Indemnification of Noteholders' Agent. The Noteholders' Agent shall
be entitled to rely upon, and shall be fully protected from all liability,
loss, cost, damage or expense in acting or omitting to act pursuant to, any
instruction, order, judgment, certification, affidavit, demand, notice,
opinion, instrument or other writing delivered to it hereunder without being
required to determine the authenticity of such document, the correctness of
any fact stated therein, the propriety of the service thereof or the capacity,
identity or authority of any party purporting to sign or deliver such document.
The Noteholders' Agent need only perform those duties that are specifically
set forth in this Agreement and no others.
The Noteholders' Agent is acting as a stakeholder only with respect to
the Proceeds Collateral. If any dispute arises as to whether Noteholders' Agent
is obligated to deliver any property or as to whom the property is to be
delivered or the amount thereof, the Noteholders' Agent shall not be required
to make any delivery, but in such event the Noteholders' Agent may hold the
property until receipt by the Noteholders' Agent of instructions in writing,
signed by all parties which have, or claim to have, any interest in the
Proceeds Collateral, directing the disposltion of the Proceeds Collateral, or
in the absence cf such authorization, the Noteholders' Agent may hold the
Proceeds Collateral until receipt of a certified copy of a final judgment of
a court of competent jurisdiction providing for the disposition of the Proceeds
Collateral. Alternatively, the Noteholders' Agent may deposit the Proceeds
Collateral in the registry of a court of competent jurisdiction; provided,
however, that notwithstanding the foregoing, the Noteholders' Agent may, but
shall not be required to, institute legal proceedings of any kind.
TKP agrees to reimburse the Noteholders' Agent on demand for, and to
indemnify and hold the Noteholders' Agent harmless against and with respect to,
any and all loss, liability, damage, or expense (including, without limitation,
attorneys' fees and costs) that the Noteholders' Agent may suffer or incur in
connection with entering into this Agreement and performance of its obligations
under this Agreement, or otherwise, in connection therewith, except to the
extent such loss, liability, damage or expense arises from the willful
misconduct, gross negligence or bad faith of the Noteholders' Agent.
22. Resignation or Removal of Noteholders' Agent. Upon thirty (30) days
written notice to all of the Senior Noteholders identified on Schedule 1, the
Noteholders' Agent and any successor Noteholders' Agent may at any time resign
as such by delivering the Proceeds Account to either (i) any successor
Noteholders' Agent designated in writing by a majority in number of the Senior
Noteholders identified on Schedule 1, and acceptable to TKP and KPI, or (ii)
any court having competent jurisdiction. Upon its resignation and delivery of
the Proceeds Account as set forth in this paragraph, the Noteholders' Agent
shall be discharged of, and from, any and all further obligations arising in
connection with this Agreement.
23. Counterparts. This agreement may be executed in any number of
separate counterparts, each of which shall, exclusively and separately,
constitute one Agreement.
24. Binding Effect. This Agreement and the rights and duties of the
parties hereto shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors,
successors in title and assigns.
IN WINESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE KOGER PARTNERSHIP, LTD.,
By: Koger Properties, Inc.
Managing General Partner
By:
Vice President
KOGER PROPERTIES, INC.,
By:
Vice President
COOPERS & LYBRAND,
as Noteholders' Agent
By:
[Title]
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President on behalf of Koger Properties,
Inc., Managing General Partner of The Koger Partnership, Ltd. on behalf of The
Koger Partnership, Ltd. He personally appeared before me, is personally known
to me and did not take an oath.
(NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc., a
Florida corporation on behalf of Koger Properties, Inc. He personally appeared
before me, is personally known to me and did not take an oath.
(NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
<PAGE>
SCHEDULE 1
NOTE HOLDERS
Basic Restructured Mortgage Notes
Lender Property Location
The Travelers Insurance Company Monterey, Miami Center, FL
1100 Abernathy Road, N.E. Cleveland, Dade County
Building 500 Augusta,
Suite 1420 Concord
Atlanta, Georgia 30328
The Travelers Insurance Company Warwick Norfolk Center, VA
1100 Abernathy Road, N.E. City of Norfolk
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Elizabeth Norfolk Center, VA
1100 Abernathy Road, N.E. City of Norfolk
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Gloucester Norfolk Center, VA
1100 Abernathy Road, N.E. City of Norfolk
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Bay Center Tampa Center, FL
1100 Abernathy Road, N.E. Hillsborough County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Intrepid Tampa Center, FL
1100 Abernathy Road, N.E. Hillsborough County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Triton East Tampa Center, FL
1100 Abernathy Road, N.E. Hillsborough County
Building 500
Suite 1420
Atlanta, Georgia 30328
<PAGE>
Lender Property Location
The Travelers Insurance Company Vanguard Tampa Center, FL
1100 Abernathy Road, N.E. Hillsborough County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Atlantic Tampa Center, FL
1100 Abernathy Road, N.E. Hillsborough County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Orion Tampa Center, FL
1100 Abernathy Road, N.E. Hillsborough County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Richmond Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Albany Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Koger Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Palm Coast Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
<PAGE>
Lender Property Location
The Travelers Insurance Company Athens Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Charleston Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Phoenix Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Columbus Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Flint Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Covington Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Spokane Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
<PAGE>
Lender Property Location
The Travelers Insurance Company Trenton Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Denver Miami Center, FL
1100 Abernathy Road, N.E. Dade County
Building 500
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Ratcliffe Richmond West End
1100 Abernathy Road, N.E. Center, VA
Building 500 City of Richmond
Suite 1420
Atlanta, Georgia 30328
The Travelers Insurance Company Dare Raleigh Glenwood
1100 Abernathy Road, N.E. Center, NC
Building 500 Register of Deeds
Suite 1420 Wake County
Atlanta, Georgia 30328
Prudential Funding Corporation Koger Tampa Center, FL
One Ravinia Drive Hillsborough County
Suite 1400
Atlanta, Georgia 30346
Prudential Funding Corporation Kogerama Richmond West End
One Ravinia Drive Center, VA
Suite 1400 Henrico County
Atlanta, Georgia 30346
Prudential Funding Corporation Randolph Richmond West End
One Ravinia Drive Center, VA
Suite 1400 Henrico County
Atlanta, Georgia 30346
<PAGE>
Lender Property Location
Prudential Funding Corporation Nelson Richmond West End
One Ravinia Drive Center, VA
Suite 1400 Henrico County
Atlanta, Georgia 30346
Prudential Funding Corporation Koger Richmond West End
One Ravinia Drive Center, VA
Suite 1400 Henrico County
Atlanta, Georgia 30346
Prudential Funding Corporation Almond Richmond West End
One Ravinia Drive Center, VA
Suite 1400 Henrico County
Atlanta, Georgia 30346
Prudential Funding Corporation Dale Richmond West End
One Ravinia Drive Center, VA
Suite 1400 Henrico County
Atlanta, Georgia 30346
Prudential Funding Corporation Kogerama Norfolk East
One Ravinia Drive Center, VA
Suite 1400 City of Norfolk
Atlanta, Georgia 30346
Prudential Funding Corporation Koger Norfolk East
One Ravinia Drive Center, VA
Suite 1400 City of Norfolk
Atlanta, Georgia 30346
Prudential Funding Corporation Shenandoah Norfolk East
One Ravinia Drive Center, VA
Suite 1400 City of Norfolk
Atlanta, Georgia 30346
Prudential Funding Corporation James Norfolk East
One Ravinia Drive Center, VA
Suite 1400 City of Norfolk
Atlanta, Georgia 30346
<PAGE>
Lender Property Location
Prudential Funding Corporation Rivanna Norfolk East
One Ravinia Drive Center, VA
Suite 1400 City of Norfolk
Atlanta, Georgias 30346
Prudential Insurance Company Jefferson Richmond West End
of America Center, VA
One Ravinia Drive Henrico County
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Kogerama Tampa Center, FL
of America Hillsborough County
One Ravinia Drive
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Mariner Tampa Center, FL
of America Hillsborough County
One Ravinia Drive
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Triton West Tampa Center, FL
of America Hillsborough County
One Ravinia Drive
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Wythe Richmond West End
of America Center, Va
One Ravinia Drive Henrico County
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Surry Richmond West End
of America Center, VA
One Ravinia Drive Henrico County
Suite 1400
Atlanta, Georgia 30346
<PAGE>
Lender Property Location
The Prudential Insurance Company Culpepper Richmond West End
of America Center, VA
One Ravinia Drive Henrico County
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Albermarle Norfolk East
of America Center, VA
One Ravinia Drive City of Norfolk
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Maury Norfolk East
of America Center, VA
One Ravinia Drive City of Norfolk
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Yancey Raleigh Crossroads
of America Center, NC
One Ravinia Drive Wake County
Suite 1400
Atlanta, Georgia 30346
The Prudential Insurance Company Smithfield Norfolk West
of America Center, VA
One Ravinia Drive City of Norfolk
Suite 1400
Atlanta, Georgia 30346
The Northwestern Mutual Life Billings Miami Center, FL
Insurance Company Dade County
720 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
<PAGE>
Lender Property Location
The Northwestern Mutual Life Manchester Miami Center, FL
Insurance Company Dade County
720 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
The Northwestern Mutual Life Seattle Miami Center, FL
Insurance Company Dade County
720 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Aetna Realty Investors, Inc. Chatham Raleigh Glenwood
242 Trumbull Street Center, NC
Hartford, Connecticut 06156-9604
Aetna Realty Investors, Inc. Cumberland Raleigh Glenwood
242 Trumbull Street Center, NC
Hartford, Connecticut 06156-9604
Aetna Realty Investors, Inc. Camden Raleigh Glenwood
242 Trumbull Street Center, NC
Hartford, Connecticut 06156-9604
Jefferson-Pilot Life Insurance Caswell Raleigh Glenwood
Company Center, NC
101 N. Green Street
P.O. Box 20407
Greensboro, N.C. 27420
Jefferson-Pilot Life Insurance Northhampton Raleigh Glenwood
Company Center, NC
101 N. Green Street
P.O. Box 20407
Greensboro, N.C. 27420
Gulf Life Insurance Company Tyler Richmond West End
2929 Allen Parkway Center, VA
34th Floor
Houston, Texas 77019
Home Beneficial Life Insurance Page Richmond West End
Company Center, VA
3901 West Broad Street
Richmond, Virginia 23261
<PAGE>
Lender Property Location
Liberty Life Insurance Company McDowell Raleigh Glenwood
Wachovia Mortgage Center, NC
2000 Wade Hampton Boulevard
P.O. Box 789 (29602)
Greenville, S.C. 29615
Life Savings Bank, FSB York Norfolk East
4530 E. Virginia Beach Blvd. Center, VA
P.O. Box 479 (23501)
Norfolk, Virginia 23502
Southwestern Life Insurance Spotswood Richmond West
Company End Center, VA
4211 Norbourne Boulevard
Louisville, KY 40207
EXHIBIT 10(t)
OPTION AND
PURCHASE AND SALE AGREEMENT
OPTION AND PURCHASE AND SALE AGREEMENT made and entered into this 3rd
day of August, 1993, effective as of the 1st day of June 1993, by and between
KOGER PROPERTIES, INC., a Florida corporation, with its principal place of
business at 3986 Boulevard Center Drive, Jacksonville, Florida 32207, as debtor
and debtor-in-possession (the "Optionor"), and THE KOGER PARTNERSHIP, LTD., a
limited partnership organized and existing under the laws of the State of
Florida, with its principal place of business at 3986 Boulevard Center Drive,
Jacksonville, Florida 32207, as debtor and debtor-in-possession (the
"Optionee").
W I T N E S S E T H:
WHEREAS, on September 25, 1991, each of the Optionor and the Optionee
filed voluntary petitions for relief under chapter 11 of title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code"); and
WHEREAS, in connection with the consummation of a plan of
reorganization for the Optionee (the "Plan") and in consideration of the
various provisions therefor, each of the Optionor and the Optionee desire to
establish the terms and conditions upon which the Optionee may acquire from
the Optionor one or more of the developed office properties described on
Schedule A hereto (together, the "Building Parcels") and/or one or more of the
undeveloped parcels of real property described on Schedule B hereto (the "Land
Parcels", and, together with the Building Parcels, the "Option Properties").
NOW, THEREFORE, in consideration of the premises, the mutual and
reciprocal promises herein contained and of the sum of Ten and No/100 Dollars
($10.00) paid by the Optionee to the Optionor, and other good and valuable
considerations, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
1. Grant of Purchase Option and Right of First Refusal. (a) Option.
Subject to all of the terms and provisions of this Agreement, including,
without limitation, the right of first refusal set forth in sub-section (b)
below (the "Right of First Refusal"), Optionor hereby grants to Optionee the
exclusive right to acquire from the Optionor all of the Optionor's interest
in any or all of the Option Properties (but not a portion or portions of any
individual property less than 100%), in one or more transactions, which Option
shall be effective for the period commencing on the date hereof and ending, as
to any subject Option Properties, on the earlier to occur of (i) the seventh
anniversary of the Effective Date (as such term is defined in the Plan), (ii)
the purchase and sale or such property pursuant to the Right of First Refusal,
or (iii) the earlier termination of such rights upon an unexcused or unwaived
default by the Optionee described in subsection (c) hereof. Notwithstanding the
foregoing, except as effected in connection with a merger, sale of assets or
other business combination effected as part of the resolution of the Optionor's
pending chapter 11 case, the aggregate consideration to be paid by Koger
Equity, Inc. in respect of any acquisition thereby, directly or indirectly, of
Option Properties shall not be less than the fair value of such property,
determined consistent with the provisions of Section 2 hereof.
(b) Right of First Refusal. At any time prior to the Optionee's
exercise of the Option pursuant to Section 4 hereof in respect of the Option
Properties specified in the Sale Proposal (as defined below), the Optionor may
cause all or any specified portion of the Option Properties to be sold subject
to the terms of this subsection (b). In connection with any such sale, the
Optionor shall give notice to the Optionee that it desires to cause such sale
and shall deliver to the Optionee a proposal (the "Sale Proposal") for the
Optionor to sell all or some specified portion of the Option Properties,
setting forth the portion of the Option Properties proposed to be sold, the
proposed purchase price therefor and all of the other material terms and
conditions on which the Optionor proposes to sell such Option Properties. The
Optionee shall then have thirty (30) days after the receipt of the Sale
Proposal to elect (by giving written notice of the same to the Optionor) either
of the following: (i) to agree to the Optionor attempting to sell such Option
Properties (or the portion thereof specified in such Sale Proposal) to a
Person which is not an Affiliate of the Optionor for the purchase price and on
the terms and conditions as set forth in the Sale Proposal or terms more
favorable to the Optionor; or (ii) to acquire all (but not less than all) of
the Optionor's interest in the Option Properties (or the portion thereof
specified in such Sale Proposal), free and clear of all liens and encumbrances
securing repayment of indebtedness (except such indebtedness as may be
described in the Sale Proposal as to be assumed by a prospective transferee of
the Subject Option Properties), but subject to such other title matters as may
be reasonably acceptable to the Optionee. In the event the Optionee makes the
election in clause (ii) above, the Optionor and the Optionee shall close the
transaction within a period of sixty (60) days after the making of such
election, on the date (or within such period) as specified by the Optionee in
the notice of its election to purchase and in the office of the Optionor's
legal counsel located in Jacksonville, Florida, or such other place as may be
mutually agreed by the Optionor and the Optionee. The purchase price of the
subject Option Properties and the terms of such purchase will be such as will
produce for the Optionor the aggregate net cash consideration the Optionor
would have received had the Optionor sold the specified Option Properties at
the price and on the terms set forth in the Sale Proposal. If the Optionee
makes such election to purchase the specified Option Properties, the right to
purchase may be transferred to an assignee subject to the provisions of Section
6 hereof. If the Optionee fails to make either of the elections provided above,
then the Optionee will be deemed to have made the election in clause (i) above.
If the Optionee makes or is deemed to have made the election in clause (i)
above, then the Optionor may consummate a sale at any time not more than nine
months after the giving of the Sale Proposal for a purchase price and on terms
which are at least as favorable to the Optionor as those contained in the Sale
Proposal, provided that such contract of sale is entered into within six months
after the giving of the Sale Proposal, but if such contract is not entered
into, or a sale is not consummated, within such six or nine-month period, as
the case may be, then the rights of the Optionee under this Section 1 will be
reinstated in full as if such Sale Proposal had not been made. Following any
election under clause (i) above, the Optionor shall give the Optionee sixty
(60) days notice of the anticipated closing date of any sale of Option
Properties covered by such election. Such closing date shall in no event occur
prior to ninety (90) days following the date upon which the Sale Proposal was
delivered. If the Optionee makes an election to purchase (election (ii) above)
but fails because of its default to consummate the same, then, without limiting
the Optionor's other rights and remedies, the Optionee will be deemed to have
made election (i) and the six and nine-month periods shall be 24-month and
36-month periods, respectively, and such periods shall commence upon such
default. If the Optionee makes the election to purchase (election (ii) above),
but fails because of its default to consummate the same, then Optionor shall
have all remedies available at law or equity, including, but not limited to, a
suit for damages or specific performance.
(c) Early Termination by Default. If the Optionee elects to exercise
the Option, but fails because of its unexcused or unwaived default to
consummate the same, then, without limiting the Optionor's other rights and
remedies, at the option of the Optionor, the Option and Right of First Refusal
shall be terminated as to the subject Option Properties and shall be of no
further force or effect in respect thereof.
2. Option Purchase Price. Subject to the next following sentence of
this Section 2, the purchase price for Option Properties to be paid by the
Optionee in connection with any exercise of the Option (the "Option Purchase
Price") shall equal, as to each or all of the Option Properties in respect of
which such exercise is made, the fair market value of the fee simple title for
the subject Option Properties, construed as part of the office park of which
such building or other property is a part (which office park shall be assumed
to be managed by a single manager and owned by a single owner), determined
without consideration of the existence of the Option or the terms thereof. By
exercise of the Option, Optionee shall have the right only to acquire Option
Properties (i) subject to any and all then-existing liens and encumbrances,
including, without limitation, any such mortgage or deed of trust indebtedness,
and only in the event that the instrument underlying such indebtedness (a
"Mortgage") provides for, or the mortgagee in respect thereof shall agree and
consent in writing to allow, such transfer subject to the assumption and
performance by the Optionee of the Optionor's liabilities and obligations
under such Mortgage and the indebtedness secured thereby and without any
acceleration of, or continuing liability or obligation of Optionor in respect
of, any such liabilities or obligations, and said mortgagee grants a release
or covenant not to sue in favor of Optionor in a form reasonably acceptable
thereto, or (ii) provided that the proceeds of such sale to be received by the
Optionor at closing, net of all costs and expenses of such sale borne by the
Optionor, shall be sufficient in the aggregate to repay the full amount of the
Mortgage and all then-existing and outstanding liabilities and obligations of
the Optionor which are secured by a pledge of, or other interest in, any of the
subject Option Properties.
3. Determination of the Option Purchase Price. The Option Purchase
Price shall be determined in accordance with Section 2 and otherwise as
follows:
(a) Within ten (10) business days of any written request
therefor by the Optionee (an "Option Price Request"), the Optionor
shall provide to the Optionee a written statement setting forth the
Optionor's assessment of the Option Purchase Price as to the Option
Properties specified in the Option Price Request (the "Preliminary
Option Price"). As to any specific Option Properties, the Optionee
shall not be entitled to make more than one Option Price Request in
any consecutive six-month period.
(b) As a condition precedent to its exercise of the Option,
within ten (10) business days of its receipt of a written notice from
the Optionor setting forth the Preliminary Option Price, the Optionee
may, by written notice to the Optionor, reject the Preliminary Option
Price and require that an appraisal (the "Appraisal") be made as to the
fair value of the subject Option Properties consistent with the terms
of Section 2 hereof. Promptly following its receipt of such notice, the
Optionor shall order and secure the Appraisal and, within ten (10) days
after its receipt of a certificate of the Appraisal or a written report
of same, shall deliver the original or a counterpart thereof to the
Optionee. The Appraisal shall be made by an independent real estate
appraiser which is, or one or more of whose officers, employees or both
are, members of the American Institute of Real Estate Appraisal and
which is reasonably acceptable to each of the Optionor and the Optionee
(the "Appraiser"). If any dispute as to the identity of such Appraiser
shall arise, the Optionor's choice thereof shall be controlling if it
selects an appraiser which has previously appraised property of the
Optionor or Optionee for an institutional mortgagee which holds or has
held a mortgage interest in respect of such property. The costs and
expenses of the Appraisal shall be borne solely by the Optionee and a
deposit of $5,000 toward the amount of such costs and expenses shall be
paid by the Optionee to the Optionor in connection with any rejection
by the Optionee of the Preliminary Option Price. The determination of
the Appraiser of the Option Price shall constitute a final, binding and
non-appealable determination of the Option Price as to such Option
Properties for the purposes of any exercise of the Option made by the
Optionee during the one hundred and eighty (180) days following
delivery to the Optionee of the report or certificate of appraisal
pertaining thereto. If the Optionee shall not, within the aforesaid
ten (10) day period, reject the Preliminary Option Price, then the
Option Price shall be deemed to be the Preliminary Option Price.
4. Exercise of Option. The Optionee shall exercise the Option by notice
in writing to the Optionor, delivered in person or by mail and actually
received by the Optionor, whereupon the Optionee shall be obligated to purchase
and the Optionor shall be bound to sell, deliver and convey the Option
Properties, at the Option Purchase Price and subject to the terms and
conditions of the sale as are contained in Section 7 of this Agreement. The
Optionee shall have one hundred and twenty (120) days from and after the date
of receipt by the Optionor of any notice of exercise of the Option within
which to close each purchase of Option Properties as to which the option is
exercised and to provide the necessary funds to complete the purchase. The
Optionor and the Optionee may extend the closing date by written agreement.
5. Subordination. Notwithstanding any other provision of the Agreement,
the rights of the Optionee hereunder shall at all times be subordinate and
inferior to the lien and operation of any mortgage, deed of trust, lien or
other right or obligation now or hereafter encumbering any of the Option
Properties. The Optionor retains the absolute right, without the consent or
joinder of the Optionee, to enter into any leases or other occupancy
arrangements with respect to any of the Option Properties and to place (i)
construction or permanent mortgages, deeds of trust, liens or rights or any
other liens on any of the property and to modify, extend, combine or
consolidate any financing so as to change the terms or provisions or to
increase the amount thereof or to refinance such existing indebtedness and (ii)
any easement, license, dedication, or other agreement or right on or affecting
any of the Option Properties and to modify, extend or amend any of the
foregoing, as the Optionor may determine to be necessary or convenient in the
development or operation of any building or any office center. The Optionee
agrees, if requested by the Optionor, to execute any and all such instruments
as may be reasonably requested by the Optionor in order to effectuate the
provisions of this Section 5, but nothing herein shall require, nor be
construed to require, Optionee's joinder or execution in order for such
subordination to be effective.
6. Assignment. Except as provided expressly herein, neither party
hereto shall assign its rights or obligations under this Agreement without the
prior written consent of the other party. As to all or any portion of the
Option Properties, and without Optionee's consent, Optionor may assign its
rights, duties and obligations under this agreement to any person in
connection with the sale of all or substantially all of the Optionor's real
property as shall be located in the same office park as the Option Properties.
Without Optionor's consent, but with prior notice to the Optionor, Optionee
may assign its rights, duties and obligations under this agreement to any
third party purchaser of one or more of the Optionee's existing office
properties, provided (i) that the properties so acquired or to be so acquired
by such third party are located in the same office park in which the Option
Properties which are the subject of such assignment are located, (ii) such
assignment shall be made only together with the simultaneous exercise of
Option, to the extent rights hereunder are so assigned, and shall require
consummation of the sale transactions required thereby subject to the term of
this Agreement. To the extent that any such agreement contemplates a transfer
of Option Properties or an assignment of all or any portion of Optionee's
rights hereunder, Optionor shall be named as an intended third party
beneficiary of any purchase and sale agreement between Optionee and such third
party purchaser and shall be entitled, solely as to the transfer of Option
Properties or rights hereunder, to enforce any rights thereunder. No transfer
or assignment of any rights or obligations hereunder shall relieve or otherwise
modify or affect the liabilities or obligations of the transferor or assignor
thereof.
7. Option Closings; Terms of Sale.
(a) Closing Date. The Optionee shall give the Optionor thirty (30)
days' prior written notice of the closing date of the sale of each building
and related land as to which the Option is exercised. The closing shall take
place in the Optionor's legal counsel in Jacksonville, Florida, on the date
specified in this Agreement, or at such other place and/or time as the parties
hereto may agree in writing.
(b) Conveyance. Both building and related land shall be conveyed by
one or more general warranty deeds, subject to the Mortgage or Mortgages as
provided in Section 2 of this Agreement and subject to usual and customary
easements, restrictions of record and other title matters or other matters
provided herein or as may be otherwise agreed by the Optionee. Within fifteen
(15) days prior to each closing, the Optionor shall deliver to the Optionee a
copy of each Mortgage to be assumed and a statement or certification from the
holder of each mortgage, deed of trust, or other lien, whether or not to be
assumed, to enable the computation of the outstanding principal balance and
accrued interest of such mortgage, deed of trust, or lien as of the closing
date.
(c) Rent Rolls. The conveyance by execution of the Option shall
transfer to the Optionee all of the Optionor's interest in all existing leases,
and all rents therefrom accruing after the date of the closing, and the
Optionee shall assume and take each building and related land subject to the
obligations of the Optionor under such leases, which Optionee shall undertake
and assume. Within five (5) days prior to each closing, the Optionor shall
deliver to the Optionee a copy of a certified rent roll for each building to
be sold. The Optionor shall also permit the Optionee to inspect the originals
of all leases and other contracts or agreements between the Optionor and the
tenants or any of the parties in possession of any portion of each building to
be conveyed. At the closing, the Optionor shall deliver to the Optionee an
updated certified rent roll for each building to be conveyed, together with
the originals of such leases, contracts and agreements. Instruments of
conveyance of the Option Properties executed in connection with any exercise
of the option granted hereunder shall contain ordinary and commercially-
reasonable indemnities as to pre- and post-closing matters relating to such
properties.
(d) Title Insurance. At least fifteen (15) days prior to the time of
each closing, the Optionor shall furnish to the Optionee a commitment or
commitments to issue an owner's title insurance policy, substantially
equivalent to the current form of American Land Title Association Form A,
insuring that the Optionee, upon purchase and the delivery and recording of
a warranty deed, will own the fee simple title in and to the building and
related land conveyed by the warranty deed or warranty deeds, subject only
to existing mortgages, deeds of trust, or other liens and standard exceptions
(other than those which are removable) contained in such owner's policies in
the state where the building and related land is located, real estate or ad
valorem taxes for the current year, and to all easements, covenants,
restrictions, encumbrances and other matters which do not materially
adversely affect the use and enjoyment of each building and related land for
multi-story and multi-tenant office building purposes or buildings ancillary
to the operation of a multi-story and multi-tenant office center. If the
Optionee shall reasonably object to any material matter shown by such title
insurance commitment, it shall notify the Optionor within ten (10) days after
the receipt of such commitment and the closing date shall be extended for
thirty (30) days in which the Optionor shall use its good faith efforts to
remove or cure such objection, provided, however, that the Optionor shall
not be required hereby to make any material expenditure of funds to effect
any such cure. If the Optionor is unable or unwilling to remove or cure such
objections, then Optionee shall have the right either to (i) remove or cure
such defect at Optionee's expense and without delay, provided, however, that
any cost, expense, liability or obligation to be incurred in connection with
such removal or cure shall not be material, or (ii) terminate the agreement
to acquire such of the Option Properties as are the subject of such objection
and receive a return of any deposits theretofore paid by Optionee to
Optionor, following which all further liability or obligation thereunder of
the parties with respect thereto shall be terminated. If the closing is
extended, the title insurance commitment shall be updated to the time of
closing by endorsement, which shall not reveal any material adverse change
in the state of title since the issuance of the Commitment. The cost of title
insurance premiums for both the commitment and the policy and any other costs
associated therewith shall be borne solely by the Optionor.
(e) Survey. The Optionor shall furnish to the Optionee, at least
fifteen (15) days prior to each closing, copies of existing or new surveys
showing the boundaries of each parcel to be conveyed at such closing and the
location of all improvements thereon which have been certified or recertified
as of a recent date so as to eliminate the survey exception from the title
insurance policy referred to in subsection 7(d) hereof.
(f) Condition and Repair. Each property to be sold pursuant to this
Agreement shall be sold in its "as is, where is" condition. Optionor makes no
representations or warranties regarding the quality, condition, character or
class of any such property or any part thereof. Optionee represents and
warrants that Optionee will rely solely upon Optionee's inspection of said
property and shall not rely upon any representation or warranty provided by
Optionor at any time either prior to this Agreement or hereafter. Optionee
shall protect and hold harmless Optionor from any loss, liability, cost or
expense arising out of Optionee's inspection of the Option Properties. Such
inspection shall take place at least 45 days prior to closing, and may
otherwise be at any time after an option hereunder is exercised so long as
such inspection does not interfere with any tenant's use of the subject
premises and occurs during such days and hours which have been approved by
Optionor and Optionee. If any such inspection is unsatisfactory in Optionee's
sole discretion, the Optionee, as its sole remedy hereunder and under any
other agreement to acquire such properties, shall have the right to terminate
the agreement to purchase the Option Properties executed in connection with
the exercise of such option.
The risk of loss for all causes other than any caused by Optionee's
inspection, shall be on Optionor until closing.
(g) Books and Records. At any time within fifteen (15) days prior to
each closing and for a reasonable time thereafter, the Optionee or its designee
may inspect and copy any part of the Optionor's books and records relating to
the ownership of each building and related land to be conveyed at such closing
from the time of its acquisition to the closing. Within fifteen (15) days prior
to each closing, the Optionor shall deliver to the Optionee copies of all
policies of hazard, rental, personal liability and property damage insurance
for the buildings to be conveyed at such closing, together with a proposed form
of endorsement from the insurance companies pursuant to which all insurance
will remain in force, if and to the extent permitted by the insurer thereof,
for the benefit of the Optionee from the closing to the date on which such
policies would otherwise expire. If there have been any repairs, alterations
or improvements to any building and related land, then prior to each closing,
the Optionor shall pay all sums due to any persons furnishing materials or
performing labor or services in connection with such repairs, alterations or
improvements, and shall provide the Optionee with satisfactory proof of
proper payment to such persons, which may, at Optionee's election, include
lien waivers. All ad valorem taxes, interest and rents shall be prorated as to
each building and related land up to the time of the closing of such building.
Premium costs of all insurance relating to each building and related land at
the time of transfer, to the extent of any prepaid premiums for any unexpired
portion of the period of coverage, as well as amounts attributable to fuel oil
and the prepaid portion of any other item customarily adjusted in the
jurisdiction in which the subject Option Properties are located, shall be
prorated as of the closing date. All security deposits or prepaid rents for a
period past the time of closing shall be paid by the Optionor to the Optionee.
At the closing of each building and related land, the Optionor shall deliver
to the optionee the original or copies of any plans or specifications then in
the Optionor's possession for each building to be conveyed to the Optionee at
such closing. Personal property shall be conveyed by a bill of sale which shall
warrant the Optionor's title to the property conveyed, subject to the title
exceptions described in Sections 7(e) and 7(f) hereof.
(h) Payment of Purchase Price. The Option Purchase Price as determined
pursuant to Sections 2 and 3 of this Agreement shall be paid by the Optionee
to the Optionor in immediately-available U.S. funds at the place of closing.
The outstanding balance of any Mortgage to be assumed in respect of such
exercise which Optionee shall so assume and agree to pay, and in respect of
which the mortgagee therefor shall release the Optionor, shall constitute a
portion of the Option Purchase Price, and the balance of such purchase price
shall be paid in cash.
(i) Expenses. Documentary stamps, intangible taxes, sales taxes, costs
of inspections and any assumption fees, point, yield maintenance charges,
appraisal fees, commitment fees and other costs of the Mortgage, grantor
stamps, recording fees, costs and taxes incurred in connection with the
conveyance of the title to each building and related land shall be paid by
the Optionee and the Optionor at the closing thereof as consistent with local
custom and practice.
(j) Estoppel Certificate. The Optionor shall use good faith efforts to
obtain from the lender holding the Mortgage encumbering the building and
related land, an estoppel certificate stating that there is no default in the
payment of principal or interest due nor is the lender aware of any uncured
defaults under the subject Mortgage. If any such lender, after repeated
requests, shall fail to provide such certificate, then Optionor shall certify
such information to Optionee.
8. Recordation. This instrument shall not be recorded. If the Option
is not exercised within the time period specified in Section 1(a) hereof, then
the Optionee will, upon request, execute such release, quit claim or other
instrument to evidence the termination of the right of the Optionee hereunder
as may be reasonably requested by the Optionor.
9. Competition. During the term of this Agreement, the Optionor will
have access to certain confidential information regarding the Owner and its
properties and will be offering space for rental in buildings owned by Optionor
at the same time that it will be offering office space as Managing General
Partner of the Optionee in buildings owned by the Optionee. When such buildings
are located in the same office park, the Optionor will use its best efforts to
fully lease the space available in buildings owned by the Optionee at then
current market rates contingent upon the needs of a tenant or prospective
tenant and the availability of space desired by such tenant or prospective
tenant.
10. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida.
11. Notices. All notices, requests and communications required or
permitted under this Agreement shall be in writing and shall be sufficiently
given and deemed to have been received upon personal delivery or, if mailed,
upon the first to occur of actual receipt or 48 hours after being placed in
the United States mail postage prepaid, registered mail with return receipt
requested, addressed to the parties as follows, or to such other address as
either party may advise the other in writing:
Optionor: Koger Properties, Inc.
Post Office Box 4520
Jacksonville, Florida 32201
Attn: Chairman or President
Optionee: The Koger Partnership, Ltd.
3986 Boulevard Center Drive
Jacksonville, Florida 32207
Attn: Koger Properties, Inc.
Chairman or President
with a Copy to:
Newleaf-KP Services Corporation
2814 New Spring Road
Suite 330
Atlanta, Georgia 30339
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed on date first above written.
KOGER PROPERTIES, INC.,
By: Jack H. Chambers
Title: President
THE KOGER PARTNERSHIP, LTD.,
by its Managing General Partner,
Koger Properties, Inc.,
By: Jack H. Chambers
Title: President
<PAGE>
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc., a
Florida corporation on behalf of Koger Properties, Inc. He personally
appeared before me, is personally known to me and did not take an oath.
(NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc.,
Managing General Partner of The Koger Partnership, Ltd. on behalf of The
Koger Partnership, Ltd. He personally appeared before me, is personally known
to me and did not take an oath.
(NOTARIAL SEAL) Notary: Sue J. Wakeman
SUE J. WAKEMAN Print Name: Sue J. Wakeman
MY COMMISSION # CC 205882 EXPIRES Notary Public, State of Florida
June 4, 1996 My commission expires: June 4, 1996
BONDED THRU TROY FAIN INSURANCE, INC.
<PAGE>
SCHEDULE A
Building Parcels
<PAGE>
Legal Description - Halifax Building - Norfolk, Virginia
All that certain tract or parcel of land lying and being in the City of
Norfolk, Commonwealth of Virginia and being more particularly described as
follows:
TO FIND THE POINT OF BEGINNING, commence at the POINT OF COMMENCEMENT where
the westerly right-of-way line of Kempsville Road (State Route Number 165
having a variable right-of-way) would intersect the southerly right-of-way
line of the most southerly portion of Kempsville Circle (as shown in Map book
41, Pages 104 and 104A in the Clerk's Office in the Circuit Court of Norfolk,
Virginia) if said rights-of-way were extended to form an angle instead of a
curve; running thence along said westerly right-of-way line of Kempsville Road
as extended South 13 degrees 56 minutes 11 seconds East a distance of 27.00
feet to a steel pin on the existing westerly right-of-way line of Kempsville
Road and the POINT OF BEGINNING; from the POINT OF BEGINNING AS THUS
ESTABLISHED, run thence along said westerly right-of-way line South 13 degrees
56 minutes 11 seconds East a distance of 462.58 feet to a steel pin on a
northerly boundary line of property now or formerly owned by the Trustees of
James Barry-Robinson Home for Boys Trust (Map Book 44, Pages 50-51A, aforesaid
records); thence leaving said westerly right-of-way line and running along
said northerly boundary line South 76 degree 03 minutes 49 seconds West a
distance of 358.00 feet to a steel pin; thence leaving said northerly boundary
line and running along the easterly boundary line of property now or formerly
owned by the Trustees of James Barry-Robinson Home for Boys Trust (Map Book 44,
pages 50-51A, aforesaid records) North 13 degrees 56 minutes 11 seconds West a
distance of 502.73 feet to a steel pin on said southerly right-of-way line of
the most southerly portion of Kempsville Circle; running thence along said
southerly right-of-way line of Kempsville Circle the following courses and
distances: North 76 degrees 03 minutes 49 seconds East a distance of 8.00 feet
to an steel pin; North 86 degrees 16 minutes 29 seconds East a distance of,
74.18 feet to a steel pin; North 76 degrees 03 minutes 49 seconds East a
distance of 250.00 feet to a steel pin; along the arc of a curve to the right
(said arc having a radius of 27.00 feet and being subtended by a chord bearing
South 58 degrees 56 minutes 11 seconds East a distance of 38.18 feet) an arc
distance of 42.41 feet to the POINT OF BEGINNING; said tract containing 4.0335
acres, all as shown on that certain Physical Survey of the Halifax Building
prepared by Wilfred P. Large, Virginia Certified Land Surveyor Number 000724B
of W.P. Large, Inc., Virginia Beach, Virginia, dated December 28, 1990, last
revised February 1, 1991, and being designated as Parcel A-1, "Resubdivision
of Property of Trustees of the James Barry-Robinson Home for Boys Trust and
Property of Koger Properties, Inc., as recorded in Map Book 44, Pages 51 and
51-A, aforesaid record.
<PAGE>
Legal Description - Dawson Building - Miami, Florida
Tract C of THE KOGER CENTER according to the plat thereof as recorded in Plat
Book 132, page 73 of the public records of Dade County, Florida. Containing
245,171 square feet or 5.628 acres, more or less.
<PAGE>
SCHEDULE B
Land Parcels
<PAGE>
Legal Description - Vacant Land - Raleigh Crossroads
All that certain piece, parcel or tract of land situate, lying, and being in
Wake County, North Carolina being more particularly described as follows:
Beginning at the point of intersection of the westerly right-of-way
line of Jones Franklin Road (State Road 1319) (variable R/W) with the
southerly right-of-way line of the most northerly portion of Centerview
Drive (variable R/W) as shown on a plat of Lot 5 of The Koger Center
and Road Rights-of-Way recorded in Book of Maps 1985, Page 2068 of the
Wake County Register; thence along with southerly right-of-way line of
the most northerly portion of Centerview Drive, becoming the most
easterly and the northerly right-of-way line of the most southerly
portion of Centerview Drive the following eleven (11) courses and
distances: 1) with a curve to the left having a radius of 20 feet, a
central angle of 107 degrees 55'09" and a chord which bears North 34
degrees 54'43" West 32.34 feet, an arc distance of 37.67 feet, 2) North
88 degrees 52'18" West 504 feet, 3) North 01 degrees 07'42" East 10
feet, 4) North 88 degrees 52'18" West 434.84 feet, 5) with a curve to
the left having a radius of 270 feet, a central angle of 91 degrees
07'42" and a chord which bears South 45 degrees 33'51" West 385.58
feet, an arc distance of 429.43 feet, 6) due North 250.54 feet, 7)
with a curve to the left having a radius of 270 feet, a central angle
of 89 degrees 33'14" and a chord which bears South 44 degrees 46'37"
East 380.35 feet, an arc distance of 422.01 feet, 8) South 89 degrees
33'14" East 350.48 feet, 9) North 00 degrees 26'46" East 10 feet, 10)
South 89 degrees 33'14" East 361.79 feet, and 11) with a curve to the
left having a radius of 20 feet, a central angle of 73 degrees 13'53"
and a chord which bears North 53 degrees 49'51" East 23.86 feet, an
arc distance of 25.56 feet to a point on the westerly right-of-way
line of said Jones Franklin Road; thence along the westerly right-of-
way line of Jones Franklin Road the following two (2) courses and
distances: 1) North 17 degrees 12'56" East 435.42 feet, and 2) North
19 degrees 02'51" East 318.47 feet to the Point of Beginning.
and;
All that certain piece, parcel or tract of land situate, lying, and being a
portion of Tract 1, as shown on that certain survey for Koger Properties,
Inc. as recorded in Book of Maps 1984, Page 1737, of the Wake County Registry,
Wake County, North Carolina, and being more particularly described as follows:
Beginning at the point of intersection of the westerly right-of-way
line of Jones Franklin Road (State Road 1319) (variable R/W) with the
northerly right-of-way line of the most northerly portion of Centerview
Drive (variable R/W) as shown on a plat of Lot 5 of The Koger Center
and Road Rights-of-Way recorded in Book of Maps 1985, page 2068, of the
Wake County Registry; thence along the northerly right-of-way line of
Centerview Drive the following five (5) courses and distances: 1) with
a curve to the right having a radius of 20.00 feet, a central angle of
72 degrees 04'51" and a chord which bears South 55 degrees 05'17" West
23.53 feet, an arc distance of 25.16 feet, 2) North 88 degrees 52'18"
west 542.80 feet, 3) South 01 degrees 07'42" West 10.00 feet, 4) North
88 degrees 52'18" West 434.84 feet, and 5) with a curve to the left
having a radius of 330.00 feet, a central angle of 50 degrees 01'38" and
a chord which bears South 66 degrees 06'53" West 279.07 feet, an arc
distance of 288.14 feet to an iron pin; said iron pin being the most
northeasterly corner of Lot 5, as described on said plat; thence
departing said northerly right-of-way line of Centerview Drive and
along the northeasterly line of said Lot 5 North 36 degrees 36'20" West
661.25 feet to an iron pin, said iron pin lying on the southerly line
of property now or formerly owned by Capital Center Associates, as
recorded in Deed Book 3353, page 613, of said public records and being
on the northerly line of Tract 1; thence along the northerly and
easterly line of said Tract 1 the following five (5) courses and
distances: 1) South 89 degrees 06'35" East 783.13 feet, 2) South 88
degrees 44'51" East 235.96 feet, 3) South 01 degrees 18'28" West 104.09
feet, 4) South 01 degrees 46'19" West 263.43 feet, and 5) North 89
degrees 57'21" East 648.17 feet to an iron pin on the westerly right-of
-way line of Jones Franklin Road; thence along the westerly right-of
-way line of Jones Franklin Road South 19 degrees 02'51" West 31.13
feet to an iron pin and the Point of Beginning.
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Legal Description - Vacant Land - Richmond South
All those certain pieces, parcels or tracts of land located in Chesterfield
County, Virginia and being more particularly described as follows:
Commencing at the intersection of the northerly right-of-way line of
U. S. Route No. 60 (Midlothian Turnpike) (variable right-of-way) with
the southwesterly right-of-way line of Koger Center Boulevard (90'
R/W), as extended, as such rights-of-way now exist, as shown on a plat
recorded in Plat Book 50, Page 51 in the Clerks Office of the Circuit
Court of Chesterfield County, Virginia; thence along the southwesterly
right-of-way line of said Koger Center Boulevard, the following four
(4) courses and distances: 1) with a curve to the left having a radius
of 25.00 feet, a central angle of 96 degrees 11'20" and a chord which
bears North 34 degrees 11'00" East 37.21 feet, an arc distance of 41.97
feet, 2) North 13 degrees 54'40" West 168.82 feet, 3) with a curve to
the left having a radius of 641.60 feet, a central angle of 20 degrees
00'00" and a chord which bears North 23 degrees 54'40" West, 222.83
feet and an arc distance of 223.96 feet, 4) North 33 degrees 54'40"
West 375.01 feet to the POINT OF BEGINNING; thence South 56 degrees 05'
20" West 245.63 feet to a point; thence South 13 degrees 51'56" East
43.03 feet to a point; thence South 48 degrees 07'15" West 325.65 feet
to a point; thence North 84 degrees 39'40" West 404.57 feet to a point;
thence North 06 degrees 50'45" West 1244.92 feet to a point on the
southwesterly right-of-way line of Koger Center Boulevard as shown on
a plat recorded in Plat Book 59, Page 9 in said Clerk's Office; thence
along the southwesterly right-of-way line of said Koger Center
Boulevard the following two (2) courses and distances: 1) with a curve
to the right having a radius of 1,260 feet, a central angle of 42
degrees 32'16" and a chord which bears South 55 degrees 09'48" East
913.43 feet, an arc distance of 934.72 feet, and 2) South 33 degrees
54'40" East 424.99 feet to the Point of Beginning,
and;
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Commence at the intersection of the northeasterly right-of-way line
of Koger Center Boulevard (90' R/W) and the northerly right-of-way
line of Centerview Drive (60' R/W), as extended, all as shown on a
plat recorded in Plat Book 50, Page 1 in said Clerk's Office; thence
along the northeasterly right-of-way line of Koger Center Boulevard
(90' R/W) as shown on that certain plat recorded in Plat Book 59,
Page 9 in said Clerk's Office the following two (2) courses and
distances: 1) North 33 degrees 54'40" West 45 feet, and 2) with a
curve to the left having a radius of 1,350 feet a central angle of
19 degrees 26'02" and a chord bearing North 43 degrees 37'41" West
454.71 feet, an arc distance of 457.90 feet to the POINT OF
BEGINNING; thence continue along the northeasterly right-of-way line
of said Koger Center Boulevard the following two (2) courses and
distances: 1) with a curve to the left having a radius of 1,350 feet
a central angle of 23 degrees 48'17" and a chord which bears North
65 degrees 14'51" West 556.86 feet, an arc distance of 560.89 feet,
and 2 ) North 77 degrees 08'59" west 16.11 feet to a point on an
easterly property line of property now or formerly owned by Woodland
Associates as described in deed recorded in Deed Book 1049, Page 486
in said Clerk's Office ; thence along said easterly line of property
now formerly owned by Woodland Associates North 06 degrees 50'45"
West 212.82 feet to a point; thence North 39 degrees 50'55" East
319.61 feet to a point; thence South 46 degrees 26'55" East 671.20
feet to a point; thence South 32 degrees 01'39" west 272.43 feet to
the Point of Beginning.
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Legal Description - Vacant Land - Virginia Beach
All that certain lot, piece or parcel of land lying, situate and being in the
City of Virginia Beach, Virginia and being Site AA as shown on that certain
plat entitled "Re-subdivision of Parcel D of The Koger Center" as recorded
in Map Book 219, Page 5 in the Clerk's Office of the Circuit Court of Virginia
Beach, Virginia.
and;
All that certain lot, piece or parcel of land lying, situate and being in the
City of Virginia Beach and being Parcel-B as shown on that certain plat of the
"Subdivision of The Koger Center" as recorded in Map Book 2608, Page 679 in
the Clerk's Office of the Circuit Court of Virginia Beach, Virginia.
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Legal Description - Vacant Land - Miami Center
Tract B, The Koger Center, as shown on a plat recorded in Plat Book 32, Page
73 of the Public Records of Dade County, Florida. Containing 217,476 square
feet or 4.993 acres, more or less,
and;
Tract 1, Koger Executive Center, as shown on a plat recorded in Plat Book 91,
Page 38 in the Public Records of Dade County, Florida. Containing 3.15 acres,
more or less.
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Legal Description - Vacant Land - Norfolk West
Being Parcels C and D, Subdivision of The Koger Center being a Re-Subdivision
of Parcels 1 and 2, Subdivision of Property of the Trustees of the James
Barry-Robinson Home for Boys Trust, as shown on a plat recorded in Map Book
41, Pages 104 and 104A in the Clerk's Office of the Circuit Court, Norfolk,
Virginia.
Exhibit 10(u)
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT, dated as of August 3, 1993, made
effective as of June 1, 1993, executed and delivered by KOGER PROPERTIES,
INC., a Florida corporation.
W I T N E S S E T H:
WHEREAS, the Koger Partnership, Ltd. ("TKP") is a Florida limited
partnership in which Koger Properties, Inc., a Florida corporation ("KPI"),
serves as the Managing General Partner; and
WHEREAS, on September 25, 1991, each of TKP and KPI filed voluntary
petitions for relief under chapter 11 of title 11 of the United States Code,
11 U.S.C. sections 101 et. seq. (the "Bankruptcy Cases"); and
WHEREAS, TKP's Third Amended and Restated Plan of Reorganization, dated
as of October 28, 1992 (the "Plan"), requires that TKP execute and deliver a
certain promissory note, dated June 1, 1993, in the original principal amount
of $30,961,436.42, to the order of KPI (the "Restructured KPI Note"); and
WHEREAS, the Plan further requires KPI to agree to subordinate its
rights of payment in respect of the indebtedness under the Restructured KPI
Note to certain other indebtedness to be incurred by TKP under the Plan;
NOW, THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt, adequacy and sufficiency of which we
hereby acknowledged, KPI hereby agrees as follows:
1. For purposes of this Subordination Agreement, the terms set forth
below shall have the indicated meanings:
Confirmation Loan Agreement: That certain Confirmation Loan
Agreement, effective as of June 1, 1993, between the Maker, American
Security Bank, N.A. (individually and as administrative agent), Barnett
Banks, Inc., First Union National Bank of Florida, Wachovia Bank of
North Carolina, N.A. (collectively, the "Banks"), and (for limited
purposes) KPI.
Indebtedness: All obligations of any Person, contingent and
otherwise, that in accordance with generally accepted accounting
principles should be classified upon the Person's balance sheet as
liabilities, including in any event and whether or not so classified:
(a) all debt and similar monetary obligations, whether direct or
indirect; (b) all liabilities secured by any mortgage, pledge,
security interest, lien, charge or other encumbrance existing on
property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; (c) all guarantees,
endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including any obligation
to supply funds to or in any manner to invest in, directly or
indirectly, the Person, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase
goods, supplies, or services for the purpose of enabling the Person to
make payment of the indebtedness held by such owner or otherwise, and
the obligations to reimburse the issuer in respect of any letters of
credit and (d) the discounted future rental obligations of the Person
under all leases, including, but not limited to capital leases.
New Secured Notes: The 9% Junior Secured Notes due 2000 of TKP
issued under that certain Indenture, effective as of June 1, 1993,
between TKP, as issuer, and Bankers Trust Company, as Trustee.
Plan: That certain "Third Amended and Restated Plan of
Reorganization of The Koger Partnership, Ltd.", dated as of
October 28, 1992, as confirmed by Order entered on March 24, 1993
of the United States Bankruptcy Court, Middle District of Florida,
Tampa Division, filed in Chapter 11 Case No. 91-12293-8P1.
Senior Indebtedness: Senior Debt shall mean, in the aggregate,
all Indebtedness of the Maker arising under the following as initially
outstanding: (i) the Confirmation Loan Agreement; (ii) the Restructured
Mortgage Notes executed and delivered by the Maker in accordance with
the terms of the Plan; (iii) the Restructured Secured Notes executed
and delivered by the Maker in accordance with the terms of the Plan;
(iv) Tax Claims; (v) the New Secured Notes; and (vi) all mortgages,
pledges, security interest, liens, charges or other encumbrances
securing any of the foregoing Indebtedness.
Tax Claims: Indebtedness incurred by TKP under the Plan in
respect of claims against TKP arising prior to the Bankruptcy Cases
for taxes owed by TKP.
2. KPI agrees to subordinate on the terms and to the extent set forth
herein the payment of principal, interest, fees, and all other indebtedness
due KPI pursuant to the terms of the Restructured KPI Note (collectively, the
"Subordinated Indebtedness") to the payment of principal, premium and interest,
if any, and all other amounts due and owing on the Senior Indebtedness (as
hereinafter defined).
3. KPI further agrees that upon any distribution of the assets or
readjustment of indebtedness of TKP, whether by reason of liquidation,
dissolution, bankruptcy, reorganization, receivership or any other action or
proceedings involving the readjustment of all or any of the Subordinated
Indebtedness, or the application of assets of TKP to the payment or
liquidation thereof, the holders of the Senior Indebtedness, as the case may
be, shall be entitled to receive payment in full of the principal and
interest then due and owing, if any, on any and all Senior Indebtedness prior
to the payment of any Subordinated Indebtedness.
4. Without affecting the rights hereunder of the holders of the
Senior Indebtedness, as the case may be, KPI further agrees and consents:
(a) to waive, and does hereby waive, any and all notice of the creation,
modification, renewal, extension or accrual of any of the Senior Indebtedness,
present or future, of Senior Indebtedness in whole or in part, by any holder,
as the case may be, or of the reliance by them on this Subordination
Agreement at any time(s); (b) that without further notice to, or further
assent by, KPI, the liability of TKP under the Senior Indebtedness may, from
time to time, in whole or in part, be renewed, extended or modified by the
agreement of the appropriate representatives of TKP or may be compromised or
released by the holder of Senior Indebtedness, as the case may be, as they
deem advisable; and (c) that any collateral for, and/or lien(s) securing, the
Senior Indebtedness, if any, or any part of them, may, from time to time, in
whole or in part, be exchanged, sold or surrendered by the holder of Senior
Indebtedness, as the case may be, as they deem advisable.
5. KPI further agrees that the Restructured KPI Note, and any
substitution or replacement thereof, shall contain a specific statement
therein or legend thereon that the indebtedness thereby evidenced is subject
to the provisions of this Subordination Agreement.
6. KPI further agrees that no waiver shall be deemed to have been made by
any holder of Senior Indebtedness as the case may be, of any of their rights
hereunder unless the same shall be in writing and duly signed and authorized
by appropriate officers of the respective holder, as the case may be, and each
waiver, if any, shall be a waiver only in respect of the specific instance
involved and shall in no way impair the rights of the respective holder, as
the case may be, in any other respect at any time.
7. KPI further agrees, no executory agreement shall be effective to
change or modify or discharge, in whole or in part, this Subordination
Agreement, unless such executory agreement is in writing and duly signed by
each and every holder of obligations of TKP constituting Senior Indebtedness.
8. This Subordination Agreement shall remain in full force and effect
so long as TKP remains indebted or liable, directly or indirectly, under any
of the Senior Indebtedness.
9. The use of terms in the singular or plural will be regarded as
singular or plural as the text requires.
10. This Agreement shall be binding upon KPI and the respective legal
representatives, successors and assigns thereof, and shall be governed by and
construed in accordance with the laws of the State of Florida.
SIGNATURE OF SUBORDINATOR
KOGER PROPERTIES, INC.
By Jack H. Chambers
Title: President
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STATE OF FLORIDA )
) SS:
COUNTY OF DUVAL )
The foregoing instrument was acknowledged before me this 3rd day of
August, 1993, by Jack H. Chambers as President of Koger Properties, Inc. a
Florida corporation on behalf of Koger Properties, Inc. He personally appeared
before me, is personally known to me and did not take an oath.
Notary : Sue J. Wakeman
(NOTARIAL SEAL) Print Name: Sue J. Wakeman
Notary Public, State of Florida
My commission expires: June 4, 1996
Exhibit 22
SUBSIDIARIES OF THE REGISTRANT
Name of State of
Subsidiaries Incorporation
Koger Real Estate Services, Inc. Florida
Southeast Properties Holding Corporation, Inc. Florida
*All of the above subsidiaries are wholly owned by Koger Equity, Inc.
