<PAGE> 1
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
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------- ----------
COMMISSION FILE NUMBER 1-12080
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POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
(Exact name of registrants as specified in their charters)
Georgia 58-1550675
------- ----------
Georgia 58-2053632
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3350 CUMBERLAND CIRCLE, SUITE 2200, ATLANTA, GEORGIA 30339
(Address of principal executive offices -- zip code)
(770) 850-4400
(Registrant's telephone number, including area code)
----------------------------------
Securities registered pursuant to section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $.01 par value New York Stock Exchange
8 1/2% Series A Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
7 5/8% Series B Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
7 5/8% Series C Cumulative New York Stock Exchange
Redeemable Preferred Shares,
$.01 par value
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Units of Limited Partnership None
----------------------------------
Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Post Properties, Inc.: YES [x] NO [ ]
Post Apartment Homes, L.P.: YES [x] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K 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 shares of common stock held by
non-affiliates (based upon the closing sale price on the New York Stock
Exchange) on March 17, 1998 was approximately $1,352,048,423. As of March 17,
1998, there were 34,229,074 shares of common stock, $.01 par value,
outstanding.
__________________________________
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement in connection with its
Annual Meeting of Shareholders to be held May 8, 1998 are incorporated by
reference in Part III.
<PAGE> 2
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item FINANCIAL INFORMATION Page
No. No.
--- ---
<S> <C> <C>
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Submission of Matters to a Vote of Securityholders . . . . . . . . . . . . . . . . . . 10
X. Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II
5. Market Price of the Registrant's Common Stock and Related Stockholder Matters . . . . . 13
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . 29
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PART III
10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . 30
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . 30
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . 30
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K . . . . . . . . . . . 31
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
THE COMPANY
Post Properties, Inc. (the "Company") is one of the largest developers and
operators of upscale multifamily apartment communities in the Southeastern and
Southwestern United States. The Company currently owns 78 stabilized
communities (the "Communities") containing 25,938 apartment units located
primarily in metropolitan Atlanta, Georgia, Dallas, Texas and Tampa, Florida.
In addition, the Company currently has under construction or in initial
lease-up 13 new communities and additions to three existing communities in the
Atlanta, Georgia, Dallas and Houston, Texas, Tampa, Florida, Denver, Colorado,
and Nashville, Tennessee metropolitan areas that will contain an aggregate of
4,945 apartment units upon completion. For the year ended December 31, 1997,
the average economic occupancy rate (defined as gross potential rent less
vacancy losses, model expenses and bad debt divided by gross potential rent) of
the 45 Communities stabilized for the entire year was 94.9%. The average
monthly rental rate per apartment unit at these Communities for December 1997
was $811. The Company also manages through affiliates approximately 10,700
additional apartment units owned by third parties. The Company is a
fully-integrated organization with multifamily development, acquisition,
operation and asset management expertise and has approximately 1,600 employees,
none of whom is a party to a collective bargaining agreement.
Since founded in 1971, the Company has pursued three distinctive core business
strategies that, for over 25 years, have remained substantially unchanged:
Investment Building
Investment building means taking a long-term view of the assets the Company
creates. The Company develops communities with the intention of operating them
for periods that are relatively long by the standards of the apartment
industry. Key elements of the Company's investment building strategy include
instilling a disciplined team approach to development decisions; selecting
sites in niche and infill locations in strong primary markets; consistently
constructing new apartment communities with a uniformly high quality; and
conducting ongoing property improvements.
Promotion of the Post(R) Brand Name
The Post(R) brand name strategy has been integral to the success of the Company
and, to the knowledge of the Company, has not been successfully duplicated
within the multifamily real estate industry in any major U.S. market. For such
a strategy to work, a company must develop and implement systems to achieve
uniformly high quality and value throughout its operations. As a result of the
Company's efforts in developing and maintaining its communities, the Company
believes that the Post(R) brand name is synonymous with quality upscale
apartment communities that are situated in desirable locations and provide
superior resident service. Key elements in implementing the Company's brand
name strategy include extensively utilizing the trademarked brand name;
adhering to quality in all aspects of the Company's operations; developing and
implementing leading edge training programs; and coordinating the Company's
advertising programs to increase brand name recognition.
Service Orientation
The Company's mission statement is: "To provide the superior apartment living
experience for our residents." By striving to provide a superior product and
superior service, the Company believes that it will be able to achieve its
long-term goals. The Company believes that it provides its residents with
superior product and superior service through its uniformly high quality
construction, award winning landscaping and numerous amenities, including on
site business centers, on site courtesy officers, urban vegetable gardens and
state of the art fitness centers.
The Company believes that with the implementation of these strategies,
multifamily properties in its primary markets have the potential over the long
term to provide investment returns that exceed national averages. According to
recent market surveys, employment growth, population growth and household
formation growth in the Company's primary markets have exceeded and are
forecasted to continue to exceed national averages.
The Company is a self-administered and self-managed equity real estate
investment trust (a "REIT"). On July 22, 1993, the Company completed an initial
public offering of 10,580,000 shares of Common Stock (the "Initial Offering")
and a business combination involving entities under varying common ownership
(the "Formation Transactions"). On February 7, 1994, the Company completed a
second public offering of 3,000,000 shares of Common Stock (the "Second
1
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Offering"). On October 20, 1995, the Company completed a third public offering
of 3,710,500 additional shares of Common Stock (the "Third Offering"). Proceeds
from the Initial Offering were used by the Company (i) to acquire a controlling
interest in Post Apartment Homes, L.P. (the "Operating Partnership"), the
Company's principal operating subsidiary, which was formed to succeed to
substantially all of the ownership interest in a portfolio of 40 Post(R)
multifamily apartment communities, all of which were developed by the Company
and owned by affiliates of the Company, and to the development, leasing,
landscaping and management business of the Company and certain other affiliates
and (ii) to pay down existing indebtedness on certain communities. Proceeds of
the Second and Third Offerings were used by the Company to pay down existing
indebtedness.
On October 1, 1996, the Company sold one million non-convertible 8 1/2% Series
A Cumulative Redeemable Preferred Shares (the "Series A Perpetual Preferred
Shares") with a liquidation preference equivalent to $50 per share. On October
28, 1997, the Company sold two million non-convertible 7 5/8% Series B
Cumulative Redeemable Preferred Shares (the "Series B Perpetual Preferred
Shares" together with the Series A Perpetual Preferred Shares, the "Perpetual
Preferred Shares") with a liquidation preference equivalent to $25 per share.
Proceeds from the sale of the Perpetual Preferred Shares were contributed to
the Operating Partnership in exchange for one million Series A Preferred Units
and two million Series B Preferred Units, respectively, and used by the
Operating Partnership to repay outstanding indebtedness.
On October 24, 1997, Columbus Realty Trust ("Columbus") a Texas real estate
investment trust, was merged into a wholly owned subsidiary of the Company (the
"Merger"). At the time of the Merger, Columbus operated 26 completed
communities containing 6,296 apartment units and had an additional five
communities under development that will contain 1,243 apartment units upon
completion located primarily in Dallas, Texas. Pursuant to the merger
agreement, each outstanding share of Columbus common stock was converted into
.615 shares of common stock of the Company, which resulted in the issuance of
approximately 8.4 million shares of common stock of the Company.
The Company, through wholly owned subsidiaries, is the sole general partner of,
and controls a majority of the limited partnership interests in, the Operating
Partnership. The Company conducts all of its business through the Operating
Partnership and its subsidiaries.
The Company's and the Partnership's executive offices are located at 3350
Cumberland Circle, Atlanta, Georgia 30339 and their telephone number is (770)
850-4400. Post Properties, Inc., a Georgia corporation, was incorporated on
January 25, 1984, and is the successor by merger to the original Post
Properties, Inc., a Georgia corporation, which was formed in 1971. The Operating
Partnership is a Georgia limited partnership that was formed in July 1993 for
the purpose of consolidating the operating and development businesses of the
Company and the Post(R) apartment portfolio described herein.
THE OPERATING PARTNERSHIP
The Operating Partnership, through the operating divisions and subsidiaries
described below, is the entity through which all of the Company's operations
are conducted. At December 31, 1997, the Company, through wholly owned
subsidiaries, controlled the Operating Partnership as the sole general partner
and as the holder of 85.5% of the common units in the Operating Partnership
("Units") and 100% of the Perpetual Preferred Units. The other limited partners
of the Operating Partnership are those persons (including certain officers and
directors of the Company) who, at the time of the Initial Offering, elected to
hold all or a portion of their interest in the Company in the form of Units
rather than receiving shares of Common Stock. Each Unit may be redeemed by the
holder thereof for either one share of Common Stock or cash equal to the fair
market value thereof at the time of such redemption, at the option of the
Company. The Company presently anticipates that it will elect to issue shares
of Common Stock in connection with each such redemption rather than paying cash
(and has done so in all redemptions to date). With each redemption of
outstanding Units for Common Stock, the Company's percentage ownership interest
in the Operating Partnership will increase. In addition, whenever the Company
issues shares of Common Stock, the Company will contribute any net proceeds
therefrom to the Operating Partnership and the Operating Partnership will issue
an equivalent number of Units to the Company.
As the sole shareholder of the Operating Partnership's sole general partner,
the Company has the exclusive power under the agreement of limited partnership
of the Operating Partnership to manage and conduct the business of the
Operating Partnership, subject to the consent of the holders of the Units in
connection with the sale of all or substantially all of the assets of the
Operating Partnership or in connection with a dissolution of the Operating
Partnership. The board of directors of the Company manages the affairs of the
Company by directing the affairs of the Operating Partnership. The Operating
Partnership cannot be terminated, except in connection with a sale of all or
substantially all of the assets of the Company, for a period of 50 years
without a vote of limited partners of the Operating Partnership. The Company's
2
<PAGE> 5
indirect limited and general partner interests in the Operating Partnership
entitle it to share in cash distributions from, and in the profits and losses
of, the Operating Partnership in proportion to the Company's percentage
interest therein and indirectly entitle the Company to vote on all matters
requiring a vote of the limited partners.
As part of the formation of the Operating Partnership, a new holding company,
Post Services, Inc. ("Post Services") was organized as a separate corporate
subsidiary of the Operating Partnership. Post Services, in turn, owns all the
outstanding stock of two operating subsidiaries, RAM Partners, Inc. ("RAM") and
Post Landscape Services, Inc. ("Post Landscape"). Certain officers and
directors of the Company received 99%, collectively, of the voting common stock
of Post Services, and the Operating Partnership received 1% of the voting
common stock and 100% of the nonvoting common stock of Post Services. The
voting and nonvoting common stock of Post Services held by the Operating
Partnership represents 99% of the equity interests therein. The voting common
stock held by officers and directors in Post Services is subject to an
agreement that is designed to ensure that the stock will be held by one or more
officers of Post Services. The by-laws of Post Services provide that a majority
of the board of directors of Post Services must be persons who are not
employees, members of management or affiliates of the Company or its
subsidiaries. This by-law provision cannot be amended without the vote of 100%
of the outstanding voting common stock of Post Services. Post Services
currently has the same board of directors as the Company.
OPERATING DIVISIONS
The major operating divisions of the Operating Partnership include:
Post Management Services
Post Management Services is responsible for the day-to-day operations of all
the Post(R) communities located in the eastern United States and is itself
comprised of two divisions: one responsible for community leasing, property
management and personnel recruiting, training and development, and the other
for maintenance and security. Post Management Services also conducts short-term
leasing activities and is the largest division in the Company.
Post Apartment Development
Post Apartment Development conducts the development and construction activities
of the Company in metropolitan Atlanta. Development activities include site
selection, zoning and regulatory approvals, project design, and the full range
of construction management services.
Post East Development
Post East Development conducts the development and construction activities of
the Company in metropolitan Tampa, Charlotte and Nashville. In addition, it
studies other markets in the Eastern United States for development and
acquisition opportunities.
Post West
Post West conducts the development and construction activities and day to day
operations of the Company in metropolitan Dallas, Denver and Houston. In
addition, it studies other markets in the Western United States for development
and acquisition opportunities.
Post Landscape Operations
This division works closely with Post Apartment Development and Post East
Development in the initial design of each Post(R) community and then has primary
responsibility for maintaining each community's landscape. The division
maintains each community's grounds on a cost effective basis for seasonal impact
and has earned national recognition for the Company. Post Landscape Operations
employs professionals specializing in landscape architecture, horticulture,
floriculture, and general landscape maintenance.
Post Corporate Services
Post Corporate Services provides executive direction and control to the
Company's other divisions and subsidiaries and has responsibility for the
creation and implementation of all Company financing and capital strategies.
All accounting, management reporting, information systems and insurance
services required by the Company and all of its affiliates are centralized in
Post Corporate Services.
3
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OPERATING SUBSIDIARIES
The operating subsidiaries of the Operating Partnership, each of which is
wholly owned by Post Services, include:
RAM
RAM provides third party asset management and leasing services for multifamily
properties that do not operate under the Post(R) name. RAM's clients include
pension funds, independent private investors, financial institutions and
insurance companies. RAM's asset management contracts generally are subject to
annual renewal or are terminable upon specified notice. As of December 31,
1997, RAM managed 57 properties (located in Georgia, Florida, Kansas, Missouri,
North Carolina, Texas and Virginia) with approximately 10,700 units under
management.
Post Landscape Services
As a result of the reputation the Company developed in connection with the
landscaping of Post(R) communities, in 1990 the Company began providing third
party landscape services for clients other than Post(R) communities. Projects
with third parties include the maintenance and design of the landscape for
office parks, commercial buildings and other commercial enterprises, and
private residences. Post Landscape Services provides such third party landscape
services.
HISTORY OF POST PROPERTIES, INC.
During the five-year period from January 1, 1993 through December 31, 1997, the
Company and its predecessors and affiliates have developed and completed 5,828
apartment units in 14 apartment communities, acquired 7,186 units in 28
apartment communities (26 were as a result of the Merger) and sold five
apartment communities containing an aggregate of 1,164 apartment units.
Historically, the Company has primarily developed its apartment communities to
the Company's specifications as opposed to buying or refurbishing existing
properties built by others. During 1997, the Company acquired 26 communities
containing 6,296 apartment units in conjunction with the Columbus merger. The
Company and its affiliates have sold apartment communities after holding them
for investment periods that typically have been seven to twelve years after
development. The following table shows the results of the Company's
developments during this period:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Units completed . . . . . . . . . . . . . . . . 2,128 2,258 685 575 182
Units acquired(1) . . . . . . . . . . . . . . . 6,296 890 -- -- --
Units sold . . . . . . . . . . . . . . . . . . (416) (180) (568) -- --
Total units owned by Company affiliates
at end of year . . . . . . . . . . . . . . . 25,938 17,930 14,962 14,845 14,270
Total apartment rental income (in
thousands) . . . . . . . . . . . . . . . . . $186,126 158,618 $133,817 $115,309 $104,482
</TABLE>
(1) As part of the Merger, the Company acquired 26 communities containing 6,296
units. Of the communities acquired in the Merger, 14 communities containing
3,916 units were built by Columbus and 12 communities containing 2,380
units were acquired by Columbus.
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CURRENT DEVELOPMENT ACTIVITY
The Company currently has under construction or in initial lease-up 13 new
communities and additions to three existing communities that will contain an
aggregate of 4,945 units upon completion. The Company's communities under
development or in initial lease-up are summarized in the following table:
<TABLE>
<CAPTION>
ACTUAL OR ACTUAL OR
ESTIMATED ESTIMATED UNITS LEASED
QUARTER OF QUARTER QUARTER OF AS OF FEBRUARY
# OF CONSTRUCTION FIRST UNITS STABILIZED 28,
METROPOLITAN AREA UNITS COMMENCEMENT AVAILABLE OCCUPANCY 1998
----------------- ----- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C>
ATLANTA, GA
Post Lindbergh(TM) . . . . . . . . 395 3Q'96 4Q'97 1Q'99 131
Post Gardens(R) . . . . . . . . . . 397 3Q'96 4Q'97 1Q'99 128
Riverside by Post(TM) . . . . . . . 537 3Q'96 2Q'98 1Q'00 N/A
Post Ridge(TM) . . . . . . . . . . 232 1Q'97 4Q'97 4Q'98 55
Post River(R) - Phase II . . . . . 88 1Q'97 1Q'98 2Q'98 18
Post Briarcliff(TM) - Phase I . . . 388 2Q'97 2Q'98 3Q'99 N/A
-------- --------
2,037 332
-------- --------
DALLAS, TX
Heights of State-Thomas . . . . . . 198 4Q'96 4Q'97 2Q'98 141
American Beauty Mill . . . . . . . 81 2Q'97 2Q'98 3Q'98 30
Addison Circle by Post(TM)
- Phase II . . . . . . . . . . . 471 4Q'97 4Q'98 1Q'00 N/A
Block 580 . . . . . . . . . . . . . 203 4Q'97 4Q'98 2Q'99 N/A
-------- --------
953 171
-------- --------
HOUSTON, TX
The Rice . . . . . . . . . . . . . 312 1Q'97 2Q'98 4Q'98 178
Midtown - Phase I . . . . . . . . . 479 4Q'97 1Q'99 3Q'99 N/A
-------- --------
791 178
-------- --------
TAMPA, FL
Post Rocky Point(R) - Phase III . . 290 2Q'97 2Q'98 1Q'99 9
Post Harbour Island(TM) . . . . . . 206 3Q'97 3Q'98 2Q'99 N/A
-------- --------
496 9
-------- --------
DENVER, CO
Post Apartment Homes
of Uptown . . . . . . . . . . . . 467 4Q'97 1Q'99 1Q'00 N/A
-------- --------
NASHVILLE, TN
Post Hillsboro Village(TM) . . . . 201 1Q'97 3Q'97 2Q'98 161
-------- --------
4,945 851
======== ========
</TABLE>
The Company is also currently conducting feasibility and other pre-development
studies for possible new Post(R) communities in its primary market areas.
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COMPETITION
All of the Communities are located in developed areas that include other
upscale apartments. The number of competitive upscale apartment properties in a
particular area could have a material effect on the Company's ability to lease
apartment units at the Communities or at any newly developed or acquired
communities and on the rents charged. The Company may be competing with others
that have greater resources than the Company. In addition, other forms of
residential properties, including single family housing, provide housing
alternatives to potential residents of upscale apartment communities.
AMERICANS WITH DISABILITIES ACT
The Communities and any newly acquired apartment communities must comply with
Title III of the Americans with Disabilities Act (the "ADA") to the extent that
such properties are "public accommodations" and/or "commercial facilities" as
defined by the ADA. Compliance with the ADA requirements could require removal
of structural barriers to handicapped access in certain public areas of the
Company's Communities where such removal is readily achievable. The ADA does
not, however, consider residential properties, such as apartment communities,
to be public accommodations or commercial facilities, except to the extent
portions of such facilities, such as the leasing office, are open to the
public. The Company believes that its properties comply with all present
requirements under the ADA and applicable state laws. Noncompliance could
result in imposition of fines or an award of damages to private litigants. If
required to make material additional changes, the Company's results of
operations could be adversely affected.
ENVIRONMENTAL REGULATIONS
The Company is subject to Federal, state and local environmental regulations
that apply to the development of real property, including construction
activities, the ownership of real property, and the operation of multifamily
apartment communities.
In developing properties and constructing apartments, the Company utilizes
environmental consultants to determine whether there are any flood plains,
wetlands or environmentally sensitive areas that are part of the property to be
developed. If flood plains are identified, development and construction is
planned so that flood plain areas are preserved or alternative flood plain
capacity is created in conformance with Federal and local flood plain
management requirements.
Storm water discharge from a construction facility is evaluated in connection
with the requirements for storm water permits under the Clean Water Act. This
is an evolving program in most states. The Company currently anticipates it
will be able to obtain storm water permits for existing or new development.
The Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. sec. 9601 et seq. ("CERCLA"), and applicable state superfund laws
subject the owner of real property to claims or liability for the costs of
removal or remediation of hazardous substances that are disposed of on real
property in amounts that require removal or remediation. Liability under CERCLA
and applicable state superfund laws can be imposed on the owner of real
property or the operator of a facility without regard to fault or even
knowledge of the disposal of hazardous substances on the property or at the
facility. The presence of hazardous substances in amounts requiring response
action or the failure to undertake remediation where it is necessary may
adversely affect the owner's ability to sell real estate or borrow money using
such real estate as collateral. In addition to claims for cleanup costs, the
presence of hazardous substances on a property could result in a claim by a
private party for personal injury or a claim by an adjacent property owner for
property damage.
The Company has instituted a policy that requires an environmental
investigation of each property that it considers for purchase or that it owns
and plans to develop. The environmental investigation is conducted by a
qualified environmental consultant. If there is any indication of
contamination, sampling of the property is performed by the environmental
consultant. The environmental investigation report is reviewed by the Company
and counsel prior to purchase of any property. If necessary, remediation of
contamination, including underground storage tanks, is undertaken prior to
development.
6
<PAGE> 9
The Company has not been notified by any governmental authority of any
noncompliance, claim, or liability in connection with any of the Communities.
The Company has not been notified of a claim for personal injury or property
damage by a private party in connection with any of the Communities in
connection with environmental conditions. The Company is not aware of any other
environmental condition with respect to any of the Communities that could be
considered to be material.
YEAR 2000 ISSUE
In 1997, the Company implemented an integrated accounting software package that
is Year 2000 compatible. The Company intends to upgrade its property management
software to a Year 2000 compliant version of its existing software in 1998.
The Company has not yet determined whether other Year 2000 issues will affect
its operations. However, management does not believe the cost related to
undetermined issues will have a material effect on its financial results.
ITEM 2. PROPERTIES
The Communities consist of 78 stabilized Post(R) multifamily apartment
communities located in the following metropolitan areas:
<TABLE>
<CAPTION>
METROPOLITAN AREA COMMUNITIES # OF UNITS % OF TOTAL
----------------- ----------- ---------- ----------
<S> <C> <C> <C>
Atlanta, GA . . . . . . . . . . . . . . . . . . . 36 13,768 53.1%
Dallas, TX . . . . . . . . . . . . . . . . . . . 24 6,021 23.2%
Tampa, FL . . . . . . . . . . . . . . . . . . . . 8 2,570 9.9%
Jackson, MS . . . . . . . . . . . . . . . . . . . 3 983 3.8%
Orlando, FL . . . . . . . . . . . . . . . . . . . 2 1,248 4.8%
Fairfax, VA . . . . . . . . . . . . . . . . . . . 2 700 2.7%
Nashville, TN . . . . . . . . . . . . . . . . . . 2 246 1.0%
Charlotte, NC . . . . . . . . . . . . . . . . . . 1 402 1.5%
-------- --------- ------
78 25,938 100.0%
======== ========= ======
</TABLE>
The Company or its predecessors developed all but 14 of the Post(R) Communities
and currently manages all of the Communities. Forty-four of the Communities have
in excess of 300 apartment units, with the largest Community having a total of
907 apartment units. The oldest of the Communities was first occupied in 1977
and 69 of the 78 Communities, comprising approximately 92% of such Communities'
apartment units, were completed after January 1, 1986. The average age of the
Company's Communities is approximately seven years. The average economic
occupancy rate was 94.8% and 95.4%, respectively, and the average monthly rental
rate per apartment unit was 733 and 72%, respectively, for communities
stabilized for each of the entire years ended December 31, 1997 and 1996 (does
not include 11,066 units stabilized after January 1, 1996 or acquired in the
Merger). See "Selected Financial Information".
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COMMUNITY INFORMATION
<TABLE>
<CAPTION>
DECEMBER 1997 1997
AVERAGE NUMBER AVERAGE AVERAGE
YEAR UNIT SIZE OF RENTAL RATES ECONOMIC
COMMUNITIES LOCATION(1) COMPLETED (SQUARE FEET) UNITS PER UNIT OCCUPANCY(2)
- ----------- ----------- ------------------- ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
GEORGIA
Post Ashford(R) . . . . . . . . Atlanta 1987 872 222 $760 96.0%
Post Bridge(R) . . . . . . . . Atlanta 1986 847 354 655 94.5%
Post Brookhaven(R) . . . . . . Atlanta 1990-92 (3) 991 735 929 92.0%
Post Canyon(R) . . . . . . . . Atlanta 1986 899 494 684 96.9%
Post Chase(R) . . . . . . . . . Atlanta 1987 938 410 684 94.7%
Post Chastain(R) . . . . . . . Atlanta 1990 965 558 980 94.5%
Post Collier Hills(R) . . . . . Atlanta 1997 967 396 987 N/A (4)
Post Corners(R) . . . . . . . . Atlanta 1986 860 460 691 95.4%
Post Court(R) . . . . . . . . . Atlanta 1988 838 446 676 95.0%
Post Creek(TM) . . . . . . . . Atlanta 1983 (5) 1,180 810 884 94.3%
Post Crest(R) . . . . . . . . . Atlanta 1996 1,073 410 950 96.8%
Post Crossing(R) . . . . . . . Atlanta 1995 1,067 354 1,054 95.9%
Post Dunwoody(R) . . . . . . . Atlanta 1989-96 (3) 941 530 927 93.4%
Post Glen(R) . . . . . . . . . Atlanta 1997 1,113 314 1,137 N/A (4)
Post Lane(R) . . . . . . . . . Atlanta 1988 840 166 721 97.2%
Post Lenox Park(TM) . . . . . . Atlanta 1995 1,030 206 1,075 97.4%
Post Mill(R) . . . . . . . . . Atlanta 1985 952 398 713 93.2%
Post Oak(TM) . . . . . . . . . Atlanta 1993 1,003 182 995 97.4%
Post Oglethorpe(R) . . . . . . Atlanta 1994 1,205 250 1,210 93.2%
Post Park(R) . . . . . . . . . Atlanta 1988-90 (3) 904 770 780 95.0%
Post Parkwood(R) . . . . . . . Atlanta 1995 1,071 125 931 95.4%
Post Peachtree Hills(R) . . . . Atlanta 1992-94 (3) 982 300 1,007 96.3%
Post Pointe(R) . . . . . . . . Atlanta 1988 835 360 671 95.4%
Post Renaissance(R) (6) . . . . Atlanta 1992-94 (3) 890 342 926 94.5%
Post River(R) . . . . . . . . . Atlanta 1991 983 125 1,118 93.1%
Post Summit(R) . . . . . . . . Atlanta 1990 957 148 859 96.6%
Post Terrace(R) . . . . . . . . Atlanta 1996 1,144 296 1,066 94.1%
Post Valley(R) . . . . . . . . Atlanta 1988 854 496 659 93.6%
Post Village(R) . . . . . . . . Atlanta 915 724 92.7%
The Arbors . . . . . . . . . 1983 1,063 301
The Fountains . . . . . . . . 1987 850 352
The Gardens . . . . . . . . . 1986 891 494
The Hills . . . . . . . . . . 1984 953 241
The Meadows . . . . . . . . . 1988 817 350
Post Vinings(R) . . . . . . . . Atlanta 1989-91 (3) 964 403 780 95.0%
Post Walk(R) . . . . . . . . . Atlanta 1984-87 (3)(7) 932 476 814 95.2%
Post Woods(R) . . . . . . . . . Atlanta 1977-83 (3) 1,057 494 857 93.9%
------- ------ -------- -------
Subtotal/Average -- Atlanta . 965 13,768 872 95.0%
------- ------ -------- -------
TEXAS
Addison Circle Apartment Homes
by Post(TM) - Phase I . . . Dallas 1997 896 460 866 N/A (4)
Cole's Corner . . . . . . . . . Dallas 1997 796 186 943 N/A (4)
Columbus Square by Post(TM) . . Dallas 1996 861 218 1,066 98.3%
Parkway Village . . . . . . . . Dallas 1986 1,308 136 1,108 88.2%
Post Parkwood(R) (8) . . . . . Dallas 1962-70 (3) 1,042 96 1,048 98.5%
Post Ascension(TM) . . . . . . Dallas 1985-95 (3) 929 165 787 93.0%
Post Hackberry Creek(TM) . . . Dallas 1988-96 (3) 865 432 763 96.6%
Post Lakeside(TM) . . . . . . . Dallas 1986 791 327 781 98.4%
Post Reflections(TM) . . . . . Dallas 1986 797 198 642 99.0%
Post Town Lake(TM)/Parks . . . Dallas 1986-87 (3) 869 398 698 98.5%
Post White Rock(TM) . . . . . . Dallas 1988 659 207 676 93.5%
Post Winsted(TM) . . . . . . . Dallas 1996 728 314 690 98.5%
The Shores by Post(TM) . . . . Dallas 1988-97 (3) 874 907 868 97.0%
Springstead Condos (9) . . . . Dallas 1983 1,157 38 1,207 94.4%
The Abbey of State-Thomas . . . Dallas 1996 1,276 34 1,800 97.0%
The Commons at Turtle Creek (10)Dallas 1985 645 158 703 98.0%
The Meridian at State-Thomas . Dallas 1991 798 132 1,007 97.0%
The Residences on McKinney . . Dallas 1986 749 196 987 95.7%
The Vineyard of Uptown . . . . Dallas 1996 728 116 845 97.3%
The Vintage of Uptown . . . . . Dallas 1993 781 161 850 96.6%
The Worthington of State-Thomas Dallas 1993 818 332 1,082 95.6%
Uptown Village . . . . . . . . Dallas 1995 767 300 821 98.1%
Villas at Valley Ranch (9) . . Dallas 1985 1,300 36 1,335 93.6%
Post Windhaven(TM) (11) . . . . Dallas 1991 825 474 528 100.0%
------- ------ -------- -------
Subtotal/Average -- Texas . . 886 6,021 921 96.6%
------- ------ -------- -------
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FLORIDA
Post Bay(R) . . . . . . . . . . Tampa 1988 782 312 674 98.2%
Post Court(R) . . . . . . . . . Tampa 1991 1,018 228 788 95.1%
Post Fountains at Lee Vista(R) Orlando 1988 835 508 617 96.0%
Post Hyde Park(R) . . . . . . . Tampa 1996 1,009 270 957 99.6%
Post Lake(R) . . . . . . . . . Orlando 1988 850 740 633 95.7%
Post Rocky Point(R) . . . . . . Tampa 1996-97 (3) 1,018 626 946 N/A (4)
Post Village(R) . . . . . . . . Tampa 941 742 94.8%
The Arbors . . . . . . . . . 1991 967 304
The Lakes . . . . . . . . . . 1989 895 360
The Oaks . . . . . . . . . . 1991 968 336
Post Walk(R) at
Old Hyde Park Village . . . . Tampa 1997 984 134 1,165 N/A (4)
------- ------- -------- ------
Subtotal/Average -- Florida . 933 3,818 815 96.6%
------- ----- -------- ------
MISSISSIPPI
Post Mark . . . . . . . . . . . Jackson 1984 988 256 596 97.9%
Post Pointe(R) . . . . . . . . Jackson 1997 812 241 597 N/A (4)
Post Trace(R) (8) . . . . . . . Jackson 1989-95 (3) 734 486 566 94.7%
------- ----- -------- ------
Subtotal/Average -- Mississippi 845 983 586 96.3%
------- ----- -------- ------
VIRGINIA
Post Corners(R) at Trinity
Centre Fairfax . . . . . . . . 1996 1,030 336 963 98.2%
Post Forest(R) . . . . . . . . Fairfax 1990 889 364 908 96.8%
------- ----- -------- ------
Subtotal/Average -- Virginia 960 700 936 97.5%
------- ----- -------- ------
NORTH CAROLINA
Post Park at Phillips Place(R) Charlotte 1997 912 402 1,056 N/A (4)
------- ----- -------- -------
TENNESSEE
Post Green Hills(R) . . . . . . Nashville 1996 1,056 166 1,099 95.6%
The Lee Apartments . . . . . . Nashville 1924 808 80 628 98.8%
------- ----- -------- ------
Subtotal/Average -- Tennessee 932 246 864 97.2%
------- ----- -------- ------
TOTAL . . . . . . . . . . . 930 25,938 $ 874 95.4% (12)
======= ====== ======== ======
</TABLE>
- --------------
(1) Refers to greater metropolitan areas of cities indicated.
(2) Average economic occupancy is defined as gross potential rent less vacancy
losses, model expenses and bad debt divided by gross potential rent for
the period, expressed as a percentage. For the Texas and Mississippi
communities which were acquired in connection with the Merger in October,
1997, average economic occupancy is for the period from October 24, 1997
through December 31, 1997.
(3) These dates represent the respective completion dates for multiple phases
of a Community.
(4) During 1997, this community or a phase in this community was in lease-up
and, therefore, is not included.
(5) This community was completed by the Company in 1983, sold during 1986,
managed by the Company through 1993 and
reacquired by the Company in 1996.
(6) The Company has a leasehold interest in the land underlying Post
Renaissance pursuant to a ground lease that expires on January 1, 2040.
(7) Post Brook(R) and Post Walk(R) were combined as one property effective
January 1, 1997.
(8) Existing property acquired in August 1997. Occupancy reflected is partial
year from acquisition through December 31, 1997.
(9) The Company does not own all of the units in these properties. Information
is provided only with respect to the units owned by the Company as of
December 31, 1997.
(10) Existing property acquired in February 1997.
(11) Post Windhaven(TM) Village is subject to a master lease with Electonic
Data Systems.
(12) The overall 1997 Average Economic Occupancy excludes the Texas and
Mississippi communities.
9
<PAGE> 12
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held a special meeting of shareholders on October 24, 1997. The
matters voted upon and the results of voting were as follows:
(i) To consider and vote upon a proposal to (a) approve and adopt the
Agreement and Plan of Merger dated as of August 1, 1997 among the
Company, Columbus Realty Trust ("Columbus") and Post LP Holdings,
Inc. (subsequently renamed Post Interim Holdings, Inc.), a wholly
owned subsidiary of the Company, and (b) approve the issuance of
shares of Common Stock of the Company pursuant to the merger of
Columbus with and into the Company. There were 15,542,329 votes for,
32,978 votes against and 46,207 votes abstained from this proposal.
(ii) To consider and vote upon a proposal to amend the Company's Employee
Stock Plan to increase the number of shares of Common Stock reserved
for issuance thereunder from 1,200,000 to 3,500,000 shares. There
were 12,889,067 votes for, 2,650,216 votes against and 82,231 votes
abstained from this proposal.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The persons who are executive officers of the Company and its affiliates and
their positions are as follows:
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES HELD
- ----------------------------------------------------------------------------------------------------------
<S> <C>
John A. Williams . . . . . . . . . . . Chairman of the Board, Chief Executive Officer and Director
John T. Glover . . . . . . . . . . . . President, Chief Operating Officer, Treasurer and Director
Robert L. Shaw . . . . . . . . . . . . President -- Post West
W. Daniel Faulk, Jr . . . . . . . . . . President -- Post Apartment Development
Jeffrey A. Harris . . . . . . . . . . . President -- Post Management Services
Sherry W. Cohen . . . . . . . . . . . . Executive Vice President -- Post Corporate Services and Secretary
James F. Duffy . . . . . . . . . . . . Executive Vice President -- Post West
Martha J. Logan . . . . . . . . . . . . Executive Vice President -- Post Management Services
Arthur E. Lomenick . . . . . . . . . . Executive Vice President -- Post West
John B. Mears . . . . . . . . . . . . . Executive Vice President -- Post East Development
Timothy A. Peterson . . . . . . . . . . Executive Vice President -- Post Corporate Services
Thomas L. Wilkes . . . . . . . . . . . Executive Vice President -- Post West
Terry L. Chapman . . . . . . . . . . . Senior Vice President -- Post Management Services
Judy M. Denman . . . . . . . . . . . . Senior Vice President -- Post Corporate Services
R. Gregory Fox . . . . . . . . . . . . Senior Vice President -- Post Corporate Services
John D. Hooks . . . . . . . . . . . . . Senior Vice President -- Post Management Services
Katharine W. Kelley . . . . . . . . . . Senior Vice President -- Post Apartment Development
William F. Leseman . . . . . . . . . . Senior Vice President -- RAM Partners, Inc.
William C. Lincicome . . . . . . . . . Senior Vice President -- Post Landscape Services
Janie S. Maddox . . . . . . . . . . . . Vice President -- Post Corporate Services
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Company:
John A. Williams. Mr. Williams is the Chairman of the Board and Chief Executive
Officer of the Company. Mr. Williams founded the business of the Company in
1971 and since that time has acted as Chairman and Chief Executive Officer. Mr.
Williams is currently serving on the board of directors of NationsBank Corp.,
Crawford & Co. and the Atlanta Regional Commission. Mr. Williams is 55 years
old.
10
<PAGE> 13
John T. Glover. Mr. Glover is the President, Chief Operating Officer and
Treasurer of the Company and a director. Mr. Glover joined the Company in 1984
and since that time has acted as its President. Mr. Glover is a Director of
SunTrust Banks of Georgia Inc., SunTrust Bank, Atlanta, N.A. and Haverty's
Furniture Companies, Inc. In addition, he is a member of the board of directors
of the National Realty Committee and the National Multi-Housing Council. Mr.
Glover is 51 years old.
Robert L. Shaw. Mr. Shaw joined the Company in October 1997 and currently
serves as President of Post West. Mr. Shaw was Chief Executive Officer of
Columbus from January 1994 through October 1997. Mr. Shaw was a co-founder of
Columbus Realty Holdings, Inc. ("CRH"), a predecessor of Columbus, and of its
affiliate, Memphis Real Estate, Inc. ("Memphis Real Estate"), and served as
President of CRH and Memphis Real Estate from August 1989 to December 1993. He
serves on the Board of Directors of the Greater Dallas Chamber of Commerce and
the Board of Governors of the National Association of Real Estate Investments
Trusts. He is also a member of the Young Presidents Organization ("YPO"), the
Urban Land Institute, and the Board of Governors of the National Multifamily
Housing Counsel. In addition, he serves on the University of Texas at Dallas
Advisory Board. Mr. Shaw is 41 years old.
W. Daniel Faulk, Jr. Mr. Faulk has been with the Company for ten years. Since
October 1997, he has been President of Post Apartment Development, which is
responsible for the development and construction of all Post apartment
communities located in Atlanta. Mr. Faulk was the President of Post Apartment
Development from April 1993 to October 1997. Prior thereto, Mr. Faulk was
President of Post Atlanta since February 1987. Mr. Faulk is currently on the
board of directors of Mountain National Bank. Mr. Faulk is 55 years old.
Jeffrey A. Harris. Mr. Harris has been with the Company for thirteen years.
Since October 1995, he has been President of Post Management Services and
President of Post Landscape. Prior thereto, Mr. Harris was President of Post
Management Division from March 1995, Executive Vice President of Post
Management Division from April 1993 and Senior Vice President from 1989. Mr.
Harris is on the Board of Directors and was President of the Atlanta Apartment
Association. Mr. Harris is 40 years old.
Sherry W. Cohen. Ms. Cohen has been with the Company for thirteen years. Since
October 1997, she has been an Executive Vice President of Post Corporate
Services responsible for supervising and coordinating legal affairs and
insurance. She was a Senior Vice President with Post Corporate Services from
July 1993 to October 1997. Prior thereto, Ms. Cohen was a Vice President of
Post Properties, Inc. since April 1990, as well as Corporate Secretary. Ms.
Cohen is 43 years old.
James F. Duffy. Mr. Duffy joined the Company in October 1997 as an Executive
Vice President of Post West and is responsible for the construction of all Post
apartment communities located in the Western United States. He was a Senior
Vice President of Columbus from May 1996 through October 1997. Prior to his
affiliation with Columbus, Mr. Duffy was President of the JFD Group, a business
consulting firm specializing in the commercial construction industry from 1993
to 1996. Prior thereto, he was President of the W. B. Moore Company from 1991
to 1993. Mr. Duffy is 54 years old. Martha J. Logan. Ms. Logan has been with
the Company for six years. Since October 1995, she has been President of Post
Management Services. Prior thereto, Ms. Logan was President of RAM since July
1994, Executive Vice President of RAM from January 1994 and Vice President of
RAM since 1991. Ms. Logan is 43 years old.
Arthur E. Lomenick. Mr. Lomenick joined the Company in October 1997 as an
Executive Vice President of Post West and is responsible for acquiring new
development sites in the Company's primary markets in the Western United
States. Mr. Lomenick was a Senior Vice President of Columbus from October 1994
through October 1997 and was Vice President from October 1993 to October 1994.
Previously, Mr. Lomenick served as Vice President, Investments, for Memphis
Real Estate since January 1993. Mr. Lomenick is 42 years old.
John B. Mears. Mr. Mears has been with the Company since November 1993. Since
October, 1997, he has been an Executive Vice President of Post East Development
responsible for acquiring new development sites in the Company's primary
markets outside of Atlanta, Georgia in the Eastern United States. Prior
thereto, he was a Senior Vice President of Post Apartment Development since
July 1994. Prior to joining the Company, Mr. Mears was an associate in the Real
Estate Investment Banking Group at Merrill Lynch and Company since July 1992.
Mr. Mears is 34 years old.
11
<PAGE> 14
Timothy A. Peterson. Mr. Peterson has been with the Company for eight years and
currently serves as Executive Vice President of Post Corporate Services
responsible for capital markets. Prior thereto, he was Senior Vice President of
Post Corporate Services since April 1993 and responsible for capital markets
since November 1995. Mr. Peterson was Vice President of Post Corporate Services
since January 1993, and he was responsible for planning and reporting services
since 1989. Mr. Peterson is Co-Chairman of the Accounting Committee for the
National Association of Real Estate Investment Trust. Mr. Peterson is a
Certified Public Accountant. Mr. Peterson is 32 years old.
Thomas L. Wilkes. Mr. Wilkes joined the Company in October 1997 as an Executive
Vice President and Director of Operations of Post West. Mr. Wilkes was a Senior
Vice President of Columbus from October 1993 through October 1997. Mr. Wilkes
served as President of CRH Management Company, a multifamily property management
firm and a member of the Columbus Group, since its formation in October 1990 to
December 1993. Mr. Wilkes is a Certified Property Manager. Mr. Wilkes is 38
years old.
Terry L. Chapman. Mr. Chapman has been with the Company for twenty-four years.
Since October 1997, he has been a Senior Vice President of Post Management
Services. Prior thereto, he was an Executive Vice President of Post Management
Services for more than five years responsible for maintenance, quality
assurance, security, and preventive maintenance for all Post(R) communities.
Mr. Chapman is 51 years old.
Judy M. Denman. Ms. Denman has been with the Company for twenty-two years.
Since July 1993, she has been a Senior Vice President of Post Corporate
Services responsible for employee benefits and payroll. Prior thereto, she was
a Vice President of Post Properties, Inc. since June 1984. Ms. Denman is 51
years old.
R. Gregory Fox. Mr. Fox has been with the Company since February 1996 and he
serves as Senior Vice President of Post Corporate Services and the Company's
Chief Accounting Officer responsible for financial reporting, accounting and
management information systems. Prior to joining the Company, he was a senior
manager in the audit division of Price Waterhouse LLP where he was employed for
ten years. Mr. Fox is a Certified Public Accountant. Mr. Fox is 38 years old.
John D. Hooks. Mr. Hooks has been with the Company for nineteen years. Since
October 1997, he has been a Senior Vice President of Post Management Services
responsible for landscape design, installation and maintenance on all Post(R)
communities. Prior thereto, he was an Executive Vice President of Post
Landscape since July 1993. He was the Senior Vice President of Landscape from
January 1987 to July 1993. Mr. Hooks is 43 years old.
Katharine W. Kelley. Ms. Kelley has been with the Company four years. Since
October 1997, she has been a Senior Vice President of Post Apartment
Development responsible for acquiring new development sites in metropolitan
Atlanta, Georgia. Prior thereto, she served as a Senior Vice President of Post
Apartment Development since 1994. For five years prior to joining the Company,
she was a Vice President at The Landmarks Group, a commercial real estate
development firm. Ms. Kelley is 34 years old.
William F. Leseman. Mr. Leseman has been with the Company for eight years.
Since October 1997, he has been Senior Vice President of RAM responsible for
day-to-day operations of such division. Prior thereto, he was an Executive Vice
President of RAM. Since October 1995, Mr. Leseman was Senior Vice President of
Post Management Services from 1994 to 1995 and an Area Vice President of Post
Management Services from 1989 to 1994. Mr. Leseman is 38 years old.
William C. Lincicome. Mr. Lincicome has been with the Company for seven years.
Since October 1997, he has been Senior Vice President of Post Landscape
Services responsible for the day to day operations of Post Landscape Services.
Prior thereto, he was Executive Vice President of Post Landscape Services since
September 1996. He was an independent architectural consultant from April 1996
to September 1996 and was Vice President and Director of Land Planning of Post
Landscape Services from 1989 to 1996. Mr. Lincicome is 45 years old.
Janie S. Maddox. Ms. Maddox has been with the Company for twenty-two years.
Since November 1995, she has been a Vice President of Post Corporate Services
in charge of community relations. Prior thereto, she was a Senior Vice
President of Post Management Services primarily responsible for human resources
since 1990. Ms. Maddox is 50 years old.
12
<PAGE> 15
PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Common Stock is traded on the New York Stock Exchange ("NYSE") under the
symbol "PPS." The following table sets forth the quarterly high and low
closing sales prices per share reported on the NYSE, as well as the quarterly
dividends declared per share:
<TABLE>
<CAPTION>
Dividends
Quarter Ended High Low Declared
------------- ---- --- ---------
<S> <C> <C> <C>
1996
First Quarter . . . . . . . . . . . . . $33.125 $ 30.875 $ 0.54
Second Quarter . . . . . . . . . . . . 35.375 32.000 0.54
Third Quarter . . . . . . . . . . . . . 37.000 33.875 0.54
Fourth Quarter . . . . . . . . . . . . 40.250 36.500 0.54
1997
First Quarter . . . . . . . . . . . . . $43.375 $ 37.625 $ 0.595
Second Quarter . . . . . . . . . . . . 42.000 37.250 0.595
Third Quarter . . . . . . . . . . . . . 41.500 37.000 0.595
Fourth Quarter . . . . . . . . . . . . 40.625 36.125 0.595
</TABLE>
On March 17, 1998, the Company had 1,814 common shareholders of record.
The Company pays regular quarterly dividends to holders of shares of Common
Stock. Future distributions by the Company will be at the discretion of the
board of directors and will depend on the actual funds from operations of the
Company, the Company's financial condition and capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue
Code (the "Code") and such other factors as the board of directors deems
relevant.
During 1997, the Company did not sell any unregistered securities. For a
discussion of the Company's credit agreements and their restrictions on
dividend payments, see Liquidity and Capital Resources at Management's
Discussion and Analysis of Financial Condition and Results of Operations.
There is no established public trading market for the Units. As of March 17,
1998, the Operating Partnership had 121 holders of record of Units of the
Operating Partnership.
13
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
POST PROPERTIES, INC. AND PREDECESSOR
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND APARTMENT UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Rental . . . . . . . . . . . . . . . . . . $186,126 $158,618 $133,817 $115,309 $104,482
Property management (1) . . . . . . . . . . 2,421 2,828 2,764 2,508 3,057
Landscape services (1) . . . . . . . . . . 5,120 4,834 4,647 3,799 3,829
Other . . . . . . . . . . . . . . . . . . . 6,449 5,295 3,477 3,123 2,879
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . . . 200,116 171,575 144,705 124,739 114,247
-------- -------- -------- -------- --------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) . . . . . . . . . . . . . 67,519 58,202 49,912 43,376 41,209
Depreciation (real estate assets) . . . . . 27,991 22,676 20,127 19,967 19,427
Depreciation (non-real estate assets) . . . . 1,057 927 692 241 303
Property management expenses (1) . . . . . . 1,956 2,055 2,166 2,229 2,453
Landscape services expenses (1) . . . . . . . 4,284 3,917 3,950 3,098 3,151
Interest expense . . . . . . . . . . . . . . 24,658 22,131 22,698 19,231 34,309
Amortization of deferred loan costs . . . . . 980 1,352 1,967 1,999 969
General and administrative . . . . . . . . . 7,363 7,716 6,071 6,269 4,384
REIT formation expense . . . . . . . . . . . -- -- -- -- 2,783
Minority interest in consolidated
property partnership . . . . . . . . . . . -- -- 451 680 692
-- -- --- --- ---
Total expense . . . . . . . . . . . . 135,808 118,976 108,034 97,090 109,680
Income before minority interest
of unitholders, net gain on sale of assets,
loss on relocation of corporate office and
extraordinary item . . . . . . . . . . . . 64,308 52,599 36,671 27,649 4,567
Net gain on sale of assets . . . . . . . . . 3,270 854 1,746 1,494 --
Loss on relocation of corporate office . . . (1,500) -- -- -- --
Minority interest of unitholders in
Operating Partnership . . . . . . . . . . . (11,131) (9,984) (8,429) (6,951) (1,935)
-------- -------- -------- -------- --------
Income before extraordinary item . . . . . . 54,947 43,469 29,988 22,192 2,632
Extraordinary item, net of minority
interest (2). . . . . . . . . . . . . . . . . (75) -- (870) (3,293) (7,855)
-------- -------- -------- -------- --------
Net income (loss) . . . . . . . . . . . . . . 54,872 43,469 29,118 18,899 (5,223)
Dividends to preferred shareholders . . . . . (4,907) (1,063) -- -- --
-------- -------- -------- -------- --------
Net income (loss) available to
common shareholders . . . . . . . . . . . . $ 49,965 $ 42,406 $ 29,118 $ 18,899 $ (5,223)
======== ======== ======== ======== ========
PER COMMON SHARE DATA:
Income before extraordinary item
(net of preferred dividend) - basic . . . . $ 2.11 $ 1.95 $ 1.63 $ 1.32 $ 0.34
Net income (loss) available to common
shareholders - basic . . . . . . . . . . . 2.11 1.95 1.58 1.12 (0.67)
Income before extraordinary item
(net of preferred dividend) - diluted . . . 2.09 1.94 1.63 1.32 0.34
Net income (loss) available to common
shareholders - diluted . . . . . . . . . . 2.09 1.94 1.58 1.12 (0.67)
Dividends declared (3) . . . . . . . . . . . 2.38 2.16 1.96 1.8 0.77
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation . . . . . . . . . . . . $1,936,011 $1,109,342 $937,924 $828,585 $722,266
Real estate, net of accumulated
depreciation. . . . . . . . . . . . . 1,734,916 931,670 781,100 686,009 599,898
Total assets . . . . . . . . . . . . . 1,780,563 958,675 812,984 710,973 627,322
Total debt . . . . . . . . . . . . . . 821,209 434,319 349,719 362,045 357,809
Shareholders' equity . . . . . . . . . 756,920 398,993 343,624 240,196 177,864
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
--------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flow provided from (used in):
Operating activities . . . . . . . $ 109,544 $ 78,966 $ 57,362 $ 43,807 $ 2,412
Investing activities . . . . . . . $ (208,377) $(166,762) $(114,531) $ (99,364) $ (51,152)
Financing activities . . . . . . . $ 109,469 $ 79,021 $ 60,885 $ 46,508 $ 49,647
Funds from operations (4) . . . . . . . $ 87,392 $ 74,212 $ 56,798 $ 47,616 $ 26,777
Weighted average common shares
outstanding - basic . . . . . . . . 23,664,044 21,787,648 18,382,299 16,847,999 7,824,311
Weighted average common shares and
units outstanding - basic . . . . . . . 28,880,928 26,917,723 23,541,639 22,125,890 13,574,767
Weighted average common shares
outstanding - diluted . . . . . . . . . 23,887,906 21,879,248 18,387,894 16,848,165 7,824,311
Weighted average common shares and
units outstanding - diluted . . . . . . 29,104,790 27,009,323 23,547,234 22,126,056 13,574,767
Total stabilized communities
(at end of period) . . . . . . . . . 78 49 42 42 41
Total stabilized apartment units
(at end of period) . . . . . . . . . 25,938 17,930 14,962 14,845 14,270
Average economic occupancy
(stabilized communities) (5) . . . . . . 94.8% 95.3% 96.0% 96.4% 94.7%
</TABLE>
- ---------------
(1) Consists of revenues and expenses from property management and landscape
services provided to properties owned by third parties (including services
provided to third-party owners of properties previously developed and sold
by the Company that operate under the Post(R) name).
(2) The extraordinary item resulted from costs associated with the early
extinguishment of indebtedness. The extraordinary item has been reduced by
the portion related to the minority interest of the unitholders calculated
on the basis of weighted average Units outstanding for the year.
(3) The dividend paid by the Company for the portion of the quarter ended
September 30, 1993 after the Initial Offering was $.320 per share of
Common Stock, which is an amount equivalent to a quarterly distribution of
$.415 per share (which, if annualized, would equal $1.66 per share).
(4) The Company uses the National Association of Real Estate Investment Trust
("NAREIT") definition of FFO, which was adopted for periods beginning
after January 1, 1996. FFO for any period means the Consolidated Net
Income of the Company and its subsidiaries for such period excluding gains
or losses from debt restructuring and sales of property, plus depreciation
of real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures, all determined on a consistent basis in
accordance with generally accepted accounting principles ("GAAP"). FFO
presented herein is not necessarily comparable to FFO presented by other
real estate companies due to the fact that not all real estate companies
use the same definition. However, the Company's FFO is comparable to the
FFO of real estate companies that use the current NAREIT definition. FFO
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indicator of the Company's financial
performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the
Company's needs or ability to service indebtedness or make distributions.
(5) Amount represents average economic occupancy for communities stabilized
for both the current and prior respective periods. Average economic
occupancy is defined as gross potential rent less vacancy losses, model
expenses and bad debt divided by gross potential rent for the period,
expressed as a percentage. The calculation of average economic occupancy
does not include a deduction for concessions and employee discounts
(average economic occupancy, taking account of these amounts, would have
been 93.9% and 94.7% for the year ended December 31, 1997 and 1996,
respectively). Concessions were $903 and $428 and employee discounts were
$267 and $261 for the years ended December 31, 1997 and 1996,
respectively. A community is considered by the Company to have achieved
stabilized occupancy on the earlier to occur of (i) attainment of 95%
physical occupancy on the first day of any month, or (ii) one year after
completion of construction. These calculations do not include communities
which were acquired as part of the Merger.
15
<PAGE> 18
POST APARTMENT HOMES, L.P. AND PREDECESSOR
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AND APARTMENT UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue:
Rental . . . . . . . . . . . . . . . . . . $186,126 $158,618 $133,817 $115,309 $104,482
Property management (1) . . . . . . . . . . 2,421 2,828 2,764 2,508 3,057
Landscape services ( 1) . . . . . . . . . 5,120 4,834 4,647 3,799 3,829
Other . . . . . . . . . . . . . . . . . . . 6,449 5,295 3,477 3,123 2,879
-------- -------- -------- -------- --------
Total revenue . . . . . . . . . . . . 200,116 171,575 144,705 124,739 114,247
-------- -------- -------- -------- --------
Property operating and maintenance
expense (exclusive of depreciation
and amortization) . . . . . . . . . . . . . 67,519 58,202 49,912 43,376 41,209
Depreciation (real estate assets) . . . . . 27,991 22,676 20,127 19,967 19,427
Depreciation (non-real estate assets) . . . . 1,057 927 692 241 303
Property management expenses (1) . . . . . . 1,956 2,055 2,166 2,229 2,453
Landscape services expenses (1) . . . . . . . 4,284 3,917 3,950 3,098 3,151
Interest expense . . . . . . . . . . . . . . 24,658 22,131 22,698 19,231 34,309
Amortization of deferred loan costs . . . . . 980 1,352 1,967 1,999 969
General and administrative . . . . . . . . . 7,363 7,716 6,071 6,269 4,384
REIT formation expense . . . . . . . . . . . -- -- -- -- 2,783
Minority interest in consolidated
property partnership . . . . . . . . . . . -- -- 451 680 692
-- -- --- --- ---
Total expenses . . . . . . . . . . . 135,808 118,976 108,034 97,090 109,680
-------- -------- -------- -------- --------
Income before net gain on sale of assets
loss on relocation of corporate office, and
extraordinary item . . . . . . . . . . . . 64,308 52,599 36,671 27,649 4,567
Net gain on sale of assets . . . . . . . . . 3,270 854 1,746 1,494 --
Loss on relocation of corporate office . . . (1,500) -- -- -- --
-------- -------- -------- -------- --------
Income before extraordinary item . . . . . . 66,078 53,453 38,417 29,143 4,567
Extraordinary item (2) . . . . . . . . . . . (93) -- (1,120) (4,413) (13,628)
-------- -------- -------- -------- --------
Net Income (loss) 65,985 53,453 37,297 24,730 (9,061)
Distribution to preferred unitholders . . . . (4,907) (1,063) -- -- --
-------- -------- -------- -------- --------
Net income (loss) available to
common unitholders. . . . . . . . . . . . . $ 61,078 $ 52,390 $ 37,297 $ 24,730 $ (9,061)
======== ======== ======== ======== ========
PER COMMON UNIT DATA:
Income before extraordinary item
(net of preferred distribution) - basic $ 2.11 $ 1.95 $ 1.63 $ 1.32 $ 0.34
Net income (loss) available to common
unitholders - basic . . . . . . . . . . . . 2.11 1.95 1.58 1.12 (0.67)
Income before extraordinary item
(net of preferred distribution) -
diluted . . . . . . . . . . . . . . . . . . 2.09 1.94 1.63 1.32 0.34
Net income (loss) available to common
unitholders - diluted . . . . . . . . . . . 2.09 1.94 1.58 1.12 (0.67)
Distributions declared (3) . . . . . . . . . 2.38 2.16 1.96 1.80 0.77
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, before accumulated depreciation . . . . . $1,936,011 $1,109,342 $937,924 $828,585 $722,266
Real estate, net of accumulated depreciation . . . . . 1,734,916 931,670 781,100 686,009 599,898
Total assets . . . . . . . . . . . . . . . . . . . . . 1,780,563 958,675 812,984 710,973 627,322
Total debt . . . . . . . . . . . . . . . . . . . . . . 821,809 434,319 349,719 362,045 357,809
Partners' equity . . . . . . . . . . . . . . . . . . . 869,304 482,434 425,489 313,367 246,342
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flow provided from (used in):
Operating activities . . . . . . . $ 109,554 $ 78,966 $ 57,362 $ 43,807 $ 2,412
Investing activities . . . . . . . $ (208,377) $ (166,762) $ (114,531) $ (99,364) $ (51,152)
Financing activities . . . . . . . $ 109,469 $ 79,021 $ 60,885 $ 46,508 $ 49,647
Funds from operations (4) . . . . . . . $ 87,392 $ 74,212 $ 56,798 $ 47,616 $ 26,777
Weighted average common Units
outstanding - basic . . . . . . . . 28,880,928 26,917,723 23,541,639 22,125,890 13,574,767
Weighted average common Units
outstanding - diluted . . . . . . . 29,104,790 27,009,323 23,547,234 22,126,056 13,574,767
Total stabilized communities
(at end of period) . . . . . . . . 78 49 42 42 41
Total stabilized apartment units
(at end of period) . . . . . . . . 25,938 17,930 14,962 14,845 14,270
Average economic occupancy
(stabilized communities) (5) . . . 94.8% 95.3% 96.0% 96.4% 94.7%
</TABLE>
- --------------
(1) Consists of revenues and expenses from property management and landscape
services provided to properties owned by third parties (including services
provided to third-party owners of properties previously developed and sold
by the Company that operate under the Post(R) name).
(2) The extraordinary item resulted from costs associated with the early
extinguishment of indebtedness.
(3) The distribution paid by the Company for the portion of the quarter ended
September 30, 1993 after the Initial Offering was $.320 per Unit, which is
an amount equivalent to a quarterly distribution of $.415 per Unit (which,
if annualized, would equal $1.66 per Unit).
(4) The Company uses the National Association of Real Estate Investment Trust
("NAREIT") definition of FFO, which was adopted for periods beginning
after January 1, 1996. FFO for any period means the Consolidated Net
Income of the Company and its subsidiaries for such period excluding gains
or losses from debt restructuring and sales of property, plus depreciation
of real estate assets, and after adjustment for unconsolidated
partnerships and joint ventures, all determined on a consistent basis in
accordance with generally accepted accounting principles ("GAAP"). FFO
presented herein is not necessarily comparable to FFO presented by other
real estate companies due to the fact that not all real estate companies
use the same definition. However, the Company's FFO is comparable to the
FFO of real estate companies that use the current NAREIT definition. FFO
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indicator of the Company's financial
performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
necessarily indicative of sufficient cash flow to fund all of the
Company's needs or ability to service indebtedness or make distributions.
(5) Amount represents average economic occupancy for communities stabilized
for both the current and prior respective periods. Average economic
occupancy is defined as gross potential rent less vacancy losses, model
expenses and bad debt divided by gross potential rent for the period,
expressed as a percentage. The calculation of average economic occupancy
does not include a deduction for concessions and employee discounts
(average economic occupancy, taking account of these amounts, would have
been 93.9% and 94.7% for the year ended December 31, 1997 and 1996,
respectively). Concessions were $903 and $428 and employee discounts were
$267 and $261 for the years ended December 31, 1997 and 1996,
respectively. A community is considered by the Company to have achieved
stabilized occupancy on the earlier to occur of (i) attainment of 95%
physical occupancy on the first day of any month, or (ii) one year after
completion of construction. These calculations do not include communities
acquired as part of the Merger.
17
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT APARTMENT UNIT
DATA)
OVERVIEW
The following discussion should be read in conjunction with all of the
financial statements appearing elsewhere in this report. The following
discussion is based primarily on the Consolidated Financial Statements of Post
Properties, Inc. and Post Apartment Homes, L.P. Except for the effect of
minority interest in the Operating Partnership, the following discussion with
respect to the Company is the same for the Operating Partnership.
As of December 31, 1997, there were 35,843,066 Units outstanding, of which
30,626,592 or 85.5%, were owned by the Company and 5,216,474, or 14.5% were
owned by other limited partners ( including certain officers and directors of
the Company). As of December 31, 1997, there were 3,000,000 Perpetual Preferred
Units outstanding, all of which were owned by the Company.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
The Company recorded net income available to common shareholders of $49,965,
$42,406 and $29,118 for the year ended December 31, 1997, 1996 and 1995,
respectively. The increase in net income available to common shareholders of
$7,559, from 1996 to 1997 was primarily related to the Merger, increased rental
rates for fully stabilized communities and an increase in units placed in
service. The $13,288 increase in net income available to common shareholders
from 1995 and 1996 was primarily due to increased rental rates for fully
stabilized communities and an increase in units placed in service.
COMMUNITY OPERATIONS
The Company's net income is generated primarily from the operation of its
apartment communities. For purposes of evaluating comparative operating
performance, the Company categorizes its operating communities based on the
period each community reaches stabilized occupancy. A community is generally
considered by the Company to have achieved stabilized occupancy on the earlier
to occur of (i) attainment of 95% physical occupancy on the first day of any
month or (ii) one year after completion of construction.
At December 31, 1997, the Company's portfolio of apartment communities
consisted of the following: (i) 37 communities that were completed and
stabilized for all of the current and prior year, (ii) eight communities that
achieved full stabilization during the prior year, (iii) four communities which
reached stabilization during 1997, (iv) 27 communities that were acquired by
way of the Merger during 1997 and (v) 13 communities and an additional phase of
three existing communities in the development or lease-up stage.
For communities with respect to which construction is completed and the
community has become fully operational, all property operating and maintenance
expenses are expensed as incurred and those recurring and non-recurring
expenditures relating to acquiring new assets, materially enhancing the value
of an existing asset, or substantially extending the useful life of an existing
asset are capitalized. (See "Capitalization of Fixed Assets and Community
Improvements").
The Company has adopted an accounting policy related to communities in the
development and lease-up stage whereby substantially all operating expenses
(including pre-opening marketing expenses) are expensed as incurred. The
Company treats each unit in an apartment community separately for cost
accumulation, capitalization and expense recognition purposes. Prior to the
commencement of leasing activities, interest and other construction costs are
capitalized and reflected on the balance sheet as construction in progress.
Once a unit is placed in service, all operating expenses allocated to that
unit, including interest, are expensed as incurred. During the lease-up phase,
the sum of interest expense on completed units and other operating expenses
(including pre-opening marketing expenses) will initially exceed rental
revenues, resulting in a "lease-up deficit," which continues until such time as
rental revenues exceed such expenses.
Therefore, in order to evaluate the operating performance of its communities,
the Company has presented financial information which summarizes the revenue in
excess of specified expense on a comparative basis for all of its operating
18
<PAGE> 21
communities combined and for communities which have reached stabilization prior
to January 1, 1996. The Company has also presented financial information
reflecting the dilutive impact of lease-up deficits incurred for communities in
the development and lease-up stage and not yet operating at break-even.
ALL OPERATING COMMUNITIES
The operating performance for all of the Company's apartment communities
combined for the years ended December 31, 1997, 1996 and 1995 is summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------------------------- ---------------------------
% %
1997 1996 CHANGE 1996 1995 CHANGE
------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Rental and other revenue:
Fully stabilized communities (1) . . . . 127,495 125,921 1.3% 125,921 118,388 6.4%
Communities stabilized during 1996 . . . 31,337 22,747 37.8% 22,747 4,346 423.4%
Acquired communities (2) . . . . . . . . 12,525 -- -- -- -- --
Development and lease-up communities (3)
15,793 6,039 161.5% 6,039 3,209 88.2%
Sold communities (4) . . . . . . . . . . 1,494 4,763 (68.6)% 4,763 8,300 42.6%
Other revenue (5) . . . . . . . . . . . . 3,842 4,117 6.7% 4,117 2,458 67.5%
------- ------- ------- -------
192,486 163,587 17.7% 163,587 136,701 19.7%
------- ------- ------- -------
Property operating and maintenance expense
(exclusive of depreciation and
amortization):
Fully stabilized communities . . . . . . 41,223 41,092 0.3% 41,092 39,107 5.1%
Communities stabilized during 1996 . . . 9,124 7,324 24.6% 7,324 2,241 226.8%
Acquired communities . . . . . . . . . . 4,089 -- -- -- -- --
Development and lease-up communities . . 5,896 2,461 139.6% 2,461 1,309 88.0%
Sold communities . . . . . . . . . . . . 657 2,033 (67.7)% 2,033 3,413 40.4%
Other expenses (6) . . . . . . . . . . . 6,530 5,292 23.4% 5,292 3,842 37.7%
------- ------- ------- -------
67,519 58,202 16.0% 58,202 49,912 16.6%
------- ------- ------- -------
Revenue in excess of specified expense . . 124,967 105,385 18.6% 105,385 86,789 21.4%
======= ======= ======= =======
Recurring capital expenditures: (7)
Carpet . . . . . . . . . . . . . . . . . 1,617 1,087 48.8% 1,087 897 21.2%
Other . . . . . . . . . . . . . . . . . . 2,058 1,874 9.8% 1,874 803 133.4%
------- ------- ------- -------
Total . . . . . . . . . . . . . . . . 3,675 2,961 24.1% 2,961 1,700 74.2%
======= ======= ======= =======
Average apartment units in service . . . . 19,413 17,089 8.3% 17,089 15,519 10.1%
======= ======= ======= =======
</TABLE>
- --------------------
(1) Communities which reached stabilization prior to January 1, 1996.
(2) As part of the Merger on October 24, 1997, the Company acquired 26
completed communities containing 6,296 units and five communities under
development containing 1,243 apartment units when completed. Results of
these communities are included from October 24, 1997 through year-end.
(3) Communities in the "construction", "development" or "lease-up" stage
during 1997 and, therefore, not considered fully stabilized for all of
the periods presented.
(4) Includes three communities, containing 568 units, which were sold on
September 13, 1995 and one community, containing 180 units, which was
sold on July 19, 1996 and one community, containing 416 units, which
was sold on May 22, 1997. The revenues and expenses for these
communities had previously been included in the fully stabilized group.
(5) Other revenue includes revenue on furnished apartment rentals above the
unfurnished rental rates and any revenue not directly related to
property operations. Other revenue also includes, for the year ended
December 31, 1996, approximately $527 which resulted from the Company's
Olympic-related housing initiatives.
(6) Other expenses includes certain indirect central office operating
expenses related to management, grounds maintenance, and costs
associated with furnished apartment rentals.
19
<PAGE> 22
(7) In addition to those expenses which relate to property operations, the
Company incurs recurring and non- recurring expenditures relating to
acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset,
all of which are capitalized.
For the year ended December 31, 1997, rental and other revenue increased
$28,899 or 17.7% compared to the same period in the prior year, primarily as a
result of communities acquired in the Merger and an increase in units placed in
service, partially offset by a decrease in rental and other revenue due to the
sale of one community during the third quarter of 1996 and the sale of one
community during the second quarter of 1997.
For the year ended December 31, 1996, rental and other revenue increased
$26,886, or 19.7% compared to the same period in the prior year, primarily as a
result of increased rental rates for fully stabilized communities, an increase
in units placed in service, and the acquisition of communities and the
Company's Olympic-related housing initiatives, partially offset by a decrease
in rental and other revenue due to the sale of three communities during the
third quarter of 1995 and the sale of one community during the third quarter of
1996.
Property operating and maintenance expenses (exclusive of depreciation and
amortization) increased from 1996 to 1997 and 1995 to 1996 primarily due to the
increase in the units placed in service through the development and acquisition
of communities.
For the year ended December 31, 1997 and 1996, recurring capital expenditures
increased $714 or 24.1% and $1,261 or 74.2%, respectively, compared to the same
period in the prior year, primarily due to additional units placed in service
and the timing of scheduled capital improvements.
FULLY STABILIZED COMMUNITIES
The Company defines fully stabilized communities as those which have reached
stabilization prior to the beginning of the previous calendar year.
The operating performance of the 37 communities containing an aggregate of
14,039 units which were stabilized as of January 1, 1996, are summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------------------------- ---------------------------------
% %
1997 1996 CHANGE 1996 1995 Change
---------- --------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Rental and other revenue . . . . . . . . . $127,495 $125,921 1.3% $125,921 $118,388 6.4%
Property operating and maintenance expense
(exclusive of depreciation and
amortization) (1) . . . . . . . . . . . . 41,223 41,092 0.3% 41,092 39,107 5.1%
-------- -------- -------- --------
Revenue in excess of specified expense . . $ 86,272 $ 84,829 1.7% $ 84,829 $ 79,281 7.0%
======== ======== ======== ========
Average economic occupancy (2) . . . . . . 94.8% 95.4% 95.4% 94.7%
======== ======== ======== ========
Average monthly rental rate per apartment
unit (3) . . . . . . . . . . . . . . . . $733 $ 729 0.5% $729 $ 691 5.5%
======== ======== ======== ========
Apartment units in service . . . . . . . . 14,039 14,039 14,039 14,039
======== ======== ======== ========
</TABLE>
- ---------------
(1) In addition to those expenses which relate to property operations, the
Company incurs recurring and non-recurring expenditures relating to
acquiring new assets, materially enhancing the value of an existing asset,
or substantially extending the useful life of an existing asset, all of
which are capitalized. For the year ended December 31, 1997 and 1996,
recurring expenditures were $3,146 and $2,571 or $224 and $183 on a per
unit basis, respectively.
(2) Average economic occupancy is defined as gross potential rent less vacancy
losses, model expenses and bad debt divided by gross potential rent for
the period, expressed as a percentage. The calculation of average economic
occupancy does not include a deduction for concessions and employee
discounts. (Average economic occupancy, taking account of these amounts
would have been 93.9% and 94.9% for the years ended December 31, 1997 and
1996, respectively.) Concessions were $903 and $375 and employee
discounts were $267 and $256 for the years ended December 31, 1997 and
1996, respectively.
(3) Average monthly rental rate is defined as the average of the gross actual
rental rates for leased units and the average of the anticipated rental
rates for unoccupied units.
20
<PAGE> 23
Rental and other revenue increased from 1996 to 1997 due to higher rental rates
with occupancy slightly declining. The modest increase in property and
maintenance expense (exclusive of depreciation and amortization) from 1996 to
1997 was primarily due to an increase in personnel costs which was
substantially offset by a decrease in ad valorem real estate taxes.
Rental and other revenue increased from 1995 to 1996 due to higher rental rates
and occupancy. Property operating and maintenance expenses (exclusive of
depreciation and amortization) increased primarily as a result of increases in
ad valorem real estate taxes ($1,287 or 65% of the increase). The remaining
increase was due to increases in salaries and utilities.
LEASE-UP DEFICITS
As noted in the overview of Community Operations, the Company has adopted an
accounting policy related to communities in the development and lease-up stage
whereby substantially all operating expenses (including pre-opening marketing
expenses) are expensed as incurred. The Company treats each unit in an
apartment community separately for cost accumulation, capitalization and
expense recognition purposes. Prior to the commencement of leasing activities,
interest as well as other construction costs are capitalized and reflected on
the balance sheet as construction in progress. Once a unit is placed in
service, all expenses allocated to that unit, including interest, are expensed
as incurred. During the lease-up phase, the sum of interest expense on
completed units and other operating expenses (including pre-opening marketing
expenses) will typically exceed rental revenues, resulting in a "lease-up
deficit," which continues until rental revenues exceed such expenses.
In this presentation, only those communities which were dilutive during each
period are included in that period and, accordingly, different communities may
be included in different periods.
The Company calculates "lease-up deficit" on a quarterly basis, and accumulates
the quarterly deficits to the annual deficit. Only those communities which were
dilutive during each quarter are included and, accordingly, different
communities may be included in each quarter within each year. For each of the
years ended December 31, 1997 through 1995, the "lease-up deficit" charged to
and included in results of operations are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Rental and other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,467 $ 974 $ 3,327
Property operating and maintenance expense (exclusive of
depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . 1,442 1,056 2,422
---------- --------- --------
Revenue in excess of specified expense . . . . . . . . . . . . . . . . . . . 25 (82) 905
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,364 673 2,072
---------- --------- --------
Lease-up deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,339) $ (755) $ (1,167)
========== ========= ========
</TABLE>
THIRD PARTY SERVICES
THIRD PARTY MANAGEMENT SERVICES
The Company provides asset management, leasing and other consulting services to
non-related owners of apartment communities through its subsidiary, RAM. The
operating performance of RAM for the years ended December 31, 1997, 1996 and
1995 is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- --------------------------------
% %
1997 1996 CHANGE 1996 1995 CHANGE
------ ------- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Property management and other revenue . $2,444 $ 2,562 (4.6)% $2,562 $2,331 9.9%
Property management expense . . . . . . 1,313 1,244 5.5% 1,244 1,213 2.6%
General and administrative expense . . 574 502 14.3% 502 467 7.5%
Depreciation expense . . . . . . . . . 44 66 (33.3)% 66 89 (25.8)%
------ ------- ------ ------
Revenue in excess of specified expense $ 513 $ 750 (31.6)% $ 750 $ 562 33.5%
------ ======= ====== ======
Average apartment units in service . . 9,061 8,852 2.4% 8,852 8,798 0.6%
====== ======= ====== ======
</TABLE>
21
<PAGE> 24
The change in property management revenues and expenses from 1996 to 1997 and
from 1995 to 1996 is primarily attributable to the change in the average number
and the average gross revenues of units managed.
THIRD PARTY LANDSCAPE SERVICES
The Company provides landscape maintenance, design and installation services to
non-related parties through a subsidiary, Post Landscape Services.
The operating performance of Post Landscape Services for the years ended
December 31, 1997, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
Year ended Year ended
December 31, December 31,
----------------------------------------- -------------------------------------
% %
1997 1996 CHANGE 1996 1995 CHANGE
------------- -------------- ---------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Landscape services and other revenue $5,149 $4,882 5.5% $4,882 $4,662 4.7%
Landscape services expense . . . . . 3,777 3,459 9.2% 3,459 3,255 6.3%
General and administrative expense . 507 458 10.7% 458 695 (34.1)%
Depreciation expense . . . . . . . . 107 76 40.8% 76 111 (31.5)%
------ ------ ------ ------
Revenue in excess of specified
expense . . . . . . . . . . . . . . . $ 758 $ 889 (14.7)% $ 889 $ 601 47.9%
====== ====== ====== ======
</TABLE>
The change in landscape services revenue, landscape services expense and
general and administrative expense from 1996 to 1997 and 1995 to 1996 is
primarily due to an increase in landscape contracts.
OTHER INCOME AND EXPENSES
Depreciation expense increased from 1996 to 1997 primarily due to the
communities acquired in the Merger and the completion of new communities, and
1995 to 1996 primarily due to the completion of new communities and the
acquisition of communities.
Interest expense increased from 1996 to 1997 primarily due to additional debt
incurred in connection with the Merger. Interest expense decreased from 1995
to 1996 primarily due to the repayment of debt with proceeds from the Third
Offering and the Series A Perpetual Preferred Shares.
Amortization of deferred loan costs decreased from 1996 to 1997 primarily due
to interest rate protection agreements becoming fully amortized and from 1995
to 1996 as a result of repayment of indebtedness with proceeds of the Third
Offering.
General and administrative expenses decreased from 1996 to 1997 as a result of
a reduction in executive incentive compensation. General and administrative
expense increased from 1995 to 1996 primarily as a result of increased travel-
related expenses and personnel costs.
The gain on sale of assets resulted from the sale of a community in 1997, gain
on sale of a community and other assets in 1996 and the sale of three
communities in 1995.
The loss on relocation of corporate office in 1997 resulted from a decision to
relocate the corporate office prior to the end of the lease term on the current
corporate office space.
The extraordinary item of $75 and $870, net of minority interest portion, for
the years ended December 31, 1997 and 1995, respectively, resulted from the
costs associated with the early retirement of debt.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company's net cash provided by operating activities increased from $57,362
in 1995 to $78,966 in 1996 and to $109,554 in 1997, principally due to
increased property operating income. Net cash used in investing activities
increased
22
<PAGE> 25
from $114,531 in 1995 to $166,762 in 1996 and to $208,377 in 1997, primarily
due to increases in spending on construction and acquisition of real estate
assets. Net cash provided by financing activities increased from $60,885 in
1995 to $79,021 in 1996 and to $109,469 in 1997. The increase from 1995 to 1996
is a result of a decrease in net borrowings and an increase in offering
proceeds from the Notes and the Perpetual Preferred Shares. The increase from
1996 to 1997 is primarily a result of an increase in net borrowings.
The Company has elected to be taxed as a Real Estate Investment Trust ("REIT")
under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended, commencing with its taxable year ended December 31, 1993. REITs are
subject to a number of organizational and operational requirements, including a
requirement that they currently distribute 95% of their ordinary taxable
income. As a REIT, the Company generally will not be subject to Federal income
tax on net income.
At December 31, 1997, the Company had total indebtedness of $821,209 and cash
and cash equivalents of $10,879. The Company's indebtedness includes
approximately $38,681 in conventional mortgages payable and $154,528 in
tax-exempt bond indebtedness secured by communities, senior unsecured notes of
$306,000, and borrowings under unsecured lines of credit totaling
approximately $322,000.
The Company expects to meet its short-term liquidity requirements generally
through its net cash provided by operations and borrowings under credit
arrangements and expects to meet certain of its long-term liquidity
requirements, such as scheduled debt maturities, repayment of financing of
construction and development activities and possible property acquisitions,
through long-term secured and unsecured borrowings, possible sale of properties
and the issuance of debt securities or additional equity securities of the
Company, or, possibly in connection with acquisitions of land or improved
properties, Units of the Operating Partnership. The Company believes that its
net cash provided by operations will be adequate and anticipates that it will
continue to be adequate to meet both operating requirements and payment of
dividends by the Company in accordance with REIT requirements in both the short
and the long term. The budgeted expenditures for improvements and renovations
to certain of the communities are expected to be funded from property
operations.
Lines Of Credit
In December 1997, the Company added two banks to its syndicated line of credit
(the "Revolver"), increasing its capacity from $180,000 to $200,000. The
Revolver matures on May 1, 2000 and borrowings currently bear interest at LIBOR
plus .675% or prime minus .25%. The Revolver provides for the rate to be
adjusted up or down based on changes in the credit ratings on the Company's
senior unsecured debt. The Revolver also includes a money market competitive
bid option for short term funds up to $100,000 (increased in December 1997 from
$90,000) at rates below the stated line rate. The credit agreement for the
Revolver contains customary representations, covenants and events of default,
including covenants which restrict the ability of the Operating Partnership to
make distributions, in excess of stated amounts, which in turn restricts the
discretion of the Company to declare and pay dividends. In general, during any
fiscal year the Operating Partnership may only distribute up to 100% of the
Operating Partnership's consolidated income available for distribution (as
defined in the credit agreement) exclusive of distributions of up to $30,000 of
capital gains for such year. The credit agreement contains exceptions to these
limitations to allow the Operating Partnership to make distributions necessary
to allow the Company to maintain its status as a REIT. The Company does not
anticipate that this covenant will adversely affect the ability of the
Operating Partnership to make distributions, or the Company to declare
dividends, under the Company's current dividend policy.
On November 21, 1997, the Company closed on an aggregate of $132,000 in bridge
loans (the "Bridge loans") with three commercial banks. These notes bear
interest at LIBOR plus 1.04% for the first 30 days. From December 21, 1997
through maturity on May 20, 1998, these notes bear interest of LIBOR plus .92%.
Proceeds from these notes were used to pay down debt assumed in the Merger.
On July 26, 1996, the Company closed a $20,000 unsecured line of credit with
Wachovia Bank of Georgia, N.A. (The "Cash Management Line"), which was fully
funded and used to pay down the outstanding balance on the Revolver. The Cash
Management Line bears interest at LIBOR plus .675% or prime minus .25% and has
a maturity date of June 26, 1998. The Revolver requires three days advance
notice to repay borrowings whereas the Cash Management Line provides the
Company with an automatic daily sweep which applies all available cash to
reduce the outstanding balance. In addition, the Company has a $3,000 facility
to provide letters of credit for general business purposes.
23
<PAGE> 26
Tax Exempt Bonds
On June 29, 1995, the Company replaced the bank letters of credit providing
credit enhancement for twelve of its outstanding tax-exempt bonds and three of
its economically defeased tax-exempt bonds. Under an agreement with the Federal
National Mortgage Association ("FNMA"), FNMA now provides, directly or
indirectly through other bank letters of credit, credit enhancement with
respect to such bonds. Under the terms of such agreement, FNMA has provided
replacement credit enhancement through 2025 for seven bond issues, aggregating
$141,230, which were concurrently reissued, and has agreed, subject to certain
conditions, to provide credit enhancement through June 1, 2025 for up to an
additional $94,650 ($81,352 of which is currently defeased) with respect to
four other bond issues which mature and may be refunded during 1998. Under this
agreement, on January 1, 1998, the Post Fountains, Post Fountains and Meadows
and Post Lake bonds (all of which had previously been defeased) were refunded
in the amount of $21,500, $26,000 and $28,500, respectively, with an issue
enhanced by FNMA and maturing on June 1, 2025. The agreement with FNMA contains
representations, covenants, and events of default customary to such secured
loans.
Refundable Tax Exempt Bonds
The Company has previously issued tax-exempt bonds, secured by certain
communities, totaling $235,880, of which $81,352 has been economically defeased
at December 31, 1997, leaving $154,528 of principal amount of tax-exempt bonds
outstanding at December 31, 1997 of which $141,230 of the bonds outstanding
have been reissued with a maturity of June 1, 2025. On January 1, 1998, the
Post Vista, Post F&M Villages and Post Lake (Orlando) bonds were refunded in
the amount of $21,500, $26,000 and $28,500, respectively, with an issue
enhanced by FNMA and maturing on June 1, 2025. Proceeds from these
re-issuances, which totaled $76,000, were used to reduce outstanding balances
on the Bridge loans ($61,050) and the Revolver ($14,950). The Company has
chosen economic defeasance of the bond obligations rather than a legal
defeasance in order to preserve the legal right to refund such obligations on a
tax-exempt basis at the stated maturity if the Company then determines that
such refunding is beneficial to the Company.
The following table shows the amount of bonds (both defeased and outstanding)
at December 31, 1997, which the Company may reissue during the years 1998 and
2025:
<TABLE>
<CAPTION>
DEFEASED OUTSTANDING TOTAL REISSUE
PORTION PORTION CAPACITY
-------------- --------------- ---------------
<S> <C> <C> <C>
1998 (1) $ 81,352 $ 13,298 $ 94,650
2025 -- 141,230 141,230
-------------- --------------- ---------------
$ 81,352 $ 154,528 $ 235,880
============== =============== ===============
</TABLE>
- --------------
(1) 1998 amounts include Post Vista, Post F&M Villages and Post Lake (Orlando)
bonds aggregating $76,000 which matured and were refunded on January 1, 1998.
Senior Unsecured Debt Offering
On September 30, 1996, the Company completed a $125,000 senior unsecured debt
offering comprised of two tranches. The first tranche, $100,000 of 7.25% Notes
due on October 1, 2003 (the "2003 Notes"), was priced at 99.642% to yield
7.316%, or 71 basis points over the rate on U.S. Treasury securities with a
comparable maturity. The second tranche, $25,000 or 7.50% Notes due on October
1, 2006 (the "2006 Notes", and together with the 2003 Notes, the "Notes"), was
priced at 99.694% to yield 7.544%, or 83 basis points over the rate on U.S.
Treasury securities with a comparable maturity. Proceeds from the Notes were
used to pay down the Revolver.
Medium Term Notes
On January 29, 1997, the Operating Partnership established a program for the
sale of up to $175,000 aggregate principal amount of Medium-Term Notes due nine
months or more from the date of issue (the "MTNs"). On October 20, 1997, the
Company increased the amount available under this program to $344 million.
24
<PAGE> 27
The following table sets forth MTNs issued and outstanding as of December 31,
1997:
<TABLE>
<CAPTION>
ISSUE INTEREST MATURITY
DATE AMOUNT RATE DATE
----------------- ----------------- ------------------ -------------------
<S> <C> <C> <C>
March 3, 1997 $ 30,000 LIBOR plus .25% 03/03/2000
March 31, 1997 37,000 7.02% 04/02/2001
March 31, 1997 13,000 7.30% 04/01/2004
September 22, 1997 10,000 6.69% 09/22/2004
September 22, 1997 25,000 6.78% 09/22/2005
September 26, 1997 16,000 6.22% 12/31/99
----------
$ 131,000
==========
</TABLE>
Proceeds from the MTNs were used to (i) prepay certain outstanding notes and
(ii) pay down existing indebtedness outstanding under the Company's Revolver.
Perpetual Preferred Stock Offerings
On October 1, 1996, the Company sold one million non-convertible 8.5% Series A
Cumulative Redeemable Shares (the "Series A Perpetual Preferred Shares"),
raising $50 million. Net proceeds of $48,700 from the sale of the Series A
Perpetual Preferred Shares were contributed to the Operating Partnership in
exchange for one million Series A Preferred Units and used by the Operating
Partnership to repay outstanding indebtedness.
On October 28, 1997, the Company sold two million non-convertible 7 5/8% Series
B Cumulative Redeemable Shares (the "Series B Perpetual Preferred Shares") with
a liquidation preference equivalent to $25 per share. Net proceeds of $48,300
from the sale of Series B Perpetual Preferred Shares were contributed to the
Operating Partnership in exchange for two million Series B Preferred Units and
used by the Operating Partnership to repay outstanding indebtedness.
On February 9, 1998, the Company sold two million non-convertible 7 5/8% Series
C Cumulative Redeemable Shares (the "Series C Perpetual Preferred Shares") at a
price of $25 per share. Net proceeds of $ 48,425 from the sale of Series C
Perpetual Shares were contributed to the Operating Partnership in exchange for
two million Series C Preferred Units and used by the Operating Partnership to
repay outstanding indebtedness.
Common Stock Offering
On February 26, 1998, the Company sold 3.5 million shares of common stock. The
net proceeds from this offering of $129.5 million were contributed to the
Operating Partnership in exchange for 3.5 million common units and used by the
Operating Partnership to repay outstanding indebtedness.
MandatOry Par Put Remarketed Securities
On March 12, 1998, the Operating Partnership issued $100 million of 6.85%
MandatOry Par Put Remarketed Securities(SM) ("MOPPRS(SM)"). The net proceeds
from the MOPPRS(SM) were used to repay outstanding indebtedness. As part of the
MOPPRS(SM) structure, Merrill Lynch & Co. purchased an option to remarket the
securities as of March 16, 2005. The Operating Partnership will have an
effective borrowing rate through the remarketing date of approximately 6.59%.
In anticipation of the offering, the Company entered into forward-treasury-lock
agreements in the fall of 1997. As a result of the termination of these
agreements, the effective borrowing rate will be approximately 6.85%, the
coupon rate on the MOPPRS(SM).
Shelf Registration
On September 25, 1997, the Company filed a shelf registration to register an
additional $200,000 of undesignated equity securities and an additional
$300,000 of undesignated debt securities.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of the
Company. Under the DRIP, shareholders may elect for their dividends to be used
to acquire additional shares of the Company's Common Stock directly from the
Company, for 95% of the market price on the date of purchase.
25
<PAGE> 28
Schedule of Indebtedness
The following table reflects the Company's indebtedness at December 31, 1997:
<TABLE>
<CAPTION>
MATURITY PRINCIPAL
COMMUNITY LOCATION INTEREST RATE DATE (1) BALANCE
- --------- ------------- ------------------- -------------- -----------
<S> <C> <C> <C> <C>
TAX EXEMPT FIXED RATE (SECURED)
Post Court(R) . . . . . . . . . . . . Atlanta, GA 7.5% + .575% (2)(3) 06/01/98(4) $ 13,298
--------
13,298
--------
CONVENTIONAL FIXED RATE (SECURED)
Post Summit(R) . . . . . . . . . . . Atlanta, GA 7.72% 02/01/98 5,250
Post River(R) . . . . . . . . . . . . Atlanta, GA 7.72% 03/01/98 5,803
Clyde Lane . . . . . . . . . . . . . Dallas, TX 10.00% 05/12/98 1,995
Post Hillsboro Village(TM) . . . . . Nashville, TN 9.20% 10/01/2001 3,009
Parkwood Townhomes(TM) . . . . . . . Dallas, TX 7.375% 04/01/2014 899
--------
16,956
--------
CONVENTIONAL FLOATING RATE (SECURED)
Addison Circle Apartment Homes
by Post(TM) - Phase I . . . . . . Dallas, TX LIBOR +1.65% (6) 6/01/99 21,724
The Rice . . . . . . . . . . . . . . Houston, TX LIBOR + 1.90% 8/01/99 1
--------
21,725
--------
TAX EXEMPT FLOATING RATE (SECURED)
Post Ashford(R) Series 1995 . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 9,895
Post Valley(R) Series 1995 . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 18,600
Post Brook(R) Series 1995 . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 4,300
Post Village(R) (Atlanta) Hills
Series 1995 . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 7,000
Post Mill(R) . . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 12,880
Post Canyon(R) . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 16,845
Post Corners(R) . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 14,760
Post Bridge(R) . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 12,450
Post Village(R) (Atlanta) Gardens . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 14,500
Post Chase(R) . . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 15,000
Post Walk(R) . . . . . . . . . . . . Atlanta, GA "AAA" NON-AMT + .575% (2)(3) 06/01/2025 15,000
--------
141,230
--------
SENIOR NOTES (UNSECURED)
Medium Term Notes . . . . . . . . . . N/A 6.22% 12/31/99 16,000
Medium Term Notes . . . . . . . . . . N/A LIBOR + .25% 03/03/2000 30,000
Northwestern Mutual Life . . . . . . N/A 8.21% 06/07/2000 30,000
Medium Term Notes . . . . . . . . . . N/A 7.02% 04/02/2001 37,000
Northwestern Mutual Life . . . . . . N/A 8.37% 06/07/2002 20,000
Senior Notes . . . . . . . . . . . . N/A 7.25% 10/01/2003 100,000
Medium Term Notes . . . . . . . . . . N/A 7.30% 04/01/2004 13,000
Medium Term Notes . . . . . . . . . . N/A 6.69% 09/22/2004 10,000
Medium Term Notes . . . . . . . . . . N/A 6.78% 09/22/2005 25,000
Senior Notes . . . . . . . . . . . . N/A 7.50% 10/01/2006 25,000
--------
306,000
--------
LINES OF CREDIT (UNSECURED)
Revolver . . . . . . . . . . . . . . N/A LIBOR + .675% or prime minus.25%(5) 05/01/2000 170,000
Bridge Loan . . . . . . . . . . . . . N/A LIBOR + .92% 5/20/98 132,000
Cash Management Line . . . . . . . . N/A LIBOR + .675 % or prime minus.25% 6/26/98 20,000
--------
322,000
--------
TOTAL . . . . . . . . . . . . . . . . $821,209
========
</TABLE>
- --------------
(1) All of the debt can be prepaid at any time, subject to certain prepayment
penalties. All dates listed are final maturity dates assuming the exercise
of any available extension option by the Company.
(2) Bond financed (interest rate on bonds plus credit enhancement fees).
26
<PAGE> 29
(3) These bonds are cross collateralized and are also secured by Post Vista,
Post Lake (Orlando) and Post F&M Villages for which the Company has
economically defeased their respective bond indebtedness.
(4) Subject to certain conditions at re-issuance, the credit enhancement runs
to June 1, 2025.
(5) Represents stated rate. The Company may also make "money market' loans of
up to $100,000 at rates below the stated rate.
(6) Rate reduced to LIBOR + .75% effective January 14, 1998.
Other Activities
On May 7, 1996, the Company reacquired three contiguous Atlanta apartment
communities, containing 810 units, which the Company developed in the early
1980's and managed under the Post(R) brand name through mid-1993. The Company
is operating this as one community under the name Post Creek(R).
On July 19, 1996, the Company sold a community located in Florida, containing
180 units. On May 22, 1997, the Company sold another community located in
Florida, containing 416 units. The sale of these communities is consistent with
the Company's strategy of selling communities when the market demographics for
a community are no longer consistent with the Company's existing ownership
strategy.
Capitalization of Fixed Assets and Community Improvements
The Company has established a policy of capitalizing those expenditures
relating to acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset. All
expenditures necessary to maintain a community in ordinary operating condition
are expensed as incurred. During the first five years of a community (which
corresponds to the estimated depreciable life), carpet replacements are
expensed as incurred. Thereafter, carpet replacements are capitalized.
Acquisition of assets and community improvement expenditures for the year ended
December 31, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
New community development and acquisition activity .................. $ 218,111 $ 173,328
Revenue generating additions and improvements
Property renovations ........................................ 5,532 509
Submetering of water service................................. 2,636 --
Nonrecurring capital expenditures
Vehicle access control gates................................. 115 66
Other community additions and improvements................... 490 1,363
Recurring capital expenditures
Carpet replacements.......................................... 1,617 1,087
Other community additions and improvements .................. 2,058 1,874
Corporate additions and improvements......................... 3,220 820
--------------- ---------------
$ 233,779 $ 179,047
=============== ===============
</TABLE>
INFLATION
Substantially all of the leases at the Communities allow, at the time of
renewal, for adjustments in the rent payable thereunder, and thus may enable
the Company to seek increases in rents. The substantial majority of these
leases are for one year or less and the remaining leases are for up to two
years. At the expiration of a lease term, the Company's lease agreements
provide that the term will be extended unless either the Company or the lessee
gives at least sixty (60) days written notice of termination; in addition, the
Company's policy permits the earlier termination of a lease by a lessee upon
thirty (30) days written notice to the Company and the payment of one month's
additional rent as compensation for early termination. The short-term nature of
these leases generally serves to reduce the risk to the Company of the adverse
effect of inflation.
27
<PAGE> 30
YEAR 2000 ISSUE
In 1997, the Company implemented an integrated accounting software package that
is Year 2000 compatible. The Company intends to upgrade its property management
software to a Year 2000 compliant version of its existing software in 1998.
The Company has not yet determined whether other Year 2000 issues will affect
its operations. However, management does not believe the cost related to
undetermined issues will have a material effect on its financial results.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 1 to Consolidated Financial Statements.
FUNDS FROM OPERATIONS AND CASH AVAILABLE FOR DISTRIBUTION
Historical Funds from Operations
The Company considers funds from operations ("FFO") an appropriate measure of
performance of an equity REIT. FFO is defined to mean net income (loss)
determined in accordance with GAAP, excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation of real estate assets,
and after adjustment for unconsolidated partnerships and joint ventures. FFO
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indicator of the Company's financial performance or
to cash flow from operating activities (determined in accordance with GAAP) as
a measure of the Company's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company's needs. Cash available for
distribution ("CAD") is defined as FFO less capital expenditures funded by
operations and loan amortization payments. The Company believes that in order
to facilitate a clear understanding of the consolidated historical operating
results of the Company, FFO and CAD should be examined in conjunction with net
income as presented in the consolidated financial statements and data included
elsewhere in this report.
FFO and CAD for the years ended December 31, 1997, 1996 and 1995 presented on a
historical basis are summarized in the following table:
Calculations of Funds from Operations and Cash Available for Distribution
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
Net income available to common shareholders . . . . . . . . . . . . . $ 49,965 $ 42,406 $ 29,118
Extraordinary item, net of minority interest. . . . . . . . . . . . . 75 -- 870
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . 11,131 9,984 8,429
Net gain on sale of assets . . . . . . . . . . . . . . . . . . . . (3,270) (854) (1,746)
Loss on relocation of corporate office . . . . . . . . . . . . . . 1,500 -- --
----------- ----------- ----------
Adjusted net income . . . . . . . . . . . . . . . . . . . . . . . . 59,401 51,536 36,671
Depreciation of real estate assets . . . . . . . . . . . . . . . . 27,991 22,676 20,127
----------- ----------- -----------
Funds from Operations (1) . . . . . . . . . . . . . . . . . . . . . . 87,392 74,212 56,798
Recurring capital expenditures (2) . . . . . . . . . . . . . . . . (3,675) (2,961) (1,700)
Non-recurring capital expenditures (3) . . . . . . . . . . . . . . . (605) (1,429) (428)
Loan amortization payments . . . . . . . . . . . . . . . . . . . . (179) (228) (199)
----------- ----------- -----------
Cash Available for Distribution . . . . . . . . . . . . . . . . . . . $ 82,933 $ 69,594 $ 54,471
=========== =========== ===========
Revenue generating capital expenditures (4) . . . . . . . . . . . . . $ 8,168 $ 509 $ (859)
=========== =========== ===========
Cash Flow Provided From (Used In):
Operating activities . . . . . . . . . . . . . . . . . . . . . . . $ 109,554 $ 78,966 $ 57,362
Investing activities . . . . . . . . . . . . . . . . . . . . . . . $ (208,377) $ (166,762) $ (114,531)
Financing activities . . . . . . . . . . . . . . . . . . . . . . . $ 109,469 $ 79,021 $ 60,885
Weighted average common shares outstanding - basic . . . . . . . . . 23,664,044 21,787,648 18,382,299
=========== =========== ===========
Weighted average common shares outstanding - diluted . . . . . . . . 23,887,906 21,879,248 18,387,894
=========== =========== ===========
Weighted average common shares and Units outstanding - basic . . . . 28,880,928 26,917,723 23,541,639
=========== =========== ===========
Weighted average common shares and Units outstanding - diluted . . . 29,104,790 27,009,323 23,547,234
=========== =========== ===========
</TABLE>
28
<PAGE> 31
(1) The Company uses the National Association of Real Estate Investment Trusts
("NAREIT") definition of FFO which was adopted for periods beginning after
January 1, 1996. FFO for any period means the Consolidated Net Income of
the Company and its subsidiaries for such period excluding gains or losses
from debt restructuring and sales of property plus depreciation of real
estate assets, and after adjustment for unconsolidated partnerships and
joint ventures, all determined on a consistent basis in accordance with
generally accepted accounting principles. FFO presented herein is not
necessarily comparable to FFO presented by other real estate companies due
to the fact that not all real estate companies use the same definition.
However, the Company's FFO is comparable to the FFO of real estate
companies that use the current NAREIT definition.
(2) Recurring capital expenditures consisted primarily of $1,617, $1,087 and
$897 of carpet replacement and $2,058, $1,874 and $803 of other community
additions and improvements to existing communities for the years ended
December 31, 1997, 1996 and 1995, respectively. Since the Company does not
add back the depreciation of non-real estate assets in its calculation of
FFO, capital expenditures of $3,220, $820 and $1,267 are excluded from
the calculation of CAD for the years ended December 31, 1997, 1996 and
1995, respectively.
(3) Non-recurring capital expenditures consisted of the additions of vehicle
access control gates to communities of $115, $66 and $428 and other
community additions and improvements of $490, $1,363 and $0 for the years
ended December 31, 1997, 1996 and 1995, respectively.
(4) Revenue generating capital expenditures included a major renovation of
communities in the amount of $5,532, $509 and $0 for the years ended
December 31, 1997, 1996 and 1995, respectively, and submetering of water
service to communities in the amount of $2,636 for the year ended December
31, 1997, and construction of garages on certain communities in the amount
of $859 for the year ended December 31, 1995.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of The Securities Exchange Act of 1934, as amended.
Forward - looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not
even be anticipated. Future events and actual results, financial and otherwise,
may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to the following: (i) local market conditions, (ii) governmental laws
and regulations related to the Company's REIT status, housing and the
environment, among others, and (iii) general economic conditions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements are listed under Item 14(a) and are filed as part of
this report on the pages indicated. The supplementary data are included in Note
13 of the Notes to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
29
<PAGE> 32
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections under the headings "Election of Directors" entitled "Nominee for
Election -- New Director," "Nominees for Election -- Term Expiring 1998,"
"Incumbent Directors -- Term Expiring 1999," and "Incumbent Directors -- Term
Expiring 2000" of the Proxy Statement for Annual Meeting of Shareholders to be
held May 8, 1998 (the "Proxy Statement") are incorporated herein by reference
for information on Directors of the Registrant. See Item X in Part I hereof for
information regarding executive officers of the Registrant. The section under
the heading "Other Matters" entitled "Section 16(a) Beneficial Ownership
Reporting Compliance" of the Proxy Statement is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION
The section under the heading "Election of Directors" entitled "Compensation of
Directors" of the Proxy Statement and the sections under the heading titled
"Executive Compensation" entitled "Summary Compensation Table", "Fiscal
Year-End Option Value Table", "Profit Sharing Plan", "Noncompetition and
Employment Contract" and "Compensation Committee Interlocks and Insider
Participation" of the Proxy Statement are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section under the heading "Common Stock Ownership by Management and
Principal Shareholders" of the Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section under the heading "Certain Transactions" of the Proxy Statement is
incorporated herein by reference.
30
<PAGE> 33
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. and 2. FINANCIAL STATEMENTS AND SCHEDULES
The financial statements and schedules listed below are filed as part of this
annual report on the pages indicated.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
POST PROPERTIES, INC.
Consolidated Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Consolidated Balance Sheets as of December 31, 1997 and 1996 . . . . . . . . . . . . . . . . 33
Consolidated Statements of Operations for the Years Ended December 31, 1997,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Consolidated Statements of Shareholders' Equity and Accumulated Earnings (Deficit) for the
Years Ended December 31, 1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 35
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 37
POST APARTMENT HOMES, L.P.
Consolidated Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Consolidated Balance Sheets as of December 31, 1997 and 1996 . . . . . . . . . . . . . . . . 51
Consolidated Statements of Operations for the Years Ended December 31, 1997,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Consolidated Statements of Partners' Equity for the Years Ended December 31, 1997,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 55
Schedule III:
Consolidated Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . 68
All other schedules are omitted because they are not applicable or not required.
POST PROPERTIES, INC. -- 1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Financial Statements: PAGE
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Statement of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 . . . . 72
Statement of Changes in Net Assets Available for Plan Benefits for the years ended
December 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
31
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Post Properties, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a) 1. and 2. on page 31 present fairly, in all material
respects, the financial position of Post Properties, Inc. at December 31, 1997
and 1996, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the management of Post Properties, Inc.; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Atlanta, Georgia
March 20, 1998
32
<PAGE> 35
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Real estate assets
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 234,011 $ 150,072
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,255,118 730,518
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 89,251 74,120
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,071 140,437
Land held for future development . . . . . . . . . . . . . . . . . . . . . . . . . 15,560 14,195
---------- ----------
1,936,011 1,109,342
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . (201,095) (177,672)
---------- ----------
Real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,734,916 931,670
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,879 233
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,542 1,148
Deferred charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,629 9,459
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,597 16,165
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,780,563 $ 958,675
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 821,209 $ 434,319
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,505 4,264
Dividend and distribution payable . . . . . . . . . . . . . . . . . . . . . . . . . . 21,327 14,659
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 53,101 17,915
Security deposits and prepaid rents . . . . . . . . . . . . . . . . . . . . . . . . . 8,117 5,084
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911,259 476,241
---------- ----------
Minority interest of unitholders in Operating Partnership . . . . . . . . . . . . . . 112,384 83,441
---------- ----------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders' equity
Preferred stock, $.01 par value, 20,000,000
authorized, 3,000,000 shares issued and outstanding . . . . . . . . . . . . . . . 30 10
Common stock, $.01 par value, 100,000,000
authorized, 30,626,592 and 21,922,393 shares
issued and outstanding at December 31, 1997
and December 31, 1996, respectively . . . . . . . . . . . . . . . . . . . . . . . 306 219
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 756,584 398,764
Accumulated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
---------- ----------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . 756,920 398,993
---------- ----------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . $1,780,563 $ 958,675
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
33
<PAGE> 36
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 186,126 $ 158,618 $ 133,817
Property management - third party. . . . . . . . . . . . . . . . . . . 2,421 2,828 2,764
Landscape services - third party . . . . . . . . . . . . . . . . . . . 5,120 4,834 4,647
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 326 593
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,360 4,969 2,884
---------- ---------- ----------
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . 200,116 171,575 144,705
---------- ---------- ----------
EXPENSES
Property operating and maintenance (exclusive of items
shown separately below) . . . . . . . . . . . . . . . . . . . . . 67,519 58,202 49,912
Depreciation (real estate assets) . . . . . . . . . . . . . . . . . 27,991 22,676 20,127
Depreciation (non-real estate assets) . . . . . . . . . . . . . . . 1,057 927 692
Property management . . . . . . . . . . . . . . . . . . . . . . . . 1,956 2,055 2,166
Landscape services . . . . . . . . . . . . . . . . . . . . . . . . 4,284 3,917 3,950
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,658 22,131 22,698
Amortization of deferred loan costs . . . . . . . . . . . . . . . . 980 1,352 1,967
General and administrative . . . . . . . . . . . . . . . . . . . . 7,363 7,716 6,071
Minority interest in consolidated property partnership . . . . . . -- -- 451
---------- ---------- ----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 135,808 118,976 108,034
---------- ---------- ----------
Income before net gain on sale of assets, loss on relocation
of corporate office, minority interest of unitholders in
Operating Partnership and extraordinary item . . . . . . . . . . . 64,308 52,599 36,671
Net gain on sale of assets . . . . . . . . . . . . . . . . . . . 3,270 854 1,746
Loss on relocation of corporate office . . . . . . . . . . . . . . (1,500) -- --
Minority interest of unitholders in Operating Partnership . . . . (11,131) (9,984) (8,429)
---------- ---------- ----------
Income before extraordinary item . . . . . . . . . . . . . . . . . 54,947 43,469 29,988
Extraordinary item, net of minority interest of unitholders
in Operating Partnership . . . . . . . . . . . . . . . . . . . . . (75) -- (870)
---------- ---------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,872 43,469 29,118
Dividends to preferred shareholders . . . . . . . . . . . . . . . (4,907) (1,063) --
---------- ---------- ----------
Net income available to common shareholders . . . . . . . . . . . $ 49,965 $ 42,406 $ 29,118
========== ========== ==========
EARNINGS PER COMMON SHARE - BASIC
Income before extraordinary item (net of preferred dividends) . . $ 2.11 $ 1.95 $ 1.63
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . -- -- (0.05)
---------- ---------- ----------
Net income available to common shareholders . . . . . . . . . . . $ 2.11 $ 1.95 $ 1.58
========== ========== ==========
Weighted average common shares outstanding . . . . . . . . . . . . 23,664,044 21,787,648 18,382,299
========== ========== ==========
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . $ 2.38 $ 2.16 $ 1.96
========== ========== ==========
EARNINGS PER COMMON SHARE - DILUTED
Income before extraordinary item (net of preferred dividends) . . $ 2.09 $ 1.94 $ 1.63
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . -- -- (0.05)
---------- ---------- ----------
Net income available to common shareholders . . . . . . . . . . . $ 2.09 $ 1.94 $ 1.58
========== ========== ==========
Weighted average common shares outstanding . . . . . . . . . . . . 23,887,906 21,879,248 18,387,894
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
34
<PAGE> 37
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION> ACCUMULATED
PREFERRED COMMON PAID-IN EARNINGS/
SHARES SHARES CAPITAL (DEFICIT) TOTAL
--------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS (DEFICIT),
DECEMBER 31, 1994 . . . . . . . . . . . . . . . . $ -- $172 $ 256,377 $ (16,353) $240,196
Proceeds of Third Offering, net of underwriting
discount and offering costs of $6,501 . . . . . -- 37 105,241 -- 105,278
Adjustment for minority interest of unitholders in
Operating Partnership at date
of Third Offering . . . . . . . . . . . . . . . -- -- (10,598) -- (10,598)
Proceeds from Dividend Reinvestment Plan . . . . . -- 6 16,165 -- 16,171
Conversion of Units to shares . . . . . . . . . . -- 1 -- (1) --
Net income . . . . . . . . . . . . . . . . . . . . -- -- -- 29,118 29,118
Dividends declared and paid . . . . . . . . . . . -- -- (22,071) (3,897) (25,968)
Dividends declared . . . . . . . . . . . . . . . . -- -- (1,706) (8,867) (10,573)
---- ---- --------- --------- --------
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS,
DECEMBER 31, 1995 . . . . . . . . . . . . . . . . . -- 216 343,408 -- 343,624
Proceeds from Preferred Shares, net of
underwriting discount and offering
costs of $1,387 . . . . . . . . . . . . . . . . 10 -- 48,603 -- 48,613
Acquisition of real estate through issuance of
Units . . . . . . . . . . . . . . . . . . . . . -- -- 5,091 -- 5,091
Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans . . . . . . . . . -- 2 9,032 -- 9,034
Conversion of Units to shares . . . . . . . . . . -- 1 (1) -- --
Adjustment for minority interest of
unitholders in Operating Partnership
at dates of capital transactions . . . . . . . . -- -- (2,680) -- (2,680)
Net income . . . . . . . . . . . . . . . . . . . . -- -- -- 43,469 43,469
Dividends to preferred shareholders . . . . . . . -- -- -- (1,063) (1,063)
Dividends declared and paid to common
shareholders . . . . . . . . . . . . . . . . . . -- -- (3,549) (31,708) (35,257)
Dividends declared to common shareholders . . . . -- -- (1,140) (10,698) (11,838)
---- ---- --------- --------- --------
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS
DECEMBER 31, 1996 . . . . . . . . . . . . . . . . 10 219 398,764 -- 398,993
---- ---- --------- --------- --------
Proceeds from Preferred Shares,
net of underwriting discount and
offering costs of $1,709 . . . . . . . . . . . . 20 -- 48,271 -- 48,291
Common shares issued in connection
with Merger . . . . . . . . . . . . . . . . . . -- 84 338,269 -- 338,353
Proceeds from Dividend Reinvestment and
Employee Stock Purchase Plans . . . . . . . . . -- 2 9,128 -- 9,130
Conversion of Units to shares . . . . . . . . . . -- 1 (1) -- --
Adjustment for minority interest of
unitholders in Operating Partnership
at dates of capital transactions . . . . . . . . -- -- (30,245) -- (30,245)
Net income . . . . . . . . . . . . . . . . . . . . -- -- -- 54,872 54,872
Dividends to preferred shareholders . . . . . . . -- -- -- (4,907) (4,907)
Dividends declared and paid to common
shareholders . . . . . . . . . . . . . . . . . . -- -- (3,273) (36,073) (39,346)
Dividends declared to common shareholders . . . . -- -- (4,329) (13,892) (18,221)
---- ---- --------- --------- --------
SHAREHOLDERS' EQUITY AND
ACCUMULATED EARNINGS
DECEMBER 31, 1997 . . . . . . . . . . . . . . . . $ 30 $306 $ 756,584 $ -- $756,920
==== ==== ========= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
35
<PAGE> 38
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,872 $ 43,469 $ 29,118
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest of unitholders in Operating Partnership . . . . . . . . . 11,131 9,984 8,175
Net gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . (3,270) (854) (1,746)
Loss on relocation of corporate office . . . . . . . . . . . . . . . . . . 1,500 -- --
Extraordinary item, net of minority interest of unitholders in
Operating Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . 75 -- --
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,048 23,603 20,819
Write-off of deferred financing costs . . . . . . . . . . . . . . . . . . . (93) -- 1,120
Amortization of deferred loan costs . . . . . . . . . . . . . . . . . . . . 980 1,352 1,967
Changes in assets, (increase) decrease in:
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (394) (2) 7,211
Organization costs and other deferred charges . . . . . . . . . . . . . . -- 1,589 (90)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,797 (3,281) (9,122)
Changes in liabilities, increase (decrease) in:
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . 2,172 299 (1,171)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . 1,341 2,089 868
Security deposits and prepaid rents . . . . . . . . . . . . . . . . . . . 395 718 213
--------- -------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . 109,554 78,966 57,362
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction and acquisition of real estate assets,
net of payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (190,810) (168,885) (117,120)
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . 25,402 12,285 22,645
Acquisition of Columbus Realty Trust, net of cash acquired . . . . . . . . (17,734) -- --
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,567) (4,443) (5,653)
Recurring capital expenditures . . . . . . . . . . . . . . . . . . . . . . (3,675) (2,961) (1,700)
Corporate capital expenditures . . . . . . . . . . . . . . . . . . . . . . (3,220) (820) (1,267)
Non-recurring capital expenditures . . . . . . . . . . . . . . . . . . . . (605) (1,429) (428)
Revenue generating capital expenditures . . . . . . . . . . . . . . . . . . (8,168) (509) (859)
Purchase of minority interests in property partnerships . . . . . . . . . . -- -- (10,149)
--------- -------- --------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . (208,377) (166,762) (114,531)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs . . . . . . . . . . . . . . . . . . . . . . . . (4,208) (3,986) (4,614)
Debt proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688,564 236,833 362,196
Debt payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (564,085) (277,233) (374,522)
Offering proceeds, net of underwriters discount and offering costs . . . . -- 123,438 105,278
Proceeds from Preferred Shares . . . . . . . . . . . . . . . . . . . . . . 48,291 48,613 --
Proceeds from Dividend Reinvestment Plan . . . . . . . . . . . . . . . . . 9,130 9,034 16,171
Capital distributions to unitholders . . . . . . . . . . . . . . . . . . . (12,132) (10,785) (9,919)
Dividends paid to preferred shareholders . . . . . . . . . . . . . . . . . (4,907) (1,063) --
Dividends paid to common shareholders . . . . . . . . . . . . . . . . . . . (51,184) (45,830) (33,705)
--------- -------- --------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . 109,469 79,021 60,885
--------- -------- --------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . 10,646 (8,775) 3,716
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . 233 9,008 5,292
--------- -------- --------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . $ 10,879 $ 233 $ 9,008
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
36
<PAGE> 39
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. ORGANIZATION AND FORMATION OF THE COMPANY
ORGANIZATION AND FORMATION OF THE COMPANY
Post Properties, Inc. (the "Company") through its majority owned subsidiary,
Post Apartment Homes, L.P. (the "Operating Partnership") currently owns and
manages or is in the process of developing apartment communities located in the
Atlanta, Dallas, Tampa, Orlando, Northern Virginia, Nashville, Houston, Denver
and Charlotte metropolitan areas. At December 31, 1997, approximately 53.1% and
23.2% (on a unit basis) of the Company's communities are located in the Atlanta
and Dallas metropolitan areas, respectively.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the consolidated
accounts of the Company and the Operating Partnership. All significant
intercompany accounts and transactions have been eliminated in consolidation.
See Note 2 related to the acquisition of Columbus Realty Trust. Since units can
be redeemed for shares of the Company on a one-for- one basis at the Company's
option, minority interest of unitholders in the operations of the Operating
Partnership is calculated based on the weighted average of shares and units
outstanding during the period.
Certain items in the Consolidated Financial Statements were reclassified for
comparative purposes.
ACCOUNTING CHANGES
In the fourth quarter of 1997, the company adopted Statement of Financial
Accounting Standards ("SFAS") 128, "Earnings per Share," which requires the
dual presentation of basic and diluted earnings per share ("EPS") on the face
of the income statement for all entities with complex capital structures. It
also requires a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS
computation. All prior period EPS data presented in the consolidated financial
statements was restated in accordance with the provisions of this statement.
NEW ACCOUNTING PRONOUNCEMENTS
In the first quarter of 1998, the Company is required to adopt SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for
reporting and disclosing comprehensive income and its components. Besides net
income, SFAS No. 130 requires the reporting of other comprehensive income,
defined as revenues, expenses, gains and losses that under generally accepted
accounting principles are not included in net income. As of December 31, 1997,
the Company had no items of other comprehensive income and, as a result;
management does not believe this statement will result in significant changes
to its current disclosures.
In the first quarter of 1998, the Company is required to adopt SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information." This
statement establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in its interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated by the chief decision maker in deciding how to
allocate resources and in assessing performance. FAS No. 131 also allows the
aggregation of segments which meet certain criteria. Management believes its
current disclosure contained within the "Management's Discussion on Analysis of
Financial Condition and Results of Operations" section of its interim reports
on SEC Form 10Q and annual report on SEC Form 10K as well as its Annual Report
comply with most of the requirements of SFAS 131. As a result, management does
not believe the adoption of SFAS 131 will significantly affect its financial
statement disclosures.
REAL ESTATE ASSETS AND DEPRECIATION
Real estate assets are stated at the lower of depreciated cost or fair value,
if deemed impaired. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 - 10
years).
37
<PAGE> 40
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
REVENUE RECOGNITION
Rental -- Residential properties are leased under operating leases with terms
of generally one year or less. Rental income is recognized when earned, which
is not materially different from revenue recognition on a straight line basis.
Property management and landscaping services -- Income is recognized when
earned for property management and landscaping services provided to third
parties.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash
equivalents.
RESTRICTED CASH
Restricted cash generally is comprised of resident security deposits for
communities located in Florida and Tennessee and required maintenance reserves
for communities located in DeKalb County, Georgia.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the interest method over the terms
of the related debt.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (including capitalized amounts of $9,567, $4,443 and $5,653 during 1997,
1996 and 1995, respectively, and interest rate protection receipts of $296,
$830 and $1,539 during 1997, 1996 and 1995, respectively) aggregated $39,815,
$31,563 and $28,343 for the years ended December 31, 1997, 1996 and 1995,
respectively.
DERIVATIVES
The Company may enter into various treasury lock arrangements from time to time
in anticipation of a specific debt transaction. These arrangements are used to
manage the Company's exposure to fluctuations in interest rates. The Company
does not utilize these arrangements for trading or speculative purposes. These
arrangements, considered qualifying hedges, are not recorded in the financial
statements until the debt transaction is consummated and the arrangement is
settled. The proceeds or payments resulting from the settlement of the
arrangement are deferred and amortized over the life of the debt as an
adjustment to interest expense.
As of December 31, 1997, the Company had entered into nine treasury locks
arrangements with various financial institutions with an aggregate notional
amount of $200,000. The notional amounts are used to measure the proceeds to be
received or payments to be made upon settlement of the arrangement and do not
represent the amount of exposure to credit loss. The counterparties to these
arrangements are various financial institutions of high credit quality;
therefore, the risk of nonperformance by the counterparties is considered to be
negligible. The arrangements are tied to treasury bills ranging from 5-10 year
terms and yields of 6.051% to 6.327%. At December 31, 1997, the expected cost
to settle these arrangements was approximately $5,300.
Premiums paid to purchase interest rate protection agreements are capitalized
and amortized over the terms of those agreements using the interest method.
Unamortized premiums are included in other assets in the consolidated balance
sheet. Amounts receivable under the interest rate protection agreements are
accrued as a reduction of interest expense.
PER SHARE DATA
Basic earnings per common share with respect to the Company for the years ended
December 31, 1997, 1996 and 1995 is computed based upon the weighted average
number of shares outstanding during the period. Diluted earnings per common
share is based upon the weighted average number of shares outstanding during
the period and includes the effect of the potential issuance of additional
shares if stock options were exercised or converted into common stock.
38
<PAGE> 41
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. ACQUISITION OF COLUMBUS REALTY TRUST
On October 24, 1997, Columbus Realty Trust ("Columbus") a Texas real estate
investment trust, was merged into a wholly owned subsidiary of the Company (the
"Merger"). At the time of the Merger, Columbus was operating 26 completed
communities containing 6,296 apartment units and had an additional 5
communities under development that will contain 1,243 apartment units upon
completion located in Dallas and Houston, Texas. Pursuant to the merger
agreement, each outstanding share of Columbus common stock was converted into
.615 shares of common stock of the Company, which resulted in the issuance of
approximately 8.4 million shares of common stock of the Company. The total
purchase price including liabilities assumed was $643,268. The Merger was
accounted for as a purchase. Under the purchase method of accounting, the
assets acquired and liabilities assumed of Columbus were recorded at their
estimated fair market values and its results of operations have been included
in the accompanying consolidated statements of operations from the date of the
acquisition, October 24, 1997, through year-end. Unaudited, supplemental
pro-forma information, assuming the acquisition had occurred on January 1,
1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
----------- ----------
<S> <C> <C>
Total revenue . . . . . . . . . . . . . . . . . $ 247,295 $ 219,238
Net income available to common
shareholders before extraordinary items . . 60,242 54,071
Net income available to common
shareholders . . . . . . . . . . . . . . . . 60,167 54,071
Earnings per share available to common
shareholders - basic . . . . . . . . . . . . . $ 1.99 $ 1.79
Earnings per share available to common
shareholders - diluted . . . . . . . . . . . $ 1.96 $ 1.77
</TABLE>
3. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Deferred financing costs . . . . . . . . . . . $ 20,131 $ 18,915
Other . . . . . . . . . . . . . . . . . . . . . 2,822 1,156
---------- ----------
22,953 20,071
Less: accumulated amortization . . . . . . . . (10,324) (10,612)
---------- ----------
$ 12,629 $ 9,459
========== ==========
</TABLE>
39
<PAGE> 42
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4. NOTES PAYABLE
The Company's indebtedness consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Tax-exempt fixed rate bond indebtedness
(secured) . . . . . . . . . . . . . . . . . . . $ 13,298 $ 64,758
Conventional fixed rate (secured) . . . . . . . 16,956 21,881
Conventional floating rate (secured) . . . . . 21,725 14,400
Tax-exempt floating rate bond indebtedness
(secured) . . . . . . . . . . . . . . . . . . . 141,230 84,280
Senior notes (unsecured) . . . . . . . . . . . 306,000 225,000
Lines of credit (unsecured) . . . . . . . . . . 322,000 24,000
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . $ 821,209 $ 434,319
========= =========
</TABLE>
CONVENTIONAL MORTGAGES PAYABLE
Conventional mortgages payable were comprised of seven and three loans at
December 31, 1997 and 1996, respectively, each of which is collateralized by an
apartment community included in real estate assets. The mortgages payable are
generally due in monthly installments of interest only and mature at various
dates through 2014. The interest rates on the fixed rate mortgages payable
ranged from 7.375% to 10.00% at December 31, 1997. At December 31, 1997, the
interest rates on the variable rate mortgages payable were at a range from
1.65% to 1.90% above the London Interbank Offered Rate ("LIBOR"). At December
31, 1997, LIBOR ranged from 5.72% to 5.97% for one, three, six, and twelve
month indices.
TAX-EXEMPT BOND INDEBTEDNESS
Certain of the apartment communities are encumbered to secure tax-exempt
housing bonds. Such bonds are generally payable in monthly or semi-annual
installments of interest only and mature at various dates through 2025. The
interest rate on the fixed rate bond payable was 7.50% at December 31, 1997.
Floating rate indebtedness reissued in 1995 through 1997, bears interest at the
"AAA" non-AMT tax exempt rate, set weekly, which was 3.80% at December 31, 1997
(average of 3.67% for 1997). With respect to such bonds, the Company pays
certain credit enhancement fees of .575% of the amount of such bonds or the
amount of such letters of credit, as the case may be.
On June 29, 1995, the Company replaced the bank letters of credit providing
credit enhancement for twelve of its outstanding tax-exempt bonds and three of
its economically defeased tax-exempt bonds. Under an agreement with the Federal
National Mortgage Association ("FNMA"), FNMA now provides, directly or
indirectly through other bank letters of credit, credit enhancement for such
bonds. Under the terms of such agreement, FNMA has provided replacement credit
enhancement through 2025 for eleven bond issues, aggregating $141,230, which
were concurrently reissued, and has agreed, subject to certain conditions, to
provide credit enhancement through June 1, 2025 for up to an additional $94,650
($81,352 of which is currently defeased) with respect to four other bond issues
which mature and may be refunded during 1998. Under this agreement, on January
1, 1997, the Post F&M Villages, Post Vista and Post Lake (Orlando) bonds were
refunded in the amount of $76,000 (all of which had previously been defeased),
with issues enhanced by FNMA and maturing on June 1, 2025. The agreement with
FNMA contains representations, covenants, and events of default customary to
such secured loans.
40
<PAGE> 43
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
DEBT DEFEASED
The Company applied a portion of the net proceeds of its equity offerings in
1993 and 1994 to pay in full thirteen fixed rate obligations totaling $132,470
and economically defease in full six tax exempt bond financings totaling
$52,700. In addition, the Company paid $43,108 to partially prepay eleven
variable rate obligations and $51,956 to economically defease portions of eight
tax exempt bond financings. The above amounts do not include aggregate
prepayment penalties and defeasance escrow requirements in excess of principal
defeased of $18,077. The balance of debt fully or partially economically
defeased aggregated $81,352 at December 31, 1997.
LINES OF CREDIT
In December 1997, the Company added two banks to its syndicated line of credit
(the "Revolver"), increasing its capacity from $180,000 to $200,000. The
Revolver matures on May 1, 2000 and borrowings currently bear interest at LIBOR
plus .675% or prime minus .25%. The Revolver provides for the rate to be
adjusted up or down based on changes in the credit ratings on the Company's
senior unsecured debt. The Revolver also includes a money market competitive
bid option for short term funds up to $100,000 (increased in December 1997 from
$90,000) at rates below the stated line rate. The credit agreement for the
Revolver contains customary representations, covenants and events of default,
including covenants which restrict the ability of the Operating Partnership to
make distributions, in excess of stated amounts, which in turn restricts the
discretion of the Company to declare and pay dividends. In general, during any
fiscal year the Operating Partnership may only distribute up to 100% of the
Operating Partnership's consolidated income available for distribution (as
defined in the credit agreement) exclusive of distributions of up to $30,000 of
capital gains for such year. The credit agreement contains exceptions to these
limitations to allow the Operating Partnership to make distributions necessary
to allow the Company to maintain its status as a REIT. The Company does not
anticipate that this covenant will adversely affect the ability of the
Operating Partnership to make distributions, or the Company to declare
dividends, under the Company's current dividend policy.
On July 26, 1996, the Company closed a $20,000 unsecured line of credit with
Wachovia Bank of Georgia, N.A. (The "Cash Management Line"), which was fully
funded and used to pay down the outstanding balance on the Revolver. The Cash
Management Line bears interest at LIBOR plus .675% or prime minus .25% and has
a maturity date of June 26, 1998. The Revolver requires three days advance
notice to repay borrowings whereas this facility provides the Company with an
automatic daily sweep which applies all available cash to reduce the
outstanding balance.
On November 21, 1997, the Company closed on an aggregrate of $132,000 in bridge
loans (the "Bridge Loan") with three commercial banks. These notes bear
interest at LIBOR plus 1.04% for the first 30 days. From December 21, 1997
through maturity on May 20, 1998, these notes bear interest of LIBOR plus .92%.
Proceeds from these notes were used to pay down debt assumed in the Merger. On
February 20, 1998, the Company sold 3.5 million shares of common stock. Net
proceeds from this offering of $129.5 million were used to pay in full the
Bridge Loan and to repay other outstanding indebtedness.
At December 31, 1997, the outstanding balances on the Revolver, Bridge Loan and
Cash Management Line were $170,000, $132,000 and $20,000, respectively.
In addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.
SENIOR UNSECURED NOTES
On June 7, 1995, the Company issued $50,000 of unsecured senior notes with The
Northwestern Mutual Life Insurance Company. The notes were in two tranches: the
first, totaling $30,000, carries an interest rate of 8.21% per annum (1.25%
over the corresponding treasury rate on the date such rate was set) and matures
on June 7, 2000; and the second, totaling $20,000 carries an interest rate of
8.37% per annum (1.35% over the corresponding treasury rate on the date such
rate was set) and matures on June 7, 2002. Proceeds from the notes were used to
reduce other secured indebtedness and to pay down the Revolver. The note
agreements pursuant to which the notes were purchased contain customary
representations, covenants and events of default similar to those contained in
the note agreement for the Revolver.
41
<PAGE> 44
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
On September 30, 1996, the Company completed a $125,000 senior unsecured debt
offering comprised of two tranches. The first tranche, $100,000 of 7.25% Notes
due on October 1, 2003 (the "2003 Notes"), was priced at 99.642% to yield
7.316% per annum (.71% over the corresponding treasury rate on the date such
rate was set). The second tranche, $25,000 of 7.50% Notes due on October 1,
2006 (the "2006 Notes", and together with the 2003 Notes, the "Notes"), was
priced at 99.694% to yield 7.544% per annum (.83% over the corresponding
treasury rate on the date such rate was set). Proceeds from the Notes were
used to pay down existing indebtedness outstanding on the Revolver.
MEDIUM TERM NOTES
On January 29, 1997, the Company established a program for the sale of up to
$175,000 aggregate principal amount of Medium-Term Notes due nine months or
more from the date of issue (the "MTNs"). On October 20, 1997, the Company
increased the amount available under this program to $344 million.
The following table sets forth MTNs issued and outstanding as of December 31,
1997:
<TABLE>
<CAPTION>
ISSUE INTEREST MATURITY
DATE AMOUNT RATE DATE
---------------- ---------- --------------- ----------
<S> <C> <C> <C>
March 3, 1997 $ 30,000 LIBOR plus .25% 03/03/2000
March 31, 1997 37,000 7.02% 04/02/2001
March 31, 1997 13,000 7.30% 04/01/2004
September 22, 1997 10,000 6.69% 09/22/2004
September 22, 1997 25,000 6.78% 09/22/2005
September 26, 1997 16,000 6.22% 12/31/99
----------
$ 131,000
==========
</TABLE>
Proceeds from the MTNs were used to (i) prepay certain outstanding notes and
(ii) paydown existing indebtedness outstanding under the Company's revolving
line of credit (the "Revolver").
The aggregate maturities of the above conventional mortgages payable,
tax-exempt bond indebtedness, lines of credit and senior unsecured notes (after
giving effect to the refunding of the Post F&M Villages, Post Vista and Post
Lake (Orlando) bonds and the issuance of the MOPPRS(SM)) are as follows:
<TABLE>
<S> <C>
1998 . . . . . . . . . . . . . . . . . . . . . . . . . $ 165,048
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 37,725
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 130,000
2001 . . . . . . . . . . . . . . . . . . . . . . . . . 40,010
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Thereafter . . . . . . . . . . . . . . . . . . . . . . 428,426
----------
$ 821,209
==========
</TABLE>
42
<PAGE> 45
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
MandatOry Par Put Remarketed Securities
On March 12, 1998, the Operating Partnership issued $100 million of 6.85%
MandatOry Par Put Remarketed Securities(SM) ("MOPPRS(SM)"). The net proceeds
from the MOPPRS(SM) were used to repay outstanding indebtedness. As part of the
MOPPRS(SM) structure, Merrill Lynch & Co. purchased an option to remarket the
securities as of March 16, 2005. The Operating Partnership will have an
effective borrowing rate through the remarketing date of approximately 6.59%.
In anticipation of the offering, the Company entered into forward-treasury-lock
agreements in the fall of 1997. As a result of the termination of these
agreements, the effective borrowing rate will be approximately 6.85%, the
coupon rate on the MOPPRS(SM).
PLEDGED ASSETS
The aggregate net book value at December 31, 1997 of property pledged as
collateral for indebtedness amounted to approximately $297,763.
EXTRAORDINARY ITEM
The extraordinary item for the year ended December 31, 1997 and 1995 resulted
from the write-off of deferred financing costs on the mortgage debt satisfied.
The extraordinary item is net of minority interest ($18 and $250) of the
unitholders calculated on the basis of weighted average units and common shares
outstanding for the year ended December 31, 1997 and 1995, respectively.
5. INCOME TAXES
The Company has elected to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended (the "Code") commencing with the taxable year ended
December 31, 1993. In order for the Company to qualify as a REIT, it must
distribute annually at least 95% of its REIT taxable income, as defined in the
Code, to its shareholders and satisfy certain other requirements. As a result,
the Company generally will not be subject to Federal income taxation at the
corporate level on the income it distributes to the shareholders. Although Post
Properties, Inc. has elected to be taxed as a REIT, Post Services, Inc. ("Post
Services") was formed as a subsidiary of the Operating Partnership to provide
through its subsidiaries asset management, leasing and landscaping services to
third parties. The consolidated taxable income of Post Services, if any, will
be subject to tax at regular corporate rates.
As of December 31, 1997, the net basis for Federal income tax purposes, taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership and including minority interest in the
Operating Partnership, was lower than the net assets as reported in the
Company's consolidated financial statements by $54,896.
6. RELATED PARTY TRANSACTIONS
The Company provides landscaping services for executive officers, employees,
directors and other related parties. For the years ended December 31, 1997,
1996 and 1995, the Company received landscaping fees of $670, $1,391 and $1,758
for such services. These amounts include reimbursements of direct expenses in
the amount of $138, $729 and $1,111 which are not included in landscape
services revenue; accordingly, these transactions resulted in the Company
recording landscape services net fees in excess of direct expenses of $532,
$662 and $647 in the accompanying financial statements for the years ended
December 31, 1997, 1996 and 1995, respectively.
The Company provides accounting and administrative services to entities
controlled by certain executive officers of the Company. Fees under this
arrangement aggregated $25, $25 and $32 for the years ended December 31, 1997,
1996 and 1995, respectively.
43
<PAGE> 46
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The Company was contracted to assist in the development of apartment complexes
constructed by a former executive and current shareholder. Fees under this
arrangement were $326, $363 and $317 for the years ended December 31, 1997,
1996 and 1995, respectively.
On May 22, 1995, the Company purchased for a nominal amount the outstanding
capital stock of A.T. Aviation, Inc. ("A.T. Aviation"), an entity formed and
owned by John A. Williams, Chairman of the Board of Directors of the Company,
and John T. Glover, President and a Director of the Company. In connection with
the acquisition, the Company assumed certain obligations of A.T. Aviation. At
the time of the acquisition, A.T. Aviation had entered into a purchase
agreement for a used aircraft, leased certain property improvements related
thereto, and obtained a line of credit in the amount of $7,500 to fund such
acquisitions. In connection with the acquisition, the Company assumed and
repaid such line of credit, which had been guaranteed by such officers, and
such line and guarantees were terminated.
On October 15, 1996, the Company exercised its option to purchase land from
unitholders of the Operating Partnership. In exchange for the land, the Company
issued 138,150 units of the Operating Partnership to the unitholders.
7. EMPLOYEE BENEFIT PLANS
The employees of the Company are participants in a defined contribution plan
pursuant to Section 401 of the Internal Revenue Code. Beginning in 1996,
Company contributions, if any, to this plan are based on the performance of the
Company and are allocated to each participant based on the relative
contribution of the participant to the total contributions of all participants.
For purposes of allocating the Company contribution, the maximum employee
contribution included in the calculation is 3% of salary. Company contributions
of $158 and $251 were made in 1997 and 1996, respectively.
During 1995, the Company adopted the Employee Stock Purchase Plan ("ESPP") to
encourage stock ownership by eligible directors and employees. To participate
in the ESPP, (i) directors must not be employed by the Company or the Operating
Partnership and must have been a member of the Board of Directors for at least
one month and (ii) an employee must have been employed full or part-time by the
Company or the Operating Partnership for at least one month. The purchase price
of shares of Common Stock under the ESPP is equal to 85% of the lesser of the
closing price per share of Common Stock on the first or last day of the trading
period, as defined.
8. DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of the
Company. Under the DRIP, shareholders may elect for their dividends to be used
to acquire additional shares of the Company's Common Stock directly from the
Company, for 95% of the market price on the date of purchase.
9. STOCK-BASED COMPENSATION PLANS
STOCK COMPENSATION PLANS
At December 31, 1997, the Company had two stock-based compensation plans, the
Employee Stock Plan (the "Stock Plan"), the Employee Stock Purchase Plan (the
"ESPP") and, under the Stock Plan, a stock grant program (the "Grant Plan") as
described below. The Company applies APB Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, based upon the
criteria of APB Opinion 25 no compensation cost is required to be recognized
for the Stock Plan and the ESPP. The compensation cost which is required to be
charged against income for the Grant Plan was, $209 and $129 for 1997 and 1996,
respectively. Had compensation cost for the Company's Stock Plan and ESPP been
determined based on the fair value at the grant dates for awards under the
Plans consistent with the method of FASB Statement 123, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:
44
<PAGE> 47
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- --------
<S> <C> <C> <C> <C>
Net income available to common
shareholders As reported . . . $ 49,965 $ 42,406 $ 29,118
Pro forma . . . . $ 49,579 $ 40,488 $ 28,771
Net income per common share - basic As reported . . . $ 2.11 $ 1.95 $ 1.58
Pro forma . . . . $ 2.10 $ 1.86 $ 1.57
Net income per common share - diluted
As reported . . . $ 2.09 $ 1.94 $ 1.58
Pro forma . . . . $ 2.08 $ 1.85 $ 1.56
</TABLE>
For purposes of the pro forma presentation, the fair value of each option grant
is estimated as of the date of grant using the Black-Scholes option-pricing
model. The weighted-average of all assumptions used in the calculation for
various grants under all of the Company's plans during 1997, 1996 and 1995, are
as follows: dividend yield of 6.5 percent for 1997, 5.4 percent 1996 and 6.2
percent for 1995; expected volatility of 14.5 percent for all years; risk- free
interest rates ranging from 5.5 to 5.6 percent for 1997, 5.4 to 5.7 percent for
1996 and 5.5 to 7.3 percent for 1995; and expected lives ranging from 5 to 7
years for all years.
FIXED STOCK OPTION PLANS
Under the Stock Plan, the Company may grant options to its employees and
directors for up to 3,500,000 shares of common stock. Of this amount, 550,000
shares are available for grants of restricted stock. Options granted to any
key employee or officer cannot exceed 50,000 shares a year. The exercise price
of each option equals the market price on the date of grant and all options
have a maximum term of ten years from the grant date.
A summary of the status of the Company's Stock Plan as of December 31, 1997 and
1996, changes during the years then ended, and the weighted-average fair value
of options granted during the years is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------------------------------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FIXED OPTIONS
Outstanding at beginning of year . . 864,105 $ 31 601,366 $ 31 353,344 $ 31
Granted . . . . . . . . . . . . . . . 243,946 39 310,067 32 251,383 30
Converted in connection with the
Merger . . . . . . . . . . . . . . . 1,192,230 30 -- -- -- --
Exercised . . . . . . . . . . . . . . (49,406) 31 (18,993) 31 (361) 28
Forfeited . . . . . . . . . . . . . . (13,324) 38 (28,335) 31 (3,000) 30
--------- -------- --------
Outstanding at end of year . . . . . 2,237,551 31 864,105 31 601,366 31
========= ======== ========
Options exercisable at year-end . . . 2,000,279 797,830 238,188
========= ======== ========
Weighted-average fair value of options
granted during the year . . . . . . $ 2.85 $ 3.47 $ 3.59
========= ======== ========
</TABLE>
At December 31, 1997, the range of exercise prices for options outstanding was
$28 - $41 and the weighted average remaining contractual life was 7 years.
45
<PAGE> 48
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
10. COMMITMENTS AND CONTINGENCIES
LAND, OFFICE AND EQUIPMENT LEASES
The Company is party to two ground leases relating to an operating community
with terms expiring in years 2040 and 2043, one ground lease for a community
under development with terms expiring in year 2038 and to office, equipment and
other operating leases with terms expiring in years 1997 through 2004. Future
minimum lease payments for noncancellable land, office, equipment and other
leases at December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998 . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,296
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 2,186
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 1,090
2001 . . . . . . . . . . . . . . . . . . . . . . . . . 804
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 202
2003 and thereafter . . . . . . . . . . . . . . . . . . 6,562
</TABLE>
The Company incurred $3,366, $2,172 and $2,034 of rent expense for the years
ended December 31, 1997, 1996 and 1995, respectively.
CONTINGENCIES
The Company is party to various legal actions which are incidental to its
business. Management believes that these actions will not have a material
adverse affect on the consolidated balance sheets and statements of operations.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company could realize on disposition
of the financial instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Cash equivalents, rents and landscape service receivables, interest rate
protection agreement, accounts payable, accrued expenses, notes payable and
other liabilities are carried at amounts which reasonably approximate their
fair values.
The fair values of treasury lock arrangements (used for hedging purposes) are
estimated by obtaining quotes from an investment broker. At December 31, 1997,
there were no carrying amounts related to these arrangements in the
consolidated balance sheet. As of December 31, 1997, the expected cost to
settle these contracts was approximately $5,300.
Disclosure about fair value of financial instruments are based on pertinent
information available to management as of December 31, 1997. Although
management is not aware of any factors that would significantly affect the
reasonable fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and current
estimates of fair value may differ significantly from the amounts presented
herein.
46
<PAGE> 49
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
12. EARNINGS PER SHARE
For the years ended December 31, 1997, 1996 and 1995, basic and diluted
earnings per common share for income before extraordinary item, net of
preferred dividends, and net income available to common shareholders before
extraordinary item has been computed as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 1997
----------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------- -------------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . . . . . . . . . . . . $ 54,947
Less: Preferred stock dividends . . . . . . . . . . . . . . . . . . (4,907)
----------
BASIC EPS
Income available to common shareholders before extraordinary item . 50,040 23,664,044 $ 2.11
==========
EFFECT OF DILUTIVE SECURITIES
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 223,862
---------- -----------
DILUTED EPS
Income available to common shareholders + assumed
conversions before extraordinary item . . . . . . . . . . . . . $ 50,040 23,887,906 $ 2.09
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 1996
---------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------- -------------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . . . . . . . . . . . . $ 43,469
Less: Preferred stock dividends . . . . . . . . . . . . . . . . . . (1,063)
----------
BASIC EPS
Income available to common shareholders before extraordinary item . 42,406 21,787,648 $ 1.95
==========
EFFECT OF DILUTIVE SECURITIES
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 91,600
---------- -----------
DILUTED EPS
Income available to common shareholders + assumed
conversions before extraordinary item . . . . . . . . . . . . . $ 42,406 21,879,248 $ 1.94
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 1995
----------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------ ------------- -------------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . . . . . . . . . . . . $ 29,988
Less: Preferred stock dividends . . . . . . . . . . . . . . . . . . --
-----------
BASIC EPS
Income available to common shareholders before extraordinary item . 29,988 18,382,299 $ 1.63
===========
EFFECT OF DILUTIVE SECURITIES
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 5,595
----------- -----------
DILUTED EPS
Income available to common shareholders + assumed
conversions before extraordinary item . . . . . . . . . . . . . $ 29,988 18,387,894 $ 1.63
=========== =========== ===========
</TABLE>
47
<PAGE> 50
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
13. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the years ended December 31,
1997, 1996 and 1995 are as follows:
(a) On the date of the Second Offering and Third Offering, holders of
5,401,185 and 5,139,243 Units of the Operating Partnership, respectively,
were allocated capital on a pro rata basis in proportion to their Units
over total Units outstanding in the Operating Partnership. During 1997,
1996 and 1995, holders of 6,519, 54,400 and 97,201 Units in the Operating
Partnership, respectively, exercised their option to convert their units to
shares of the Company on a one-for-one basis. During 1996 the Company
exercised its option to purchase land in exchange for 138,150 Units of the
Operating Partnership. The net effect of the capital allocated to the
unitholders of the Operating Partnership on the dates of the offerings, the
subsequent conversion of Units of the Operating Partnership to shares of
the Company, the adjustments to minority interest for the dilutive impact
of the Dividend Reinvestment and Employee Stock Purchase Plans and the
issuance of Units of the Operating Partnership in exchange for land was a
reclassification increasing minority interest and decreasing shareholders'
equity in the amount of $30,245, $2,680 and $10,598 for the years ended
December 31, 1997, 1996 and 1995, respectively.
(b) The Operating Partnership committed to distribute $21,327, $14,659 and
$13,091 for the quarters ended December 31, 1997, 1996 and 1995,
respectively. As a result, the Company declared dividends of $18,221,
$11,838 and $10,573 for the quarters ended December 31, 1997, 1996 and
1995, respectively. The remaining distributions from the Operating
Partnership in the amount of $3,104, $2,821 and $2,518 for the quarters
ended December 31, 1997, 1996 and 1995, respectively, are distributed to
minority interest unitholders in the Operating Partnership.
(c) The Merger was a stock for stock transaction. In connection with the
Merger, the cash and non-cash components were are follows:
<TABLE>
<S> <C>
Fair value of assets acquired . . . . . . . . . . . . . $ 643,268
Less:
Value of stock issued in exchange for
stock of Columbus . . . . . . . . . . . . . . . . . 338,353
Liabilities assumed . . . . . . . . . . . . . . . . 285,852
Cash acquired . . . . . . . . . . . . . . . . . . . 1,329
-----------
Cash component of purchase price, net of
cash acquired . . . . . . . . . . . . . . . . . . . $ 17,734
===========
</TABLE>
48
<PAGE> 51
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997*
-------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $ 44,566 $46,114 $47,514 $61,922
Net income before net gain(loss) on sale of
assets,
loss on relocation of corporate office, and
minority interest of unitholders in Operating
Partnership . . . . . . . . . . . . . . . . 14,156 14,448 15,783 19,923
Net gain(loss) on sale of assets -- 3,512 -- (242)
Loss on relocation of corporate office . . . . -- -- -- (1,500)
Minority interest of unitholders in Operating
Partnership . . . . . . . . . . . . . . . . (2,515) (3,236) (2,811) (2,569)
Net income . . . . . . . . . . . . . . . . . . 11,566 14,724 12,972 15,612
Dividends to preferred shareholders . . . . . . (1,063) (1,062) (1,062) (1,720)
Net income available to common shareholders . . 10,503 13,662 11,910 13,892
Earnings per common share:
Net income available to common
shareholders - basic . . . . . . . . . . . . 0.48 0.62 0.54 0.49
Net income available to common
shareholders - diluted . . . . . . . . . . . 0.47 0.62 0.53 0.48
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996*
--------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $ 39,205 $42,578 $ 44,699 $ 44,335
Net income before net gain on sale of assets
and minority interest of unitholders in
Operating Partnership . . . . . . . . . . . 12,432 12,443 13,423 14,301
Net gain on sale of assets -- -- 854 --
Minority interest of unitholders in Operating
Partnership . . . . . . . . . . . . . . . . (2,386) (2,360) (2,696) (2,542)
Net income . . . . . . . . . . . . . . . . . . 10,046 10,083 11,581 11,759
Dividends to preferred shareholders . . . . . . -- -- -- (1,063)
Net income available to common shareholders . . 10,046 10,083 11,581 10,696
Earnings per common share:
Net income available to common
shareholders - basic . . . . . . . . . . . . 0.46 0.46 0.53
Net income available to common
shareholders - diluted . . . . . . . . . . . 0.46 0.46 0.53 0.48
</TABLE>
- --------------
* The total of the four quarterly amounts for minority interest of unitholders
in Operating Partnership, extraordinary item, net income and earnings per
share may not equal the total for the year. These differences result from the
use of a weighted average to compute minority interest in the Operating
Partnership and average number of shares outstanding.
49
<PAGE> 52
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Post Apartment Homes, L.P.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a) 1. and 2. on page 31 present fairly, in all material
respects, the financial position of Post Apartment Homes, L.P. at December 31,
1997 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the management of Post Apartment Homes, L.P.; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Atlanta, Georgia
March 20, 1998
50
<PAGE> 53
POST APARTMENT HOMES, L.P.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Real estate assets
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 234,011 $ 150,072
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,255,118 730,518
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 89,251 74,120
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342,071 140,437
Land held for future development . . . . . . . . . . . . . . . . . . . . . . . . . 15,560 14,195
----------- ----------
1,936,011 1,109,342
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . (201,095) (177,672)
----------- ----------
Operating real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,734,916 931,670
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,879 233
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,542 1,148
Deferred charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,629 9,459
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,597 16,165
----------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,780,563 $ 958,675
=========== ==========
LIABILITIES AND PARTNERS' EQUITY
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 821,209 $ 434,319
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,505 4,264
Distribution payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,327 14,659
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 53,101 17,915
Security deposits and prepaid rents . . . . . . . . . . . . . . . . . . . . . . . . . 8,117 5,084
----------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911,259 476,241
----------- ----------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partners' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 869,304 482,434
----------- ----------
Total liabilities and partners' equity . . . . . . . . . . . . . . . . . . . . $ 1,780,563 $ 958,675
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
51
<PAGE> 54
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES
Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 186,126 $ 158,618 $ 133,817
Property management - third party . . . . . . . . . . . . . . . . . . . 2,421 2,828 2,764
Landscape services - third party . . . . . . . . . . . . . . . . . . . 5,120 4,834 4,647
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 326 593
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,360 4,969 2,884
---------- ----------- ----------
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,116 171,575 144,705
---------- ----------- ----------
Expenses
Property operating and maintenance (exclusive of items
shown separately below) . . . . . . . . . . . . . . . . . . . . . . . 67,519 58,202 49,912
Depreciation (real estate assets) . . . . . . . . . . . . . . . . . . . 27,991 22,676 20,127
Depreciation (non-real estate assets) . . . . . . . . . . . . . . . . . 1,057 927 692
Property management . . . . . . . . . . . . . . . . . . . . . . . . . . 1,956 2,055 2,166
Landscape services . . . . . . . . . . . . . . . . . . . . . . . . . . 4,284 3,917 3,950
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,658 22,131 22,698
Amortization of deferred loan costs . . . . . . . . . . . . . . . . . . 980 1,352 1,967
General and administrative . . . . . . . . . . . . . . . . . . . . . . 7,363 7,716 6,071
Minority interest in consolidated property partnership . . . . . . . . -- -- 451
---------- ----------- ----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,808 118,976 108,034
---------- ----------- ----------
Income before net gain on sale of assets, loss on relocation
of corporate office, and extraordinary item . . . . . . . . . . . . . 64,308 52,599 36,671
Net gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . 3,270 854 1,746
Loss on relocation of corporate office . . . . . . . . . . . . . . . . (1,500) -- --
---------- ----------- ----------
Income before extraordinary item . . . . . . . . . . . . . . . . . . . 66,078 53,453 38,417
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . (93) -- (1,120)
---------- ----------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,985 53,453 37,297
Distribution to preferred Unitholders . . . . . . . . . . . . . . . . . (4,907) (1,063) --
---------- ----------- ----------
Net income available to common Unitholders . . . . . . . . . . . . . . $ 61,078 $ 52,390 $ 37,297
========== =========== ==========
EARNINGS PER COMMON UNIT - BASIC
Income before extraordinary item (net of preferred distributions) . . $ 2.11 $ 1.95 $ 1.63
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- (0.05)
---------- ----------- ----------
Net income available to common Unitholders . . . . . . . . . . . . . . $ 2.11 $ 1.95 $ 1.58
---------- =========== ==========
Weighted average common Units outstanding . . . . . . . . . . . . . . 28,880,928 26,917,723 23,541,639
========== =========== ==========
Distributions declared . . . . . . . . . . . . . . . . . . . . . . . . $ 2.38 $ 2.16 $ 1.96
========== =========== ==========
EARNINGS PER COMMON UNIT - DILUTED
Income before extraordinary item (net of preferred distributions) . . $ 2.09 $ 1.94 $ 1.63
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- (0.05)
---------- ----------- ----------
Net income available to common Unitholders . . . . . . . . . . . . . . $ 2.09 $ 1.94 $ 1.58
========== =========== ==========
Weighted average common Units outstanding . . . . . . . . . . . . . . 29,104,790 27,009,323 23,547,234
========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
52
<PAGE> 55
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER PARTNERS TOTAL
-------- --------- -----
<S> <C> <C> <C>
PARTNERS' EQUITY, DECEMBER 31, 1994 . . . . . . . . . . . . $ 3,527 $ 309,840 $313,367
Contribution from PPI related to Third Offering . . . . . . 1,053 104,225 105,278
Contribution from PPI related to Dividend Reinvestment Plan 161 16,010 16,171
Distributions paid . . . . . . . . . . . . . . . . . . . . (335) (33,198) (33,533)
Distributions declared to common Unitholders . . . . . . . (131) (12,960) (13,091)
Net income . . . . . . . . . . . . . . . . . . . . . . . . 373 36,924 37,297
------- --------- --------
PARTNERS' EQUITY, DECEMBER 31, 1995 . . . . . . . . . . . . 4,648 420,841 425,489
Contributions from PPI related to Preferred Shares . . . . 486 48,127 48,613
Acquisition of real estate through issuance of Units . . . 51 5,040 5,091
Contributions from PPI related to Dividend Reinvestment
and Employee Stock Purchase Plans . . . . . . . . . . . . 90 8,944 9,034
Distributions to preferred Unitholders . . . . . . . . . . (11) (1,052) (1,063)
Distributions to common Unitholders . . . . . . . . . . . . (435) (43,089) (43,524)
Distributions declared to common Unitholders . . . . . . . (147) (14,512) (14,659)
Net income . . . . . . . . . . . . . . . . . . . . . . . . 534 52,919 53,453
------- --------- --------
PARTNERS' EQUITY, DECEMBER 31, 1996 . . . . . . . . . . . . 5,216 477,218 482,434
Contributions from PPI related to Preferred Shares . . . . 483 47,808 48,291
Common units issued in connection with Merger . . . . . . . 3,384 334,969 338,353
Contributions from PPI related to Dividend Reinvestment
and Employee Stock Purchase Plans . . . . . . . . . . . . 91 9,039 9,130
Distributions to preferred Unitholders . . . . . . . . . . (49) (4,858) (4,907)
Distributions to common Unitholders . . . . . . . . . . . . (487) (48,172) (48,659)
Distributions declared to common Unitholders . . . . . . . (213) (21,110) (21,323)
Net income . . . . . . . . . . . . . . . . . . . . . . . . 660 65,325 65,985
------- --------- --------
PARTNERS' EQUITY, DECEMBER 31, 1997 . . . . . . . . . . . . $ 9,085 $ 860,219 $869,304
======= ========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
53
<PAGE> 56
POST APARTMENT HOMES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,985 $ 53,453 $ 37,297
Adjustments to reconcile net income to net cash provided
by operating activities:
Net gain on sale of assets . . . . . . . . . . . . . . . . . . . . . (3,270) (854) (1,746)
Loss on relocation of corporate office . . . . . . . . . . . . . . . 1,500 -- --
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . 93 -- --
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,048 23,603 20,819
Write-off of deferred financing costs . . . . . . . . . . . . . . . . (93) -- 1,120
Amortization of deferred loan costs . . . . . . . . . . . . . . . . . 980 1,352 1,967
Changes in assets, (increase) decrease in:
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . (394) (2) 7,211
Organization costs and other deferred charges . . . . . . . . . . . -- 1,589 (90)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,797 (3,281) (9,122)
Changes in liabilities, increase (decrease) in:
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . 2,172 299 (1,171)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . 1,341 2,089 868
Security deposits and prepaid rents . . . . . . . . . . . . . . . . 395 718 213
----------- ----------- ----------
Net cash provided by operating activities . . . . . . . . . . . . . . 109,554 78,966 57,366
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction and acquisition of real estate assets,
net of payables . . . . . . . . . . . . . . . . . . . . . . . . . . (190,810) (168,885) (117,120)
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . 25,402 12,285 22,645
Acquisition of Columbus Realty Trust, net of cash acquired . . . . . (17,734) -- --
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . (9,567) (4,443) (5,653)
Recurring capital expenditures . . . . . . . . . . . . . . . . . . . (3,675) (2,961) (1,700)
Corporate capital expenditures . . . . . . . . . . . . . . . . . . . (3,220) (820) (1,267)
Non-recurring capital expenditures . . . . . . . . . . . . . . . . . (605) (1,429) (428)
Revenue generating capital expenditures . . . . . . . . . . . . . . . (8,168) (509) (859)
Purchase of minority interests in property partnerships . . . . . . . -- -- (10,149)
----------- ----------- ----------
Net cash used in investing activities . . . . . . . . . . . . . . . . (208,377) (166,762) (114,531)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of financing costs . . . . . . . . . . . . . . . . . . . . . (4,208) (3,986) (4,614)
Debt proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688,564 236,833 362,196
Debt payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (564,085) (277,233) (374,523)
Offering proceeds, net of underwriters discount and offering costs . -- 123,438 105,278
Proceeds from contributions from PPI related to Preferred Shares . . 48,291 48,613 --
Proceeds from contributions from PPI related to Dividend
Reinvestment Plan . . . . . . . . . . . . . . . . . . . . . . . . . 9,130 9,034 16,171
Capital distributions to preferred Unitholders . . . . . . . . . . . (4,907) (1,063) --
Capital distributions to common Unitholders . . . . . . . . . . . . . (63,316) (56,615) (43,627)
----------- ----------- ----------
Net cash provided by financing activities . . . . . . . . . . . . . . 109,469 79,021 60,881
----------- ----------- ----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . 10,646 (8,775) 3,716
Cash and cash equivalents, beginning of period . . . . . . . . . . . 233 9,008 5,292
----------- ----------- ----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . $ 10,879 $ 233 $ 9,008
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
54
<PAGE> 57
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
1. ORGANIZATION AND FORMATION OF THE COMPANY
ORGANIZATION AND FORMATION OF THE COMPANY
Post Apartment Homes, L.P. (the "Operating Partnership"), a Georgia limited
partnership, was formed on January 22, 1993, to conduct the business of
developing, leasing and managing upscale multi-family apartment communities for
its general partner, Post Properties, Inc. (the "Company"). The Operating
Partnership, through its operating divisions and subsidiaries, is the entity
through which all of the Company's operations are conducted.
The Company elected to be taxed as a real estate investment trust ("REIT") for
Federal income tax purposes beginning with the year ended December 31, 1993. A
REIT is a legal entity which holds real estate interest and, through payments
of dividends to shareholders, in practical effect is not subject to Federal
income taxes at the corporate level.
The Operating Partnership currently owns and manages or is in the process of
developing apartment communities located in the Atlanta, Dallas, Tampa,
Orlando, Northern Virginia, Nashville, Houston, Denver and Charlotte
metropolitan areas. At December 31, 1997, approximately 53.1% and 23.2% (on a
unit basis) of the Operating Partnership communities are located in the Atlanta
and Dallas metropolitan areas, respectively.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the consolidated
accounts of the Operating Partnership and the Company. All significant
intercompany accounts and transactions have been eliminated in consolidation.
See Note 2 related to the acquisition of Columbus Realty Trust.
Certain items in the Consolidated Financial Statements were reclassified for
comparative purposes.
ACCOUNTING CHANGES
In the fourth quarter of 1997, the Operating Partnership adopted Statement of
Financial Accounting Standards ("SFAS") 128, "Earnings per Share," which
requires the dual presentation of basic and diluted earnings per share ("EPS")
on the face of the income statement for all entities with complex capital
structures. It also requires a reconciliation of the numerator and denominator
of the basic EPS computation to the numerator and denominator of the diluted
EPS computation. Since each Unit may be redeemed by the holder thereof for
either one share of common stock or cash equal to the fair market value thereof
at the time of the such redemption, at the option of the Company, the Operating
Partnership applies the requirements of SFAS 128 to its calculations of its per
Unit information. All prior period per Unit data presented in the consolidated
financial statements was restated in accordance with the provisions of this
statement.
NEW ACCOUNTING PRONOUNCEMENTS
In the first quarter of 1998, the Operating Partnership is required to adopt
SFAS No. 130, "Reporting Comprehensive Income." This statement establishes
standards for reporting and disclosing comprehensive income and its components.
Besides net income, SFAS No. 130 requires the reporting of other comprehensive
income, defined as revenues, expenses, gains and losses that under generally
accepted accounting principles are not included in net income. As of December
31, 1997, the Operating Partnership had no items of other comprehensive income
and, as a result; management does not believe this statement will result in
significant changes to its current disclosures.
In the first quarter of 1998, the Operating Partnership is required to adopt
SFAS No. 131, "Disclosure About Segments of an Enterprise and Related
Information." This statement establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in its interim financial reports issued to
Unitholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated by the chief decision
maker in deciding how to allocate resources and in assessing performance. FAS
No. 131 also allows the aggregation of segments which meet certain criteria.
Management believes its current disclosure contained within the "Management's
Discussion on Analysis of Financial Condition and Results of Operations"
section of its interim reports on SEC Form 10Q and annual report on SEC Form
10K comply with most of the requirements of SFAS 131. As a result, management
does not believe the adoption of SFAS 131 will significantly affect its
financial statement disclosures.
55
<PAGE> 58
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
REAL ESTATE ASSETS AND DEPRECIATION
Real estate assets are stated at the lower of depreciated cost or fair value,
if deemed impaired. Ordinary repairs and maintenance are expensed as incurred;
major replacements and betterments are capitalized and depreciated over their
estimated useful lives. Depreciation is computed on a straight-line basis over
the useful lives of the properties (buildings and components and related land
improvements -- 20-40 years; furniture, fixtures and equipment -- 5 - 10
years).
REVENUE RECOGNITION
Rental -- Residential properties are leased under operating leases with terms
of generally one year or less. Rental income is recognized when earned, which
is not materially different from revenue recognition on a straight line basis.
Property management and landscaping services -- Income is recognized when
earned for property management and landscaping services provided to third
parties.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, all investments purchased with an
original maturity of three months or less are considered to be cash
equivalents.
RESTRICTED CASH
Restricted cash generally is comprised of resident security deposits for
communities located in Florida and Tennessee and required maintenance reserves
for communities located in DeKalb County, Georgia.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized using the interest method over the terms
of the related debt.
INTEREST AND REAL ESTATE TAXES
Interest and real estate taxes incurred during the construction period are
capitalized and depreciated over the lives of the constructed assets. Interest
paid (including capitalized amounts of $9,567, $4,443 and $5,653 during 1997,
1996 and 1995, respectively, and interest rate protection receipts of $296,
$830 and $1,539 during 1997, 1996 and 1995, respectively) aggregated $39,815,
$31,563 and $28,343 for the years ended December 31, 1997, 1996 and 1995,
respectively.
DERIVATIVES
The Operating Partnership may enter into various treasury lock arrangements
from time to time in anticipation of a specific debt transaction. These
arrangements are used to manage the Operating Partnership's exposure to
fluctuations in interest rates. The Operating Partnership does not utilize
these arrangements for trading or speculative purposes. These arrangements,
considered qualifying hedges, are not recorded in the financial statements
until the debt transaction is consummated and the arrangement is settled. The
proceeds or payments resulting from the settlement of the arrangement are
deferred and amortized over the life of the debt as an adjustment to interest
expense.
As of December 31, 1997, the Operating Partnership had entered into 9 treasury
locks arrangements with various financial institutions with an aggregate
notional amount of $200,000. The notional amounts are used to measure the
proceeds to be received or payments to be made upon settlement of the
arrangement and do not represent the amount of exposure to credit loss. The
counterparties to these arrangements are various financial institutions of high
credit quality; therefore, the risk of nonperformance by the counterparties is
considered to be negligible. The arrangements are tied to treasury bills
ranging from 5-10 year terms and yields of 6.051% to 6.327%. At December 31,
1997, the expected cost to settle these arrangements was approximately $5,300.
Premiums paid to purchase interest rate protection agreements are capitalized
and amortized over the terms of those agreements using the interest method.
Unamortized premiums are included in other assets in the consolidated balance
sheet. Amounts receivable under the interest rate protection agreements are
accrued as a reduction of interest expense.
56
<PAGE> 59
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
PER UNIT DATA
Basic earnings per common Unit with respect to the Operating Partnership for
the years ended December 31, 1997, 1996 and 1995 is computed based upon the
weighted average number of units outstanding during the period. Diluted
earnings per common Unit is based upon the weighted average number of Units
outstanding during the period and includes the effect of the potential issuance
of additional Units if stock options were exercised or converted into common
stock of the Company.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. ACQUISITION OF COLUMBUS REALTY TRUST
On October 24, 1997, Columbus Realty Trust ("Columbus") a Texas real estate
investment trust, was merged in to a wholly owned subsidiary of the Company
(the "Merger"). At the time of the Merger, Columbus was operating 26 completed
communities containing 6,296 apartment units and had an additional 5
communities under development that will contain 1,243 apartment units upon
completion located in Dallas and Houston, Texas. Pursuant to the merger
agreement, each outstanding share of Columbus common stock was converted into
.615 shares of common stock of the Company, which resulted in the issuance of
approximately 8.4 million shares of common stock of the Company. The total
purchase price including liabilities assumed was $643,268. The Merger was
accounted for as a purchase. Under the purchase method of accounting, the
assets acquired and liabilities assumed of Columbus were recorded at their
estimated fair market values and its results of operations have been included
in the accompanying consolidated statements of operations from the date of the
acquisition, October 24, 1997, through year-end. Unaudited, supplemental
pro-forma information, assuming the acquisition had occurred on January 1,
1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Total revenue . . . . . . . . . . . . . . . . . $247,295 $219,238
Net income available to common
unitholders before extraordinary items . . 69,978 63,241
Net income available to common
unitholders . . . . . . . . . . . . . . . . 69,885 63,241
Earnings per unit available to common
unitholders - basic . . . . . . . . . . . . . . $ 1.99 $ 1.79
Earnings per unit available to common
unitholders - diluted . . . . . . . . . . . $ 1.96 $ 1.77
</TABLE>
3. DEFERRED CHARGES
Deferred charges consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Deferred financing costs . . . . . . . . . . . $ 20,131 $ 18,915
Other . . . . . . . . . . . . . . . . . . . . . 2,822 1,156
---------- ----------
22,953 20,071
Less: accumulated amortization . . . . . . . . (10,324) (10,612)
---------- ----------
$ 12,629 $ 9,459
========== ==========
</TABLE>
57
<PAGE> 60
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
4. NOTES PAYABLE
The Operating Partnership's indebtedness consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1997 1996
------------- ------------
<S> <C> <C>
Tax-exempt fixed rate bond indebtedness
(secured) . . . . . . . . . . . . . . . . . . . $ 13,298 $ 64,758
Conventional fixed rate (secured) . . . . . . . 16,956 21,881
Conventional floating rate (secured) . . . . . 21,725 14,400
Tax-exempt floating rate bond indebtedness 141,230 84,280
(secured) . . . . . . . . . . . . . . . . . . .
Senior notes (unsecured) . . . . . . . . . . . 306,000 225,000
Lines of credit (unsecured) . . . . . . . . . . 322,000 24,000
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . $ 821,209 $ 434,319
========= =========
</TABLE>
CONVENTIONAL MORTGAGES PAYABLE
Conventional mortgages payable were comprised of seven and three loans at
December 31, 1997 and 1996, respectively, each of which is collateralized by an
apartment community included in real estate assets. The mortgages payable are
generally due in monthly installments of interest only and mature at various
dates through 2014. The interest rates on the fixed rate mortgages payable
ranged from 7.375% to 10.00% at December 31, 1997. At December 31, 1997, the
interest rates on the variable rate mortgage payable were at a range from 1.65%
to 1.90% above the London Interbank Offered Rate ("LIBOR"). At December 31,
1997, LIBOR ranged from 5.72% to 5.97% for one, three, six, and twelve month
indices.
TAX-EXEMPT BOND INDEBTEDNESS
Certain of the apartment communities are encumbered to secure tax-exempt
housing bonds. Such bonds are generally payable in monthly or semi-annual
installments of interest only and mature at various dates through 2025. The
interest rate on the fixed rate bond payable was 7.50% at December 31, 1997.
Floating rate indebtedness reissued in 1995 through 1997, bears interest at the
"AAA" non-AMT tax exempt rate, set weekly, which was 3.80% at December 31, 1997
(average of 3.67% for 1997). With respect to such bonds, the Operating
Partnership pays certain credit enhancement fees of .575% of the amount of such
bonds or the amount of such letters of credit, as the case may be.
On June 29, 1995, the Operating Partnership replaced the bank letters of credit
providing credit enhancement for twelve of its outstanding tax-exempt bonds and
three of its economically defeased tax-exempt bonds. Under an agreement with
the Federal National Mortgage Association ("FNMA"), FNMA now provides, directly
or indirectly through other bank letters of credit, credit enhancement for such
bonds. Under the terms of such agreement, FNMA has provided replacement credit
enhancement through 2025 for eleven bond issues, aggregating $141,230, which
were concurrently reissued, and has agreed, subject to certain conditions, to
provide credit enhancement through June 1, 2025 for up to an additional $94,650
($81,352 of which is currently defeased) with respect to four other bond issues
which mature and may be refunded during 1998. Under this agreement, on January
1, 1997, the Post F&M Villages, Post Vista and Post Lake (Orlando) bonds were
refunded in the amount of $76,000 (all of which had previously been defeased),
with issues enhanced by FNMA and maturing on June 1, 2025. The agreement with
FNMA contains representations, covenants, and events of default customary to
such secured loans.
58
<PAGE> 61
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
DEBT DEFEASED
The Operating Partnership applied a portion of the net proceeds of equity
offerings in 1993 and 1994, contributed from the Company, to pay in full
thirteen fixed rate obligations totaling $132,470 and economically defease in
full six tax exempt bond financings totaling $52,700. In addition, the Company
paid $43,108 to partially prepay eleven variable rate obligations and $51,956
to economically defease portions of eight tax exempt bond financings. The above
amounts do not include aggregate prepayment penalties and defeasance escrow
requirements in excess of principal defeased of $18,077. The balance of debt
fully or partially economically defeased aggregated $81,352 at December 31,
1997.
LINES OF CREDIT
In December 1997, the Operating Partnership added two banks to its syndicated
line of credit (the "Revolver"), increasing its capacity from $180,000 to
$200,000. The Revolver matures on May 1, 2000 and borrowings currently bear
interest at LIBOR plus .675% or prime minus .25%. The Revolver provides for the
rate to be adjusted up or down based on changes in the credit ratings on the
Operating Partnership's senior unsecured debt. The Revolver also includes a
money market competitive bid option for short term funds up to $100,000
(increased in December 1997 from $90,000) at rates below the stated line rate.
The credit agreement for the Revolver contains customary representations,
covenants and events of default, including covenants which restrict the ability
of the Operating Partnership to make distributions, in excess of stated
amounts, which in turn restricts the discretion of the Company to declare and
pay dividends. In general, during any fiscal year the Operating Partnership may
only distribute up to 100% of the Operating Partnership's consolidated income
available for distribution (as defined in the credit agreement) exclusive of
distributions of up to $30,000 of capital gains for such year. The credit
agreement contains exceptions to these limitations to allow the Operating
Partnership to make distributions necessary to allow the Company to maintain
its status as a REIT. The Operating Partnership does not anticipate that this
covenant will adversely affect its ability to make required distributions.
On July 26, 1996, the Operating Partnership closed a $20,000 unsecured line of
credit with Wachovia Bank of Georgia, N.A. (The "Cash Management Line"), which
was fully funded and used to pay down the outstanding balance on the Revolver.
The Cash Management Line bears interest at LIBOR plus .75% or prime minus .25%
and has a maturity date of November 14, 1997. The Revolver requires three days
advance notice to repay borrowings whereas this facility provides the Operating
Partnership with an automatic daily sweep which applies all available cash to
reduce the outstanding balance.
On November 21, 1997, the Operating Partnership closed on an aggregrate of
$132,000 in bridge loans (the "Bridge Loan") with three commercial banks. These
notes bear interest at LIBOR plus 1.04% for the first 30 days. From December
21, 1997 through maturity on May 20, 1998, these notes bear interest of LIBOR
plus .92%. Proceeds from these notes were used to pay down debt assumed in the
Merger. On February 20, 1998, the Company sold 3.5 million shares of common
stock. Net proceeds from this offering of $129.5 million were contributed by
the Company to the Operating Partnership and used to pay in full the Bridge
Loan and to repay other outstanding indebtedness.
At December 31, 1997, the outstanding balances on the Revolver, Bridge Loan and
Cash Management Line were $170,000, $132,000 and $20,000, respectively.
In addition, the Company has a $3,000 facility to provide letters of credit for
general business purposes.
SENIOR UNSECURED NOTES
On June 7, 1995, the Operating Partnership issued $50,000 of unsecured senior
notes with The Northwestern Mutual Life Insurance Company. The notes were in
two tranches: the first, totaling $30,000, carries an interest rate of 8.21%
per annum (1.25% over the corresponding treasury rate on the date such rate was
set) and matures on June 7, 2000; and the second, totaling $20,000 carries an
interest rate of 8.37% per annum (1.35% over the corresponding treasury rate on
the date such rate was set) and matures on June 7, 2002. Proceeds from the
notes were used to reduce other secured indebtedness and to pay down the
Revolver. The note agreements pursuant to which the notes were purchased
contain customary representations, covenants and events of default similar to
those contained in the note agreement for the Revolver.
59
<PAGE> 62
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
On September 30, 1996, the Operating Partnership completed a $125,000 senior
unsecured debt offering comprised of two tranches. The first tranche, $100,000
of 7.25% Notes due on October 1, 2003 (the "2003 Notes"), was priced at 99.642%
to yield 7.316% per annum (.71% over the corresponding treasury rate on the
date such rate was set). The second tranche, $25,000 of 7.50% Notes due on
October 1, 2006 (the "2006 Notes", and together with the 2003 Notes, the
"Notes"), was priced at 99.694% to yield 7.544% per annum (.83% over the
corresponding treasury rate on the date such rate was set). Proceeds from the
Notes were used to pay down existing indebtedness outstanding on the Revolver.
MEDIUM TERM NOTES
On January 29, 1997, the Operating Partnership established a program for the
sale of up to $175,000 aggregate principal amount of Medium-Term Notes due nine
months or more from the date of issue (the "MTNs"). On October 20, 1997, the
Operating Partnership increased the amount available under this program to $344
million.
The following table sets forth MTNs issued and outstanding as of December 31,
1997:
<TABLE>
<CAPTION>
ISSUE INTEREST MATURITY
DATE AMOUNT RATE DATE
----------------- ----------------- ------------------ -------------------
<S> <C> <C> <C>
March 3, 1997 $ 30,000 LIBOR plus .25% 03/03/2000
March 31, 1997 37,000 7.02% 04/02/2001
March 31, 1997 13,000 7.30% 04/01/2004
September 22, 1997 10,000 6.69% 09/22/2004
September 22, 1997 25,000 6.78% 09/22/2005
September 26, 1997 16,000 6.22% 12/31/99
----------
$ 131,000
==========
</TABLE>
Proceeds from the MTNs were used to (i) prepay certain outstanding notes and
(ii) paydown existing indebtedness outstanding under the Operating
Partnership's revolving line of credit (the "Revolver").
The aggregate maturities of the above conventional mortgages payable,
tax-exempt bond indebtedness, lines of credit and senior unsecured notes (after
giving effect to the refunding of the Post F&M Villages, Post Vista and Post
Lake (Orlando) bonds) are as follows:
<TABLE>
<S> <C>
1998 . . . . . . . . . . . . . . . . . . . . . . . . . $ 165,048
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 37,725
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 230,000
2001 . . . . . . . . . . . . . . . . . . . . . . . . . 40,010
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Thereafter . . . . . . . . . . . . . . . . . . . . . . 328,426
----------
$ 821,209
==========
</TABLE>
PLEDGED ASSETS
The aggregate net book value at December 31, 1997 of property pledged as
collateral for indebtedness amounted to approximately $297,763.
60
<PAGE> 63
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
EXTRAORDINARY ITEM
The extraordinary item for the year ended December 31, 1997 and 1995 resulted
from the write-off of deferred financing costs on the mortgage debt satisfied.
5. INCOME TAXES
Income or losses of the Operating Partnership are allocated to the partners of
the Operating Partnership for inclusion in their respective income tax returns.
Accordingly, no provision or benefit for income taxes has been made in the
accompanying financial statements. The Company has elected to be taxed as a
REIT under the Internal Revenue Code of 1986, as amended (the "Code")
commencing with the taxable year ended December 31, 1993. In order for the
Company to qualify as a REIT, it must distribute annually at least 95% of its
REIT taxable income, as defined in the Code, to its shareholders and satisfy
certain other requirements. As a result, the Operating Partnership generally
will not be subject to Federal income taxation at the corporate level on the
income the Comapny distributes to the shareholders. Although the Company, Inc.
has elected to be taxed as a REIT, Post Services, Inc. ("Post Services") was
formed as a subsidiary of the Operating Partnership to provide through its
subsidiaries asset management, leasing and landscaping services to third
parties. The consolidated taxable income of Post Services, if any, will be
subject to tax at regular corporate rates.
As of December 31, 1997, the net basis for Federal income tax purposes, taking
into account the special allocation of gain to the partners contributing
property to the Operating Partnership, was lower than the net assets as
reported in the Operating Partnership's consolidated financial statements by
$54,896.
6. RELATED PARTY TRANSACTIONS
The Operating Partnership provides landscaping services for executive officers,
employees, directors and other related parties. For the years ended December
31, 1997, 1996 and 1995, the Operating Partnership received landscaping fees of
$670, $1,391 and $1,758 for such services. These amounts include reimbursements
of direct expenses in the amount of $138, $729 and $1,111 which are not
included in landscape services revenue; accordingly, these transactions
resulted in the Operating Partnership recording landscape services net fees in
excess of direct expenses of $532, $662 and $647 in the accompanying financial
statements for the years ended December 31, 1997, 1996 and 1995, respectively.
The Operating Partnership provides accounting and administrative services to
entities controlled by certain executive officers of the Operating Partnership.
Fees under this arrangement aggregated $25, $25 and $32 for the years ended
December 31, 1997, 1996 and 1995, respectively.
The Operating Partnership was contracted to assist in the development of
apartment complexes constructed by a former executive and current shareholder.
Fees under this arrangement were $326, $363 and $317 for the years ended
December 31, 1997, 1996 and 1995, respectively.
On May 22, 1995, the Operating Partnership purchased for a nominal amount the
outstanding capital stock of A.T. Aviation, Inc. ("A.T. Aviation"), an entity
formed and owned by John A. Williams, Chairman of the Board of Directors of the
Operating Partnership, and John T. Glover, President and a Director of the
Company. In connection with the acquisition, the Operating Partnership assumed
certain obligations of A.T. Aviation. At the time of the acquisition, A.T.
Aviation had entered into a purchase agreement for a used aircraft, leased
certain property improvements related thereto, and obtained a line of credit in
the amount of $7,500 to fund such acquisitions. In connection with the
acquisition, the Operating Partnership assumed and repaid such line of credit,
which had been guaranteed by such officers, and such line and guarantees were
terminated.
On October 15, 1996, the Operating Partnership exercised its option to purchase
land from certain Unitholders. In exchange for the land, the Operating
Partnership issued 138,150 Units to the unitholders.
61
<PAGE> 64
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
7. EMPLOYEE BENEFIT PLANS
Through a plan adopted by the Company, the employees of the Operating
Partnership are participants in a defined contribution plan pursuant to Section
401 of the Internal Revenue Code. Beginning in 1996, Operating Partnership
contributions, if any, to this plan are based on the performance of the Company
and are allocated to each participant based on the relative contribution of the
participant to the total contributions of all participants. For purposes of
allocating the Operating Partnership contribution, the maximum employee
contribution included in the calculation is 3% of salary. Operating Partnership
contributions of $158 and $251 were made in 1997 and 1996, respectively.
During 1995, the Company adopted the Employee Stock Purchase Plan ("ESPP") to
encourage stock ownership by eligible directors and employees. To participate
in the ESPP, (i) directors must not be employed by the Company or the Operating
Partnership and must have been a member of the Board of Directors for at least
one month and (ii) an employee must have been employed full-time by the Company
or the Operating Partnership for at least one month. The purchase price of
shares of Common Stock under the ESPP is equal to 85% of the lesser of the
closing price per share of Common Stock on the first or last day of the trading
period, as defined.
8. DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan ("DRIP") is available to all shareholders of the
Company. Under the DRIP, shareholders may elect for their dividends to be used
to acquire additional shares of the Company's Common Stock directly from the
Company, for 95% of the market price on the date of purchase.
9. STOCK-BASED COMPENSATION PLANS
STOCK COMPENSATION PLANS
At December 31, 1997, the Company had two stock-based compensation plans, the
Employee Stock Plan (the "Stock Plan"), the Employee Stock Purchase Plan (the
"ESPP") and, under the Stock Plan, a stock grant program (the "Grant Plan") as
described below. The Operating Partnership applies APB Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, based upon the
criteria of APB Opinion 25 no compensation cost is required to be recognized
for the Stock Plan and the ESPP. The compensation cost which is required to be
charged against income for the Grant Plan was, $209 and $129 for 1997 and 1996,
respectively. Had compensation cost for the Company's Stock Plan and ESPP been
determined based on the fair value at the grant dates for awards under the
Plans consistent with the method of FASB Statement 123, the Operating
Partnership's net income and earnings per Unit would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- --------
<S> <C> <C> <C> <C>
Net income available to common
Unitholders As reported . . . $ 61,078 $ 52,390 $ 37,297
Pro forma . . . . $ 60,692 $ 50,472 $ 36,950
Net income per common Unit - basic As reported . . . $ 2.11 $ 1.95 $ 1.58
Pro forma . . . . $ 2.10 $ 1.86 $ 1.57
Net income per common Unit - diluted
As reported . . . $ 2.09 $ 1.94 $ 1.58
Pro forma . . . . $ 2.08 $ 1.85 $ 1.56
</TABLE>
For purposes of the pro forma presentation, the fair value of each option grant
is estimated as of the date of grant using the Black-Scholes option-pricing
model. The weighted-average of all assumptions used in the calculation for
various grants under all of the Company's plans during 1997, 1996 and 1995, are
as follows: dividend yield of 6.5 percent for 1997, 5.4 percent
62
<PAGE> 65
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
for 1996 and 6.2 percent for 1995; expected volatility of 14.5 percent for all
years; risk-free interest rates ranging from 5.5 to 5.6 percent for 1997, 5.4
to 5.7 percent for 1996 and 5.5 to 7.3 percent for 1995; and expected lives
ranging from 5 to 7 years for all years.
FIXED STOCK OPTION PLANS
Under the Stock Plan, the Company may grant options to its employees and
directors for up to 3,500,000 shares of common stock. Of this amount, 550,000
shares are available for grants of restricted stock. Options granted to any
key employee or officer cannot exceed 50,000 shares a year. The exercise price
of each option equals the market price on the date of grant and all options
have a maximum term of ten years from the grant date.
A summary of the status of the Company's Stock Plan as of December 31, 1997 and
1996, changes during the years then ended, and the weighted-average fair value
of options granted during the years is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
---------------------- ---------------------- ----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- --------- ---------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
FIXED OPTIONS
Outstanding at beginning of year . . 864,105 $ 31 601,366 $ 31 353,344 $ 31
Granted . . . . . . . . . . . . . . . 243,946 39 310,067 32 251,383 30
Converted in connection with the
Merger . . . . . . . . . . . . . . . 1,192,230 30 -- -- -- --
Exercised . . . . . . . . . . . . . . (49,406) 31 (18,993) 31 (361) 28
Forfeited . . . . . . . . . . . . . . (13,324) 38 (28,335) 31 (3,000) 30
---------- -------- --------
Outstanding at end of year . . . . . 2,237,551 31 864,105 31 601,366 31
========== ======== ========
Options exercisable at year-end . . . 2,000,279 797,830 238,188
========== ======== ========
Weighted-average fair value of options
granted during the year . . . . . . $ 2.85 $ 3.47 $ 3.59
========== ======== ========
</TABLE>
At December 31, 1997, the range of exercise prices for options outstanding was
$28 - $41 and the weighted average remaining contractual life was 7 years.
63
<PAGE> 66
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
10. COMMITMENTS AND CONTINGENCIES
LAND, OFFICE AND EQUIPMENT LEASES
The Operating Partnership is party to two ground leases relating to an
operating community with terms expiring in years 2040 and 2043, one ground
lease for a community under development with terms expiring in year 2038 and to
office, equipment and other operating leases with terms expiring in years 1997
through 2004. Future minimum lease payments for noncancellable land, office,
equipment and other leases at December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998 . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,296
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 2,186
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 1,090
2001 . . . . . . . . . . . . . . . . . . . . . . . . . 804
2002 . . . . . . . . . . . . . . . . . . . . . . . . . 202
2003 and thereafter . . . . . . . . . . . . . . . . . . 6,562
</TABLE>
The Operating Partnership incurred $3,366, $2,172 and $2,034 of rent expense
for the years ended December 31, 1997, 1996 and 1995, respectively.
CONTINGENCIES
The Operating Partnership is party to various legal actions which are
incidental to its business. Management believes that these actions will not
have a material adverse affect on the consolidated balance sheets and
statements of operations.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Considerable judgment is necessary to interpret market data and develop
estimated fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Operating Partnership could realize
on disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
Cash equivalents, rents and landscape service receivables, interest rate
protection agreement, accounts payable, accrued expenses, notes payable and
other liabilities are carried at amounts which reasonably approximate their
fair values.
The fair values of treasury lock arrangements (used for hedging purposes) are
estimated by obtaining quotes from an investment broker. At December 31, 1997,
there were no carrying amounts related to these arrangements in the
consolidated balance sheet. As of December 31, 1997, the expected cost to
settle these contracts was approximately $5,300.
Disclosure about fair value of financial instruments are based on pertinent
information available to management as of December 31, 1997. Although
management is not aware of any factors that would significantly affect the
reasonable fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and current
estimates of fair value may differ significantly from the amounts presented
herein.
64
<PAGE> 67
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
12. EARNINGS PER UNIT
For the years ended December 31, 1997, 1996 and 1995, basic and diluted
earnings per common Unit for income before extraordinary item, net of preferred
distributions, and net income available to common Unitholders before
extraordinary item has been computed as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 1997
---------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- -----------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . . . . . . . . . . . . $ 66,078
Less: Preferred stock distributions . . . . . . . . . . . . . . . . (4,907)
----------
BASIC EPS
Income available to common Unitholders before extraordinary item . 61,171 28,880,928 $ 2.11
==========
EFFECT OF DILUTIVE SECURITIES
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 223,862
---------- -----------
DILUTED EPS
Income available to common Unitholders + assumed
conversions before extraordinary item . . . . . . . . . . . . . $ 61,171 29,104,790 $ 2.09
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 1996
---------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- -----------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . . . . . . . . . . . . $ 53,453
Less: Preferred stock distributions . . . . . . . . . . . . . . . . (1,063)
----------
BASIC EPS
Income available to common Unitholders before extraordinary item . 52,390 26,917,723 $ 1.95
==========
EFFECT OF DILUTIVE SECURITIES
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 91,600
---------- -----------
DILUTED EPS
Income available to common Unitholders + assumed
conversions before extraordinary item . . . . . . . . . . . . . $ 52,390 27,009,323 $ 1.94
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 1995
---------------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- -------------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . . . . . . . . . . . . $ 38,417
Less: Preferred stock distributions . . . . . . . . . . . . . . . . --
-----------
BASIC EPS
Income available to common Unitholders before extraordinary item . 38,417 23,541,639 $ 1.63
===========
EFFECT OF DILUTIVE SECURITIES
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 5,595
----------- -----------
DILUTED EPS
Income available to common Unitholders + assumed
conversions before extraordinary item . . . . . . . . . . . . . $ 38,417 23,547,234 $ 1.63
=========== =========== ===========
</TABLE>
65
<PAGE> 68
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
13. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash investing and financing activities for the years ended December 31,
1997, 1996 and 1995 are as follows:
(a) During 1996 the Company exercised its option to purchase land in exchange
for 138,150 Units of the Operating Partnership.
(b) The Operating Partnership committed to distribute $21,327, $14,659 and
$13,091 for the quarters ended December 31, 1997, 1996 and 1995,
respectively.
(c) The Merger was a stock for stock transaction. In connection with the
Merger, the cash and non-cash components were are follows:
<TABLE>
<S> <C>
Fair value of assets acquired . . . . . . . . . . . . . $ 643,268
Less:
Value of stock issued in exchange for
stock of Columbus . . . . . . . . . . . . . . . . . 338,353
Liabilities assumed . . . . . . . . . . . . . . . . 285,852
Cash acquired . . . . . . . . . . . . . . . . . . . 1,329
-----------
Cash component of purchase price, net of
cash acquired . . . . . . . . . . . . . . . . . . . $ 17,734
===========
</TABLE>
66
<PAGE> 69
POST APARTMENT HOMES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT DATA)
14. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for the years ended 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997*
-------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . $ 44,566 $ 46,114 $ 47,514 $ 61,922
Net income before net gain(loss) on sale of
assets, loss on relocation of corporate office,
and minority interest of Unitholders in
Operating Partnership . . . . . . . . . . . . 14,156 14,448 15,783 19,923
Net gain(loss) on sale of assets -- 3,512 -- (242)
Loss on relocation of corporate office . . . . . -- -- -- (1,500)
Net income . . . . . . . . . . . . . . . . . . . 14,156 17,960 15,783 18,181
Distributions to preferred Unitholders . . . . . (1,063) (1,062) (1,062) (1,720)
Net income available to common Unitholders . . . 13,093 16,898 14,721 16,461
Earnings per common Unit:
Net income available to common
Unitholders - basic . . . . . . . . . . . . . 0.48 0.62 0.54 0.49
Net income available to common
Unitholders - diluted . . . . . . . . . . . . 0.47 0.62 0.53 0.48
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996*
-----------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $ 39,205 $ 42,578 $ 44,699 $ 44,335
Net income before net gain on sale of assets
and minority interest of Unitholders in
Operating Partnership . . . . . . . . . . . 12,432 12,443 13,423 14,301
Net gain on sale of assets -- -- 854 --
Net income . . . . . . . . . . . . . . . . . . 12,432 12,443 14,277 14,301
Distributions to preferred Unitholders . . . . -- -- -- (1,063)
Net income available to common Unitholders . . 12,432 12,443 14,277 13,238
Earnings per common Unit:
Net income available to common
Unitholders - basic . . . . . . . . . . . . 0.46 0.46 0.53 0.49
Net income available to common
Unitholders - diluted . . . . . . . . . . . 0.46 0.46 0.53 0.48
</TABLE>
- --------------
* The total of the four quarterly amounts for earnings per Unit may not equal
the total for the year. These differences result from the use of a weighted
average to compute average number of Units outstanding.
67
<PAGE> 70
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
======================= CAPITALIZED
RELATED BUILDING AND SUBSEQUENT
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
============= ============ ======== ============ ===============
<S> <C> <C> <C> <C> <C>
GEORGIA
Post Ashford Apartments $9,895 (2) $1,906 $ - $7,508
Post Briarcliff Apartments - 18,785 - 549
Post Bridge Apartments 12,450 (2) 868 - 11,803
Post Brookhaven Apartments - 7,921 - 30,205
Post Canyon Apartments 16,845 (2) 931 - 15,713
Post Chase Apartments 15,000 (2) 1,438 - 14,094
Post Chastain Apartments - 6,352 - 38,042
Post Collier Hills Apartments - 6,487 - 24,925
Post Corners Apartments 14,760 (2) 1,473 - 13,655
Post Court Apartments 13,298 (2) 1,769 - 15,851
Post Creek Apartments - 10,406 36,756 2,690
Post Crest Apartments - 4,733 - 24,601
Post Crossing Apartments - 3,951 - 19,308
Post Dunwoody Apartments - 4,917 - 28,084
Post Gardens Apartments - 5,859 - 30,618
Post Glen Apartments - 5,591 - 38,196
Post Lane Apartments - 1,512 - 8,005
Post Lenox Park Apartments - 3,132 - 10,638
Post Lindbergh Apartments - 6,268 - 26,663
Post Mill Apartments 12,880 (2) 915 - 12,257
Post Oak Apartments - 2,028 - 8,105
Post Oglethorpe Apartments - 3,662 - 16,822
Post Park Apartments - 6,253 - 39,047
Post Parkwood Apartments - 1,331 - 7,290
Post Peachtree Hills Apartments - 4,215 - 13,525
Post Pointe Apartments - 2,417 - 15,347
Post Renaissance Apartments - - - 19,389
Post Ridge Apartments - 11,332 - 1,136
Post River Apartments 5,803 1,011 - 9,397
Post River - Phase II Apartments - 5,368 - 408
Post Summit Apartments 5,250 1,575 - 6,077
Post Terrace Apartments - 4,131 - 14,594
Post Valley Apartments 18,600 (2) 1,117 - 17,301
Post Vinings Apartments - 4,322 - 21,132
Post Village Apartments
The Arbors Apartments - 384 - 15,677
The Fountains and The Meadows Apartments - (2) 611 - 33,132
The Gardens Apartments 14,500 (2) 187 - 24,584
The Hills Apartments 7,000 (2) 91 - 11,864
Post Walk Apartments 19,300 (2) 2,954 - 16,460
Post Woods Apartments - 1,378 - 26,146
Riverside by Post Mixed Use - 11,130 - 36,437
<CAPTION>
GROSS AMOUNTS AT WHICH
CARRIED AT CLOSE OF PERIOD
=====================================
BUILDING AND ACCUMULATED
LAND IMPROVEMENTS TOTAL (1) DEPRECIATION
========= ============ ========= ============
<S> <C> <C> <C> <C>
GEORGIA
Post Ashford $1,906 $7,508 $9,414 $2,698
Post Briarcliff 18,785 549 19,334 -
Post Bridge 869 11,802 12,671 4,150
Post Brookhaven 7,921 30,205 38,126 8,376
Post Canyon 931 15,713 16,644 6,283
Post Chase 1,438 14,094 15,532 5,150
Post Chastain 6,779 37,615 44,394 10,139
Post Collier Hills 7,183 24,229 31,412 2
Post Corners 1,473 13,655 15,128 5,376
Post Court 1,769 15,851 17,620 5,393
Post Creek 10,442 39,410 49,852 2,305
Post Crest 4,763 24,571 29,334 876
Post Crossing 3,951 19,308 23,259 1,563
Post Dunwoody 4,961 28,040 33,001 3,812
Post Gardens 5,859 30,618 36,477 -
Post Glen 6,029 37,758 43,787 1
Post Lane 2,067 7,450 9,517 2,404
Post Lenox Park 3,132 10,638 13,770 998
Post Lindbergh 6,670 26,261 32,931 -
Post Mill 922 12,250 13,172 4,739
Post Oak 2,027 8,106 10,133 1,545
Post Oglethorpe 3,662 16,822 20,484 1,758
Post Park 8,830 36,470 45,300 10,539
Post Parkwood 1,331 7,290 8,621 614
Post Peachtree Hills 4,857 12,883 17,740 2,025
Post Pointe 3,027 14,737 17,764 4,963
Post Renaissance - 19,389 19,389 3,557
Post Ridge 11,332 1,136 12,468 -
Post River 1,011 9,397 10,408 2,372
Post River - Phase II 5,368 408 5,776 -
Post Summit 1,575 6,077 7,652 1,833
Post Terrace 4,148 18,726 18,725 706
Post Valley 1,117 17,301 18,418 5,815
Post Vinings 5,668 19,786 25,454 5,687
Post Village
The Arbors 774 15,287 16,061 5,090
The Fountains and The Meadows 907 32,836 33,743 9,670
The Gardens 348 24,423 24,771 6,871
The Hills 165 11,790 11,955 3,817
Post Walk 2,954 16,460 19,414 6,178
Post Woods 3,070 24,454 27,524 7,888
Riverside by Post 45,854 1,713 47,567 -
<CAPTION>
DEPRECIABLE
DATE OF DATE LIVES
CONSTRUCTION ACQUIRED YEARS
===================== =========== =============
<S> <C> <C> <C>
GEORGIA
Post Ashford 4/86 - 6/87 6/87 5 - 40 Years
Post Briarcliff 12/96 (4) 9/96 5 - 40 Years
Post Bridge 9/84 - 12/86 9/84 5 - 40 Years
Post Brookhaven 7/89 - 12/92 3/89 5 - 40 Years
Post Canyon 4/84 - 4/86 10/81 5 - 40 Years
Post Chase 6/85 - 4/87 6/85 5 - 40 Years
Post Chastain 6/88 - 10/90 6/88 5 - 40 Years
Post Collier Hills 10/95 6/95 5 - 40 Years
Post Corners 8/84 - 4/86 8/84 5 - 40 Years
Post Court 6/86 - 4/88 12/85 5 - 40 Years
Post Creek 9/81 - 8/83 5/96 5 - 40 Years
Post Crest 9/95 10/94 5 - 40 Years
Post Crossing 4/94 - 8/95 11/93 5 - 40 Years
Post Dunwoody 11/88 12/84&8/94 (6) 5 - 40 Years
Post Gardens 7/96 (4) 5/96 -
Post Glen 7/96 (4) 5/96 -
Post Lane 4/87 - 5/88 1/87 5 - 40 Years
Post Lenox Park 3/94 - 5/95 3/94 5 - 40 Years
Post Lindbergh 11/96 (4) 8/96 -
Post Mill 5/83 - 5/85 5/81 5 - 40 Years
Post Oak 9/92 - 12/93 9/92 5 - 40 Years
Post Oglethorpe 3/93 - 10/94 3/93 5 - 40 Years
Post Park 6/87 - 9/90 6/87 5 - 40 Years
Post Parkwood 7/94 - 8/95 6/94 5 - 40 Years
Post Peachtree Hills 2/92 - 9/94 2&11/92 (6) 5 - 40 Years
Post Pointe 4/87 - 12/88 12/86 5 - 40 Years
Post Renaissance 7/91 - 12/94 6/91&1/94 (6) 5 - 40 Years
Post Ridge 10/96 (4) 7/96 -
Post River 9/90 - 1/92 7/90 5 - 40 Years
Post River - Phase II 12/96 (4) 7/90 -
Post Summit 1/90 - 12/90 1/90 5 - 40 Years
Post Terrace 10/94 3/94 5 - 40 Years
Post Valley 3/86 - 4/88 12/85 5 - 40 Years
Post Vinings 5/88 - 9/91 5/88 5 - 40 Years
Post Village
The Arbors 4/82 - 10/83 3/82 5 - 40 Years
The Fountains and The Meadows 8/85 - 5/88 8/85 5 - 40 Years
The Gardens 6/88 - 7/89 5/84 5 - 40 Years
The Hills 5/84 - 4/86 4/83 5 - 40 Years
Post Walk 3/86 - 8/87 6/85 5 - 40 Years
Post Woods 3/76 - 9/83 6/76 5 - 40 Years
Riverside by Post 7/96 (4) 1/96 -
</TABLE>
68
<PAGE> 71
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
INITIAL COSTS COSTS CARRIED AT CLOSE OF PERIOD
===================== CAPITALIZED ==========================
RELATED BUILDING AND SUBSEQUENT BUILDING AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS
=========== ============= ======= ============ ============== ===== ============
<S> <C> <C> <C> <C> <C> <C> <C>
TEXAS
Addison Circle Apartment Homes
by Post - Phase I Mixed Use 21,724 2,885 41,482 1,050 2,885 42,532
Addison Circle Apartment Homes
by Post - Phase II Mixed Use - - 1,128 5,841 - 6,969
American Beauty Mill Apartments - 234 2,786 1,208 234 3,994
Block 580 Mixed Use - 3,334 2,536 246 3,334 2,782
Block 588 Apartments - - 48 1,278 1,278 48
Clyde Lane Apartments 1,995 2,765 895 56 2,765 951
Cole's Corner Mixed Use - 1,886 18,006 751 1,912 18,731
Columbus Square by Post Mixed Use - 4,565 24,595 47 4,565 24,642
Heights of State-Thomas Mixed Use - 2,615 15,559 4,482 2,615 20,041
Mattingly Site Apartments - 824 11 47 824 58
Midtown - Phase I Mixed Use - 2,456 1,134 402 2,456 1,536
Midtown - Phase II Mixed Use - 2,093 278 28 2,093 306
Parkway Village Apartments - 1,020 4,024 22 1,020 4,046
Post Parkwood Apartments 899 306 2,592 14 306 2,606
Post Ascension Apartments - 1,230 8,976 18 1,230 8,994
Post Hackberry Creek Apartments - 7,269 23,579 47 7,269 23,626
Post Lakeside Apartments - 3,924 20,334 38 3,924 20,372
Post Reflections Apartments - 1,188 10,005 22 1,188 10,027
Post Town Lake/Parks Apartments - 2,985 19,464 42 2,985 19,506
Post White Rock Apartments - 1,560 9,969 0 1,560 9,969
Post Winsted Apartments - 2,826 18,632 20 2,826 18,652
Post Windhaven Apartments - 4,029 23,385 34 4,029 23,419
The Shores by Post Mixed Use - 11,572 69,794 254 11,572 70,048
Springstead Condos Apartments - 225 948 (307) 181 685
The Abbey of State-Thomas Apartments - 575 6,276 1,470 575 7,746
The Commons at Turtle Creek Apartments - 1,406 7,938 48 1,406 7,986
The Meridian at State-Thomas Apartments - 1,535 11,605 25 1,535 11,630
The Residences on McKinney Apartments - 1,494 18,022 32 1,494 18,054
The Rice Apartments 1 - 13,393 3,483 - 16,876
The Vineyard of Uptown Apartments - 1,133 8,560 9 1,133 8,569
The Vintage of Uptown Apartments - 2,614 12,188 1,013 3,614 12,201
The Worthington of State-Thomas Mixed Use - 3,744 34,700 45 3,744 34,745
Thomas Tract Apartments - - 68 1,715 1,708 75
Uptown Village Apartments - 3,955 22,120 25 3,955 22,145
Villas at Valley Ranch Apartments - 212 899 (213) 212 686
Wilson Building Mixed Use - 2,766 689 111 2,766 800
Campus Circle Retail - 1,045 3,084 29 1,045 3,113
Towne Crossing Retail - 3,703 10,721 11 3,703 10,732
Post & Paddock Retail - 2,352 7,383 13 2,352 7,396
FLORIDA
Post Bay Apartments - 2,203 - 13,578 2,573 13,208
Post Court Apartments - 2,083 - 9,664 2,083 9,664
Post Fountains Apartments - (2) 3,856 - 20,458 3,856 20,458
Post Harbour Island Apartments - 3,854 - 367 3,854 367
Post Hyde Park Apartments - 3,498 - 15,979 3,853 15,624
Post Lake Apartments - (2) 6,113 - 30,483 6,724 29,872
Post Rocky Point Apartments - 4,634 - 22,734 4,709 22,659
Post Rocky Point - Phase III Apartments - 7,425 - 1,290 7,425 1,290
Post Village Apartments -
The Arbors Apartments - 2,063 - 14,544 2,446 14,161
The Lakes Apartments - 2,813 - 16,063 3,387 15,489
The Oaks Apartments - 3,229 - 15,230 3,855 14,604
Post Walk at Hyde Park Apartments - 1,943 - 10,770 1,974 10,739
<CAPTION>
GROSS
AMOUNT
AT WHICH
CARRIED AT
CLOSE
OF PERIOD DEPRECIABLE
=========== ACCUMULATED DATE OF DATE LIVES
TOTAL (1) DEPRECIATION CONSTRUCTION ACQUIRED YEARS
=========== ============ ============ ======== ===========
<S> <C> <C> <C> <C> <C>
TEXAS
Addison Circle Apartment Homes
by Post - Phase I 45,417 - 10/97 (4) 10/97 -
Addison Circle Apartment Homes
by Post - Phase II 6,969 - 10/97 (4) 10/97 -
American Beauty Mill 4,228 - 10/97 (4) 10/97 -
Block 580 6,116 - 10/97 (4) 10/97 -
Block 588 1,326 - 10/97 (4) 10/97 -
Clyde Lane 3,716 - 10/97 (4) 10/97 -
Cole's Corner 20,643 20 n/a 10/97 5 - 40 Years
Columbus Square by Post 29,207 132 n/a 10/97 5 - 40 Years
Heights of State-Thomas 22,656 - 10/97 (4) 10/97 -
Mattingly Site 882 - 10/97 (4) 10/97 -
Midtown - Phase I 3,992 - 10/97 (4) 10/97 -
Midtown - Phase II 2,399 - 10/97 (4) 10/97 -
Parkway Village 5,066 30 n/a 10/97 5 - 40 Years
Post Parkwood 2,912 20 n/a 10/97 5 - 40 Years
Post Ascension 10,224 57 n/a 10/97 5 - 40 Years
Post Hackberry Creek 30,895 145 n/a 10/97 5 - 40 Years
Post Lakeside 24,296 148 n/a 10/97 5 - 40 Years
Post Reflections 11,215 73 n/a 10/97 5 - 40 Years
Post Town Lake/Parks 22,491 140 n/a 10/97 5 - 40 Years
Post White Rock 11,529 68 n/a 10/97 5 - 40 Years
Post Winsted 21,478 100 n/a 10/97 5 - 40 Years
Post Windhaven 27,448 144 n/a 10/97 5 - 40 Years
The Shores by Post 81,620 415 n/a 10/97 5 - 40 Years
Springstead Condos 866 (75) n/a 10/97 5 - 40 Years
The Abbey of State-Thomas 8,321 34 n/a 10/97 5 - 40 Years
The Commons at Turtle Creek 9,392 60 n/a 10/97 5 - 40 Years
The Meridian at State-Thomas 13,165 72 n/a 10/97 5 - 40 Years
The Residences on McKinney 19,548 138 n/a 10/97 5 - 40 Years
The Rice 16,876 - 10/97 (4) 10/97 -
The Vineyard of Uptown 9,702 46 n/a 10/97 5 - 40 Years
The Vintage of Uptown 15,815 72 n/a 10/97 5 - 40 Years
The Worthington of State-Thomas 38,489 205 n/a 10/97 5 - 40 Years
Thomas Tract 1,783 - 10/97 (4) -
Uptown Village 26,100 125 n/a 10/97 5 - 40 Years
Villas at Valley Ranch 898 (63) n/a 10/97 5 - 40 Years
Wilson Building 3,566 - 10/97 (4) -
Campus Circle 4,158 16 n/a 10/97 5 - 40 Years
Towne Crossing 14,435 56 n/a 10/97 5 - 40 Years
Post & Paddock 9,748 39 n/a 10/97 5 - 40 Years
FLORIDA
Post Bay 15,781 4,296 5/87 - 12/88 5/87 5 - 40 Years
Post Court 11,747 2,792 4/90 - 5/91 10/87 5 - 40 Years
Post Fountains 24,314 6,671 12/85 - 3/88 12/85 5 - 40 Years
Post Harbour Island 4,221 - 3/97 (4) 1/97 -
Post Hyde Park 19,477 966 9/94 7/94 5 - 40 Years
Post Lake 36,596 9,723 11/85 - 3/88 10/85 5 - 40 Years
Post Rocky Point 27,368 1,367 4/94 2/94&9/96 (6) 5 - 40 Years
Post Rocky Point - Phase III 8,715 - 11/96 (4) 9/96 -
Post Village
The Arbors 16,607 3,801 6/90 - 12/91 11/90 5 - 40 Years
The Lakes 18,876 4,158 7/88 - 12/89 5/88 5 - 40 Years
The Oaks 18,459 3,920 11/89 - 7/91 12/89 5 - 40 Years
Post Walk at Hyde Park 12,713 189 10/95 - 9/97 9/95 5 - 40 Years
</TABLE>
69
<PAGE> 72
POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INITIAL COSTS COSTS
====================== CAPITALIZED
RELATED BUILDING AND SUBSEQUENT
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION
============ ============ ======== ============= ===============
<S> <C> <C> <C> <C> <C>
MISSISSIPPI
Post Mark Apartments - 716 13,879 34
Post Pointe Apartments - 723 14,091 165
Post Trace Apartments - 1,944 24,616 49
VIRGINIA
Post Corners at Trinity Centre Apartments - 4,404 - 23,176
Post Forest Apartments - 8,590 - 23,509
NORTH CAROLINA
Post Park at Phillips Place Mixed Use - 4,685 - 21,753
TENNESSEE
Post Green Hills Apartments - 2,464 - 13,629
Post Hillsboro Village Apartments 1,685 2,255 2,555 585
The Lee Apartments Apartments 1,324 720 2,125 36
MISCELLANEOUS INVESTMENTS - 15,560 703 23,842
---------- ---------- -------- ----------
TOTAL $ 193,209 $ 334,811 $572,531 $1,028,669
========== ========== ======== ==========
<CAPTION>
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
========================================
BUILDING AND ACCUMULATED DATE OF DATE
LAND IMPROVEMENTS TOTAL (1) DEPRECIATION CONSTRUCTION ACQUIRED
========== ============ ============ ============ ============ ===========
<S> <C> <C> <C> <C> <C> <C>
MISSISSIPPI
Post Mark 717 13,912 14,629 109 n/a 10/97
Post Pointe 723 14,256 14,979 74 n/a 10/97
Post Trace 1,944 24,665 26,609 150 n/a 10/97
VIRGINIA
Post Corners at Trinity Centre 4,493 23,087 27,580 1,338 6/94 6/94
Post Forest 9,106 22,993 32,099 7,502 1/89 - 12/90 3/88
NORTH CAROLINA
Post Park at Phillips Place 3,190 23,248 26,438 1 1/96 11/95
TENNESSEE
Post Green Hills 2,505 13,588 16,093 854 9/94 7/94
Post Hillsboro Village 2,369 3,026 5,395 - 12/96 (4) 8/96
The Lee Apartments 720 2,161 2,881 67 n/a (5) 8/96
MISCELLANEOUS INVESTMENTS 15,560 13,200 40,105 5,707
-------- ---------- ----------- ---------
TOTAL $386,234 $1,542,581 $ 1,936,011 $ 201,095
======== ========== =========== =========
<CAPTION>
DEPRECIABLE
LIVES
YEARS
============
<S> <C>
MISSISSIPPI
Post Mark 5 - 40 Years
Post Pointe 5 - 40 Years
Post Trace 5 - 40 Years
VIRGINIA
Post Corners at Trinity Centre 5 - 40 Years
Post Forest 5 - 40 Years
NORTH CAROLINA
Post Park at Phillips Place 5 - 40 Years
TENNESSEE
Post Green Hills 5 - 40 Years
Post Hillsboro Village -
The Lee Apartments 5 - 40 Years
MISCELLANEOUS INVESTMENTS 5 - 40 Years
TOTAL
</TABLE>
(1) The aggregate cost for Federal Income Tax purposes to the Company was
approximately $1,702,403 at December 31, 1997, taking into account the
special allocation of gain to the partners contributing property to the
Operating Partnership.
(2) These properties serve as collateral for the Federal National Mortgage
Association credit enhancement.
(3) Balance includes an allowance for possible loss of $3,700 which was
taken in prior years.
(4) Construction still in process as of December 31, 1997.
(5) The Company acquired this community during 1996. The Company is operating
the community while evaluating whether whether to hold, renovate or sell
the community.
(6) Additional land was acquired for construction of a second phase.
=============================
A summary of activity for real estate investments and accumulated
depreciation is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER, 31
=============================================
1997 1996 1995
=========== =========== ==========
<S> <C> <C> <C>
Real estate investments:
Balance at beginning of year $ 1,109,342 $ 937,924 $ 828,585
Purchase of minority interests in certain property partnerships - - 10,149
Purchase of assets in connection with the Merger 635,732
Improvements 216,020 183,910 127,150
Disposition of property (25,083) (12,492) (27,960)
----------- ----------- ---------
Balance at end of year $ 1,936,011 $ 1,109,342 $ 937,924
=========== =========== =========
Accumulated depreciation:
Balance at beginning of year $ 177,672 $ 156,824 $ 142,576
Depreciation 29,023 [A] 23,372 [A] 20,681 [A]
Depreciation on disposed property (5,600) (2,524) (6,433)
----------- ----------- ---------
Balance at end of year $ 201,095 $ 177,672 $ 156,824
=========== =========== =========
</TABLE>
[a] Depreciation expense in the Consolidated Statements for the years ended
December 31, 1997, 1996 and 1995, include $25, $231 and $138, respectively,
of depreciation expense on other assets.
70
<PAGE> 73
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Post Properties, Inc. 1995 Non-Qualified Employee Stock Purchase Plan
In our opinion, the accompanying statements of net assets available for plan
benefits and of changes in net assets available for plan benefits present
fairly, in all material respects, the net assets of the Post Properties, Inc.
1995 Non-Qualified Employee Stock Purchase Plan at December 31, 1997 and 1996
and the changes in net assets available for plan benefits for the years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Atlanta, Georgia
March 20, 1998
71
<PAGE> 74
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Receivable from Post Apartment Homes, L.P. . . . . . . $440,170 $424,015
-------- ========
NET ASSETS AVAILABLE FOR PLAN BENEFITS
Net Assets available for Plan Benefits . . . . . . . . $440,170 $424,015
======== ========
</TABLE>
72
<PAGE> 75
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996
---------- -----------
<S> <C> <C>
NET ASSETS AVAILABLE FOR PLAN BENEFITS, JANUARY 1 . . . . $ 424,015 $ 805,797
DEDUCTIONS:
Purchase of participants' shares . . . . . . . . . . . (961,877) (1,162,977)
Payment for payroll taxes on behalf
of participants . . . . . . . . . . . . . . . . . . . (63,869) (70,204)
ADDITIONS:
Participant contributions . . . . . . . . . . . . . . . 1,041,901 851,399
---------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS, DECEMBER 31 . . . $ 440,170 $ 424,015
========== ===========
</TABLE>
73
<PAGE> 76
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(A) Post Properties, Inc. (the "Company") established the 1995 Non-Qualified
Employee Stock Purchase Plan (the "Plan") to encourage stock ownership by
eligible directors and employees.
(B) The financial statements have been prepared on the accrual basis of
accounting.
(C) All expenses incurred in the administration of the Plan are paid by the
Company and are excluded from these financial statements.
NOTE 2 - THE PLAN:
Upon adoption by the Company's Board of Directors, the Plan became effective as
of January 1, 1995. Under the Plan, eligible participating employees and
directors of the Company can purchase Common Stock at a discount (up to 15% set
by the Compensation Committee of the Company's Board of Directors) from the
Company through salary withholding or cash contributions. The Plan is not
subject to the provisions of the Employee Retirement Income Security Act of
1974, nor is it intended to qualify for special tax treatment under Section
401(a) of the Internal Revenue Code.
Directors who have been a member of the Board of Directors for at least one
full calendar month and full-time employees who have been employed a full
calendar month are eligible to participate in the Plan. Eligible directors and
employees (the "Participants") may contribute in cash or as a specified dollar
amount or percentage of their compensation to the Plan. The minimum payroll
deduction for a Participant for each payroll period for purchases under the
Plan is $10.00. The maximum contribution which a Participant can make for
purchases under the Plan for any calendar year is $100,000. All contributions
to the Plan are held in the general assets of Post Apartment Homes, L.P., the
Company's operating subsidiary.
Shares of the Company's Common Stock are purchased by an investment firm
semi-annually after the end of each six-month period, as defined, and credited
to each Participant's individual account. The purchase price of the Common
Stock purchased pursuant to the Plan is currently equal to 85% of the closing
price on either the first or last trading day of each purchase period,
whichever is lower.
All Common Stock of the Company purchased by Participants pursuant to the Plan
may be voted by the Participants or as directed by the Participants.
The Plan does not discriminate, in scope, terms, or operation, in favor of
officers or directors of the Company and is available, subject to the
eligibility rules of the Plan, to all employees of the Company on the same
basis.
NOTE 3 - FEDERAL INCOME TAXES:
The Plan is not subject to Federal incomes taxes. The difference between the
fair market value of the shares acquired under the Plan, and the amount
contributed by the Participants is treated as ordinary income to the
Participants' for Federal income tax purposes. Accordingly, the Company
withholds all applicable taxes from the Participant contributions. The fair
market value of the shares is determined as of the stock purchase date.
74
<PAGE> 77
3. EXHIBITS
Certain of the exhibits required by Item 601 of Regulation S-K have been filed
with previous reports by the registrant and are herein incorporated by
reference thereto.
The Registrant agrees to furnish a copy of all agreements relating to long-term
debt upon request of the Commission.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<S> <C> <C>
2.1+++ -- Agreement and Plan of Merger dated as of August 1, 1997 among Post Properties, Inc. (the "Company"),
Columbus Realty Trust ("Columbus") and Post LP Holdings, Inc. (subsequently renamed Post Interim
Holdings, Inc.), a wholly owned subsidiary of the Company.
3.1* -- Articles of Incorporation of the Company
3.2* -- Bylaws of the Company
4.1*** -- Indenture between the Company and Sun Trust Bank, Atlanta, as Trustee
10.1 -- Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership
10.2 -- First Amendment to Second Amended and Restated Partnership Agreement
10.3 -- Second Amendment to Second Amended and Restated Partnership Agreement
10.4** -- Employee Stock Plan
10.5 -- Amendment to Employee Stock Plan
10.6 -- Amendment No. 2 to Employee Stock Plan
10.7 -- Amendment No. 3 to Employee Stock Plan
10.8 -- Amendment No. 4 to Employee Stock Plan
10.9** -- Noncompetition Agreement between the Company, the Operating Partnership and John A. Williams
10.10** -- Noncompetition Agreement between the Company, the Operating Partnership and John T. Glover
10.11** -- Employment Agreement between the Company and John A. Williams
10.12** -- Employment Agreement between the Company and John T. Glover
10.13** -- Employment Agreement between the Operating Partnership and John A. Williams
10.14** -- Employment Agreement between the Operating Partnership and John T. Glover
10.15** -- Employment Agreement between Post Services, Inc. and John A. Williams
10.16** -- Employment Agreement between Post Services, Inc. and John T. Glover
10.17** -- Option and Transfer Agreement among the Operating Partnership, Post Services, John A. Williams and
John T. Glover
10.18** -- Promissory Note made by Post Services, Inc. in favor of RAM Partners, Inc.
10.19 -- Form of officers and directors Indemnification Agreement
10.20* -- Form of Option Agreement to be entered into between the Operating Partnership and the owners of four
parcels of undeveloped land
10.21* -- Profit Sharing Plan of the Company
10.22 -- Amendment Number One to Profit Sharing Plan
10.23 -- Amendment Number Two to Profit Sharing Plan
10.24 -- Amendment Number Three to Profit Sharing Plan
10.25 -- Amendment Number Four to Profit Sharing Plan
10.26** -- Form of General Partner 1% Exchange Agreement
10.27+ -- Employee Stock Purchase Plan
10.28 -- Amendment to Employee Stock Purchase Plan
10.29++ -- Amended and Restated Dividend Reinvestment and Stock Purchase Plan
10.30 -- Amended and Restated Credit Agreement dated as of April 9, 1997 among Post Apartment Homes, L.P.,
Wachovia Bank of Georgia, N.A., as administrative agent, First Union National Bank of Georgia, as Co-
Agent, and the banks listed on the signature pages thereto (the "Credit Agreement")
</TABLE>
75
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<S> <C> <C>
10.31 -- First Amendment to Credit Agreement dated December 17, 1997
21.1 -- List of Subsidiaries
23.1 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 333-38725)
23.2 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 33-86674)
23.3 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 33-81772)
23.4 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 333-39461)
23.5 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 333-36595)
23.6 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-3 (No. 333-47399)
23.7 -- Consent of Price Waterhouse LLP for Registration Statement on Form S-8 (No. 33-00020)
27.1 -- Financial Data Schedule for the Company for the year ended December 31, 1997
(for SEC use only)
27.2 -- Financial Data Schedule for the Operating Partnership for the year ended December 31, 1997
(for SEC use only)
27.3 -- Financial Data Schedule for the Company for the year ended December 31, 1996
(for SEC use only)
27.4 -- Financial Data Schedule for the Operating Partnership for the year ended December 31,
1996 (for SEC use only)
</TABLE>
- ---------------
* Filed as an exhibit to the Registration Statement on Form S-11 (SEC File
No. 33-61936), as amended, of the Company.
** Filed as an exhibit to the Registration Statement on Form S-11 (SEC File
No. 33-71650), as amended, of the Company.
*** Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No.
333-3555) of the Company.
+ Filed as an exhibit to the Registration Statement on Form S-8 (SEC File No.
33-86674) of the Company.
++ Filed as part of the Registration Statement on Form S-3 (SEC File No.
333-39461) of the Company.
+++ Filed as an exhibit to the Current Report on Form 8-K, dated as of August
6, 1997, of the Company.
The Company's proxy statement is expected to be filed with the Commission
on or about April 7, 1998.
(b) Reports on Form 8-K
During the fourth quarter of fiscal 1997, the Company and the Operating
Partnership filed current reports on Form 8-K on October 22, 1997 and October
28, 1997 and the Operating Partnership filed a current report on Form 8-K on
November 7, 1997.
76
<PAGE> 79
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POST PROPERTIES, INC.
(Registrant)
March 30,1998 John T. Glover
-------------- ------------------------------------
John T. Glover, President
Chief Operating Officer, Treasurer
and a Director
(Principal Financial Officer)
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 and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
John A. Williams Chairman of the Board, Chief
- ----------------------------------- Executive Officer and Director March 30, 1998
John A. Williams
John T. Glover President, Chief Operating Officer,
- ----------------------------------- Treasurer, Principal Financial March 30, 1998
John T. Glover Officer, and Director
Robert Shaw President, Post West
- ----------------------------------- March 30, 1998
Robert Shaw
R. Gregory Fox Senior Vice President, Chief
- ----------------------------------- Accounting Officer March 30, 1998
R. Gregory Fox
Arthur M. Blank Director
- -----------------------------------
Arthur M. Blank March 30, 1998
Herschel M. Bloom Director
- -----------------------------------
Herschel M. Bloom March 30, 1998
Russell R. French Director
- -----------------------------------
Russell R. French March 30, 1998
William A. Parker, Jr. Director
- -----------------------------------
William A. Parker, Jr. March 30, 1998
Charles Rice Director
- -----------------------------------
Charles Rice March 30, 1998
J.C. Shaw Director
- -----------------------------------
J.C. Shaw March 30, 1998
</TABLE>
77
<PAGE> 80
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
POST APARTMENT HOMES, L.P.
By: Post G.P. Holdings, Inc., as General Partner
March 30, 1998 John T. Glover
--------------- ------------------------------------------------
John T. Glover, President
Chief Operating Officer, Treasurer
and Principal Financial Officer
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 and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
John A. Williams Chief Executive Officer March 30, 1998
-----------------------------------
John A. Williams
John T. Glover President, Chief Operating Officer, March 30, 1998
----------------------------------- Treasurer and Principal Financial
John T. Glover Officer
R. Gregory Fox Senior Vice President, Chief March 30, 1998
----------------------------------- Accounting Officer
R. Gregory Fox
</TABLE>
78
<PAGE> 1
EXHIBIT 10.1
_______________________________________________________________________________
_______________________________________________________________________________
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
POST APARTMENT HOMES, L.P.
Dated as of October 24, 1997
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.3 Registered Office and Agent; Principal Office . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 3
PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.1 Purpose and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 4
CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.1 Capital Contributions of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.2 Issuances of Additional Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 5
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.1 Requirement and Characterization of Distributions . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Amounts Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.3 Distributions Upon Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 6
ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.1 Allocations For Capital Account Purposes . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.2 Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.3 Restrictions on General Partner's Authority . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.4 Reimbursement of the General Partner and PPI . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.5 Outside Activities of the General Partner, Post LP Holdings and PPI . . . . . . . . . . . . 28
</TABLE>
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<TABLE>
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Section 7.6 Contracts with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.8 Liability of the General Partner and PPI . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.9 Other Matters Concerning the General Partner . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.10 Title to Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.11 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.2 Management of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.3 Outside Activities of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.4 Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.5 Rights of Limited Partners Relating to the Partnership . . . . . . . . . . . . . . . . . . 34
Section 8.6 Redemption Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 10
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.1 Preparation of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.3 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 10.4 Organizational Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.5 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 11
TRANSFERS AND WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.2 Transfer of Post Partners' Partnership Interests or PPI's Ownership
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.3 Limited Partners' Rights to Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.4 Substituted Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.5 Assignees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.6 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 12
ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.1 Admission of Successor General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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<TABLE>
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Section 12.2 Admission of Additional Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership . . . . . . . . . . . . . . . 46
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 13.3 Negative Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 13.4 Deemed Distribution and Recontribution . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.5 Rights of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.6 Notice of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.7 Termination of Partnership and Cancellation of Certificate
of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.8 Reasonable Time for Winding-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.9 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 14.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 14.2 Meetings of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 15
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.1 Addresses and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.2 Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.4 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.8 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.9 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 15.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Exhibits:
Exhibit A - Partner, Contributions and Partnership Interests
Exhibit B - Capital Account Maintenance
Exhibit C - Special Allocation Rules
Exhibit D - Value of Contributed Property
Exhibit E - Notice of Redemption
Exhibit F - Designation of the Voting Powers, Designation, Preferences and Relative, Participating, Optional or Other
Special Rights and Qualifications, Limitations or Restrictions of the Series A Preferred Partnership Units
</TABLE>
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<PAGE> 5
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
POST APARTMENT HOMES, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of October 24, 1997, is entered into by and among Post GP Holdings,
Inc. ("Post GP Holdings"), a Georgia corporation, as the General Partner, and
the Persons whose names are set forth on Exhibit A as attached hereto, as the
Limited Partners, including Post LP Holdings, Inc. ("Post LP Holdings"), a
Georgia corporation, together with any other Persons who become Partners in the
Partnership as provided herein. Post Properties, Inc. ("PPI"), a Georgia
corporation, owns all of the stock of Post GP Holdings and Post LP Holdings but
is not a partner in the Partnership.
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Georgia Revised Uniform Limited Partnership Act
(Official Code of Georgia Annotated, Sections 14-9-100 et seq.), as it may be
amended from time to time, and any successor to such statute. References to
specific Sections of the Act refer to the corresponding Sections of the
Official Code of Georgia Annotated.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to
<PAGE> 6
Section 708 of the Code, such property shall thereafter constitute a
Contributed Property until the Carrying Value of such property is further
adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit D and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit D; (ii) in the case
of any Contributed Property not set forth in Exhibit D and as of the time of
its contribution to the Partnership, the 704(c) Value of such property or other
consideration, reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when contributed,
and (iii) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property at the time such
property is distributed, reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time
to time.
"Articles of Incorporation" means the Articles of Restatement of the
Articles of Incorporation of PPI filed in the State of Georgia on July 21,
1993, as amended or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made,
(i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case
may be) for such period (without regard to adjustments resulting from
allocations described in Sections 1.A through 1.E of Exhibit C),
(b) Depreciation and all other noncash charges deducted
in determining Net Income or Net Loss for such period,
-2-
<PAGE> 7
(c) the amount of any reduction in the reserves of the
Partnership referred to in clause (ii)(f) below (including, without
limitation, reductions resulting because the General Partner
determines such amounts are no longer necessary),
(d) the excess of proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period
over the gain (or loss, as the case may be) recognized from such sale,
exchange, disposition, or refinancing during such period (excluding
Terminating Capital Transactions), and
(e) all other cash received by the Partnership for such
period that was not included in determining Net Income or Net Loss for
such period;
(ii) less the sum of:
(a) all principal debt payments made during such period
by the Partnership,
(b) capital expenditures made by the Partnership during
such period,
(c) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clause (ii)(a) or (ii)(b),
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period,
(e) any amount included in determining Net Income or Net
Loss for such period that was not received by the Partnership during
such period,
(f) the amount of any increase in reserves during such
period which the General Partner determines to be necessary or
appropriate in its sole and absolute discretion, and
(g) the amount of any working capital accounts and other
cash or similar balances which the General Partner determines to be
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such
-3-
<PAGE> 8
Partner's Capital Account balance as maintained pursuant to Exhibit B and the
hypothetical balance of such Partner's Capital Account computed as if it had
been maintained strictly in accordance with federal income tax accounting
principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2 or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Property charged to the
Partners' Capital Accounts, and (ii) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall
be adjusted from time to time in accordance with Exhibit B hereof, and to
reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Georgia Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Partnership Unit" means a Partnership Unit that is not a
Preferred Partnership Unit.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or deemed
-4-
<PAGE> 9
contributed to the Partnership on termination and reconstitution thereof
pursuant to Section 708 of the Code). Once the Carrying Value of a Contributed
Property is adjusted pursuant to Exhibit B hereof, such property shall no
longer constitute a Contributed Property for purposes of Exhibit B hereof, but
shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that PPI (i)
declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction,
the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator
of which shall be the actual number of REIT Shares (determined without the
above assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such
Person which, in accordance with generally accepted accounting principles,
should be capitalized.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be
an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Effective Date" means October 24, 1997.
"General Partner" means Post GP Holdings or its successors as general
partner of the Partnership.
-5-
<PAGE> 10
"General Partner Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi)
as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other
similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief of or against
such Partner under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of (A) its status as the General Partner, (B) its status as the sole
shareholder of the General Partner (i.e. PPI), (C) his status as a director or
officer of the Partnership, the General Partner PPI or any Subsidiary of PPI or
the Partnership, or (D) his or its liability, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including without limitation any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and (ii) such other Persons (including Affiliates and Subsidiaries of the
General Partner,
-6-
<PAGE> 11
PPI or the Partnership) as the General Partner may designate from time to time
(whether before or after the event giving rise to potential liability), in its
sole and absolute discretion.
"IPO" means the closing on July 22, 1993 of the initial public
offering of shares of PPI pursuant to that certain Purchase Agreement among
Post Apartment Homes, L.P., PPI and the representatives of the several
underwriters.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership. The General Partner shall
maintain the information set forth in Exhibit A hereto, as such information
shall change from time to time, in such form as the General Partner deems
appropriate for the conduct of the Partnership's affairs, and Exhibit A shall
be deemed amended from time to time to reflect the information so maintained by
the General Partner, whether or not a formal amendment to this Agreement has
been executed amending such Exhibit A. Such information shall reflect (and
Exhibit A shall be deemed amended from time to time to reflect) the issuance of
any additional Partnership Units to the General Partner or any other Person,
the transfer of Partnership Units and the redemption of any Partnership Units,
all as contemplated herein.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Limited Partners and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Limited Partner Interest may be
expressed as a number of Partnership Units of any one or more classes.
"Liquidation Preference Amount" means, with respect to any Preferred
Partnership Unit, the amount payable with respect to such Preferred Partnership
Unit (as established by the instrument designating such Preferred Partnership
Units) upon the voluntary or involuntary dissolution, liquidation or winding up
of the Partnership, or upon the earlier redemption of such Preferred
Partnership Units, as the case may be.
"Liquidator" has the meaning set forth in Section 13.2.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
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"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit E to this Agreement.
"Original Limited Partner" means a Limited Partner who was a Partner
on the date of closing of the IPO and who owns one or more Original Limited
Partnership Units on the date action is called for under Section 13.1.
"Original Limited Partnership Unit" means a Partnership Unit held by
an Original Limited Partner on the date of closing of the IPO and held by such
Original Limited Partner on the date action is called for under Section 13.1.
"Ownership Interest" means the stock and securities (including
evidence of indebtedness) of the General Partner and Post LP Holdings at any
time owned or held directly or indirectly by PPI.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
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"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to the Prior Agreement, as amended and restated pursuant to this
Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the General Partner for a distribution to its shareholders of some or all of
its portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2.
The ownership of Partnership Units may be evidenced by such form of certificate
for units, if any, as the General Partner adopts from time to time on behalf of
the Partnership. Without limitation on the authority of the General Partner as
set forth in Section 4.2 hereof, the General Partner may designate any
Partnership Units, when issued, as Common Partnership Units or as Preferred
Partnership Units, may establish any other class of Partnership Units, and may
designate one or more series of any class of Partnership Units.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, with respect to any
class of Partnership Units held by such Partner, its interest in such class of
Partnership Units as determined by dividing the number of Partnership Units in
such class owned by such Partner by the total number of Partnership Units in
such class then outstanding.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Post GP Holdings" means Post GP Holdings, Inc., a Georgia
corporation.
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"Post LP Holdings" means Post LP Holdings, Inc., a Georgia
corporation.
"PPI" means Post Properties, Inc., a Georgia corporation.
"Post Merger Sub" means Post Interim Holdings, Inc., a Georgia
corporation formerly known as Post LP Holdings, Inc., or more fully discussed
in Section 12.4 hereof.
"Post Partners" means Post GP Holdings and Post LP Holdings.
"Preferred Partnership Unit" means any Partnership Unit issued from
time to time pursuant to Section 4.2 hereof that is designated by the General
Partner at the time of its issuance as a Preferred Partnership Unit. Each
Preferred Partnership Unit shall have such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to Limited Partner Interests and
Common Partnership Units, all as shall be determined by the General Partner
subject to the requirements of Section 4.2 hereof.
"Principal" means each of John A. Williams and John T. Glover, in his
individual capacity as a Limited Partner.
"Principal-Controlled Partnership" means any of those certain general
partnerships which, on the date of execution of this Agreement, has as its sole
partners a Principal and a corporation which is wholly owned by such Principal
and which becomes a Partner at the time of execution of this Agreement by
reason of a Capital Contribution pursuant to Section 4.1 hereof.
"Prior Agreement" means the Agreement of Limited Partnership of Post
Apartment Homes, L.P., dated as of May 14, 1993, between PPI as the sole
general partner and John A. Williams as the sole limited partner, as amended
and restated in its entirety by the First Amended and Restated Agreement of
Limited Partnership of Post Apartment Homes, L.P., dated as of July 22, 1993,
between PPI as the sole general partner and the Limited Partners of Post
Apartment Homes, L.P., as further amended by the First Amendment to First
Amended and Restated Agreement of Limited Partnership of Post Apartment Homes,
L.P., dated as of October 1, 1996, and as further amended by the Second
Amendment to First Amended and Restated Agreement of Limited Partnership of
Post Apartment Homes, L.P., dated as of October 15, 1996, which Prior Agreement
is, itself, amended and restated in its entirety by this Agreement as of the
Effective Date.
"Recapture Income" means any gain recognized by the Partnership upon
the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as determined by PPI in its sole and absolute discretion. A Redeeming
Partner shall have no right,
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without the General Partner's and PPI's consent, to receive the Redemption
Amount in the form of the REIT Shares Amount.
"Redemption Right" shall have the meaning set forth in Section 8.6
hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a share of common stock of PPI.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Common Partnership Units offered for redemption by a
Redeeming Partner, multiplied by the Conversion Factor; provided that in the
event PPI issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the shareholders to subscribe
for or purchase REIT Shares, or any other securities or property (collectively,
the "rights") then the REIT Shares Amount shall also include such rights that a
holder of that number of REIT Shares would be entitled to receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"704(c) Value" of any Contributed Property means the value of such
property as set forth in Exhibit D, or if no value is set forth in Exhibit D,
the fair market value of such property or other consideration at the time of
contribution as determined by the General Partner using such reasonable method
of valuation as it may adopt; provided, however, that the 704(c) Value of any
property deemed contributed to the Partnership for federal income tax purposes
upon termination and reconstitution thereof pursuant to Section 708 of the Code
shall be determined in accordance with Exhibit B hereof. Subject to Exhibit B
hereof, the General Partner shall, in its sole and absolute discretion, use
such method as it deems reasonable and appropriate to allocate the aggregate of
the 704(c) Values of Contributed Properties in a single or integrated
transaction among the separate properties on a basis proportional to their
respective fair market values.
"Series A Preferred Partnership Unit" means a Partnership Unit issued
by the Partnership to PPI in consideration of the contribution by PPI to the
Partnership of the entire net proceeds received by PPI from the issuance of the
Series A Preferred Shares on October 1, 1996. The Series A Preferred
Partnership Units constitute Preferred Partnership Units. The Series A
Preferred Partnership Units have the voting powers, designation, preferences
and relative, participating,
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optional or other special rights and qualifications, limitations or
restrictions as are set forth in Exhibit F, attached hereto. Each Series A
Preferred Partnership Unit shall be substantially the economic equivalent of a
Series A Preferred Share. The Series A Preferred Partnership Units have been
assigned by PPI to the Post Partners as of the Effective Date.
"Series A Preferred Shares" means the 8 1/2% Series A Cumulative
Redeemable Preferred Shares, par value $0.01 per share, having a liquidation
preference equivalent to $50.00 per share, issued by PPI on October 1, 1996.
"Series 1996A Common Partnership Units" means a Partnership Unit
issued by the Partnership to John A. Williams and L. Barry Teague, as
Additional Limited Partners, on October 15, 1996 pursuant to Section 14.2. The
Series 1996A Common Partnership Units constitute Common Partnership Units. The
Series 1996A Common Partnership Units have the same designation, preferences
and relative, participating, optional and other special rights, powers and
duties as all other Common Partnership Units outstanding as of October 15,
1996, with the exception that no Series 1996A Common Partnership Units may be
redeemed pursuant to Section 8.6 hereof at any time prior to October 15, 1998.
"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the General Partner of a Notice of Redemption; provided that with
respect to any Series 1996A Common Partnership Unit, no Specified Redemption
Date shall occur prior to October 15, 1998 (i.e., two years following the
issuance of the Series 1996A Common Partnership Units); and provided further,
that if PPI combines its outstanding REIT Shares, no specified Redemption Date
shall occur after the record date and prior to the effective date of such
combination.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities, or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related
series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment
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to be made pursuant to Exhibit B hereof) as of such date, over (ii) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding
the Valuation Date. The market price for each such trading day shall be: (i)
if the REIT Shares are listed or admitted to trading on any securities exchange
or the Nasdaq National Market, the closing price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid and
asked prices on such day; (ii) if the REIT Shares are not listed or admitted to
trading on any securities exchange or the Nasdaq National Market, the last
reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by PPI; or (iii) if the REIT Shares are
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low asked prices
on such day, as reported by a reliable quotation source designated by PPI, or
if there shall be no bid and asked prices on such day, the average of the high
bid and low asked prices, as so reported, on the most recent day (not more than
ten (10) days prior to the date in question) for which prices have been so
reported; provided that if there are no bid and asked prices reported during
the ten (10) days prior to the date in question, the Value of the REIT Shares
shall be determined by PPI acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment, appropriate.
In the event the REIT Shares Amount includes rights that a holder of REIT
Shares would be entitled to receive, then the Value of such rights shall be
determined by PPI acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment, appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the Prior
Agreement. The Partners hereby amend and restate the Prior Agreement in its
entirety as of the Effective Date. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
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Section 2.2 Name
The name of the Partnership is Post Apartment Homes, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State
of Georgia is located at 1201 Peachtree Street, N.E., Suite 1240, Atlanta,
Georgia 30361, and the registered agent for service of process on the
Partnership in the State of Georgia at such registered office is CT Corporation
System. The principal office of the Partnership is located at Suite 2200, 3350
Cumberland Circle, N.W., Atlanta, Georgia 30339, and may be changed to such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Georgia as the General Partner deems
advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, seal, acknowledge, deliver, file
and record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatements
thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited partners have
limited liability to the extent provided by
applicable law) in the State of Georgia and in all
other jurisdictions in which the Partnership may or
plans to conduct business or own property; (b) all
instruments that the General Partner or the
Liquidator deems appropriate or necessary to reflect
any amendment, change, modification or restatement of
this Agreement in accordance with its terms; (c) all
conveyances and other instruments or documents that
the General Partner or the Liquidator deems
appropriate or necessary to reflect the
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dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of
the General Partner or the Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other
action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or the
Liquidator, to effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or the Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
or any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not
be affected by the subsequent Incapacity of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and
all defenses which may be available to contest, negate or disaffirm the action
of the General Partner or any Liquidator, taken in good faith under such power
of attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this
Agreement and the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on May 14, 1993, the date the
Certificate was filed in the office of the Secretary of State of Georgia in
accordance with the Act and shall continue until
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December 31, 2092, unless the Partnership is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit PPI at
all times to be classified as a REIT, unless PPI ceases to qualify as a REIT
for reasons other than the conduct of the business of the Partnership, (ii) to
enter into any partnership, joint venture or other similar arrangement to
engage in any of the foregoing or to own interests in any entity engaged in any
of the foregoing, and (iii) to do anything necessary or incidental to the
foregoing. In connection with the foregoing, and without limiting PPI's right
in its sole discretion to cease qualifying as a REIT, the Partners acknowledge
that PPI's current status as a REIT inures to the benefit of all of the
Partners and not solely the Post Partners, as wholly owned subsidiaries of PPI.
Section 3.2 Powers
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, provided that the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner or PPI, in its sole and absolute discretion,
(i) could adversely affect the ability of PPI to continue to qualify as a REIT,
(ii) could subject PPI to any additional taxes under Section 857 or Section
4981 of the Code; or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over PPI or its securities,
unless such action (or inaction) shall have been specifically consented to by
the General Partner and PPI in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
Capital Contributions made by Partners at the time of and prior to the
execution of this Agreement are set forth in Exhibit A to this Agreement. To
the extent the Partnership acquires any property by the merger of any other
Person into the Partnership, Persons who receive Partnership Interests in
exchange for their interests in the Person merging into the Partnership shall
become
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Partners and shall be deemed to have made Capital Contributions as provided in
the applicable merger agreement. Each Partner shall own Partnership Units in
the amount set forth for such Partner in Exhibit A, as amended from time to
time, and shall have a Percentage Interest in each class of Partnership Units
determined as set forth herein, which Percentage Interest shall be adjusted
from time to time by the General Partner to the extent necessary to reflect
accurately redemptions, Capital Contributions, the issuance of additional
Partnership Units (pursuant to any merger or otherwise), or similar events
having an effect on a Partner's Percentage Interest. Except as provided in
Sections 4.2, 10.5, and 13.3, the Partners shall have no obligation to make any
additional Capital Contributions or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the Post Partners) or
other Persons additional Partnership Units or other Partnership Interests in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties senior
to Limited Partner Interests, all as shall be determined by the General Partner
in its sole and absolute discretion and without the approval of any of the
Limited Partners, subject to Georgia law, including, without limitation, (i)
the allocations of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Interests; (ii) the right of
each such class or series of Partnership Interests to share in Partnership
distributions; and (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership, provided that no
such additional Partnership Units or other Partnership Interests shall be
issued to PPI or any Post Partner unless either
(a) (1) the additional Partnership Interests are issued
in connection with an issuance of shares of PPI, which shares have
designations, preferences and other rights, all such that the economic
interests are substantially similar to the designations, preferences
and other rights of the additional Partnership Interests issued to the
Post Partners in accordance with this Section 4.2.A, and (2) PPI shall
transfer to one or both of the Post Partners, by loan or capital
contribution, an amount equal to the proceeds raised in connection
with the issuance of such shares of PPI and, in turn, the applicable
Post Partners shall make Capital Contributions to the Partnership in
an aggregate amount equal to the amount transferred to them by PPI; or
(b) the additional Partnership Interests are issued to
all Partners holding Common Partnership Units in proportion to their
respective Percentage Interests in Common Partnership Units.
Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such
issuance is in the interest of PPI and the Partnership (for example, and not by
way of limitation, the issuance of Partnership Units pursuant to an employee
purchase plan
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providing for employee purchases of Partnership Units at a discount from fair
market value or employee options that have an exercise price that is less than
the fair market value of the Partnership Units, either at the time of issuance
or at the time of exercise).
B. PPI shall not issue any additional REIT Shares (other than REIT
Shares issued pursuant to Section 8.6), or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase REIT Shares (collectively, "New Securities") other than to all holders
of REIT Shares unless (i) the General Partner shall cause the Partnership to
issue to the Post Partners Partnership Interests or rights, options, warrants
or convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the New Securities; and (ii)
PPI transfers to one or both of the Post Partners, by loan or contribution, the
proceeds from the issuance of such New Securities and from the exercise of
rights contained in such New Securities and the applicable Post Partners, in
turn, contribute the amount so transferred to them to the Partnership. Without
limiting the foregoing, PPI is expressly authorized to issue New Securities for
less than fair market value, and the General Partner is expressly authorized to
cause the Partnership to issue to the Post Partners corresponding Partnership
Interests, so long as (x) the General Partner concludes in good faith that such
issuance is in the interest of PPI and the Partnership (for example, and not by
way of limitation, the issuance of REIT Shares and corresponding Partnership
Units pursuant to an employee stock purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise),
and (y) PPI transfers all proceeds from such issuance and exercise to the Post
Partners, whether by loan or capital contribution, and the Post Partners, in
turn, contribute the amount so transferred to them to the Partnership.
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares
In connection with the issuance of REIT Shares pursuant to Section
4.2, PPI shall transfer to one or both of the Post Partners any proceeds raised
in connection with such issuance, by loan or capital contribution, and the
applicable Post Partners, in turn, shall contribute the amount so transferred
to them to the Partnership, provided that if the proceeds actually received by
PPI are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then PPI shall be deemed to have transferred to the applicable
Post Partners, by loan or capital contribution, and the applicable Post
Partners shall be deemed in turn to have made Capital Contributions to the
Partnership, in the amount of the gross proceeds of such issuance and the
Partnership shall be deemed simultaneously to have reimbursed the Post Partners
pursuant to Section 7.4.C, and the Post Partners in turn shall be deemed to
have reimbursed PPI, for the amount of such underwriter's discount or other
expenses paid by PPI.
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ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute
quarterly an amount equal to 100% of Available Cash generated by the
Partnership during such quarter to the Partners who are Partners on the
Partnership Record Date with respect to such quarter in the following order of
priority:
(i) First, to the holders of the Preferred Partnership
Units in such amount as is required for the
Partnership to pay all distributions with respect to
such Preferred Partnership Units due or payable in
accordance with the instruments designating such
Preferred Partnership Units through the last day of
such quarter; such distributions shall be made to
such Partners in such order of priority and with such
preferences as have been established with respect to
such Preferred Partnership Units as of the last day
of such calendar quarter; and then
(ii) To the holders of Common Partnership Units in
proportion to their respective Percentage Interests
held with respect to Common Partnership Units on such
Partnership Record Date;
provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Partnership Unit if such Partner is
entitled to receive a distribution out of such Available Cash with
respect to a REIT Share for which such Partnership Unit has been
redeemed or exchanged. The General Partner shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and
consistent with PPI's qualification as a REIT, to distribute Available
Cash to the Limited Partners so as to preclude any such distribution
or portion thereof from being treated as part of a sale of property to
the Partnership by a Limited Partner under Section 707 of the Code or
the Regulations thereunder; provided that PPI, the General Partner and
the Partnership shall not have liability to a Limited Partner under
any circumstances as a result of any distribution to a Limited Partner
being so treated.
Notwithstanding anything to the contrary contained herein, in no
event shall any Partner receive a distribution of Available Cash with
respect to any Common Partnership Unit with respect to any quarter
until such time as the Partnership has distributed to the holders of
the Preferred Partnership Units an amount sufficient to pay all
distributions payable with respect to such Preferred Partnership Units
through the last day of such quarter, in accordance with the
instruments designating such Preferred Partnership Units.
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Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction, and any other cash
received or reductions in reserves made after commencement of the liquidation
of the Partnership, shall be distributed to the Partners in accordance with
Section 13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall
be allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations
set forth in Section 1 of Exhibit C, Net Income shall be allocated in
the following manner and order of priority:
(1) To the General Partner until the cumulative
allocations of Net Income under this Section 6.1.A.(1) equal the
cumulative Net Losses allocated to the General Partner under
Section 6.1.B.(5) hereof.
(2) To those Partners who have received allocations of
Net Loss under Section 6.1.B.(4) hereof until the cumulative
allocations of Net Income under this Section 6.1.A.(2) equal such
cumulative allocations of Net Loss (such allocation of Net Income
to be in proportion to the cumulative allocations of Net Loss
under such section to each such Partner).
(3) To the Post Partners until the cumulative allocations
of Net Income under this Section 6.1.A.(3) equal the cumulative
allocations of Net Loss to the Post Partners under Section
6.1.B.(3) hereof (such allocation of Net Income to be in
proportion to the cumulative allocations of Net Loss under such
section to each such Partner).
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(4) To those Partners who have received allocations of
Net Loss under Section 6.1.B.(2) hereof until the cumulative
allocations of Net Income under this Section 6.1.A.(4) equal such
cumulative allocations of Net Loss (such allocation of Net Income
to be in proportion to the cumulative allocations of Net Loss
under such section to each such Partner).
(5) To the Partners until the cumulative allocations of
Net Income under this Section 6.1.A.(5) equal the cumulative
allocations of Net Loss to such Partners under Section 6.1.B.(1)
hereof (such allocation of Net Income to be in proportion to the
cumulative allocations of Net Loss under such section to each
such Partner).
(6) Any remaining Net Income shall be allocated to the
Partners who hold Common Partnership Units in proportion to their
respective Percentage Interests with respect to Common
Partnership Units.
B. Net Losses. After giving effect to the special allocations
set forth in Section 1 of Exhibit C, Net Losses shall be allocated to
the Partners as follows:
(1) To the Partners who hold Common Partnership Units in
accordance with their respective Percentage Interests held with
respect to Common Partnership Units, except as otherwise provided
in this Section 6.1.B.
(2) To the extent that an allocation of Net Loss under
Section 6.1.B.(1) would cause a Partner to have an Adjusted
Capital Account Deficit at the end of such taxable year (or
increase any existing Adjusted Capital Account Deficit of such
Partner), such Net Loss shall instead be allocated to those
Partners, if any, for whom such allocation of Net Loss would not
cause or increase an Adjusted Capital Account Deficit. Solely
for purposes of this Section 6.1.B.(2), the Adjusted Capital
Account Deficit, in the case of the Post Partners, shall be
determined without regard to the amount credited to the Post
Partners' respective Capital Accounts for the aggregate
Liquidation Preference Amount attributable to Preferred
Partnership Units and without regard to any deemed deficit
restoration obligation of the General Partner recognized under
Regulations Section 1.704-1(b)(2)(ii)(c)(2); and in the case of a
Principal or a Principal-Controlled Partnership, shall be
determined without regard to such Partner's deficit Capital
Account restoration obligation under Section 13.3.B hereof. The
Net Loss allocated under this Section 6.1.B.(2) shall be
allocated among the Partners who may receive such allocation in
proportion to and to the extent of the respective amounts of Net
Loss that could be allocated to such Partners without causing
such Partners to have an Adjusted Capital Account Deficit.
(3) Any remaining Net Loss that cannot be allocated under
Sections 6.1.B.(1) and (2) hereof shall be allocated to the Post
Partners in proportion to their respective Percentage Interests
with respect to Preferred Partnership Units, to the extent that
such
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allocation of Net Loss would not cause or increase an Adjusted
Capital Account Deficit of the Post Partners determined, in the
case of the General Partner, without regard to any deemed deficit
restoration obligation of the General Partner recognized under
Regulations Section 1.704-1(b)(2)(ii)(c)(2).
(4) Any remaining Net Loss shall be allocated to the
Principals and the Principal-Controlled Partnerships in
accordance with their respective Percentage Interests in Common
Partnership Units; provided that if, after the death of a
Principal, the estate of such Principal or any
Principal-Controlled Partnership with respect to such Principal
elects pursuant to Section 13.3.C hereof to eliminate or reduce
its deficit Capital Account restoration obligation under Section
13.3.B hereof, Net Losses shall not be allocated to such Partner
to the extent that such allocation would cause such Partner to
have an Adjusted Capital Account Deficit (or would increase any
existing Adjusted Capital Account Deficit of such Partner) as of
the end of such taxable year, and instead shall be allocated to
those Principals and Principal- Controlled Partnerships as to
whom the foregoing limitation does not apply.
(5) Any remaining Net Loss shall be allocated to the
General Partner.
C. For purposes of Regulations Section 1.752-3(a), the Partners
agree that Nonrecourse Liabilities of the Partnership in excess of the
sum of (i) the amount of Partnership Minimum Gain, and (ii) the total
amount of Nonrecourse Built-in Gain shall be allocated among the
Partners in accordance with their respective Percentage Interests in
Common Partnership Units.
D. Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall to the extent
possible, after taking into account other required allocations of gain
pursuant to Exhibit C, be characterized as Recapture Income in the
same proportions and to the same extent as such Partners have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and no Limited Partner
shall have any right to participate in or exercise control or management power
over the business and affairs of the Partnership. The General Partner may not
be removed by the Limited Partners with or without cause. In addition to the
powers now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General
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Partner under any other provision of this Agreement, the General Partner,
subject to Section 7.3 hereof, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its
Partners in such amounts as will permit PPI (so long
as PPI qualifies as a REIT) to avoid the payment of
any federal income tax (including, for this purpose,
any excise tax pursuant to Section 4981 of the Code)
and to make distributions to the Post Partners such
that PPI can distribute to its shareholders amounts
sufficient to permit PPI to maintain REIT status),
the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance
of evidences of indebtedness (including the securing
of same by deed to secure debt, mortgage, deed of
trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any
obligations it deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to
governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership (including the exercise or grant
of any conversion, option, privilege, or subscription
right or any other right available in connection with
any assets at any time held by the Partnership) or
the merger or other combination of the Partnership
with or into another entity (all of the foregoing
subject to any prior approval only to the extent
required by Section 7.3 hereof);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on
any terms it sees fit, including, without limitation,
the financing of the conduct of the operations of
PPI, the General Partner, the Partnership or any of
the Partnership's Subsidiaries, the lending of funds
to other Persons (including without limitation
Subsidiaries of the Partnership and/or PPI), the
repayment of obligations of PPI, the Partnership,
Subsidiaries of the Partnership and/or PPI and any
other Person in which it has an equity investment,
and the making of capital contributions to
Subsidiaries of the Partnership and/or PPI;
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(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owned by the
Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under
this Agreement, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other
agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(9) the collection and receipt of revenues and income of
the Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees
of the Partnership, any division of the Partnership,
the General Partner or PPI (including, without
limitation, employees having titles such as
"president", "vice president", "secretary" and
"treasurer" of the Partnership, any division of the
Partnership, the General Partner or PPI), and agents,
outside attorneys, accountants, consultants and
contractors of the Partnership, any division of the
Partnership, the General Partner or PPI and the
determination of their compensation and other terms
of employment or hiring;
(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(12) the formation of, or acquisition of, an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures or
other relationships that it deems desirable
(including, without limitation, the acquisition of
interests in, and the contributions of property to,
its Subsidiaries and any other Person in which it has
an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration or
any other form of dispute resolution, or abandonment
of, any claim, cause
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of action, liability, debt or damages, due or owing
to or from the Partnership, the commencement or
defense of suits, legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, and the representation of the Partnership
in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense, and the
indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as it may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited
power of attorney, of any right, including the right
to vote, appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the Partnership
or any other Person in which the Partnership has a
direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any
Person in which the Partnership does not have an
interest pursuant to contractual or other
arrangements with such Person; and
(19) the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments
or agreements in writing necessary or appropriate in
the judgment of the General Partner for the
accomplishment of any of the powers of the General
Partner enumerated in this Agreement.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest extent permitted under the Act or other applicable
law. The execution, delivery or
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performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement
or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership; and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain any and all reserves,
working capital accounts and other cash or similar balances in such amounts as
the General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
E. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner of any action taken by it. The General Partner and
the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
To the extent that such action is determined by the General Partner to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which
the limited partners have limited liability) under the laws of the State of
Georgia and each other state or the District of Columbia, in which the
Partnership may elect to do business or own property. Subject to the terms of
Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability to the extent provided by
applicable law) in the State of Georgia and any other state, or the District of
Columbia, in which the Partnership may elect to do business or own property.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not, without the written Consent of all
of the Limited Partners, take any action in contravention of an express
prohibition or limitation contained in this Agreement.
B. Except as provided in Article 13 hereof, the General Partner may
not sell, exchange, transfer or otherwise dispose of all or substantially all
of the Partnership's assets in a single
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transaction or a series of related transactions (including by way of merger,
consolidation or other combination with any other Person) without the Consent
of the Limited Partners holding a majority of the outstanding Common
Partnership Units held by Limited Partners.
Section 7.4 Reimbursement of the General Partner and PPI
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner and PPI shall be reimbursed on a monthly
basis, or such other basis as the General Partner may determine in its sole and
absolute discretion, for all expenses the General Partner and/or PPI incur
relating to the ownership and operation of, or for the benefit of, the
Partnership, provided that the amount of any such reimbursement shall be
reduced by any interest earned by the General Partner or PPI with respect to
bank accounts or other instruments or accounts held by it on behalf of the
Partnership as permitted in Section 7.5.A. The Limited Partners acknowledge
that the sole business of the General Partner and PPI is the ownership of
direct or indirect interests in and the direct or indirect operation of the
Partnership and that all of the expenses of the General Partner and PPI are
incurred for the benefit of the Partnership. Such reimbursements shall be in
addition to any reimbursement to the General Partner or PPI as a result of
indemnification pursuant to Section 7.7 hereof.
C. The General Partner and PPI shall also be reimbursed for all
expenses they incur relating to the organization and/or reorganization of the
Partnership and the General Partner, the public offering of REIT Shares by PPI,
and any other issuance of additional Partnership Interests or REIT Shares
pursuant to Section 4.2 hereof.
D. In the event that the General Partner or PPI shall elect to
purchase from the shareholders of PPI REIT Shares pursuant to any stock
repurchase program or for the purpose of delivering such REIT Shares to satisfy
an obligation under Section 8.6 of this Agreement, any dividend reinvestment
program adopted by PPI, any employee stock purchase plan adopted by the General
Partner or PPI or any other similar obligation or arrangement undertaken by the
General Partner or PPI in the future, the purchase price paid by the General
Partner or PPI for such REIT Shares and any other expenses incurred by the
General Partner or PPI in connection with such purchase shall be considered
expenses of the Partnership and shall be reimbursed to the General Partner or
PPI, as the case may be, subject to the conditions that, if such REIT Shares
are sold by the General Partner or PPI, the General Partner shall contribute to
the Partnership any proceeds received by the General Partner or PPI for such
REIT Shares (provided that a transfer of REIT Shares for Partnership Units
pursuant to Section 8.6 shall not be considered a sale for such purpose).
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Section 7.5 Outside Activities of the General Partner, Post LP
Holdings and PPI
A. The General Partner shall not directly or indirectly enter into
or conduct any business other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner, the
management of the business of the Partnership and such activities as are
incidental thereto. Post LP Holdings shall not directly or indirectly enter
into or conduct any business other than in connection with the ownership,
organization and disposition of Partnership Interests as a Limited Partner, and
such activities as are incidental thereto. PPI shall not directly or
indirectly enter into or conduct any business other than in connection with the
direct or indirect ownership of the stock and debt obligations of the General
Partner and Post LP Holdings, making loans or contributions to the Post
Partners or the Partnership, and such activities as are incidental thereto.
PPI and the Post Partners shall not incur any debts other than (i) debts for
which the Partnership may be liable or for which the General Partner may be
liable in its capacity as General Partner of the Partnership, (ii) any guaranty
of any debt of the Partnership, or (iii) a debt incurred by PPI pursuant to
Article 5 of the Articles of Incorporation. The assets of the Post Partners
shall be limited to Partnership Interests and the assets of PPI shall be
limited to the direct and indirect ownership of the stock and debt obligations
of the Post Partners. The Post Partners shall not own any assets other than
Partnership Interests as a General Partner or Limited Partner, and other than
such bank accounts or similar instruments or accounts as each deems necessary
to carry out its responsibilities contemplated under this Agreement and the
Articles of Incorporation. The Post Partners, any Affiliates of the Post
Partners and PPI may acquire Limited Partner Interests and shall be entitled to
exercise all rights of a Limited Partner relating to such Limited Partner
Interests.
B. In the event PPI exercises its rights under Article 5 of the
Articles of Incorporation to purchase REIT Shares, then the General Partner
shall cause the Partnership to purchase from one or both of the Post Partners
that number of Common Partnership Units equal to the product obtained by
multiplying the number of REIT Shares to be purchased by PPI times the
Conversion Factor on the same terms and for the same aggregate price that PPI
purchased such REIT Shares. The applicable Post Partners shall then distribute
such funds to PPI.
C. The Post Partners shall not issue at any time any capital stock
(whether voting or non-voting, common or preferred) or any evidence of
indebtedness, except to PPI or any direct or indirect wholly owned subsidiary
of PPI.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other assets to
its Subsidiaries or other Persons in which it has an equity investment, and
such Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
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B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law as
the General Partner, in its sole and absolute discretion, believes are
advisable.
C. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are determined by the General
Partner in good faith, in its sole and absolute discretion, to be fair and
reasonable.
D. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf
of the Partnership employee benefit plans, stock option plans and similar plans
funded by the Partnership for the benefit of employees of the General Partner,
PPI, the Partnership, Subsidiaries of the Partnership or any Affiliate of any
of them in respect of services performed, directly or indirectly, for the
benefit of the Partnership, the General Partner, PPI or any of the
Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership, PPI and the General Partner, on such terms as the General Partner,
in its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. The Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including without limitation attorney's fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, provided
that the Partnership shall not indemnify an Indemnitee (i) for intentional
misconduct or a knowing violation of the law, or (ii) for any transaction for
which such Indemnitee received a personal benefit in violation or breach of any
provision of this Agreement. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. It is the intention of
this Section 7.7.A that the Partnership indemnify each Indemnitee to the
fullest extent permitted under the Act. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the Indemnitee
did not meet the requisite standard of conduct set forth in this Section 7.7.A.
The termination of any proceeding by conviction of an
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Indemnitee or upon a plea of nolo contendere or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to
judgment, creates a rebuttable presumption that such Indemnitee acted in a
manner contrary to that specified in this Section 7.7.A with respect to the
subject matter of such proceeding. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and
neither the General Partner nor any Limited Partner shall have any obligation
to contribute to the capital of the Partnership or otherwise provide funds,
including pursuant to Section 13.3.B, to enable the Partnership to fund its
obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking
by or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement with
such Indemnitee or in the writing pursuant to which such Indemnitee is
indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any of the Indemnitees and such other Persons
as the General Partner shall determine, against any liability that may be
asserted against or expenses that may be incurred by such Person in connection
with the Partnership's activities, regardless of whether the Partnership would
have the power to indemnify such Person against such liability under the
provisions of this Agreement.
E. Any liabilities which an Indemnitee incurs as a result of acting
on behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of
an employee benefit plan or any related trust or funding mechanism (whether
such liabilities are in the form of excise taxes assessed by the Internal
Revenue Service, penalties assessed by the Department of Labor, restitutions to
such a plan or trust or other funding mechanism or to a participant or
beneficiary of such plan, trust or other funding mechanism, or otherwise) shall
be treated as liabilities or judgments or fines under this Section 7.7, unless
such liabilities arise as a result of (i) such Indemnitee's intentional
misconduct or knowing violation of the law, or (ii) any transaction in which
such Indemnitee received a personal benefit in violation or breach of any
provision of this Agreement or applicable law.
F. In no event may an Indemnitee subject any of the Partners to
personal liability by reason of the indemnification provisions set forth in
this Agreement.
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G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on
the Partnership's liability to any Indemnitee under this Section 7.7 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
I. To the extent, but only to the extent, that this Section 7.7 is
subject to the limitations on indemnification set forth in Official Code of
Georgia Annotated Section 13-8-2(b), and indemnification of an Indemnitee
pursuant to this Section 7.7 would under the circumstances violate the
provisions of such statute (taking into account, among other things, the
availability of insurance coverage and the intention of the Partnership to
allocate to the Partnership rather than the Indemnitees the risks of insurable
claims), this Section 7.7 shall not be construed as purporting to indemnify
such Indemnitee against or to hold such Indemnitee harmless from liability for
damages arising solely out of bodily injury to persons or damage to property
resulting from the sole negligence of such Indemnitee.
Section 7.8 Liability of the General Partner and PPI
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor PPI shall be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses sustained
or liabilities incurred as a result of errors in judgment or of any act or
omission if the General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, PPI and PPI's shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or Assignees) in deciding whether to cause
the Partnership to take (or decline to take) any actions, and that neither the
General Partner nor PPI shall be liable for monetary damages for losses
sustained, liabilities incurred, or benefits not derived by Limited Partners in
connection with such decisions, provided that the General Partner has acted in
good faith.
C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. Neither the
General Partner nor PPI shall be responsible for any misconduct or negligence
on the part of any such agent appointed by the General Partner in good faith.
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D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it,
and any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such
attorney shall, to the extent provided by the General Partner in the power of
attorney, have full power and authority to do and perform all and every act and
duty which is permitted or required to be done by the General Partner
hereunder.
D. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission
is necessary or advisable in order (i) to protect the ability of PPI to
continue to qualify as a REIT, or (ii) to avoid PPI incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General
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Partner shall be held by the General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause
beneficial and record title to such assets to be vested in the Partnership as
soon as reasonably practicable. All Partnership assets shall be recorded as
the property of the Partnership in its books and records, irrespective of the
name in which legal title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without the consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on behalf of
the Partnership, and take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the
General Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such
dealing. In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
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of the Partnership's business, transact any business in the Partnership's name
or have the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, director, employee, partner, agent or trustee of the General
Partner, the Partnership or any of their Affiliates, in their capacity as such,
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 7.6.E
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner (other
than any Post Partner) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner (other than any Post Partner)
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities that are in direct competition with the Partnership or
that are enhanced by the activities of the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. None of the
Limited Partners nor any other Person shall have any rights by virtue of this
Agreement or the partnership relationship established hereby in any business
ventures of any other Person (other than PPI and the Post Partners to the
extent expressly provided herein) and such Person shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures
to the Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except to
the extent provided by Exhibit C hereof or as permitted by Section 4.2.A, or
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
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(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by PPI pursuant to the Securities
Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership
Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner; and
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate and all
amendments thereto have been executed.
B. The Partnership shall notify any Limited Partner, on request, of
the then current Conversion Factor or any change made to the Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the General Partner in good faith believes is not in
the best interests of the Partnership or could damage the Partnership or its
business, or (ii) the Partnership is required by law or by agreements with an
unaffiliated third party to keep confidential.
Section 8.6 Redemption Right
A. Subject to the provisions of this Section 8.6., each Limited
Partner, other than any Post Partner, shall have the right (the "Redemption
Right") to require the Partnership to redeem on a Specified Redemption Date all
or a portion of the Partnership Units held by such Limited Partner at a
redemption price equal to and in the form of the Redemption Amount to be paid
by the Partnership. The Redemption Right shall be exercised pursuant to a
Notice of Redemption delivered to the General Partner by the Limited Partner
who is exercising the redemption right (the "Redeeming Partner"). A Limited
Partner may not exercise the Redemption Right for less than one thousand
(1,000) Partnership Units or, if such Limited Partner holds less than one
thousand (1,000) Partnership Units, all of the Partnership Units held by such
Limited Partner. The Redeeming Partner shall have no right, with respect to
any Partnership Units so redeemed, to receive any distributions paid after the
Specified Redemption Date. The Assignee of any Limited Partner may exercise
the rights of such Limited Partner pursuant to this Section 8.6, and such
Limited Partner shall be deemed to have assigned such rights to such Assignee
and shall be bound by the exercise of such rights by such Limited Partner's
Assignee. In connection with any exercise of such rights by such Assignee
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on behalf of such Limited Partner, the Redemption Amount shall be paid by the
Partnership directly to such Assignee and not to such Limited Partner.
B. Notwithstanding the provisions of Section 8.6.A, either of the
General Partner or PPI may, in its sole and absolute discretion, assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner the
Redemption Amount on the Specified Redemption Date, whereupon the General
Partner or PPI, as the case may be, shall acquire the Partnership Units offered
for redemption by the Redeeming Partner and shall be treated for all purposes
of this Agreement as the owner of such Partnership Units. In the event the
General Partner or PPI shall exercise this right to satisfy the Redemption
Right in the manner described in the preceding sentence, the Partnership shall
have no obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner's exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership and, as the case may be, the General Partner
or PPI shall treat the transaction between the General Partner or PPI, as the
case may be, and the Redeeming Partner as a sale of the Redeeming Partner's
Partnership Units to the General Partner or PPI, as the case may be, for
federal income tax purposes. Each Redeeming Partner agrees to execute such
documents as the General Partner or PPI, as the case may be, may reasonably
require in connection with the issuance of REIT Shares upon exercise of the
Redemption Right.
C. Notwithstanding any other provision of this Section 8.6, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date would be prohibited under the Articles of Incorporation.
D. Notwithstanding any other provision of this Section 8.6, no
Partner shall be entitled to exercise the Redemption Right pursuant to Section
8.6.A with respect to any Preferred Partnership Unit unless the General Partner
has expressly granted to such Partner in the instrument designating such
Preferred Partnership Units (or series or class thereof), the right to redeem
such Preferred Partnership Units pursuant to Section 8.6.A. Preferred
Partnership Units shall be redeemed, if at all, only in accordance with such
redemption rights or options as are set forth with respect to such Preferred
Partnership Units (or class or series thereof) in the instruments designating
such Preferred Partnership Units (or class or series thereof).
E. No Series 1996A Common Partnership Unit may be redeemed pursuant
to this Section 8.6 at any time prior to October 15, 1998, unless sooner
permitted by the General Partner in its sole discretion.
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ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles, or on such other basis as the General
Partner determines to be necessary or appropriate.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of the
Partnership or, if such statements are prepared solely on a consolidated basis
with the General Partner and/or PPI, financial statements of the General
Partner and/or PPI for such Partnership Year, presented in accordance with
generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner.
B. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each calendar quarter (except the last
calendar quarter of each year), the General Partner shall cause to be mailed to
each Limited Partner as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership or, if such
statements are prepared solely on a consolidated basis with the General Partner
and/or PPI, financial statements of the General Partner and/or PPI, as well as
such other information as may be required by applicable law or regulation, or
as the General Partner determines to be appropriate.
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ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code; provided, however, that the General Partner shall make
the election under Section 754 of the Code in accordance with applicable
Regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6223(c)(3) of
the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of
each of the Limited Partners and the Assignees; provided, however, that such
information is provided to the Partnership by the Limited Partners and the
Assignees.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to
be taken into account by a Partner for income tax
purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters
partner may expressly state that such agreement shall
bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner, or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of
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the Code) or a member of a "notice group" (as
addressed in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the United
States Claims Court, or the filing of a complaint for
refund with the District Court of the United States
for the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a
Partner for tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
law.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to
assist the tax matters partner in discharging its duties hereunder, so long as
the compensation paid by the Partnership for such services is reasonable.
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Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60)-month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines
that the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute
a loan by the Partnership to such Limited Partner, which loan shall be repaid
by such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds
such payment from a distribution which would otherwise be made to the Limited
Partner, or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of
the Partnership which would, but for such payment, be distributed to the
Limited Partner. Any amounts withheld pursuant to the foregoing clauses (i) or
(ii) shall be treated as having been distributed to such Limited Partner.
Each Limited Partner hereby unconditionally and irrevocably grants to the
Partnership a security interest in such Limited Partner's Partnership Interest
to secure such Limited Partner's obligation to pay to the Partnership any
amounts required to be paid pursuant to this Section 10.5. In the event that a
Limited Partner fails to pay any amounts owed to the Partnership pursuant to
this Section 10.5 when due, the General Partner may, in its sole and absolute
discretion, elect to make the payment to the Partnership on behalf of such
defaulting Limited Partner, and in such event shall be deemed to have loaned
such amount to such defaulting Limited Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Limited Partner.
Without limitation, in such event the General Partner shall have the right to
receive distributions that would otherwise be distributable to such defaulting
Limited Partner until such time as such loan, together with all interest
thereon, has been paid in full; and any such distributions so received by the
General Partner shall be treated as having been distributed to the defaulting
Limited Partner and immediately paid by the defaulting Limited Partner to the
General Partner in repayment of such loan. Any amounts payable by a Limited
Partner hereunder shall bear interest at the lesser of (A) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in The Wall Street Journal, plus four (4)
percentage points or (b) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each
Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with respect to
a Partnership Unit, shall be deemed to refer to a transaction by which the
General Partner purports to assign all or any part of its General Partner
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Limited Partner Interest to another Person, and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any redemption of Partnership Units by a
Limited Partner or acquisition of Partnership Units from a Limited Partner by
the General Partner or PPI pursuant to Section 8.6.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of Post Partners' Partnership Interests or
PPI's Ownership Interest
A. No Post Partner may transfer any of its Partnership Interest or
withdraw as General Partner or Limited Partner, as appropriate, except as
provided in Section 11.2.B or in connection with a Transaction described in
Section 11.2.C. PPI shall not transfer any of its Ownership Interest except in
connection with a Transaction described in Section 11.2.C.
B. Any Post Partner may transfer Partnership Interests held by it
(i) to the Partnership in accordance with Section 7.5.B hereof; (ii) to a
purported holder of REIT Shares in accordance with the provisions of Article 5
of the Articles of Incorporation; or (iii) to PPI, to the other Post Partner or
to any other direct or indirect wholly owned subsidiary of PPI.
C. Except as otherwise provided in Section 11.2.D, PPI shall not
engage in any merger, consolidation or other combination with or into another
Person or sale of all or substantially all of its assets, or any
reclassification, or recapitalization or change of outstanding REIT Shares
(other than a change in par value, or from par value to no par value, or as a
result of a subdivision or combination as described in the definition of
"Conversion Factor") ("Transaction"), unless (i) the Transaction also includes
a merger of the Partnership or sale of substantially all of the assets of the
Partnership which has been approved by the requisite Consent of Partners
pursuant to Section 7.3 and as a result of which all Limited Partners will
receive for each Common Partnership Unit an amount of cash, securities or other
property equal to the product of the Conversion Factor and the greatest amount
of cash, securities or other property paid to a holder of one REIT Share in
consideration of one REIT Share at any time during the period from and after
the date on which the Transaction is consummated, provided that if, in
connection with the Transaction, a purchase, tender or exchange offer shall
have been made to and accepted by the holders of more than fifty percent
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(50%) of the outstanding REIT Shares, each holder of Common Partnership Units
shall receive the greatest amount of cash, securities or other property which
such holder would have received had it exercised the Redemption Right and
received REIT Shares in exchange for its Common Partnership Units immediately
prior to the expiration of such purchase, tender or exchange offer and had
thereupon accepted such purchase, tender or exchange offer; and (ii) no more
than seventy-five percent (75%) of the equity securities of the acquiring
Person in such Transaction shall be owned, after consummation of such
Transaction, by PPI, the General Partner or Persons who are Affiliates of PPI,
the Partnership or the General Partner immediately prior to the date on which
the Transaction is consummated.
D. Notwithstanding Section 11.2.C, any Post Partner or PPI may merge
or combine with another entity if immediately after such merger substantially
all of the assets of the surviving entity, other than general or limited
Partnership Units held by any Post Partner or PPI, are contributed to the
Partnership as a Capital Contribution in exchange for Partnership Units (either
directly by the Post Partners or indirectly by PPI to the Post Partners and
then by the Post Partners to the Partnership). In addition, PPI may merge or
combine with any Post Partner or any other direct or indirect wholly owned
subsidiary of PPI, and any Post Partner may merge or combine with any other
Post Partner or any direct or indirect wholly owned subsidiary of PPI and, if
determined by the General Partner to be in the best interests of PPI and the
Partnership, with the Partnership.
Section 11.3 Limited Partners' Rights to Transfer
A. Subject to the provisions of Section 11.3.F, no Limited Partner
shall have the right to transfer all or any portion of his Partnership
Interest, or any of such Limited Partner's rights as a Limited Partner, without
the prior written consent of the General Partner, which consent may be given or
withheld by the General Partner in its sole and absolute discretion. Any
purported transfer of a Partnership Interest by a Limited Partner in violation
of this Section 11.3.A shall be void ab initio and shall not be given effect
for any purpose by the Partnership.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose
of settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer otherwise permitted
under Section 11.3.F by a Limited Partner of his Partnership Units (i) if, in
the opinion of legal counsel to the Partnership, such transfer would require
filing of a registration statement under the Securities Act of 1933 or would
otherwise violate any federal, state or foreign securities laws or regulations
applicable to the Partnership or the Partnership Units, or (ii) if the
transferring Limited Partner fails or is unable to obtain and deliver to the
Partnership a legal opinion, from counsel acceptable to the General Partner,
addressed to the Partnership and the General Partner, that such registration is
not required in
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connection with such transfer and that such transfer does not violate any
federal, state or foreign securities laws or regulations applicable to the
Partnership or the Partnership Units.
D. No transfer by a Limited Partner of his Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704(b) of the Code.
E. No transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General
Partner, in its sole and absolute discretion.
F. Notwithstanding the provisions of Section 11.3.A (but subject to
the provisions of Sections 11.3.C, 11.3.D, and 11.3.E), a Limited Partner may
transfer, with or without the consent of the General Partner, all or a portion
of his Partnership Units to (i) a member of his Immediate Family, or a trust
for the benefit of a member of his Immediate Family, in a donative transfer
that does not involve the receipt of any consideration (but not by inheritance
so long as the transferee at the death of such Limited Partner would have a
basis for federal income tax purposes in such Partnership Units equal to their
fair value at the time of such Limited Partner's death); or (ii) an
organization that qualifies under Section 501(c)(3) of the Code and that is not
a private foundation within the meaning of Section 509(a) of the Code; provided
that in the case of either (i) or (ii) above, such transferee shall constitute
an "accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended.
G. The transfer of any Limited Partner Interest by Post LP Holdings
or any other Post Partner shall be governed by Section 11.2 hereof rather than
this Section 11.3.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place. The General Partner shall,
however, have the right to consent to the admission of a transferee of the
interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be given or withheld by the General Partner
in its sole and absolute discretion. The General Partner's failure or refusal
to permit a transferee of any such interests to become a Substituted Limited
Partner shall not give rise to any cause of action against the Partnership or
any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
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C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be deemed to have had assigned to it, and shall be entitled to receive,
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income and any other items of income, gain, loss, deduction and
credit of the Partnership attributable to the Partnership Units assigned to
such transferee, but shall not be deemed to be a holder of Partnership Units
for any other purpose under this Agreement, and shall not be entitled to vote
such Partnership Units in any matter presented to the Limited Partners for a
vote (such Partnership Units being deemed to have been voted on such matter in
the same proportion as all other Partnership Units held by Limited Partners are
voted). In the event any such transferee desires to make a further assignment
of any such Partnership Units, such transferee shall be subject to all the
provisions of this Article 11 to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than
as a result of a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 or pursuant to redemption
of all of its Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of his Partnership
Units in a transfer permitted pursuant to this Article 11 shall cease to be a
Limited Partner upon the admission of all Assignees of such Partnership Units
as Substituted Limited Partners. Similarly, any Limited Partner who shall
transfer all of his Partnership Units pursuant to a redemption of all of his
Partnership Units under Section 8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the
first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.
D. If any Partnership Unit is transferred or assigned in compliance
with the provisions of this Article 11, or redeemed or transferred pursuant to
Section 8.6, on any day other than the first day of a Partnership Year, then
Net Income, Net Losses, each item thereof and all other items attributable to
such Partnership Unit for such Partnership Year shall be allocated to the
transferor Partner or the Redeeming Partner, as the case may be, and, in the
case of a transfer or assignment other than a redemption, to the transferee
Partner, by taking into account their varying interests
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during the Partnership Year in accordance with Section 706(d) of the Code,
using the interim closing of the books method. Solely for purposes of making
such allocations, each of such items for the calendar month in which a transfer
or assignment occurs shall be allocated to the transferee Partner, and none of
such items for the calendar month in which a transfer or a redemption occurs
shall be allocated to the transferor Partner or the Redeeming Partner, as the
case may be. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before
the date of such transfer, assignment or redemption shall be made to the
transferor Partner or the Redeeming Partner, as the case may be, and, in the
case of a transfer or assignment other than a redemption, all distributions of
Available Cash thereafter attributable to such Partnership Unit shall be made
to the transferee Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the
case of such admission on any day other than the first day of a Partnership
Year, all items attributable to the General Partner Interest for such
Partnership Year shall be allocated between the transferring General Partner
and such successor as provided in Section 11.6.D hereof.
Section 12.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial Limited
Partners on the date of the closing of the IPO, a Person who made or makes a
Capital Contribution to the Partnership in accordance with this Agreement or
who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the
General Partner (i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 2.4 hereof, and
(ii) such other documents or instruments as may be required in the discretion
of the General Partner in order to effect such Person's admission as an
Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name
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of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership
on any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using the interim closing of the books method. Solely for
purposes of making such allocations, each of such items for the calendar month
in which an admission of any Additional Limited Partner occurs shall be
allocated among all the Partners and Assignees including such Additional
Limited Partner. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and Assignees other than the Additional Limited Partner, and
all distributions of Available Cash thereafter shall be made to all the
Partners and Assignees including such Additional Limited Partner.
D. Pursuant to the Second Amendment to the First Amended and
Restated Partnership Agreement of Post Apartment Homes, L.P., dated October 15,
1996 (the "Second Amendment") the Series 1996A Common Partnership Units
(consisting of 138,150 Common Partnership Units) were issued to John A.
Williams and L. Barry Teague in connection with the Partnership's exercise of
an option to acquire real property owned by a partnership of which Messrs.
Williams and Teague were the sole partners. Such option was exercised, and
such Partnership Units were issued, with the approval of a majority of the
disinterested directors of PPI. Such Partnership Units were issued pursuant to
Section 4.2.A hereof, and are reflected on Exhibit A hereto.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
Section 12.4. Acknowledgment of and Consent to Certain
Transactions.
On or about the Effective Date, the following transactions have
occurred:
(1) PPI has organized Post GP Holdings as a wholly-owned subsidiary
of PPI.
(2) PPI has organized Post Merger Sub as a wholly-owned subsidiary of
PPI.
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(3) PPI has transferred to Post GP Holdings the General Partner
Interest, consisting of one percent (1%) of the aggregate Common
Partnership Units outstanding immediately prior to the Effective
Date.
(4) PPI has transferred to Post Merger Sub all Partnership Units
(common and preferred), other than the General Partner Interest,
held by PPI immediately prior to the Effective Date, and Post
Merger Sub has been admitted to the Partnership as a substituted
Limited Partner in the Partnership in place of PPI.
(5) Post GP Holdings has assumed and agreed to undertake, and does
hereby assume and agree to undertake, PPI's rights, duties and
responsibilities as General Partner hereunder, and PPI has
withdrawn from the Partnership as both the General Partner and
Limited Partner, such that PPI is no longer a Partner in the
Partnership. Post GP Holdings has been and is hereby admitted to
the Partnership as substitute General Partner of the Partnership.
(6) Pursuant to an Agreement and Plan of Merger, dated as of August
1, 1997, among PPI, Columbus Realty Trust ("Columbus") and Post
Merger Sub, Columbus has merged with and into Post Merger Sub,
with Post Merger Sub being the surviving corporation of the
merger (the "Columbus Merger").
(7) PPI has organized Post LP Holdings as a wholly-owned subsidiary
of PPI.
(8) PPI has contributed one hundred percent (100%) of the capital
stock of Post Merger Sub to Post LP Holdings. As a result of
such contribution, Post Merger Sub became a wholly-owned,
indirect subsidiary of PPI.
(9) PPI and Post LP Holdings have caused Post Merger Sub to be merged
with and into the Partnership, with the Partnership being the
surviving limited partnership (the "Second Merger"). As a result
of the Second Merger, the Partnership has acquired all
Partnership Units previously held by Post Merger Sub and all
assets of Post Merger Sub acquired from Columbus in the Columbus
Merger.
(10) As consideration for the Second Merger, the Partnership has
issued to Post LP Holdings, a number of Partnership Units equal
to the sum of (a) all Partnership Units previously held by Post
Merger Sub, as described above, consisting of the number of
Common Partnership Units and Series A Partnership Units acquired
by the Partnership from Post Merger Sub in the Second Merger,
plus (b) an additional number of Common Partnership Units equal
to the sum of (x) the aggregate number of REIT Shares issued to
Shareholders of Columbus in the Columbus Merger, plus (y) the
aggregate number of fractional REIT Shares (rounded to the
nearest whole number) in respect to which PPI paid cash to
Columbus shareholders in the Columbus Merger. Such Partnership
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Units so issued by the Partnership to Post LP Holdings as a
result of the Second Merger are reflected on Exhibit A.
(11) The General Partner, on behalf of the Partnership, has admitted
and does hereby admit Post LP Holdings to the Partnership as a
substituted Limited Partner, subject to the provisions of this
Agreement applicable to Post LP Holdings.
The Partners hereby consent to each of the foregoing transactions.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act (other than an event described in Sections 14-9-602(a)(4) and
14-9-602(a)(5) of the Act), unless, within ninety (90) days after the
withdrawal all the remaining Partners agree in writing to continue the business
of the Partnership and to the appointment, effective as of the date of
withdrawal, of a successor General Partner;
C. from and after the date of this Agreement through December 31,
2013, an election to dissolve the Partnership made by the General Partner,
unless any Original Limited Partner who holds one or more Original Limited
Partnership Units objects in writing to such dissolution within thirty (30)
days of receiving written notice of such election from the General Partner;
D. from and after January 1, 2014 through December 31, 2043, an
election to dissolve the Partnership made by the General Partner, unless
Original Limited Partners holding at least five percent (5%) of the Original
Limited Partnership Units object in writing to such dissolution within thirty
(30) days of receiving written notice of such election from the General
Partner;
E. on or after January 1, 2044, an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
F. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
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G. the sale of all or substantially all of the assets and properties
of the Partnership; or
H. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to the entry of such order or judgment all of the
remaining Partners agree in writing to continue the business of the Partnership
and to the appointment, effective as of a date prior to the date of such order
or judgment, of a substitute General Partner.
Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner or, in the event there is no remaining
General Partner, any Person elected by a majority in interest of the Limited
Partners (the General Partner or such other Person being referred to herein as
the "Liquidator") shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and
distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Post
Partners;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners;
(4) The balance, if any, to the General Partner and
Limited Partners in accordance with their Capital
Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the
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Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors)
and/or distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith
judgment of the Liquidator, such distributions in kind are in the best interest
of the Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market value
of any property distributed in kind using such reasonable method of valuation
as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of
the General Partner and Limited Partners for the
purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General
Partner arising out of or in connection with the
Partnership. The assets of any such trust shall be
distributed to the General Partner and Limited
Partners from time to time, in the reasonable
discretion of the Liquidator, in the same proportions
as the amount distributed to such trust by the
Partnership would otherwise have been distributed to
the General Partner and Limited Partners pursuant to
this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any
installment obligations owed to the Partnership,
provided that such withheld or escrowed amounts shall
be distributed to the General Partner and Limited
Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
Section 13.3 Negative Capital Accounts
A. Except as provided in this Section 13.3, no Partner, General or
Limited, shall be liable to the Partnership or to any other Partner for any
negative balance outstanding in each such Partner's Capital Account, whether
such negative Capital Account results from the allocation of Net Losses or
other items of deduction and loss to such Partner or from distributions to such
Partner.
B. Subject to Section 13.3.C, if a Principal or a
Principal-Controlled Partnership, on the date of the "liquidation" of his
respective interest in the Partnership (within the meaning of Regulations
Section 1.704- 1(b)(2)(ii)(g)), has a negative balance in his Capital Account,
then such
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Partner shall contribute in cash to the capital of the Partnership the amount
required to increase his Capital Account as of such date to zero. Any such
contribution required of a Partner hereunder shall be made on or before the
later of (i) the end of the Partnership Year in which the interest of such
Partner is liquidated; or (ii) the ninetieth (90th) day following the date of
such liquidation. Notwithstanding any provision hereof to the contrary, all
amounts so contributed by a Partner to the capital of the Partnership shall,
upon the liquidation of the Partnership under this Article 13, be first paid to
any then creditors of the Partnership, and any remaining amount shall be
distributed to the other Partners, if any, then having positive balances in
their respective Capital Accounts in proportion to such positive balances.
C. After the death of a Principal, the executor of the estate of
such Principal may elect to reduce (or eliminate) the deficit Capital Account
restoration obligation of such Principal pursuant to Section 13.3.B. Such
election may be made by such executor by delivering to the General Partner
within two hundred seventy (270) days of the death of such Principal a written
notice setting forth the maximum deficit balance in his Capital Account that
such executor agrees to restore under Section 13.3.B, if any. If such executor
does not make a timely election pursuant to this Section 13.3.C (whether or not
the balance in his Capital Account is negative at such time), then such
Principal's estate (and the beneficiaries thereof who receive distribution of
Partnership Units therefrom) shall be deemed to have a deficit Capital Account
restoration obligation as set forth pursuant to the terms of Section 13.3.B.
Any Principal- Controlled Partnership may likewise elect, after the death of
its respective Principal, to reduce (or eliminate) its deficit Capital Account
restoration obligation pursuant to Section 13.3.B by delivering a similar
written notice to the General Partner within the time period specified herein.
Any Principal-Controlled Partnership that does not make any such timely
election shall similarly be deemed to have a deficit Capital Account
restoration obligation as set forth pursuant to the terms of Section 13.3.B.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed the property in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such property subject
to all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership property in kind to the
Partnership, which shall be deemed to have assumed and taken such property
subject to all such liabilities.
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Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of his
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Limited
Partner as to the return of his Capital Contributions, distributions, or
allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for an election or objection by one or more Partners pursuant to Section
13.1, result in a dissolution of the Partnership, the General Partner shall,
within thirty (30) days thereafter, provide written notice thereof to each of
the Partners.
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Georgia shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partners holding twenty-five percent (25%) or more of
the Partnership Interests. Following
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such proposal, the General Partner shall submit any proposed amendment to the
Limited Partners. The General Partner shall seek the written vote of the
Partners on the proposed amendment or shall call a meeting to vote thereon and
to transact any other business that it may deem appropriate. For purposes of
obtaining a written vote, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and failure to
respond in such time period shall constitute a vote which is consistent with
the General Partner's recommendation with respect to the proposal. Except as
provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed amendment shall be
adopted and be effective as an amendment hereto if it is approved by the
General Partner and it receives the Consent of the Partners holding a majority
of the Percentage Interests of the Limited Partners with respect to Common
Partnership Units (including Limited Partner Interests held by any Post
Partner). [If the General Partner holds less than one percent (1%) of the
Common Partnership Units outstanding as of the date any Consent is sought
pursuant to the immediately preceding sentence, then solely for the purposes of
such Consent the number of Common Partnership Units held by the Post Partners
as Limited Partner Interests shall be reduced by the number of Common
Partnership Units that, if added to the Common Partnership Units then held by
the General Partner, would cause the General Partner to hold one percent (1%)
of the outstanding Common Partnership Units; the purpose of this sentence being
to avoid dilution of the Consent rights of Limited Partners other than the Post
Partners as compared to the Consent rights of such Limited Partners under the
Prior Agreement, which required the General Partner to maintain one percent
(1%) of the Partnership Units as the General Partner Interest.]
B. Notwithstanding Section 14.1.A, the General Partner shall have
the power, without the consent of the Limited Partners, to amend this Agreement
as may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Section 4.2.A hereof;
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited
Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in
this Agreement not inconsistent with law or with
other provisions, or make other changes with respect
to matters arising under this Agreement that will not
be inconsistent with law or with the provisions of
this Agreement; and
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(5) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained
in federal or state law.
The General Partner shall provide notice to the Limited Partners when any
action under this Section 14.1.B is taken.
C. Notwithstanding Sections 14.1.A and 14.1.B hereof, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner interest, (ii) modify the limited liability
of a Limited Partner in a manner adverse to such Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5, or the
allocations specified in Article 6, in a manner adverse to such Partner (except
as permitted pursuant to Section 4.2 and Section 14.1.B(3) hereof), (iv) alter
or modify the Redemption Right and REIT Shares Amount as set forth in Sections
8.6 and 11.2.B, and related definitions hereof, in a manner adverse to such
Partner, (v) cause the termination of the Partnership prior to the time set
forth in Sections 2.5 or 13.1, or (vi) amend this Section 14.1.C. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth in Section 7.3 without the Consent specified in that section.
D. Notwithstanding Section 14.1.A hereof, the General Partner shall
not amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without the Consent of the
Partners holding a majority of the Percentage Interests held by the Limited
Partners with respect to Common Partnership Units (excluding Limited Partner
Interests held by any Post Partner).
Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests held with respect to Common Partnership Units. The call shall state
the nature of the business to be transacted. Notice of any such meeting shall
be given to all Partners not less than seven (7) days nor more than thirty (30)
days prior to the date of such meeting. Partners may vote in person or by
proxy at such meeting. Whenever the vote or Consent of Partners is permitted
or required under this Agreement, such vote or Consent may be given at a
meeting of Partners or may be given in accordance with the procedure prescribed
in Section 14.1 hereof. Except as otherwise expressly provided in this
Agreement, the Consent of holders of a majority of the Percentage Interests
held with respect to Common Partnership Units shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners held with respect to Common Partnership Units (or such other
percentage as is expressly required by this Agreement). Such consent may be in
one instrument or in several instruments, and shall have the same force and
effect as a vote of a majority of the
-54-
<PAGE> 59
Percentage Interests of the Partners held with respect to Common Partnership
Units (or such other percentage as is expressly required by this Agreement).
Such consent shall be filed with the General Partner. An action so taken shall
be deemed to have been taken at a meeting held on the effective date so
certified.
C. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or his attorney-in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the Limited Partner
executing it, such revocation to be effective upon the Partnership's receipt of
written notice of such revocation from the Limited Partner executing such
proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to
such rules for the conduct of the meeting as the General Partner or such other
Person deems appropriate in his sole discretion. Without limitation, meetings
of Partners may be conducted in the same manner as meetings of the shareholders
of PPI and may be held at the same time, and as part of, meetings of the
shareholders of PPI.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by
first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles"
and "Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
-55-
<PAGE> 60
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.7 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
Section 15.8 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Georgia, without regard to the principles
of conflicts of law.
Section 15.9 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.10 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any other prior written or oral understandings or agreements
among them with respect thereto.
Section 15.11 Guaranty by PPI
PPI unconditionally and irrevocably guarantees to the Limited Partners
the performance by the Post Partners of the Post Partners' respective
obligations under this Agreement. This guarantee is exclusively for the
benefit of the Limited Partners and shall not extend to the benefit of any
creditor of the Partnership.
-56-
<PAGE> 61
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first written above.
GENERAL PARTNER:
POST GP HOLDINGS, INC.
By: /s/ John T. Glover
----------------------------------
John T. Glover
President
[CORPORATE SEAL]
LIMITED PARTNERS:
POST LP HOLDINGS, INC.:
By: /s/ John T. Glover
----------------------------------
John T. Glover
President
[CORPORATE SEAL]
Each of the Limited Partners listed on Exhibit A
(other than Post LP Holdings, Inc.)
By: POST PROPERTIES, INC.,
as attorney-in-fact
By: /s/ John A. Williams (SEAL)
----------------------------------
John A. Williams
Chairman
-57-
<PAGE> 62
Post Properties, Inc. has executed and delivered this Agreement solely for the
purposes of agreeing to the provisions of this Agreement applicable to it,
including without limitation Section 15.11 hereof. Neither this execution by
Post Properties, Inc. nor anything contained herein constitute or shall be
deemed to constitute Post Properties, Inc. as a partner in the Partnership.
POST PROPERTIES, INC.
By /s/ John A. Williams
---------------------
John A. Williams
Chairman
-58-
<PAGE> 63
EXHIBIT A
PARTNERS, CONTRIBUTIONS AND
PARTNERSHIP INTERESTS
[AWAITING CONFIRMATION FROM POST.]
<TABLE>
<CAPTION>
Agreed Value of
Name and Address Cash Contributed Total Partnership Date of
of Partner Contribution Property Contribution Units Contribution(s)
<S> <C> <C> <C> <C> <C>
General Partner
Post GP Holdings, Inc.
Suite 2200
3350 Cumberland Circle
Atlanta, Georgia 30309
Limited Partners
Post LP Holdings, Inc.
Additional Limited
Partners
</TABLE>
EXHIBIT A
(Page 1 of ___)
<PAGE> 64
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each
Partner a separate Capital Account in
accordance with the rules of Regulations
Section 1.704-1(b)(2)(iv). Such Capital
Account shall be increased by (i) the amount
of all Capital Contributions and any other
deemed contributions made by such Partner to
the Partnership pursuant to this Agreement,
and (ii) all items of Partnership income and
gain (including income and gain exempt from
tax) computed in accordance with Section 1.B
hereof and allocated to such Partner pursuant
to Section 6.1.A of the Agreement and Exhibit
C hereof, and decreased by (x) the amount of
cash or Agreed Value of all actual and deemed
distributions of cash or property made to
such Partner pursuant to this Agreement and
(y) all items of Partnership deduction and
loss computed in accordance with Section 1.B
hereof and allocated to such Partner pursuant
to Section 6.1.B of the Agreement and Exhibit
C hereof.
B. For purposes of computing the amount of any
item of income, gain, deduction or loss to be
reflected in the Partners' Capital Accounts,
unless otherwise specified in this Agreement,
the determination, recognition and
classification of any such item shall be the
same as its determination, recognition and
classification for federal income tax
purposes determined in accordance with
Section 703(a) of the Code (for this purpose
all items of income, gain, loss or deduction
required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be
included in taxable income or loss), with the
following adjustments:
(1) Except as otherwise provided
in Regulations Section
1.704(b)(2)(iv)(m), the
computation of all items of
income, gain, loss and
deduction shall be made
without regard to any
election under Section 754 of
the Code which may be made by
the Partnership, provided
that the amounts of any
adjustments to the adjusted
bases of the assets of the
Partnership made pursuant to
Section 734 of the Code as a
result of the distribution of
property by the Partnership
to a Partner (to the extent
that such adjustments have
not previously been reflected
in the Partners' Capital
Accounts) shall be reflected
in the Capital Accounts of
the Partners in the manner
and subject to the
limitations prescribed in
Regulations Section
1.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items
of income, gain, loss and
deduction shall be made
without regard to the fact
that items described in
Sections 705(a)(1)(B) or
705(a)(2)(B) of the Code are
not includable in gross
EXHIBIT B
(Page 1 of 4)
<PAGE> 65
income or are neither
currently deductible nor
capitalized for federal income
tax purposes.
(3) Any income, gain or loss
attributable to the taxable
disposition of any
Partnership property shall be
determined as if the adjusted
basis of such property as of
such date of disposition were
equal in amount to the
Partnership's Carrying Value
with respect to such property
as of such date.
(4) In lieu of the depreciation,
amortization and other cash
recovery deductions taken
into account in computing
such taxable income or loss,
there shall be taken into
account Depreciation for such
fiscal year.
(5) In the event the Carrying
Value of any Partnership
Asset is adjusted pursuant to
Section 1.D hereof, the
amount of any such adjustment
shall be taken into account
as gain or loss from the
disposition of such asset.
(6) Any items specially
allocated under Section 2 of
Exhibit C hereof shall not be
taken into account.
C. Generally, a transferee (including any
Assignee) of a Partnership Unit shall succeed
to a pro rata portion of the Capital Account
of the transferor; provided, however, that,
if the transfer causes a termination of the
Partnership under Section 708(b)(1)(B) of the
Code, the Partnership's properties shall be
deemed, solely for federal income tax
purposes, to have been distributed in
liquidation of the Partnership to the holders
of Partnership Units (including such
transferee) and recontributed by such Persons
in reconstitution of the Partnership. In
such event, the Carrying Values of the
Partnership properties shall be adjusted
immediately prior to such deemed distribution
pursuant to Section 1.D.(2) hereof. The
Capital Accounts of such reconstituted
Partnership shall be maintained in accordance
with the principles of this Exhibit B.
D. (1) Consistent with the provisions of
Regulations Section
1.704-1(b)(2)(iv)(f), and as
provided in Section 1.D.(2), the
Carrying Values of all Partnership
assets shall be adjusted upward or
downward to reflect any Unrealized
Gain or Unrealized Loss attributable
to such Partnership property, as of
the times of the adjustments
provided in Section 1.D.(2) hereof,
as if such Unrealized Gain or
Unrealized Loss had been recognized
on an actual sale of each such
property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of
the following times: (a) immediately
prior to the acquisition of an
additional interest in the
Partnership by any new or existing
Partner in exchange for more than a
de minimis Capital
EXHIBIT B
(Page 2 of 4)
<PAGE> 66
Contribution; (b) immediately prior
to the distribution by the
Partnership to a Partner of more than
a de minimis amount of property as
consideration for an interest in the
Partnership; and (c) immediately
prior to the liquidation of the
Partnership within the meaning of
Regulations Section 1.704-
1(b)(2)(ii)(g), provided, however,
that adjustments pursuant to clauses
(a) and (b) above shall be made only
if the General Partner determines
that such adjustments are necessary
or appropriate to reflect the
relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations
Section 1.704-1(b)(2)(iv)(e) the
Carrying Value of Partnership assets
distributed in kind shall be
adjusted upward or downward to
reflect any Unrealized Gain or
Unrealized Loss attributable to such
Partnership property, as of the time
any such asset is distributed.
(4) In determining Unrealized Gain or
Unrealized Loss for purposes of this
Exhibit B, the aggregate cash amount
and fair market value of all
Partnership assets (including cash
or cash equivalents) shall be
determined by the General Partner
using such reasonable method of
valuation as it may adopt, or in the
case of a liquidating distribution
pursuant to Article 13 of the
Agreement, be determined and
allocated by the Liquidator using
such reasonable methods of valuation
as it may adopt. The General
Partner, or the Liquidator, as the
case may be, shall allocate such
aggregate value among the assets of
the Partnership (in such manner as
it determines in its sole and
absolute discretion to arrive at a
fair market value for individual
properties).
E. The provisions of this Agreement (including
this Exhibit B and the other Exhibits to this
Agreement) relating to the maintenance of
Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner
consistent with such Regulations. In the
event the General Partner shall determine
that it is prudent to modify the manner in
which the Capital Accounts, or any debits or
credits thereto (including, without
limitation, debits or credits relating to
liabilities which are secured by contributed
or distributed property or which are assumed
by the Partnership, the General Partner, or
the Limited Partners), are computed in order
to comply with such Regulations, the General
Partner may make such modification, provided
that it is not likely to have a material
effect on the amounts distributable to any
Person pursuant to Article 13 of the
Agreement upon the dissolution of the
Partnership. The General Partner also shall
(i) make any adjustments that are necessary
or appropriate to maintain equality between
the Capital Accounts of the Partners and the
amount of Partnership capital reflected on
the Partnership's balance sheet, as computed
for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and
(ii) make any appropriate
EXHIBIT B
(Page 3 of 4)
<PAGE> 67
modifications in the event unanticipated
events might otherwise cause this Agreement
not to comply with Regulations Section
1.704-(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 hereof.
EXHIBIT B
(Page 4 of 4)
<PAGE> 68
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if
there is a net decrease in Partnership Minimum Gain during any Partnership
Year, each Partner shall be specially allocated items of Partnership gross
income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Section
1.704-2(f)(6). This Section 1.A is intended to comply with the minimum gain
chargeback requirements in Regulations Section 1.704-2(f) and for purposes of
this Section 1.A only, each Partner's Adjusted Capital Account Deficit shall be
determined prior to any other allocations pursuant to Section 6.1 of this
Agreement with respect to such Partnership Year and without regard to any
decrease in Partner Minimum Gain during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of the Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Partnership gross
income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Partner's share of the net decrease in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i)(5). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i)(4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit C with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
EXHIBIT C
(Page 1 of 4)
<PAGE> 69
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions described
in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704- 1(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof, such Partner has an Adjusted Capital Account
Deficit, items of Partnership gross income and gain shall be specifically
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as
possible.
D. Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests in Common Partnership Units. If the General
Partner determines in its good faith discretion that Nonrecourse Deductions for
any Partnership Year must be allocated in a different ratio to satisfy the safe
harbor requirements of the Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the Limited Partners,
to revise the prescribed ratio for such Partnership Year to the numerically
closest ratio which does satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Regulations Section 1.704-2(i)(2).
F. Priority Allocation With Respect To Preferred Partnership
Units. All or a portion of the remaining items of Partnership gross income or
gain for the Partnership Year, if any, shall be specially allocated to the Post
Partners in an amount equal to the excess, if any, of the cumulative
distributions received by each Post Partner pursuant to Section 5.1(i) hereof
for the current Partnership Year and all prior Partnership Years (other than
any distributions that are treated as being in satisfaction of the Liquidation
Preference Amount for any Preferred Partnership Units) over the cumulative
allocations of Partnership gross income and gain to such Post Partner under
this Section 1.F for all prior Partnership Years (such allocations being made
in proportion to the respective excess amounts for each Post Partner).
G. Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
EXHIBIT C
(Page 2 of 4)
<PAGE> 70
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain, loss,
and deduction shall be allocated for federal income tax purposes among the
Partners as follows:
(1) In the case of a Contributed Property, such
items attributable thereto shall be allocated
a. among the Partners consistent with
the principles of Section 704(c) of
the Code that takes into account the
variation between the 704(c) Value
of such property and its adjusted
basis at the time of contribution;
and
b. any item of Residual Gain or
Residual Loss attributable to a
Contributed Property shall be
allocated among the Partners in the
same manner as its correlative item
of "book" gain or loss is allocated
pursuant to Section 6.1 of the
Agreement and Section 1 of this
Exhibit C.
(2) In the case of an Adjusted Property, such
items attributable thereto shall be
allocated,
a. first, among the Partners in a
manner consistent with the
principles of Section 704(c) of the
Code to take into account the
Unrealized Gain or Unrealized Loss
attributable to such property and
the allocations thereof pursuant to
Exhibit B;
b. second, in the event such property
was originally a Contributed
Property, among the Partners in a
manner consistent with Section
2.B.(1) of this Exhibit C; and
c. any item of Residual Gain or
Residual Loss attributable to an
Adjusted Property shall be allocated
among the Partners in the same
manner as its correlative item of
"book" gain or loss is allocated
EXHIBIT C
(Page 3 of 4)
<PAGE> 71
pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
(3) All other items of income, gain, loss and
deduction shall be allocated among the
Partners in the same manner as their
correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section
704(c) of the Code permit a partnership to utilize alternative methods to
eliminate the disparities between the agreed value of property and its adjusted
basis (including, without limitation, the implementation of curative
allocations), the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners.
Without limiting the foregoing, the General Partner shall take all
steps (including, without limitation, implementing curative allocations) that
it determines are necessary or appropriate to ensure that the amount of taxable
gain required to be recognized by the General Partner upon a disposition by the
Partnership of any Contributed Property or Adjusted Property does not exceed
the sum of (i) the gain that would be recognized by the General Partner if such
Property had an adjusted tax basis at the time of disposition equal to the
704(c) Value of such property; plus (ii) the deductions for depreciation,
amortization or other cost recovery actually allowed to the General Partner
with respect to such property for federal income tax purposes (after giving
effect to the "ceiling rule").
EXHIBIT C
(Page 4 of 4)
<PAGE> 72
EXHIBIT D
VALUE OF CONTRIBUTED PROPERTY
<TABLE>
<S> <C> <C>
Underlying Property 704(c) Value Agreed Value
- ------------------- ------------ ------------
</TABLE>
EXHIBIT D
(Page 1 of 1)
<PAGE> 73
EXHIBIT E
NOTICE OF REDEMPTION
The undersigned Limited Partner hereby irrevocably (i) redeems
__________ Partnership Units in Post Apartment Homes, L.P. in accordance with
the terms of the Second Amended and Restated Agreement of Limited Partnership
of Post Apartment Homes, L.P., as amended, and the Redemption Right referred to
therein, (ii) surrenders such Partnership Units and all right, title and
interest therein, and (iii) directs that the Cash Amount or REIT Shares (as
determined by the General Partner) deliverable upon exercise of the Redemption
Right be delivered to the address specified below, and if REIT Shares are to be
delivered, such REIT Shares be registered or placed in the name(s) and at the
address(es) specified below. The undersigned hereby represents, warrants,
certifies and agrees (a) that the undersigned has good, marketable and
unencumbered title to such Partnership Units, free and clear of the rights or
interests of any other person or entity, (b) that the undersigned has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein, (c) that the undersigned has obtained the consent or approval
of all persons or entities, if any, having the right to consent to or approve
such redemption and surrender, (d) that, if REIT Shares are to be delivered,
the undersigned is acquiring such REIT Shares for his own account, for
investment and without a view to engaging in any resale or distribution
thereof, except such as may occur pursuant to the registration statement
required to be filed by the Company pursuant to a Registration Rights and
Lock-Up Agreement to which the undersigned and the General Partner are parties,
(e) that, if REIT Shares are to be delivered, such REIT Shares may not be
transferred by the undersigned except in transactions pursuant to such
registration statement or that are exempt from the registration requirements of
the Securities Act of 1933 and all applicable state and foreign securities laws
and (f) that, if REIT Shares are to be delivered, the Company may refuse to
transfer such REIT Shares as to which evidence satisfactory to it of such
registration or exemptions is not provided to it.
Dated:
-------------
Name of Limited Partner:
-----------------------------
(Signature of Limited Partner)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-----------------------------
IF REIT SHARES ARE TO BE ISSUED, ISSUE TO:
Please insert social security or identifying number:
EXHIBIT E
(Page 1 of 1)
<PAGE> 74
EXHIBIT F
DESIGNATION OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE
SERIES A PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series A Preferred Partnership Units
established pursuant to this Amendment:
1. Number
The maximum number of authorized Series A Preferred Partnership Units
shall be 1,150,000.
2. Relative Seniority
In respect of rights to receive quarterly distributions and to
participate in distributions of payments in the event of any liquidation,
dissolution or winding up of the Partnership, the Series A Preferred
Partnership Units shall rank senior to the Common Partnership Units and any
other class or series of Partnership Units of the Partnership ranking, as to
quarterly distributions and upon liquidation, junior to the Series A Preferred
Partnership Units (collectively, "Junior Partnership Units").
3. Quarterly Distributions
A. The Post Partners, in their capacity as the holders of the
then outstanding Series A Preferred Partnership Units, shall be entitled to
receive, when and as declared by the General Partner out of any funds legally
available therefor, cumulative quarterly distributions at the rate of $4.25 per
Series A Preferred Partnership Unit per year, payable in equal amounts of
$1.0625 per unit quarterly in cash on the last day of each March, June,
September, and December or, if not a Business Day (as hereinafter defined), the
next succeeding Business Day beginning on December 31, 1996 (each such day
being hereafter called a "Quarterly Distribution Date" and each period ending
on a Quarterly Distribution Date being hereinafter called a "Distribution
Period"). Quarterly distributions on each Series A Preferred Partnership Unit
shall accrue and be cumulative from and including the date of original issue
thereof, whether or not (i) quarterly distributions on such Series A Preferred
Partnership Units are earned or declared; or (ii) on any Quarterly Distribution
Date there shall be funds legally available for the payment of quarterly
distributions. Quarterly distributions paid on the Series A Preferred
Partnership Units in an amount less than the total amount of such quarterly
distributions at the time accrued and payable on such Partnership Units shall
be allocated pro rata on a per unit basis among all such Series A Preferred
Partnership Units at the time outstanding.
EXHIBIT E
(Page 1 of 4)
<PAGE> 75
"Business Day" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in New
York City are authorized or required by law, regulation or executive order to
close.
B. The amount of any quarterly distributions accrued on any
Series A Preferred Partnership Units at any Quarterly Distribution Date shall
be the amount of any unpaid quarterly distributions accumulated thereon, to and
including such Quarterly Distribution Date, whether or not earned or declared,
and the amount of quarterly distributions accrued on any Series A Preferred
Partnership Units at any date other than a Quarterly Distribution Date shall be
equal to the sum of the amount of any unpaid quarterly distributions
accumulated thereon, to and including the last preceding Quarterly Distribution
Date, whether or not earned or declared, plus an amount calculated on the basis
of the annual distribution rate of $4.25 per unit for the period after such
last preceding Quarterly Distribution Date to and including the date as of
which the calculation is made based on a 360-day year of twelve 30-day months.
C. Except as provided herein, the Series A Preferred Partnership
Units shall not be entitled to participate in the earnings or assets of the
Partnership, and no interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution or distributions on the Series A
Preferred Partnership Units which may be in arrears.
D. Any distribution made on the Series A Preferred Partnership
Units shall be first credited against the earliest accrued but unpaid quarterly
distribution due with respect to such Partnership Units which remains payable.
E. No quarterly distributions on the Series A Preferred
Partnership Units shall be authorized by the General Partner or be paid or set
apart for payment by the Partnership at such time as the terms and provisions
of any agreement of PPI, the General Partner or the Partnership, including any
agreement relating to its indebtedness, prohibits such authorization, payment
or setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law. Notwithstanding the foregoing, quarterly distributions on
the Series A Preferred Partnership Units will accrue whether or not the
Partnership has earnings, whether or not there are funds legally available for
the payment of such quarterly distributions and whether or not such quarterly
distributions are authorized.
4. Liquidation Rights
A. Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Partnership, the Post Partners, in their capacity as the
holders of the Series A Preferred Partnership Units then outstanding, shall be
entitled to receive and to be paid out of the assets of the Partnership
available for distribution to its partners, before any payment or distribution
shall be made on any Junior Partnership Units, the amount of $50.00 per Series
A Preferred Partnership Unit, plus accrued and unpaid quarterly distributions
thereon.
EXHIBIT F
(Page 2 of 4)
<PAGE> 76
B. After the payment to the holders of the Series A Preferred
Partnership Units of the full preferential amounts provided for herein, the
Post Partners, in their capacity as the holders of the Series A Preferred
Partnership Units as such, shall have no right or claim to any of the remaining
assets of the Partnership.
C. If, upon any voluntary or involuntary dissolution,
liquidation, or winding upon of the Partnership, the amounts payable with
respect to the preference value of the Series A Preferred Partnership Units and
any other Preferred Partnership Units of the Partnership ranking as to any such
distribution on a parity with the Series A Preferred Partnership Units are not
paid in full, the holders of the Series A Preferred Partnership Units and of
such other Preferred Partnership Units will share ratably in any such
distribution of assets of the Partnership in proportion to the full respective
preference amounts to which they are entitled.
D. Neither the sale, lease or conveyance of all or substantially
all of the property or business of the Partnership, nor the merger or
consolidation of the Partnership into or with any other entity or the merger or
consolidation of any other entity into or with the Partnership, shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, for
the purposes hereof.
5. Redemption
A. Optional Redemption. On and after October 1, 2026, the
General Partner may, at its option, cause the Partnership to redeem at any time
all or, from time to time, part of the Series A Preferred Partnership Units at
a price per unit (the " Redemption Price"), payable in cash, of $50, together
with all accrued and unpaid distributions to the and including the date fixed
for redemption (the "Redemption Date"). The Series A Preferred Partnership
Units have no stated maturity and will not be subject to any sinking fund or
mandatory redemption provisions.
B. Procedures of Redemption.
(1) At any time that PPI exercises its right to redeem
all or any of the Series A Preferred Shares, the
General Partner shall exercise its right to cause the
Partnership to redeem an equal number of Series A
Preferred Partnership Units in the manner set forth
herein.
(2) No Series A Preferred Partnership Units may be
redeemed except from proceeds from the sale of
capital stock of PPI, including but not limited to
common stock, preferred stock, depositary shares,
interests, participations or other ownership
interests (however designated) and any rights (other
than debt securities convertible into the
exchangeable for equity securities) or options to
purchase any of the foregoing. The proceeds of such
sale of capital stock of PPI shall be conveyed by PPI
to the Post Partners, by contribution or loan, and
thereupon contributed by the Post Partners to the
Partnership pursuant to the requirements of Section
4.2 of the Partnership Agreement.
EXHIBIT F
(Page 3 of 4)
<PAGE> 77
6. Voting Rights
Except as required by law, the General Partner, in its capacity as the
holder of the Series A Preferred Partnership Units, shall not be entitled to
vote at any meeting of the Partners or for any other purpose or otherwise to
participate in any action taken by the Partnership or the Partners, or to
receive notice of any meeting of Partners.
7. Conversion
The Series A Preferred Partnership Units are not convertible into or
exchangeable for an other property or securities of the Partnership.
8. Restrictions on Ownership
The Series A Preferred Partnership Units shall be owned and held
solely by one or both of the Post Partners. As of the date hereof, all of the
Series A Preferred Partnership Units are owned by Post LP Holdings.
9. General
The rights of the Post Partners, in their capacity as holders of the
Series A Preferred Partnership Units, are in addition to and not in limitation
on any other rights or authority of the Post Partners, in any other capacity,
under the Partnership Agreement. In addition, nothing contained herein shall
be deemed to limit or otherwise restrict any rights or authority of the Post
Partners under the Partnership Agreement, other than in their capacity as the
holders of the Series A Preferred Partnership Units.
EXHIBIT F
(Page 4 of 4)
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
POST APARTMENT HOMES, L.P.
This First Amendment to Second Amended and Restated Agreement of
Limited Partnership of Post Apartment Homes, L.P. (this "Amendment") is entered
into as of October 28, 1997, by and among Post GP Holdings, Inc. (the "General
Partner") and the Limited Partners of Post Apartment Homes, L.P. All capitalized
terms used herein shall have the meanings given to them in the Second Amended
and Restated Agreement of Limited Partnership of Post Apartment Homes, L.P.,
dated October 24, 1997 (the "Partnership Agreement").
WHEREAS, Post Properties, Inc. ("PPI"), on even date herewith, has
issued 2,000,000 shares of its 75/8% Series B Cumulative Redeemable Preferred
Shares, par value $0.01 per share, having a liquidation preference equivalent to
$25.00 per share (the "Series B Preferred Shares"), and has sold such Series B
Preferred Shares in a public offering;
WHEREAS, PPI has contributed to Post LP Holdings, Inc. ("Post LP
Holdings") the net proceeds of the sale of the Series B Preferred Shares;
WHEREAS, Post LP Holdings desires to contribute such net proceeds of
the sale of the Series B Preferred Shares to the Partnership in exchange for
partnership interests in the Partnership as set forth herein;
WHEREAS, the General Partner is authorized to cause the Partnership to
issue interests in the Partnership to Post LP Holdings in exchange for such
contribution;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Contribution.
PPI has contributed to Post LP Holdings, and Post LP Holdings in turn
hereby contributes to the Partnership, the entire net proceeds received by PPI
from the issuance of the Series B Preferred Shares. As provided in Section 4.3
of the Partnership Agreement, Post LP Holdings shall be deemed to have made a
Capital Contribution to the Partnership in the amount of the gross proceeds of
such issuance, which is $50,000,000.00, and the Partnership shall be deemed
simultaneously to have reimbursed Post LP Holdings (and Post LP Holdings shall
be deemed to have reimbursed PPI)
<PAGE> 2
pursuant to Section 7.4.C of the Partnership Agreement for the amount of the
underwriters discount and other costs incurred by PPI in connection with such
issuance.
Section 2. Issuance of Series B Preferred Partnership Units.
In consideration of the contribution to the Partnership made by Post LP
Holdings pursuant to Section 1 hereof, the Partnership hereby issues to Post LP
Holdings 2,000,000 Series B Preferred Partnership Units (as defined herein).
Section 3. Definitions.
In addition to those terms defined in the Partnership Agreement, the
following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in the Partnership
Agreement and in this Amendment:
"Series B Preferred Partnership Unit" means a Partnership Unit
issued by the Partnership to Post LP Holdings in consideration of the
contribution by Post LP Holdings to the Partnership of the entire net
proceeds received by Post LP Holdings from PPI in connection with PPI's
issuance of the Series B Preferred Shares. The Series B Preferred
Partnership Units shall constitute Preferred Partnership Units. The
Series B Preferred Partnership Units shall have the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions as are
set forth in Exhibit G, attached hereto. It is the intention of the
General Partner, in establishing the Series B Preferred Partnership
Units, that each Series B Preferred Partnership Unit shall be
substantially the economic equivalent of a Series B Preferred Share.
"Series B Preferred Shares" means the 75/8 % Series B
Cumulative Redeemable Preferred Shares, par value $0.01 per share,
having a liquidation preference equivalent to $25.00 per share, issued
by PPI.
Section 4. Exhibits to Partnership Agreement.
The General Partner shall maintain the information set forth in Exhibit
A to the Partnership Agreement, as such information shall change from time to
time, in such form as the General Partner deems appropriate for the conduct of
the Partnership affairs, and Exhibit A shall be deemed amended from time to time
to reflect the information so maintained by the General Partner, whether or not
a formal amendment to the Partnership Agreement has been executed amending such
Exhibit A. In addition to the issuance of Series B Preferred Partnership Units
to Post LP Holdings pursuant to this Amendment, such information shall reflect
(and Exhibit A shall be deemed amended from time to time to reflect) the
issuance of any additional Partnership Units to one or both of the Post Partners
or any other Person, the transfer of Partnership Units and the redemption of any
Partnership Units, all as contemplated herein.
In addition, the Partnership Agreement is hereby amended by attaching
thereto as Exhibit G the Exhibit G attached hereto.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed the Amendment
under seal as of the date first written above.
GENERAL PARTNER:
POST GP HOLDINGS, INC.,
a Georgia corporation
By: /s/ John A. Williams
-----------------------------------------
John A. Williams
Chairman and Chief Executive Officer
Attest: /s/ Sherry W. Cohen
-------------------------------------
Sherry W. Cohen
Vice President and Secretary
[CORPORATE SEAL]
LIMITED PARTNERS:
POST GP HOLDINGS, INC.,
a Georgia corporation,
as attorney-in-fact for the
Limited Partners
By: /s/ John A. Williams
-----------------------------------------
John A. Williams
Chairman and Chief Executive Officer
Attest: /s/ Sherry W. Cohen
-------------------------------------
Sherry W. Cohen
Vice President and Secretary
[CORPORATE SEAL]
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<PAGE> 4
EXHIBIT G
POST APARTMENT HOMES, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE
SERIES B PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series B Preferred Partnership Units
established pursuant to this Amendment:
(a) NUMBER. The maximum number of authorized Series B Preferred
Partnership Units shall be 2,300,000.
(b) RELATIVE SENIORITY. In respect of rights to receive quarterly
distributions and to participate in distributions of payments in the event of
any liquidation, dissolution or winding up of the Partnership, the Series B
Preferred Partnership Units shall rank senior to the Common Partnership Units
and any other class or series of Partnership Units of the Partnership ranking,
as to quarterly distributions and upon liquidation, junior to the Series B
Preferred Partnership Units (collectively, "Junior Partnership Units").
(c) QUARTERLY DISTRIBUTIONS.
(1) The Post Partners, in their capacity as the holders of the
then outstanding Series B Preferred Partnership Units, shall be entitled to
receive, when and as declared by the General Partner out of any funds legally
available therefor, cumulative quarterly distributions at the rate of $1.90625
per Series B Preferred Partnership Unit per year, payable in equal amounts of
$0.47656 per unit quarterly in cash on the last day of each March, June,
September, and December or, if not a Business Day (as hereinafter defined), the
next succeeding Business Day beginning on December 31, 1997 (each such day being
hereafter called a "Quarterly Distribution Date" and each period ending on a
Quarterly Distribution Date being hereinafter called a "Distribution Period").
Quarterly distributions on each Series B Preferred Partnership Unit shall accrue
and be cumulative from and including the date of original issue thereof, whether
or not (i) quarterly distributions on such Series B Preferred Partnership Units
are earned or declared or (ii) on any Quarterly Distribution Date there shall be
funds legally available for the payment of quarterly distributions. Quarterly
distributions paid on the Series B Preferred Partnership Units in an amount less
than the total amount of such quarterly
G-1
<PAGE> 5
distributions at the time accrued and payable on such Partnership Units shall be
allocated pro rata on a per unit basis among all such Series B Preferred
Partnership Units at the time outstanding.
"Business Day" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in New
York City are authorized or required by law, regulation or executive order to
close.
(2) The amount of any quarterly distributions accrued on any
Series B Preferred Partnership Units at any Quarterly Distribution Date shall be
the amount of any unpaid quarterly distributions accumulated thereon, to and
including such Quarterly Distribution Date, whether or not earned or declared,
and the amount of quarterly distributions accrued on any Series B Preferred
Partnership Units at any date other than a Quarterly Distribution Date shall be
equal to the sum of the amount of any unpaid quarterly distributions accumulated
thereon, to and including the last preceding Quarterly Distribution Date,
whether or not earned or declared, plus an amount calculated on the basis of the
annual distribution rate of $1.90625 per unit for the period after such last
preceding Quarterly Distribution Date to and including the date as of which the
calculation is made based on a 360-day year of twelve 30-day months.
(3) Except as provided herein, the Series B Preferred Partnership
Units shall not be entitled to participate in the earnings or assets of the
Partnership, and no interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution or distributions on the Series B
Preferred Partnership Units which may be in arrears.
(4) Any distribution made on the Series B Preferred Partnership
Units shall be first credited against the earliest accrued but unpaid quarterly
distribution due with respect to such Partnership Units which remains payable.
(5) No quarterly distributions on the Series B Preferred
Partnership Units shall be authorized by the General Partner or be paid or set
apart for payment by the Partnership at such time as the terms and provisions of
any agreement of PPI, General Partner or the Partnership, including any
agreement relating to its indebtedness, prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law. Notwithstanding the foregoing, quarterly distributions on the
Series B Preferred Partnership Units will accrue whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such quarterly distributions and whether or not such quarterly distributions
are authorized.
(d) LIQUIDATION RIGHTS.
(1) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Partnership, the Post Partners, in their capacity as the
holders of the Series B Preferred Partnership Units then outstanding, shall be
entitled to receive and to be paid out of the assets of the Partnership
G-2
<PAGE> 6
available for distribution to its partners, before any payment or distribution
shall be made on any Junior Partnership Units, the amount of $25.00 per Series B
Preferred Partnership Unit, plus accrued and unpaid quarterly distributions
thereon.
(2) After the payment to the holders of the Series B Preferred
Partnership Units of the full preferential amounts provided for herein, the Post
Partners, in their capacity as the holders of the Series B Preferred Partnership
Units as such, shall have no right or claim to any of the remaining assets of
the Partnership.
(3) If, upon any voluntary or involuntary dissolution,
liquidation, or winding upon of the Partnership, the amounts payable with
respect to the preference value of the Series B Preferred Partnership Units and
any other Preferred Partnership Units of the Partnership ranking as to any such
distribution on a parity with the Series B Preferred Partnership Units are not
paid in full, the holders of the Series B Preferred Partnership Units and of
such other Preferred Partnership Units will share ratably in any such
distribution of assets of the Partnership in proportion to the full respective
preference amounts to which they are entitled.
(4) Neither the sale, lease or conveyance of all or substantially
all of the property or business of the Partnership, nor the merger or
consolidation of the Partnership into or with any other entity or the merger or
consolidation of any other entity into or with the Partnership, shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, for
the purposes hereof.
(e) REDEMPTION.
(1) OPTIONAL REDEMPTION. On and after October 28, 2007, the
General Partner may, at its option, cause the Partnership to redeem at any time
all or, from time to time, part of the Series B Preferred Partnership Units at a
price per unit (the " Redemption Price"), payable in cash, of $25.00, together
with all accrued and unpaid distributions to the and including the date fixed
for redemption (the "Redemption Date"). The Series B Preferred Partnership Units
have no stated maturity and will not be subject to any sinking fund or mandatory
redemption provisions.
(2) PROCEDURES OF REDEMPTION.
(i) At any time that PPI exercises its right to redeem
all or any of the Series B Preferred Shares, the General Partner shall
exercise its right to cause the Partnership to redeem an equal number
of Series B Preferred Partnership Units in the manner set forth herein.
(ii) No Series B Preferred Partnership Units may be
redeemed except from proceeds from the sale of capital stock of PPI,
including but not limited to common stock, preferred stock, depositary
shares, interests, participations or other ownership interests (however
designated) and any rights (other than debt securities convertible into
the exchangeable for equity securities) or options to purchase any of
the foregoing. The
G-3
<PAGE> 7
proceeds of such sale of capital stock of PPI shall be conveyed by PPI
to the Post Partners, by contribution or loan, and thereupon
contributed by the Post Partners to the Partnership pursuant to the
requirements of Section 4.2 of the Partnership Agreement.
(f) VOTING RIGHTS. Except as required by law, the General Partner,
in its capacity as the holder of the Series B Preferred Partnership Units, shall
not be entitled to vote at any meeting of the Partners or for any other purpose
or otherwise to participate in any action taken by the Partnership or the
Partners, or to receive notice of any meeting of Partners.
(g) CONVERSION. The Series B Preferred Partnership Units are not
convertible into or exchangeable for an other property or securities of the
Partnership.
(h) RESTRICTIONS ON OWNERSHIP. The Series B Preferred Partnership
Units shall be owned and held solely by one or both of the Post Partners. As of
the date hereof, all of the Series B Preferred Partnership Units are owned by
Post LP Holdings.
(i) GENERAL. The rights of the Post Partners, in their capacity as
holders of the Series B Preferred Partnership Units, are in addition to and not
in limitation on any other rights or authority of the Post Partners, in any
other capacity, under the Partnership Agreement. In addition, nothing contained
herein shall be deemed to limit or otherwise restrict any rights or authority of
the Post Partners, under the Partnership Agreement, other than in their capacity
as the holders of the Series B Preferred Partnership Units.
G-4
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
POST APARTMENT HOMES, L.P.
This Second Amendment to First Amended and Restated Agreement of
Limited Partnership of Post Apartment Homes, L.P. (this "Amendment") is entered
into as of December 23, 1997, by and among Post GP Holdings, Inc. (the "General
Partner"), and the Limited Partners of Post Apartment Homes, L.P. All
capitalized terms used herein shall have the meanings given to them in the
Second Amended and Restated Agreement of Limited Partnership of Post Apartment
Homes, L.P., dated October 24, 1997, as amended by the First Amendment to Second
Amended and Restated Agreement of Limited Partnership of Post Apartment Homes,
L.P., dated as of October 28, 1997 (the "Partnership Agreement").
WHEREAS, certain Limited Partners of Post Apartment Homes, L.P. (the
"Partnership") have requested an amendment to the Partnership Agreement as
provided herein, and such amendment has been approved by the requisite number of
Limited Partners as set forth in the Partnership Agreement;
WHEREAS, the parties hereto accordingly desire to amend the Partnership
Agreement in accordance with the approved amendment;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Amendment to Partnership Agreement - Election to
Restore Deficit Capital Account.
The Partnership Agreement is hereby amended by adding the following new
Sections 13.3.D, 13.3.E, 13.3.F and 13.3.G immediately following the existing
Section 13.3.C:
D. Any Partner (other than a Principal or a
Principal-Controlled Partnership, whose rights and obligations shall be
as set forth above) may elect at any time to undertake deficit Capital
Account restoration liability under Section 13.3.E (or increase the
amount of such deficit Capital Account restoration liability previously
undertaken) by delivering written notice of such election to the
General Partner. Any such notice of election shall include a statement
of the maximum dollar amount of such Partner's deficit Capital Account
restoration obligation (the "Stipulated Liability Cap") or a statement
that such obligation shall be unlimited in amount. Such election,
including the Stipulated Liability Cap, shall
<PAGE> 2
be subject to the written approval of the General Partner. At such time
as the General Partner gives such written approval, such electing
Partner shall be deemed an "Electing Partner" for purposes of this
Section 13.3. The General Partner may prescribe such form or forms (if
any) for an election under this Section 13.3.D as the General Partner
deems appropriate.
E. Subject to Section 13.3.F, if an Electing Partner (as
hereinafter defined), on the date of the "liquidation" of his interest
in the Partnership (within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g)), has a negative balance in his Capital Account,
then such Electing Partner shall contribute in cash to the capital of
the Partnership the lesser of (i) the amount required to increase his
Capital Account as of such date to zero or (ii) such Electing Partner's
Stipulated Liability Cap (as defined above). Any such contribution
required of an Electing Partner hereunder shall be made on or before
the later of (x) the end of the Partnership Year in which the interest
of such Electing Partner is liquidated; or (y) the ninetieth (90th) day
following the date of such liquidation. Notwithstanding any provision
hereof to the contrary, all amounts so contributed by an Electing
Partner to the capital of the Partnership shall, upon the liquidation
of the Partnership under this Article 13, be first paid to any then
creditors of the Partnership, and any remaining amount shall be
distributed to the other Partners, if any, then having positive
balances in their respective Capital Accounts in proportion to such
positive balances.
F. After the death of a Control Person (as hereinafter
defined), the executor of the estate of such Control Person, on behalf
of an Electing Partner, may elect to reduce (or eliminate) the deficit
Capital Account restoration obligation of such Electing Partner
pursuant to Section 13.3.E. Such election may be made by such executor
by delivering to the General Partner within two hundred seventy (270)
days of the death of such Control Person a written notice, on behalf of
such Electing Partner, setting forth the maximum deficit balance in
such Electing Partner's Capital Account that such Electing Partner
agrees to restore under Section 13.3.E, if any. If such executor does
not make a timely election pursuant to this Section 13.3.F (whether or
not the balance in the Electing Partner's Capital Account is negative
at such time), then such Electing Partner (and the beneficiaries of any
Control Person who receive distribution of Partnership Units therefrom)
shall be deemed to have a deficit Capital Account restoration
obligation as set forth pursuant to the terms of Section 13.3.E. For
purposes of this Section 13.3.F, "Control Person" means, with respect
to any Electing Partner, (i) such Electing Partner, if such Electing
Partner is an individual, and (ii) if such Electing Partner is not an
individual, an individual who owns, directly or indirectly, a majority
of (A) the power of the voting equity securities of such Electing
Partner or (B) the outstanding equity interests of such Electing
Partner.
Section 2. Amendment to Partnership Agreement - Allocation of
Net Losses
Section 6.1.B of the Partnership Agreement is hereby deleted in its
entirety and the following new Section 6.1.B is inserted in its place:
-2-
<PAGE> 3
B. Net Losses. After giving effect to the special allocations
set forth in Section 1 of Exhibit C, Net Losses shall be allocated to
the Partners as follows:
(1) To the Partners who hold Common Partnership Units in
accordance with their respective Percentage Interests held
with respect to Common Partnership Units, except as otherwise
provided in this Section 6.1.B.
(2) To the extent that an allocation of Net Loss under
Section 6.1.B.(1) would cause a Partner to have an Adjusted
Capital Account Deficit at the end of such taxable year (or
increase any existing Adjusted Capital Account Deficit of such
Partner), such Net Loss shall instead be allocated to those
Partners, if any, for whom such allocation of Net Loss would
not cause or increase an Adjusted Capital Account Deficit.
Solely for purposes of this Section 6.1.B.(2), the Adjusted
Capital Account Deficit shall be determined (i) in the case of
the Post Partners, without regard to the amount credited to
the Post Partners' respective Capital Accounts for the
aggregate Liquidation Preference Amount attributable to
Preferred Partnership Units and without regard to any deemed
deficit restoration obligation of the General Partner
recognized under Regulations Section 1.704-1(b)(2)(ii)(c)(2),
and (ii) in the case of an Electing Partner, Principal or a
Principal-Controlled Partnership, without regard to such
Partner's deficit Capital Account restoration obligation under
Section 13.3 hereof. The Net Loss allocated under this Section
6.1.B.(2) shall be allocated among the Limited Partners who
may receive such allocation in proportion to their respective
Percentage Interests in Common Partnership Units, but for any
particular Limited Partner not in excess of the maximum amount
of Net Loss that could be allocated to such Partner without
causing such Partner to have an Adjusted Capital Account
Deficit.
(3) Any remaining Net Loss that cannot be allocated under
Sections 6.1.B.(1) and (2) hereof shall be allocated to the
Post Partners in proportion to their respective Percentage
Interests with respect to Preferred Partnership Units, to the
extent that such allocation of Net Loss would not cause or
increase an Adjusted Capital Account Deficit of the Post
Partners determined, in the case of the General Partner,
without regard to any deemed deficit restoration obligation of
the General Partner recognized under Regulations Section
1.704-1(b)(2)(ii)(c)(2).
(4) Any remaining Net Loss shall be allocated to the
Electing Partners, Principals and the Principal-Controlled
Partnerships who may receive such allocation without causing
an Adjusted Capital Account Deficit as to such Partner, in
proportion to their respective Percentage Interests in Common
Partnership Units; provided that if, after the death of a
Control Person (as defined in Section 13.3.F hereof) or
Principal, an election is made on behalf of the applicable
Electing Partner, Principal or Principal-Controlled
Partnership under Section 13.3 hereof to eliminate or reduce
its deficit Capital Account restoration obligation under
Section 13.3 hereof, Net Losses shall not be allocated to such
Partner to the extent that such allocation would cause such
-3-
<PAGE> 4
Partner to have an Adjusted Capital Account Deficit (or would
increase any existing Adjusted Capital Account Deficit of such
Partner) as of the end of such taxable year, and instead shall
be allocated to those Electing Partners, Principals and
Principal-Controlled Partnerships as to whom the foregoing
limitation does not apply, in proportion to their respective
Percentage Interests in Common Partnership Units.
(5) Any remaining Net Loss shall be allocated to the General
Partner.
C. For purposes of Regulations Section 1.752-3(a), the
Partners agree that Nonrecourse Liabilities of the Partnership in
excess of the sum of (i) the amount of Partnership Minimum Gain, and
(ii) the total amount of Nonrecourse Built-in Gains3 shall be allocated
among the Partners in accordance with their respective Percentage
Interests in Common Partnership Units.
D. Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall to the extent
possible, after taking into account other required allocations of gain
pursuant to Exhibit C, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated
any deductions directly or indirectly giving rise to the treatment of
such gains as Recapture Income.
IN WITNESS WHEREOF, the parties hereto have executed the Amendment
under seal as of the date first written above.
GENERAL PARTNER:
POST GP HOLDINGS, INC.,
a Georgia corporation
By: /s/ John A. Williams
------------------------------------
Name: John A. Williams
-------------------------------
Title: Chairman and Chief
Executive Officer
------------------------------
Attest: /s/ Sherry W. Cohen
--------------------------------
Name: Sherry W. Cohen
--------------------------
Title: Vice President and
Secretary
-------------------------
[CORPORATE SEAL]
-4-
<PAGE> 5
LIMITED PARTNERS:
POST GP HOLDINGS, INC., a
Georgia corporation, as
attorney-in-fact for the
Limited Partners (other
than Post LP Holdings,
Inc.)
By: /s/ John A. Williams
-----------------------------------
Name: John A. Williams
------------------------------
Title: Chairman and Chief
Executive Officer
-----------------------------
Attest: /s/ Sherry W. Cohen
-------------------------------
Name: Sherry W. Cohen
-------------------------
Title: Vice President and
Secretary
------------------------
POST LP HOLDINGS, INC.,
a Georgia corporation
By: /s/ John A. Williams
-----------------------------------
Name: John A. Williams
------------------------------
Title: Chairman and Chief
Executive Officer
-----------------------------
Attest: /s/ Sherry W. Cohen
------------------------------
Name: Sherry W. Cohen
--------------------------
Title: Vice President and
Secretary
-------------------------
[CORPORATE SEAL]
-5-
<PAGE> 1
EXHIBIT 10.5
AMENDMENT
POST PROPERTIES, INC.
EMPLOYEE STOCK PLAN
Pursuant to the power reserved in sec. 17 of the Post Properties, Inc.
Employee Plan, sec. 15, Adjustment, is hereby amended to delete the second
sentence in sec. 15 as currently in effect and to substitute the following for
such sentence:
"Furthermore, the Board as part of any corporate transaction described
in sec. 424(a) of the Code shall have the right to adjust (in any manner
which the Board in its discretion deems consistent with sec. 424(a) of
the Code) the number, kind or class (or any combination thereof)of
shares of Stock reserved under sec. 3 of this Plan, and the Committee as
part of any such transaction shall have the right to adjust (in any
manner which the Committee in its discretion deems consistent with sec.
424(a) of the Code) the number, kind or class (or any combination
thereof) of shares of Stock underlying any Restricted Stock grants
previously made under this Plan and any related grant conditions and
forfeiture conditions, and the number, kind or class (or any combination
thereof) of shares subject to Option grants previously made under this
Plan and the related Option Price and, further, shall have the right to
make (in any manner which the Committee in its discretion deems
consistent with sec. 424(a) of the Code) Restricted Stock and Option
grants to effect the assumption of, or the substitution for, restricted
stock or option grants previously made by any other corporation to the
extent that such corporate transaction calls for such substitution or
assumption of such restricted stock or option grants."
This Amendment to the Post Properties, Inc. Employee Stock Plan shall
be effective as of the date that the Board of Directors of Post Properties,
Inc. adopted this Amendment to the Plan.
POST PROPERTIES, INC.
BY: /s/ Sherry W. Cohen
--------------------------
TITLE: Sr. V.P. & Sec.
------------------------
DATE: October 14, 1997
-------------------------
<PAGE> 1
EXHIBIT 10.6
AMENDMENT NO. TWO
POST PROPERTIES, INC.
EMPLOYEE STOCK PLAN
Pursuant to the power reserved in section 17 of the Post Properties, Inc.
Employee Stock Plan and in connection with the approval granted by the
shareholders of Post Properties, Inc., section 3, Shares Reserved Under the
Plan, is hereby amended to delete 1,200,000 from the first sentence thereof and
to insert in its place "3,500,000."
This Amendment to the Post Properties, Inc. Employee Stock Plan shall be
effective as of the date that the shareholders of Post Properties, Inc. adopted
the Amendment to the Plan.
POST PROPERTIES, INC.
By: /s/ Sherry W. Cohen
--------------------------
Sherry W. Cohen
Senior Vice President and Secretary
Date: October 24, 1997
<PAGE> 1
EXHIBIT 10.7
AMENDMENT NO. THREE
POST PROPERTIES, INC.
EMPLOYEE STOCK PLAN
Pursuant to the power reserved in ss. 17 of the Post Properties, Inc.
Employee Stock Plan, ss. 7.3, Grants to Directors, is hereby amended to delete
ss. 7.3 in its entirety and to substitute the following for such section:
"Each Director automatically shall be granted (without any further
action on the part of the Committee) a NQO under this Plan as of the
first day he serve as such to purchase the number of shares of Stock
determined by dividing $10,000 by the Fair Market Value of a share of
Stock on the date of grant and rounding down to the nearest whole
number. Such grant shall be made at an Option Price equal to the Fair
Market Value of a share of Stock on the date of such grant. Thereafter,
each Director who is serving as such on December 31 of each calendar
year and who has served as such for more than one full year
automatically shall be granted (without any further action on the part
of the Committee), as of such December 31, a NQO under this Plan to
purchase 1,000 shares of Stock. Such grant shall be made at an Option
Price equal to the Fair Market Value of a share of Stock on the date of
such grant. Each NQO granted under this Plan to a Director shall be
evidenced by an Option Certificate, shall be exercisable in full upon
grant and shall expire 90 days after a Director ceases to serve as such
or, if earlier, on the tenth anniversary of the date of the grant of
the NQO. A NQO granted to a Director under this Plan shall conform in
all other respects to the terms and conditions of a NQO under this
Plan, and no Director shall be eligible to receive an Option under this
Plan except as provided in this ss. 7.3. A grant of a NQO to a Director
under this ss. 7.3 is intended to allow such Director to be a
"disinterested person" within the meaning of Rule 16b-3, and all NQOs
granted to Directors as well as this ss. 7.3 shall be construed to
effect such intent."
This Amendment to the Post Properties, Inc. Employee Stock Plan shall
be effective as of the date that the Board of Directors of Post Properties, Inc.
adopted the Amendment to the Plan.
POST PROPERTIES, INC.
By: /s/ Sherry Cohen
---------------------------------------
Sherry W. Cohen
Senior Vice President and Secretary
Date: October 30, 1997
<PAGE> 1
EXHIBIT 10.8
AMENDMENT NO. FOUR
POST PROPERTIES, INC.
EMPLOYEE STOCK PLAN
Pursuant to the power reserved in section 17 of the Post Properties,
Inc. Employee Stock Plan ("Plan"), the first sentence of Section 7.1, Committee
Action, is hereby amended to read as follows:
"The Committee acting in its absolute discretion shall
have the right to grant Options to Key Employees under
this Plan from time to time to purchase shares of Stock;
provided, however, that the Committee shall not have the
right to grant new Options in exchange for the cancellation
of outstanding Options which have a higher Option Price than
the new Options and, further, no grants of ISOs shall be
made to Key Employees who are not employed by Post or a
Subsidiary, and no Option or Options, individually or
collectively, shall be granted to any Key Employee in any
calendar year to purchase more than 50,000 shares of Stock."
This Amendment to the Plan shall be effective as of the date
that the Board of Directors of Post Properties, Inc. adopted this Amendment to
the Plan.
POST PROPERTIES, INC.
BY: /s/ Sherry W. Cohen
---------------------------------------
TITLE: Senior Vice President and Secretary
------------------------------------
DATE: October 30, 1997
<PAGE> 1
EXHIBIT 10.19
[AMENDED AND RESTATED] INDEMNIFICATION AGREEMENT
THIS [AMENDED AND RESTATED] INDEMNIFICATION AGREEMENT (this
"Agreement"), is made and entered into as of the ___ day of ___________, 1998,
by and between POST PROPERTIES, INC., a Georgia corporation (the "Company"),
and _______________, an officer or director of the Company ("Indemnitee"). For
the purposes of this Agreement, all references to the "Company" shall include
all subsidiaries, affiliates, corporations, partnerships, joint ventures,
enterprises, employee benefit plans, trusts and other entities on behalf of
which Indemnitee serves or will serve at the Company's request as an officer,
director, partner, trustee, employee or agent or in a related capacity.
WITNESSETH:
WHEREAS, Indemnitee has agreed to serve, at the request of the Company,
as an officer or director of the Company;
[WHEREAS, the parties hereto have executed that certain Indemnification
Agreement dated as of July 22, 1993, which agreement is hereby amended and
restated in its entirety; and]
WHEREAS, Indemnitee is willing to serve on behalf of the Company on the
condition that he or she be indemnified, and that he or she have litigation
expenses advanced, to the maximum extent permitted by law.
NOW, THEREFORE, in consideration of Indemnitee's agreement to serve as
an officer or director of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:
<PAGE> 2
1. Mandatory Indemnification.
(a) General. The Company shall indemnify and hold harmless
Indemnitee to the maximum extent provided for in this Agreement, and, to the
extent that applicable law from time to time in effect shall permit
indemnification that is broader than provided in this Agreement, then to the
maximum extent authorized by law. All amounts payable under the Company's
indemnification obligation shall be paid within thirty (30) days of Indemnitee's
request therefor.
(b) Actions Other Than Derivative Actions. In connection with any
threatened, pending or completed claim, action, suit or proceeding to which
Indemnitee is made or is threatened to be made a named defendant or respondent
("Party"), whether civil, criminal, administrative or investigative, and whether
formal or informal (an "Action"), but not including any Action by or in the
right of the Company (a "Derivative Action"), the Company hereby agrees to
indemnify and hold Indemnitee harmless from and against any judgment,
settlement, penalty, fine (including any excise tax assessed with respect to any
employee benefit plan), interest and reasonable expense (including attorneys'
fees) actually incurred by him or her by reason of the fact that Indemnitee is
or was an officer, director, employee or agent of the Company, or has liability
under Section 1l(a) of the Securities Act of 1933, as amended, or is or was
serving at the request of the Company as an officer, director, agent or
fiduciary of any corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise; provided, that Indemnitee conducted himself or
herself in good faith and reasonably believed (i) in the case of conduct in his
of her official capacity, that such conduct was in the best interests of the
Company; (ii) in all other cases, that such conduct was at least not opposed to
the best interests of the Company; (iii) in the case of any criminal Action,
that the Indemnitee had no reasonable cause to believe that such conduct was
unlawful; and (iv) in the case of conduct with
2
<PAGE> 3
respect to any employee benefit plan, that the Indemnitee acted in a manner he
or she believed to be good faith to be in the interests of the participants in
and beneficiaries of the plan. Whether an Action is threatened, and whether
Indemnitee is threatened to be made a Party thereto, shall be determined by
Indemnitee in his reasonable judgment.
(c) Derivative Actions. In connection with any Derivative Action,
the Company hereby agrees to indemnify and hold Indemnitee harmless from and
against any reasonable expenses actually incurred by him or her (including
amounts paid in settlement but not including amounts paid as a judgment, penalty
or fine in respect of any such action) by reason of the fact that Indemnitee is
or was an officer, director, partner, trustee, employee or agent of the Company;
provided, that Indemnitee met the relevant standard of conduct described in
Section 1(b) hereof.
(d) Termination of Action. The termination of any Action by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that Indemnitee did
not meet the relevant standard of conduct described in Section 1(b) hereof.
(e) Conduct of Indemnitee. Notwithstanding any foregoing provision
to the contrary, under no circumstance shall the Company indemnify or hold
Indemnitee harmless from and against any liability for judgments, settlements,
penalties, fines (including excise taxes assessed with respect to any employee
benefit plan), or expenses (including attorneys' fees) incurred by Indemnitee in
a proceeding in which Indemnitee is adjudged liable to the Company or is
subjected to injunctive relief in favor of the Company (i) for any
appropriation, in violation of his or her duties, of any business opportunity of
the Company, (ii) for acts or omissions that involve intentional misconduct or
knowing violation of law, (iii) for the types of liability set forth in Section
14-2-832
3
<PAGE> 4
of the Georgia Business Corporation Code (unlawful distributions), or (iv) for
any transaction from which he or she received an improper personal benefit.
2. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any liability (including judgments, settlements, penalties, fines
(including excise taxes assessed with respect to any employee benefit plan),
interest or reasonable expenses (including attorneys' fees)) actually incurred
by him or her but not entitled to indemnification for all of the total amount
thereof, the Company shall indemnify Indemnitee for such portion thereof to
which Indemnitee is entitled.
3. Advancement of Expenses. The Company agrees to pay, in advance
of the final disposition of any Action (including, for this purpose, any
proceeding in Section 5 hereof) and within ten (10) days after Indemnitee's
written request, all reasonable expenses incurred by Indemnitee in defending or
acting as a witness in connection with such Action, including but not limited to
the investigation, defense, settlement or appeal of any Action, to which
Indemnitee is a Party or threatened in the reasonable judgment of Indemnitee to
be made a Party by reason of the fact that Indemnitee is or was an officer,
director, employee or agent of the Company, or has liability under Section 11
(a) of the Securities Act of 1933, as amended, or is or was serving at the
request of the Company as an officer, director, agent or fiduciary of any
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise. Indemnitee shall furnish the Company (i) a written affirmation of
his or her good faith belief that he or she has met the standard of conduct set
forth in Section 1(b) hereof or that the Action involves conduct for which
liability has been eliminated under a provision of the Company's articles of
incorporation; and (ii) a written undertaking to repay any funds advanced if it
is ultimately determined that Indemnitee is not entitled to indemnification.
4
<PAGE> 5
Indemnitee agrees to reimburse the Company for any such advancement if, when and
to the extent it is ultimately determined (by a court in a proceeding described
in Section 5 or otherwise) that Indemnitee is not entitled to indemnification
pursuant to this Agreement.
4. Indemnification in Specific Actions.
(a) The determination of whether, with respect to any specific
Action, Indemnitee has met the applicable standard of conduct set forth in
Section 1(b) hereof and is entitled to indemnification pursuant to Section 1
hereof shall be made (i) if there are two or more disinterested directors, by
the Board of Directors by a majority vote of all the disinterested directors (a
majority of whom shall for such purpose constitute a quorum) or by a majority of
the members of a committee of two or more disinterested directors appointed by
such vote; (ii) if a determination cannot be made under (i) above, in a written
opinion by independent legal counsel, selected in the manner described in the
foregoing clause (i) or, if there are fewer than two disinterested directors,
selected by the Board of Directors of the Company (in which selection directors
who do not qualify as disinterested directors may participate); or (iii) if
agreed to by Indemnitee, by the vote of a majority of shares of the Company
entitled to vote thereon (excluding shares owned by, or the voting of which is
controlled by, directors who do not qualify as disinterested directors).
(b) In the event that the determination is made that Indemnitee is
entitled to indemnification or advancement of expenses in a specific Action
pursuant to Section 1 hereof, such a determination is binding upon the Company
in any subsequent proceedings in connection with such Action.
5
<PAGE> 6
5. Enforcement of this Agreement.
(a) Reasonable expenses incurred by Indemnitee in connection with
his or her request for indemnification hereunder shall be borne by the Company,
unless Indemnitee is determined not to be entitled to indemnification for any
liability or expense hereunder. In the event that Indemnitee is a party to or
intervenes in any proceeding in which the validity or enforceability of this
Agreement is at issue or seeks an adjudication or award in arbitration to
enforce his or her rights under, or to recover damages for breach of, this
Agreement, Indemnitee, if he or she prevails in whole or in part in such action,
shall be entitled to recover from the Company and shall be indemnified by the
Company against any expenses actually and reasonably incurred by him or her.
(b) In any proceeding in which the validity or enforceability of
this Agreement is at issue, or in which Indemnitee seeks an adjudication or
award in arbitration to enforce his or her rights hereunder, the Company shall
have the burden of proving that Indemnitee is not entitled to indemnification
hereunder.
6. Termination of Service. Indemnitee's right to indemnification
and advancement of expenses pursuant to this Agreement shall continue regardless
of whether Indemnitee has ceased for any reason to be a director of the Company
and shall inure to the benefit of the heirs of Indemnitee and the executors or
administrators of Indemnitee's estate.
7. Maintenance of Directors and Officers Liability Insurance. In
the event the Company maintains policies of Directors and Officers Liability
Insurance, Indemnitee shall be named as an insured in such manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors.
6
<PAGE> 7
8. Subrogation. In the event Indemnitee receives a payment under
this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such
rights.
9. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any Action to the
extent Indemnitee has otherwise actually received payment (under any insurance
policy, bylaw provision or otherwise) of the amounts otherwise indemnifiable
hereunder.
10. Non-Exclusivity. Indemnitee's rights under this Agreement
shall be in addition to, and not in lieu of, any other rights Indemnitee may
have under any provision of the Company's Articles of Incorporation or Bylaws,
the Georgia Business Corporation Code or pursuant to any Directors and Officers
Liability Insurance. Nothing in this Agreement shall be deemed to diminish or
otherwise restrict Indemnitee's right to indemnification under any provision of
the Company's Articles of Incorporation or Bylaws, the Georgia Business
Corporation Code or pursuant to any Directors and Officers Liability Insurance,
but the rights to indemnification hereunder shall in any event apply
notwithstanding any contrary provision in, or conflict with, any provision of
the Company's Articles of Incorporation or Bylaws, unless prohibited by law.
11. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns (including any direct or indirect successor by merger or
consolidation as provided in the Georgia Business Corporation Code), heirs,
executors and administrators.
7
<PAGE> 8
12. Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed, and governed by and in
accordance with the laws of, the State of Georgia (without regard to the
conflict of laws principles thereof).
13. Severability. The Company and Indemnitee agree that the
agreements and provisions contained in this Agreement are severable and
divisible, that each such agreement and provision does not depend upon any other
provision or agreement for its enforceability, and that each such agreement and
provision set forth herein constitutes an enforceable obligation between the
Company and Indemnitee. Consequently, the parties hereto agree that neither the
invalidity nor the unenforceability of any provision of this Agreement shall
affect the other provisions hereof, and this Agreement shall remain in full
force and effect and be construed in all respects as if such invalid or
unenforceable provision were omitted.
14. Certain Amendments. The Company may enter into any amendment
to this Agreement required by applicable law without shareholder approval of
such amendment, unless shareholder approval is required by applicable law.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as the date first above written.
INDEMNITEE
----------------------------------
Name:
POST PROPERTIES, INC.
Attest:
By: By:
------------------------ ------------------------------
Secretary Name:
Title:
9
<PAGE> 1
EXHIBIT 10.22
AMENDMENT NUMBER ONE
TO THE POST PROPERTIES, INC. PROFIT SHARING/sec. 401(K) PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1994
Pursuant to sec. 13.1 of the Post Properties, Inc. Profit Sharing/sec.
401(k) Plan as amended and restated effective as of January 1, 1984 ("Plan"),
Post Properties, Inc. hereby amends the Plan as follows:
1.
By amending sec. 3.19, Forfeiture, to substitute "sec. 8.4" for "sec.
8.5" where it appears in such section.
2.
By amending sec. 6.1, Plan Sponsor and Company Action, to delete the
last paragraph of such section.
3.
By amending sec. 6.5, Account Debits and Allocation of Adjustment, to
add the following sentence to the end of such section:
"For purposes of allocating the Adjustment for any Valuation Date, the
balance of an Account shall include the Before-Tax Contributions
credited to such Accounts as of such Valuation Date but shall exclude
the Profit Sharing Contributions credited to such Account as of such
Valuation Date."
4.
By amending subsection (2) of sec. 8.4(d), Forfeiture, to read as
follows:
"(2) the last day of the Plan Year in which the Employee's employment
as such terminates, unless he or she is reemployed as an Employee on or
before such date."
<PAGE> 2
5.
By amending sec. 13.1, Amendment, to add the following sentence to the
end of such section:
"Any amendments to the Plan shall be in writing and shall be signed by
the Chairman or the President of the Plan Sponsor or their delegate."
6.
This Amendment Number One shall be effective retroactively to January
1, 1994.
IN WITNESS WHEREOF, Post Properties, Inc. has executed this Amendment
Number One this 15th day of July, 1994.
(CORPORATE SEAL) POST PROPERTIES, INC.
By:/s/
---------------------------
Title: Sr. Vice President
ATTEST:/s/ Sherry W. Cohen ------------------------
-------------------------
Title: Sr. V.P. & Secretary
-------------------------
-2-
<PAGE> 1
EXHIBIT 10.23
AMENDMENT NUMBER TWO
TO THE POST PROPERTIES, INC. PROFIT SHARING/sec. 401(K) PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1994
Pursuant to sec. 13.1 of the Post Properties, Inc. Profit Sharing/sec. 401(k)
Plan as amended and restated effective as of January 1, 1994 ("Plan"), Post
Properties, Inc. hereby amends the Plan as follows:
1.
By amending sec. 12.2 to read as follows:
"12.2. Individual Account Investments. The Trustee at the direction of
the Plan Sponsor shall establish at least two separate investment funds
within the Trust Fund, one of which shall invest primarily in
"qualifying employer securities" (as defined for purposes of ERISA sec.
407) of the Plan Sponsor, and such funds as in effect from time to time
shall be described in the summary plan description for this Plan or in
such other materials as the Plan Sponsor furnishes from time to time to
Employees and Beneficiaries. The Plan Sponsor from time to time shall
establish and shall communicate in advance and in writing to Employees
and Beneficiaries procedures for making investment elections under this
sec. 12.2 between, or among, these investment funds as the Plan
Sponsor in its absolute discretion deems necessary or appropriate
under the circumstances for the proper administration of this Plan;
provided, however, no Employee or Beneficiary shall have any right to
make any investment elections with respect to his or her Matching
Account, which Matching Account shall be invested solely in the
investment fund that invests primarily in qualifying employer
securities of the Plan Sponsor.
Subject to such procedures, each Employee and each Beneficiary of a
deceased Employee for whom an Individual Account continues to be
maintained under the Plan shall have the right to elect how such
Individual Account shall be invested as between or among such
investment funds. All investment directions by Employees and
Beneficiaries shall be timely furnished by the Plan Sponsor to the
Trustee or by each Employee and Beneficiary directly to the Trustee or
its delegate in accordance with procedures established by the Plan
Sponsor. The Individual Account of an individual for whom no investment
election is in effect under this sec. 12.2 shall (together with all
contributions to such Individual Account) be invested automatically in
the fund designated by the Plan Sponsor for such accounts.
<PAGE> 2
All additional administrative expenses incurred to effect the
investment elections made under this sec. 12.2 shall be paid by the
Trust Fund and charged (in accordance with such reasonable rules as
the Plan Sponsor deems appropriate under the circumstances) to
the Individual Account of the person making such election, unless the
Plan Sponsor elects that the Plan Sponsor (or the Plan Sponsor and
each Company) shall pay such expenses.
The Trustee shall (in accordance with the provisions of the Trust
Agreement) pass through to each Employee or Beneficiary any voting,
tender and other similar rights appurtenant to his or her interest in
an investment fund that invests primarily in qualifying employer
securities of the Plan Sponsor and that is allocated to his or her
Individual Account and, to the extent required in the regulations under
ERISA sec. 404(c), shall pass through to each Employee or Beneficiary
any voting, tender and other similar rights appurtenant to other
investment funds allocated to his or her Individual Account."
2.
By adding a new sec. 15 to read as follows:
"sec. 15. Matching Contributions.
15.1. Amount of Matching Contributions. The Plan Sponsor shall
decide each Plan Year how much each Company shall contribute
as a Matching Contribution for such Plan Year based on the
extent to which the Plan Sponsor's actual funds from
operations for such year meet the targeted funds from
operations for such year. Forfeitures, if any, from Matching
Accounts shall be applied when available against the
Companies' obligation to make Matching Contributions, and no
Matching Contribution shall be made directly by the Companies
for any Plan Year to the extent that such Forfeitures are
available to satisfy the Matching Contribution obligation for
such Plan Year.
15.2. Allocation of Matching Contributions. Subject to the
limitations set forth in this sec. 15 and in sec. 7,
the Matching Contributions made for any Plan Year shall be
allocated as of the last day of such Plan Year by, or at the
direction of, the Plan Sponsor among the Matching Accounts of
all Active Participants on whose behalf Before-Tax
Contributions were made for such Plan Year. The Matching
Contribution shall be allocated to each such Matching Account
in the same proportion that the Before-Tax Contributions
allocated to such Active
-2-
<PAGE> 3
Participant's Before-Tax Account for such Plan Year bears to
the total of all Before-Tax Contributions allocated to all
Before-Tax Accounts for such Plan Year; provided, however, no
Before-Tax Contributions in excess of 3% of an Active
Participant's Compensation for a Plan Year shall be taken into
account in computing the numerator or denominator of such
fraction.
15.3. Limitations on Matching Contributions for Highly Compensated
Employees.
(a) General. Subject to sec. 15.3(f), the Average
Contribution Percentage for Highly Compensated Employees
for any Plan Year shall not exceed the Maximum
Contribution Percentage for such Plan Year. The Plan
Sponsor shall determine the amount, if any, of the
Excess Aggregate Contributions for such year for each
affected Highly Compensated Employee in accordance with
the rules under Code sec. 401(m).
(b) Special Rules.
(1) Other Plans or Arrangements. For purposes of
this sec. 15.3, the Contribution Percentage for any
Highly Compensated Employee who is eligible to have
"employee contributions" (within the meaning of
Code sec. 401(m)), "elective deferrals" (as
described in Code sec. 402(g)(3)), or "matching
contributions)' (as described in Code sec.
401(m)(4)) allocated to his or her account under
two or more plans or arrangements described in Code
sec. 401(a) or Code sec. 401(k) that are maintained
by a Company or an Affiliate shall be determined as
if all such contributions were made under this
Plan. If this Plan satisfies the requirements of
Code sec. 410(b) only if aggregated with one or
more other plans, or if one or more other plans
satisfy the requirements of Code sec. 410(b) only
if aggregated with this Plan, then this sec. 15.3
shall be applied by determining the Contribution
Percentages as if all such plans were a single
plan.
(2) Family Members. For purposes of determining the
Contribution Percentage of each Employee who is a 5%
owner or one of the 10 most highly paid Highly
Compensated Employees for such Plan Year, the
Matching Contributions and Compensation of such
Employee's "family members" (as described in
-3-
<PAGE> 4
Code sec. 414(q)(6)) shall be treated as the
Matching Contributions and Compensation of such
Employee, and such family members shall be
disregarded as separate Employees in determining
the Contribution Percentage both for individuals
who are Nonhighly Compensated Employees and for
individuals who are Highly Compensated Employees.
In the case of a Highly Compensated Employee whose
Contribution Percentage is determined under these
family aggregation rules, the determination of the
amount of Excess Aggregate Contributions shall be
made by reducing the Contribution Percentage in
accordance with the "leveling" method described in
Treas. Reg. sec. 1.401(m)-l(e)(2) and allocating
the Excess Aggregate Contributions among the family
members in proportion to the contributions of each
family member that have been combined.
(3) Other Requirements. The determination and
treatment of the Matching Contributions and
Contribution Percentage of any Employee shall
satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(c) Distribution or Forfeiture of Excess Aggregate
Contributions. Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions made for any Plan
Year, plus any investment income and minus any loss
allocable to such Excess Aggregate Contributions, shall be
forfeited (if otherwise forfeitable under sec. 8.4 and sec.
15.4(b)) or distributed (if not so forfeitable) from the
Individual Accounts of Highly Compensated Employees on
whose behalf such Excess Aggregate Contributions were
allocated for such Plan Year no later than the last day of
the immediately following Plan Year. Such distributions or
forfeitures shall be made to such Employees on the basis of
the respective portions of the Excess Aggregate
Contributions attributable to each such Employee,
determined by first reducing the Contribution Percentage of
the Highly Compensated Employee with the highest
Contribution Percentage to the extent necessary to satisfy
the Maximum Contribution Percentage limitations or to cause
such Contribution Percentage to equal the Contribution
Percentage of the Highly Compensated Employee with the next
highest Contribution Percentage, and then repeating such
process until the Maximum Contribution Percentage
limitations is satisfied.
-4-
<PAGE> 5
(d) Determination of Income or Loss. The investment income
or loss allocable to Excess Aggregate Contributions shall
be determined in accordance with sec. 6.5 for the Plan Year
for which such contributions were allocated (but not for
the period between the end of such Plan Year and the date
of distribution or forfeiture) in accordance with the
regulations under Code sec. 401(m).
(e) Order for Determining Excess Aggregate Contributions.
Excess Aggregate Contributions shall be determined after
first determining "excess deferrals" under sec. 7.3 and
then determining "excess contributions" under sec. 7.4.
(f) Multiple Use Limit. If in the same Plan Year the
Maximum Deferral Percentage limitation is satisfied by
using the alternate limit under sec. 3.24(b) and the
Maximum Contribution Percentage limitation is satisfied by
using the alternate limit under sec. 15.5(f)(2), the Plan
Sponsor shall determine the amount, if any, of the
reductions required to satisfy the rules under Code sec.
401(m) on the multiple use of such alternative limits. Any
such reduction shall be treated as an Excess Aggregate
Contribution and shall be distributed or forfeited in
accordance with sec. 15.3(c).
15.4. Other Rules Applicable to Matching Accounts.
(a) Vesting and Forfeitures. The vested portion of an
Employee's Matching Account shall equal the percentage
figure shown opposite the Employee's completed Years of
Employment under the Vesting Schedule set forth in sec.
8.4(c), and the rules in sec. 8.4 shall apply to an
Employee's Matching Account in the same manner as to his
or her Profit Sharing Account; provided, however,
Forfeitures, if any, from Matching Accounts shall be
applied when available against the Companies' obligation
to make Matching Contributions under sec. 15.1.
(b) Top-Heavy. For purposes of the minimum top-heavy
contribution under sec. 14.7(d), Matching Contributions
shall be taken into account in calculating the highest
percentage allocated to a key employee.
(c) Code sec. 415 Limitations. Notwithstanding anything to
the contrary in sec. 7.2(a), the sum of the Matching
Contributions, Before-Tax Contributions, Profit Sharing
Contributions and
-5-
<PAGE> 6
Forfeitures credited to an Eligible Employee's
Individual Account for any Plan Year shall not
exceed the Code sec. 415 limitation described in
sec. 7.2(a)
15.5. Special Definitions.
(a) Average Contribution Percentage -- means for each Plan
Year the average (expressed as a percentage) of the
Contribution Percentages computed separately (a) for the
group of individuals who are Highly Compensated Employees
during such Plan Year and (b) for the group of individuals
who are Nonhighly Compensated Employees during such Plan
Year.
(b) Matching Account -- means the bookkeeping subaccount
maintained as part of an Employee's Individual Account
attributable to his or her Matching Contributions under
this Plan.
(c) Matching Contribution -- means the matching
contribution made by a Company in accordance with this sec.
15.
(d) Contribution Percentage -- means for each Plan Year
for each Employee who has satisfied the employment
requirement described in sec. 4.1 and who is an
Eligible Employee at any time during the Plan Year, the
ratio (expressed as a percentage) of (1) the Matching
Contribution, if any, credited to his or her Individual
Account for such Plan Year to (2) his or her Compensation
for such Plan Year. The Contribution Percentage for an
Employee who is eligible to make, but does not make,
Before-Tax Contributions and is not credited with a
Matching Contribution shall be zero.
(e) Excess Aggregate Contributions -- means for each Highly
Compensated Employee for each Plan Year the excess of
(1) the Matching Contributions actually taken into
account in determining the Contribution Percentage
of such Highly Compensated Employee for such Plan
Year over
(2) the maximum amount of such contributions
permitted for such Plan Year under Code sec.
401(m)(2)(A),
where such maximum shall be determined by reducing such
contributions made by or on behalf of such Highly
Compensated Employees in order of their Contribution
Percentages, beginning with the highest of such
percentages.
-6-
<PAGE> 7
(f) Maximum Contribution Percentage -- means for any Plan
Year the greater of
(1) the Average Contribution Percentage for
Nonhighly Compensated Employees for such Plan Year
multiplied by 1.25, or
(2) the lesser of (i) the Average Contribution
Percentage for Nonhighly Compensated Employees for
such Plan Year multiplied by 2 or (ii) the Average
Contribution Percentage for Nonhighly Compensated
Employees plus 2 percentage points."
3.
This amendment shall be effective as of January 1, 1996. Except as otherwise
expressly amended by this amendment, the Plan as in effect before this amendment
shall remain in full force and effect.
IN WITNESS WHEREOF, Post Properties, Inc. has caused this Amendment Number Two
to be executed by its duly authorized officer this 2nd day of January, 1996..
POST PROPERTIES, INC.
BY: /s/
-------------------------
TITLE: President
-----------------------
-7-
<PAGE> 1
EXHIBIT 10.24
AMENDMENT NUMBER THREE
POST PROPERTIES, INC. PROFIT SHARING/ss. 401(K) PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1994
Pursuant to ss. 13.1 of the Post Properties, Inc. Profit Sharing/ss. 401(k) Plan
as amended and restated effective as of January 1, 1994 ("Plan"), Post
Properties, Inc. hereby amends the Plan as follows:
1. By amending ss. 3.19, Forfeiture, to read as follows:
"3.19. Forfeiture -- means the nonvested portion of an Individual
Account of an Employee that is deducted from such Account in accordance
with the terms of this Plan."
2. By amending ss. 6.2(a), Forfeitures, to insert the phrase "attributable
to Profit Sharing Contributions" after the word "Forfeitures".
3. By amending the last sentence of ss. 6.5, Account Debits and Allocation
of Adjustment, to read as follows:
"For purposes of allocating the Adjustment for any Valuation Date, the
Individual Accounts shall be adjusted for contributions, distributions,
withdrawals and other applicable debits and credits in accordance with
procedures established for such purpose by the Plan's recordkeeper."
4. By amending ss. 6.6, Allocation Report, to read as follows:
"6.6. Allocation Report. At least annually and at such other times as
determined by the Plan Sponsor, if any, each person for whom an
Individual Account is maintained shall be provided with a statement
showing the amounts allocated to and the new value of that Individual
Account."
5. By amending the last sentence in ss. 8.4(b), Immediate Payment, to read
as follows:
"If the vested portion of an Employee's Individual Account is $3,500 or
less at the time of his or her Employment Termination Date (or at the
time of any prior distribution), such Employee shall be deemed to have
requested an immediate payment under this ss. 8.4(b) and that vested
portion shall be paid in accordance with ss. 9.1(c) and procedures
established by the Plan Sponsor as soon as practicable after the
Employee's Employment Termination Date."
<PAGE> 2
6. By amending ss. 8.4(e), Reemployment, to read as follows:
"(e) Reemployment.
(1) If the former Employee is reemployed as an Employee before
he or she has 6 consecutive Breaks in Service and the vested
portion of his or her Profit Sharing Account and Matching
Account was more than zero, the dollar amount that was treated
as a Forfeiture under ss. 8.4(d) and ss. 15.4(a), if any,
shall be restored (from Forfeitures and, if necessary, from
the Profit Sharing Contribution) to the Employee's Individual
Account only if the Employee repays to the Plan an amount
equal to the dollar amount of the distribution from the
Employee's Profit Sharing Account and Matching Account in
accordance with this ss. 8.4(e). Such repayment must be made
before the earlier of (1) five years after the first date on
which the Employee is subsequently reemployed as an Employee
or (2) the date the Employee has six consecutive Breaks in
Service following the date of the distribution. If no such
repayment is made, the dollar amount that was treated as a
Forfeiture shall not be restored notwithstanding the former
Employee's reemployment.
(2) If the former Employee is reemployed as an Employee before
he or she has six consecutive Breaks in Service and the vested
portion of his or her Profit Sharing Account and Matching
Account was zero and, the dollar amount that was treated as a
Forfeiture under ss. 8.4(d) and ss. 15.4(a), if any, shall
automatically be restored upon the Employee's reemployment.
(3) If the former Employee is reemployed as an Employee after
he or she has six consecutive Breaks in Service, the dollar
amount that was treated as a Forfeiture shall not be restored.
"
7. By amending the last sentence of ss. 3.14, Eligible Employee, to read
as follows:
"In addition, for purposes of eligibility to make Before-Tax
Contributions under ss. 5.2, the term Eligible Employee shall not
include an Employee who is classified on the Company's personnel or
payroll records as a part-time employee who works less than 30 hours
per week, unless such person has completed at least one "year of
eligibility service" as described below.
A "year of eligibility service" means (1) a period of 12 consecutive
months beginning on an Employee's Employment Commencement Date during
which such Employee is credited with at least 1,000 Hours of Service or
(2) any Plan Year including an anniversary of such Employment
Commencement Date during which such Employee is credited with at least
1,000 Hours of Service. For this purpose, an Employee's Hours of
Service shall also include hours for which the Employee (i) is directly
or indirectly paid, or entitled to
-2-
<PAGE> 3
payment, for a period of time (without regard to whether the employment
relationship is terminated) when the Employee performs no duties as an
Employee due to vacations, holidays, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence, or
(ii) is paid for any reason an amount as "back pay," irrespective of
mitigation of damages, where such Hour of Service credit, if any, for
periods when no duties are performed shall be calculated in accordance
with then applicable Department of Labor Hour of Service regulations.
8. By amending ss. 8.7, Separate Accounts, to read as follows:
"8.7. Separate Accounts. If a distribution is made from an Employee's
Profit Sharing Account under ss. 8.5(a) or ss. 8.6 at a time when the
Employee's vested portion was less than 100%, the Plan Sponsor
thereafter shall determine the then vested portion of the Employee's
Profit Sharing Account in accordance with the following formula:
X = P (AB + (R x D)) - (R x D), where
X = the current dollar amount, if any, of the vested
portion of the Employee's Profit Sharing Account;
P = the employee's current vested percentage under the
vesting schedule in ss. 8.4(c);
AB = the current dollar amount, if any, of the balance
posted to the Employee's Profit Sharing Account;
D = the dollar amount previously distributed to the
Employee from his or her Profit Sharing Account; and
R = AB divided by the dollar amount, if any, posted to
the Employee's Profit Sharing Account immediately
after the distribution.
Finally, a separate Profit Sharing Account shall be established for
such Employee if he or she subsequently becomes an Active Employee and
both Profit Sharing Accounts shall be merged into one such account when
the Employee's interest in each such account fully vests."
9. By amending the Plan to correct certain typographical errors as
follows:
a. By amending the first sentence in ss. 5.2(b)(5), Resumption
After Termination, to substitute "ss. 5.2(b)(4)" for "ss.
5.2(c)(4)";
b. By amending the last sentence in ss. 6.1, Plan Sponsor and
Company Action, to substitute "ss. 6.2(a)" for "ss. 6.3(a)";
c. By amending clause (2) in ss. 7.2(b), Corrections, to
substitute "ss. 6.2" for "ss. 6.3";
-3-
<PAGE> 4
d. By amending the last sentence in ss. 8.4(c), Vesting Schedule,
to substitute "ss. 8.4(c)" for "ss. 5.4(c)";
e. By amending the first sentence in ss. 8.4(e), Reemployment, as
in effect before the amendment made in Paragraph 6 of this
Amendment Number Three, to substitute "ss. 8.4(c)" for "ss.
5.4(c)";
f. By amending ss. 8.5(b), Before-Tax Accounts, to substitute
"ss. 8.5(b)" for "ss. 8.6(b)" each place it appears;
g. By amending the second sentence in ss. 8.6, In-Service
Withdrawals, to substitute "ss. 8.5" for "ss. 8.6";
h. By amending the last sentence in ss. 8.6, In-Service
Withdrawals, to substitute "ss. 8.6" for "ss. 8.7" each place
it appears;
i. By amending the first sentence in ss. 8.7, Separate Accounts,
as in effect before the amendment made in Paragraph 8 of this
Amendment Number Three, to substitute "ss. 8.5(a)" for "ss.
8.6(a)" and to substitute "ss. 8.6" for "ss. 8.7"; and
j. By amending the last sentence in ss. 9.1(c), Automatic Lump
Sum Distributions, to substitute "ss. 8.5" for "ss. 8.6" and
to substitute "ss. 8.6" for "ss. 8.7".
10. The provisions of Paragraphs 6, 7 and 8 of this Amendment shall be
effective for individuals who are Employees on or after the date this
Amendment is executed and all other provisions of this Amendment shall
be effective retroactively to January 1, 1994. Except as otherwise
expressly amended by this Amendment, the Plan as in effect before this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, Post Properties, Inc. has caused this Amendment Number Three
to be executed by its duly authorized officer as of this 29th day of May, 1997.
POST PROPERTIES, INC.
By: /s/ Judy Denman
---------------------------------------
Title: Senior Vice President
------------------------------------
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<PAGE> 1
EXHIBIT 10.25
AMENDMENT NUMBER FOUR
POST PROPERTIES, INC. PROFIT SHARING/SS. 401(K) PLAN
AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1994
Pursuant to ss. 13.1 of the Post Properties, Inc. Profit Sharing/ss. 401(k) Plan
as amended and restated effective as of January 1, 1994 ("Plan"), Post
Properties, Inc. hereby amends the Plan as follows:
1. The provisions set forth in Paragraph 7 of Amendment Number Three to
the Plan, which amended the last sentence of ss. 3.14, Eligible
Employee, shall be effective for individuals who are Employees in Plan
Years beginning on or after January 1, 1995.
2. Except as otherwise expressly amended by this Amendment, the Plan as in
effect before this Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, Post Properties, Inc. has caused this Amendment Number Four
to be executed by its duly authorized officer as of this 12th day of September,
1997.
POST PROPERTIES, INC.
By: /s/ Judy Denman
--------------------------------
Title: Senior Vice President
------------------------------
<PAGE> 1
EXHIBIT 10.28
AMENDMENT
POST PROPERTIES, INC.
1995 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Pursuant to the power reserved in sec. 12 in the Post Properties, Inc.
1995 NonQualified Employee Stock Purchase Plan ("Plan"), the following sections
of the Plan are hereby amended as follows:
1. Sec. 2.9., Eligible Employee is hereby amended to read as follows:
"Sec. 2.9. Eligible Employee shall mean each officer or employee of Post or
a participating Employer
(a) who is classified on the payroll records of Post or a Participating
Employer as a full-time or part-time employee, and
(b) who has completed at least one full calendar month of employment with
Post or a Participating Employer."
2. Sec. 12., Amendment or Termination, is hereby amended to read as follows:
"Sec. 12. Post shall have the right at any time and from time to time to
amend the Plan, and any amendment to the Plan shall be in writing and shall be
signed by the Chairman or President of Post or their delegate; provided, no
amendment shall affect the rights or powers or duties of the Committee absent
the approval of the Board. Furthermore, no amendment shall be retroactive unless
Post in its discretion determines that such amendment is in the best interest of
Post or such amendment is required by applicable law to be retroactive. Post may
also terminate the Plan and any Purchase Period at any time (together with any
related contribution elections) or may terminate any Purchase Period (together
with any related contribution elections) at any time; provided, however, that no
such termination shall be retroactive unless Post determines that applicable law
requires a retroactive termination of this Plan. Any termination decision shall
be evidenced in writing and shall be signed by the Chairman or President of Post
or their delegate."
<PAGE> 2
This Amendment to the Plan shall be effective as of the date that the
Board of Directors of Post Properties, Inc. adopted this Amendment to the Plan.
POST PROPERTIES, INC.
BY: /s/ Sherry W. Cohen
---------------------------
TITLE: Sr. V.P./Sec.
------------------------
DATE: October 14, 1997
------------------------
<PAGE> 1
EXHIBIT 10.30
$180,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
April 9, 1997
among
POST APARTMENT HOMES, L.P.
The Banks Listed Herein,
WACHOVIA BANK OF GEORGIA, N.A.,
as Administrative Agent
and
FIRST UNION NATIONAL BANK OF GEORGIA,
as Co-Agent
<PAGE> 2
TABLE OF CONTENTS
AMENDED AND RESTATED CREDIT AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS................................................... 1
SECTION 1.01. Definitions........................................................................................ 1
SECTION 1.02. Accounting Terms and Determinations................................................................ 17
SECTION 1.03. References......................................................................................... 18
SECTION 1.04. Use of Defined Terms............................................................................... 18
SECTION 1.05. Terminology........................................................................................ 18
ARTICLE II
THE CREDITS................................................... 18
SECTION 2.01. Commitments to Lend Loans.......................................................................... 18
SECTION 2.02. Method of Borrowing Loans other than
Transaction Rate Loans............................................................................. 20
SECTION 2.03. Money Market Loans................................................................................. 23
SECTION 2.04. Notes.............................................................................................. 26
SECTION 2.05. Maturity of Loans.................................................................................. 27
SECTION 2.06. Interest Rates..................................................................................... 29
SECTION 2.07. Fees............................................................................................... 32
SECTION 2.08. Optional Termination or Reduction of
Commitments........................................................................................ 33
SECTION 2.09. Mandatory Termination of Commitments............................................................... 33
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 2.10. Optional Prepayments............................................................................... 33
SECTION 2.11. Mandatory Prepayments.............................................................................. 34
SECTION 2.12. General Provisions as to Payments.................................................................. 34
SECTION 2.13. Computation of Interest and Fees................................................................... 37
ARTICLE III
CONDITIONS TO BORROWINGS............................................. 37
SECTION 3.01. Conditions to First Borrowing...................................................................... 37
SECTION 3.02. Conditions to All Borrowings....................................................................... 39
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.......................................... 40
SECTION 4.01. Partnership or Corporate Existence and Power....................................................... 40
SECTION 4.02. Partnership or Corporate and Governmental
Authorization; No Contravention.................................................................... 40
SECTION 4.03. Binding Effect..................................................................................... 40
SECTION 4.04. Financial and Property Information................................................................. 41
SECTION 4.05. No Litigation...................................................................................... 41
SECTION 4.06. Compliance with ERISA.............................................................................. 41
SECTION 4.07. Compliance with Laws; Payment of Taxes............................................................. 42
SECTION 4.08. Subsidiaries....................................................................................... 42
SECTION 4.09. Investment Company Act............................................................................. 42
SECTION 4.10. Public Utility Holding Company Act................................................................. 42
SECTION 4.11. Ownership of Property.............................................................................. 42
SECTION 4.12. No Default......................................................................................... 43
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 4.13. Full Disclosure.................................................................................... 43
SECTION 4.14. Environmental Matters.............................................................................. 43
SECTION 4.15. Partner Interests and Capital Stock................................................................ 44
SECTION 4.16. Margin Stock....................................................................................... 44
SECTION 4.17. Insolvency......................................................................................... 44
SECTION 4.18. Insurance.......................................................................................... 45
ARTICLE V
COVENANTS.................................................... 45
SECTION 5.01. Information........................................................................................ 45
SECTION 5.02. Inspection of Property, Books and Records.......................................................... 47
SECTION 5.03. Consolidated Total Secured Debt.................................................................... 47
SECTION 5.04. Ratio of Consolidated Total Debt to
Consolidated Total Assets.......................................................................... 48
SECTION 5.05. Interest Coverage.................................................................................. 48
SECTION 5.06. Restricted Payments................................................................................ 48
SECTION 5.07. Loans or Advances.................................................................................. 48
SECTION 5.08. Purchases of Stock by the Significant
Subsidiaries....................................................................................... 49
SECTION 5.09. Investments........................................................................................ 49
SECTION 5.10. Dissolution........................................................................................ 49
SECTION 5.11. Consolidations, Mergers and Sales of Assets........................................................ 49
SECTION 5.12. Use of Proceeds.................................................................................... 50
SECTION 5.13. Compliance with Laws; Payment of Taxes............................................................. 50
SECTION 5.14. Insurance.......................................................................................... 51
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 5.15. Change in Fiscal Year.............................................................................. 51
SECTION 5.16. Maintenance of Property; Principal Business........................................................ 51
SECTION 5.17. Environmental Notices.............................................................................. 52
SECTION 5.18. Environmental Matters.............................................................................. 52
SECTION 5.19. Environmental Release.............................................................................. 52
SECTION 5.20. Transactions with Affiliates....................................................................... 52
SECTION 5.21. Qualification as a Real Estate Investment
Trust; General Partner............................................................................. 52
SECTION 5.22. Certain Covenants Concerning Subsidiaries.......................................................... 53
ARTICLE VI
DEFAULTS..................................................... 53
SECTION 6.01. Events of Default.................................................................................. 53
SECTION 6.02. Notice of Default.................................................................................. 56
ARTICLE VII
THE ADMINISTRATIVE AGENT............................................. 56
SECTION 7.01. Appointment; Powers and Immunities................................................................. 56
SECTION 7.02. Reliance by Administrative Agent................................................................... 57
SECTION 7.03. Defaults........................................................................................... 57
SECTION 7.04. Rights of Administrative Agent as a Bank........................................................... 58
SECTION 7.05. Indemnification.................................................................................... 58
SECTION 7.06. Consequential Damages.............................................................................. 59
SECTION 7.07. Payee of Note Treated as Owner..................................................................... 59
SECTION 7.08. Nonreliance on Administrative Agent and
Other Banks........................................................................................ 59
</TABLE>
(iv)
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 7.09. Failure to Act..................................................................................... 59
SECTION 7.10. Resignation or Removal of Administrative
Agent.............................................................................................. 60
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION...................................... 60
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair............................................................................... 60
SECTION 8.02. Illegality......................................................................................... 61
SECTION 8.03. Increased Cost and Reduced Return.................................................................. 61
SECTION 8.04. Base Rate Loans or Other Euro-Dollar Loans
Substituted for Affected Euro-Dollar Loans......................................................... 64
SECTION 8.05. Compensation....................................................................................... 64
ARTICLE IX
MISCELLANEOUS.................................................. 65
SECTION 9.01. Notices............................................................................................ 65
SECTION 9.02. No Waivers......................................................................................... 65
SECTION 9.03. Expenses; Documentary Taxes........................................................................ 65
SECTION 9.04. Indemnification.................................................................................... 65
SECTION 9.05. Setoff; Sharing of Setoffs......................................................................... 66
SECTION 9.06. Amendments and Waivers............................................................................. 67
SECTION 9.07. No Margin Stock Collateral......................................................................... 68
SECTION 9.08. Successors and Assigns............................................................................. 68
SECTION 9.09. Confidentiality.................................................................................... 71
SECTION 9.10. Representation by Banks............................................................................ 71
</TABLE>
(v)
<PAGE> 7
<TABLE>
<S> <C> <C>
SECTION 9.11. Obligations Several................................................................................ 72
SECTION 9.12. Georgia Law........................................................................................ 72
SECTION 9.13. Severability....................................................................................... 72
SECTION 9.14. Interest........................................................................................... 72
SECTION 9.15. Interpretation..................................................................................... 73
SECTION 9.16. Waiver of Jury Trial; Consent to
Jurisdiction....................................................................................... 73
SECTION 9.17. Counterparts....................................................................................... 73
SECTION 9.18. Source of Funds -- ERISA........................................................................... 74
</TABLE>
(vi)
<PAGE> 8
EXHIBIT A-1 Form of Syndicated Loan Note
EXHIBIT A-2 Form of Swing Loan Note
EXHIBIT A-3 Form of Money Market Loan Note
EXHIBIT B Form of Opinion of Counsel for the Borrower and
Guarantor
EXHIBIT C Form of Opinion of Special Counsel for the Administrative
Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H Form of Guaranty
EXHIBIT I Form of Borrowing Base Certificate
EXHIBIT J Form of Money Market Quote Request
EXHIBIT K Form of Money Market Quote
Schedule 4.08 Subsidiaries
(vii)
<PAGE> 9
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 9,
1997 among POST APARTMENT HOMES, L.P., the BANKS listed on the signature pages
hereof, First Union National Bank of Georgia, as Co-Agent, and WACHOVIA BANK OF
GEORGIA, N.A., as Administrative Agent.
This Amended and Restated Credit Agreement is an amendment and
restatement of the $180,000,000 Credit Agreement by and among the Borrower,
Wachovia Bank of Georgia, N.A., First Union National Bank of Georgia, Trust
Company Bank, Commerzbank AG, Atlanta Agency, Corestates Bank and Mellon Bank,
N.A., as Banks, First Union National Bank of Georgia, as Co-Agent, and Wachovia
Bank of Georgia, N.A., as the Administrative Agent, dated as of February 1,
1995, as amended prior to the date hereof by First Amendment to Credit Agreement
and Release of Subsidiary Guarantors dated July 26, 1995, Second Amendment to
Credit Agreement dated October 27, 1995, Third Amendment to Credit Agreement
dated February 29, 1996 and Fourth Amendment to Credit Agreement dated December
1, 1996 (the "Original Agreement"), which is superseded hereby.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this
Section 1.01 shall, for all purposes of this Agreement and any amendment hereto
(except as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Affiliate" of any relevant Person means (i) any Person that
directly, or indirectly through one or more intermediaries, controls the
relevant Person (a "Controlling Person"), (ii) any Person (other than the
relevant Person or a Subsidiary of the relevant Person) which is controlled by
or is under common control with a Controlling Person, or (iii) any Person (other
than a Subsidiary of the relevant Person) of which the relevant Person owns,
directly or indirectly, 20% or more of the voting
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common stock, general partnership interest in a general or limited partnership
or equivalent equity interests in any other Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Administrative Agent" means Wachovia Bank of Georgia, N.A., a
national banking association organized under the laws of the United States of
America, in its capacity as agent for the Banks hereunder, and its successors
and permitted assigns in such capacity.
"Administrative Agent's Letter Agreement" means that certain
letter agreement, dated as of February 7, 1997 between the Borrower and the
Administrative Agent relating to the structure of the Loans, and certain fees
from time to time payable by the Borrower to the Administrative Agent, together
with all amendments and supplements thereto.
"Agreement" means this Amended and Restated Credit Agreement,
together with all amendments and supplements hereto.
"Anniversary Date" means April 30, 1998 and each April
30 thereafter.
"Applicable Margin" has the meaning set forth in
Section 2.06(a).
"Assignee" has the meaning set forth in Section
9.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.08(c) in the form attached hereto as
Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as
having a Commitment, and its successors and its assigns permitted hereby.
"Base Rate" means for any Base Rate Loan for any day, the rate
per annum equal to the higher as of such day of (i) the
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Prime Rate, or (ii) one-half of one percent above the Federal Funds Rate. For
purposes of determining the Base Rate for any day, changes in the Prime Rate or
the Federal Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan to be made as a Base Rate Loan
pursuant to the applicable Notice of Borrowing, Section 2.02(f), or Article
VIII, as applicable.
"Borrower" means Post Apartment Homes, L.P., a Georgia limited
partnership and its successors and its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of (i)
Syndicated Loans made to the Borrower at the same time by all of the Banks, (ii)
a Swing Loan made to the Borrower by Wachovia or (iii) a Money Market Loan made
to the Borrower separately by one or more Banks, in each case pursuant to
Article II. A Borrowing is a "Euro-Dollar Borrowing" if such Loans are made as
Euro-Dollar Loans. A Borrowing is a "Base Rate Borrowing" if such Loan is made
as a Base Rate Loan. A Borrowing is a "Transaction Rate Borrowing" if such Loan
is made as a Transaction Rate Loan. A Borrowing is a "Syndicated Loan Borrowing"
if such Loans are made as Syndicated Loans. A Borrowing is a "Swing Loan
Borrowing" if such Loans are made as Swing Loans. A Borrowing is a "Money Market
Borrowing" if such Loans are made pursuant to Section 2.03. A Borrowing is a
"Fixed Rate Borrowing" if such Loans are made as Fixed Rate Loans.
"Borrowing Base" means the sum of each of the following, as
determined by reference to the most recent Borrowing Base Certificate furnished
pursuant to Section 3.01(i) or Section 5.01(h), as applicable:
(i) an amount equal to the product of: (x) 7.42857; times (y) the Net
Operating Income for the 12 month period ending on the last day of the month
just ended prior to the date of determination, from each Eligible Property which
is not subject to a Mortgage and which either was on average at least 90%
economically occupied during, or with respect to which the Construction Period
Termination Date occurred prior to the commencement of, such 12 month period;
provided, that if an Eligible Property satisfies the criteria set forth in both
this clause (i) and clause (iii) below, it shall be included in the calculations
only in clause (iii) below; plus
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(ii) an amount equal to the product of: (x) 7.42857; times (y) the Net
Operating Income for the 12 month period ending on the last day of the month
just ended prior to the date of determination, from each Eligible Property which
is financed as to Debt only by bonds, debentures, notes or other similar
instruments which have been fully in substance defeased in accordance with GAAP;
plus
(iii) an amount equal to the product of: (x) 29.71428; times (y) the
Net Operating Income for the 3 month period ending on the last day of the month
just ended prior to the date of determination, from each Eligible Property which
is not subject to a Mortgage and with respect to which the Construction Period
Termination Date did not occur prior to the commencement of the 12 month period
ending on the last day of the month just ended prior to the date of
determination; plus
(iv) an amount equal to the lesser of: (x) 50% of the aggregate amount
of cash expenditures (including indirect costs internally allocated in
accordance with GAAP) as of the last day of the month just ended prior to the
date of determination on all Eligible Properties which are not subject to a
Mortgage and which consist of apartment communities as to which the Construction
Period Termination Date has not occurred as of such last day of the month just
ended; and (y) $75,000,000 less the amount determined pursuant to clause (v);
plus
(v) an amount equal to the lesser of: (x) the sum of (A) 45% of the
aggregate cost of all Eligible Properties which consist of raw land not subject
to a Mortgage, or which consist of land acquired with existing improvements
which are to be substantially demolished and the demolition of such improvements
has commenced, plus (B) with respect to Eligible Properties which consist of
land acquired with existing improvements which are to be substantially
demolished, so long as such Eligible Property was on average at least 50%
economically occupied during the 12 month period ending on the last day of the
month just ended prior to the date of determination and demolition of such
improvements has not commenced, the greater of 45% of the aggregate cost of such
Eligible Property or 5.71429 times the Net Operating Income of such Eligible
Property during such 12 month period; (y) $25,000,000; and (z) 33% of the sum of
(A) the amounts determined pursuant to clauses (i) through (iv), inclusive (but
without giving effect to clause (iv)(y)); less
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(vi) an amount equal to the greater of: (x) all outstanding Debt of the
Borrower and the Guarantor (other than the Loans and any Debt owing to the
Borrower or the Guarantor) which is not secured by a Lien (excluding Debt
consisting of a Guarantee, where the underlying Debt of the principal obligor is
subject to a Lien on property of the principal obligor); and (y) all commitments
(other than the Commitments) to the Borrower and the Guarantor then available to
be advanced, to fund Debt of the type described in clause (vi)(x).
"Borrowing Base Certificate" means a certificate substantially
in the form of Exhibit I, duly executed by an Executive Officer, setting forth
in reasonable detail the calculations for each component of the Borrowing Base.
"Capital Stock" means any capital stock issued by any Person,
whether common or preferred, excluding Redeemable Preferred Stock.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss. 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change in Control" shall mean the occurrence of either of the
following: (i) more than 50% of the outstanding voting common stock of PPI is
owned, directly or indirectly, by less than 6 "individuals" (as provided in
Section 542(a)(2) of the Code); or (ii) a majority of the Persons comprising the
Board of Directors of PPI shall during any 12 month period cease to serve on the
Board of Directors of PPI for any reason other than disability or death.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Closing Certificate" has the meaning set forth in
Section 3.01(e).
"Closing Date" means April 9, 1997.
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"Code" means the Internal Revenue Code of 1986, as amended, or
any successor Federal tax code.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.08.
"Compliance Certificate" has the meaning set forth in
Section 5.01(c).
"Consolidated Debt" means at any date the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated Income Available for Debt Service" shall mean,
calculated on a consolidated basis, the sum of the Borrower's and its
Subsidiaries': (i) net income before Minority Interests and extraordinary items,
plus (ii) depreciation and amortization, plus (iii) losses from sales or joint
ventures, plus (iv) increases in deferred taxes and other non-cash items, minus
(v) gains from sales or joint ventures, minus (vi) decreases in deferred taxes
and other non-cash items, plus (vii) interest expense and plus (viii) taxes
(excluding ad valorem taxes).
"Consolidated Income Available for Distribution" means, in any
calendar year, the sum of the following for such calendar year, calculated on a
consolidated basis for the Borrower and its Subsidiaries: (i) Consolidated
Income Available for Debt Service, less (ii) interest expense, and less (iii)
taxes (excluding ad valorem taxes and taxes on gains described in clause (v) of
the definition of Consolidated Income Available for Debt Service).
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial statements
as of such date.
"Consolidated Total Assets" shall mean (i) all Undepreciated
Real Estate Assets plus (ii) all other tangible assets of the Borrower and its
Subsidiaries.
"Consolidated Total Debt" shall mean the total liabilities of
the Borrower and its Subsidiaries, on a
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consolidated basis (excluding liabilities on account of dividends which have
been declared but not paid), plus the aggregate amount of Debt Guaranteed by the
Borrower, the Guarantor and the Subsidiaries (other than of Debt of any of them)
at the end of the Borrower's most recent Fiscal Quarter.
"Consolidated Total Secured Debt" shall mean all Debt of the
Borrower and its Subsidiaries consisting of (i) capitalized leases, and (ii)
money borrowed or the deferred purchase price of real property which is also
secured by a Mortgage on any real property owned by the Borrower or its
Subsidiaries.
"Construction Period Termination Date" means, with respect to
construction of apartment communities for Eligible Properties, the date which is
3 months after the issuance of a permanent certificate of occupancy for the last
unit of such apartment community on such Eligible Property.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument issued to
assure the payment of Debt (but while such reimbursement obligation remains
contingent due to there having been no presenting and honoring of a draft under
any such letter of credit or similar instrument, only the principal component of
the underlying Debt shall be included as Debt under this clause (vii)), (viii)
all Debt of others secured by a Lien on any asset of such Person, whether or
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not such Debt is assumed by such Person, and (ix) all Debt of others Guaranteed
by such Person; provided, however, that the term Debt shall not include (A) any
such obligations to the extent such obligations have been in substance defeased
in accordance with GAAP, or (B) obligations under Redeemable Preferred Stock to
the extent that any sinking fund payments have been made in connection
therewith.
"Debt Rating" means at any time whichever is the higher of the
rating of the Borrower's senior unsecured, unenhanced debt (or, if no such debt
exists, its prospective or implied credit rating for debt of such type) by
Moody's Investor Service or Standard and Poor's (as such rating may change from
time to time, either pursuant to Section 2.06(f) or otherwise) or if only one of
them rates the Borrower's senior unsecured, unenhanced debt (or, if no such debt
exists, has in effect a prospective or implied rating for such debt), such
rating.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day,
the sum of 2% plus the then highest interest rate (including the Applicable
Margin) which may be applicable to any Loans hereunder.
"Dollars" or "$" means dollars in lawful currency of
the United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia are authorized by law
to close.
"Eligible Properties" means any Property of the Borrower
consisting of real estate as to which the Administrative Agent has received or
reviewed each of the following, each in form and substance satisfactory to the
Administrative Agent, in its reasonable business judgment: (i) an environmental
report; (ii) a boundary survey; and (iii) an owner's title insurance policy,
without a general survey exception, issued by an insurer acceptable to the
Administrative Agent, in its reasonable business judgment; provided, however,
that for each apartment community which was or is being constructed in phases,
the term
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Eligible Property shall mean each such phase separately, except that all phases
as to which a period of 12 months after the Construction Period Termination Date
has occurred for each such phase shall be treated as a single Eligible Property.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated
in a judgment, decree or order.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of any violation of
any Environmental Requirement or any investigations concerning any violation of
any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
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"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrower,
any Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state and
local laws, ordinances, regulations, orders, writs, decrees and common law,
including without limitation, the Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal
Act, the Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, or the Federal Occupational Safety and Health Act of 1970, each
as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Syndicated Loan to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" means, for any Bank which is
a member bank of the Federal Reserve System, on any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirement for such Bank in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to United States
residents).
"Event of Default" has the meaning set forth in Section
6.01.
"Executive Officer" means any of the following officers
of the General Partner: the Chairman, the President, the Chief
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Financial Officer, the Chief Accounting Officer, the Senior Vice
President-Capital Markets and the Secretary.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Administrative Agent
on such day on such transactions, as determined by the Administrative Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means, with reference to PPI, any fiscal year of
PPI, and with reference to the Borrower, any fiscal year of the Borrower.
"Fixed Rate Borrowing" means a Euro-Dollar Borrowing, a
Transaction Rate Borrowing or a Money Market Borrowing, or any or all of them,
as the context requires.
"Fixed Rate Loan" means any Euro-Dollar Loan, Transaction Rate
Loan or Money Market Loan, or any or all of them, as the context shall require.
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance with
the terms of this Agreement.
"General Partner" means the sole general partner of the
Borrower (which, on the Closing Date, is PPI) or, if there is more than one such
general partner, the managing general partner of the Borrower.
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"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means PPI.
"Guaranty" means the Guaranty Agreement of even date herewith
in substantially the form of Exhibit "H" to be executed by the Guarantor,
unconditionally guaranteeing payment of the Loans, the Notes and all other
obligations of the Borrower to the Administrative Agent, the Co-Agent and the
Banks hereunder, including without limitation all principal, interest, fees,
costs, and compensation and indemnification amounts.
"Hazardous Materials" includes, without limitation, (a) solid
or hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss. 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or in
any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof,
or (d) pesticides, as defined in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, or in any applicable state or local law or regulation,
as each such Act, statute or regulation may be amended from time to time.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the
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first, second, third or sixth month thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (subject to paragraph (c) below) which
would otherwise end on a day which is not a Euro-Dollar Business Day
shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to paragraph (c) below, end on the last
Euro-Dollar Business Day of the appropriate subsequent calendar month;
and
(c) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter (or any lesser number of days
ending on the Termination Date); provided that:
(a) any Interest Period (subject to paragraph (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall
be extended to the next succeeding Domestic Business Day; and
(b) no Interest Period which begins before the Termination
Date and would otherwise end after the Termination Date may be
selected.
(3) with respect to each Transaction Rate Borrowing, any period up to 14
days mutually agreeable to the Borrower and Wachovia which ends on or
prior to the Termination Date.
(4) with respect to each Money Market Borrowing, the period commencing on the
date of such Borrowing and ending on the Stated Maturity Date or such other date
or dates as may be specified in the applicable Money Market Quote; provided
that:
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(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day shall
be extended to the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making of a
time deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means, as to each Bank, its office located at
its address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as such Bank
may hereafter designate as its Lending Office by notice to the Borrower and the
Administrative Agent.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, or preferential arrangement which has the practical effect of
constituting any of the foregoing in respect of such asset to secure or assure
payment of a Debt or a Guarantee, whether by consensual agreement or by
operation of statute or other law, or by any agreement, contingent or otherwise,
to provide any of the foregoing. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loans" means, as the context shall require, either (i)
Syndicated Loans, which may be either Base Rate Loans or Euro- Dollar Loans made
pursuant to the terms and conditions set forth in Section 2.01(a), (ii) Swing
Loans, which may be either Base Rate Loans or Transaction Rate Loans made
pursuant to the terms and conditions set forth in Section 2.01(b) or (iii) Money
Market Loans made pursuant to the terms and conditions set forth in 2.03.
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"Loan Documents" means this Agreement, the Notes, the
Guaranty, any other document evidencing, relating to or securing the Loans, and
any other document or instrument delivered from time to time in connection with
this Agreement, the Notes or the Loans, as such documents and instruments may be
amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.06(c).
"Margin Stock" means "margin stock" as defined in Regulations
G, T, U or X.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition, operations, business or properties of PPI, the
Borrower, and the Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Administrative Agent or the Banks under the Loan Documents, or
the ability of the Borrower to perform its obligations under the Loan Documents
to which it is a party, as applicable, or (c) the legality, validity or
enforceability of any Loan Document.
"Minority Interests" shall mean the minority interests of unit
holders as shown on the then most recently available Form 10-K or 10-Q of PPI.
"Money Market Borrowing Date" has the meaning specified
in Section 2.03.
"Money Market Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-3, evidencing the obligation of
the Borrower to repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Money Market Loans" means Loans made pursuant to the terms
and conditions set forth in Section 2.03.
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"Money Market Quote" has the meaning specified in
Section 2.03.
"Money Market Quote Request" has the meaning specified
in Section 2.03(b).
"Money Market Rate" has the meaning specified in
Section 2.03(c)(ii)(C).
"Mortgage" means a mortgage, deed to secure debt, deed of
trust or similar instrument.
"Multiemployer Plan" shall have the meaning set forth
in Section 4001(a)(3) of ERISA.
"Net Operating Income" means, for any Eligible Property, the
portion of Consolidated Income Available for Debt Service derived from such
Eligible Property (which calculation excludes intracompany charges for
management services that are eliminated in accordance with GAAP).
"Notes" means the Syndicated Loan Notes, the Swing Loan Note
or Money Market Loan Notes, or any one, or more, or all of them, as the context
shall require.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
"Original Agreement" has the meaning set forth in the
preamble hereto.
"Original Notes" means the Notes executed and delivered
pursuant to the Original Agreement.
"Participant" has the meaning set forth in Section
9.08(b).
"Partner Interests" means any partner interests in the
Borrower, whether limited or general.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
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"Performance Pricing Determination Date" has the meaning set
forth in Section 2.06(a).
"Person" means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"PPI" means Post Properties, Inc., a Georgia corporation, and
its successors and assigns.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower, the Guarantor or any Subsidiary,
wherever located.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Refunding Loan" means a new Loan made on the day on which an
outstanding Loan is maturing or a Base Rate Borrowing is being converted to a
Euro-Dollar Borrowing or a Transaction Rate Borrowing, if and to the extent that
the proceeds thereof are used entirely for the purpose of paying such maturing
Loan or Loan being converted, excluding any difference between the amount
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<PAGE> 26
of such maturing Loan or Loan being converted and any greater amount being
borrowed on such day and actually either being made available to the Borrower
pursuant to Section 2.02(c) or remitted to the Administrative Agent as provided
in Section 2.12, in each case as contemplated in Section 2.02(d).
"Regulation G" means Regulation G of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the Commitments are no
longer in effect, Banks holding at least 66 2/3% of the aggregate outstanding
principal amount of the sum of the (i) Syndicated Loans and (ii) Money Market
Loans.
"Restricted Payment" means (i) any distribution on any Partner
Interests (other than distributions consisting solely of additional Partner
Interests) or (ii) any payment on account of the purchase, redemption,
retirement or acquisition of (a) any Partner Interests or (b) any option,
warrant or other right to acquire Partner Interests.
"Significant Subsidiary" means any Subsidiary which either (x)
has assets which constitute more than 5% of Consolidated Total Assets at the end
of the most recent Fiscal Quarter, or (y) contributed more than 5% of
Consolidated Income Available for Debt Service during the most recent Fiscal
Quarter and the 3 Fiscal Quarters immediately preceding such Fiscal
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<PAGE> 27
Quarter (or, with respect to any Subsidiary which existed during the entire 4
Fiscal Quarter period but was acquired by the Borrower during such period, which
would have contributed more than 5% of Consolidated Income Available for Debt
Service during such period had it been a Subsidiary for the entire period).
"Stated Maturity Date" means, with respect to any Money Market
Loans, the Stated Maturity Date therefor specified by the Bank in the applicable
Money Market Quote.
"Subsidiary" means (i) any corporation or other entity the
majority of the shares of the non-voting capital stock or other equivalent
ownership interests of which (except directors' qualifying shares) are at the
time directly or indirectly owned by the Borrower and/or PPI, and the majority
of the shares of the voting capital stock or other equivalent ownership
interests of which (except directors' qualifying shares) are at the time
directly or indirectly owned by the Borrower, PPI, another Subsidiary, and/or
one or more of John A. Williams and John T. Glover (or, in the event of death or
disability of either of the foregoing individuals, his respective legal
representative(s)), or such individuals' successors in office as an officer of
such Subsidiary or the Secretary of such Subsidiary, and (ii) any other entity
(other than PPI or the Borrower) the accounts of which are consolidated with the
accounts of the Borrower.
"Subsidiary Consolidated Total Assets" means the sum of
(i) Consolidated Total Assets less (ii) Consolidated Total
Assets.
"Swing Loan" means a Loan made by Wachovia pursuant to Section
2.01(b), which must be a Base Rate Loan or a Transaction Rate Loan.
"Swing Loan Note" means the promissory note of the Borrower,
substantially in the form of Exhibit A-2, evidencing the obligation of the
Borrower to repay the Swing Loans, together with all amendments, consolidations,
modifications, renewals, and supplements thereto.
"Syndicated Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-1, evidencing the obligation of
the Borrower to repay Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
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"Taxes" has the meaning set forth in Section 2.12(c).
"Termination Date" means whichever is applicable of (i) the
third Anniversary Date, or such later date to which it is extended by the Banks
pursuant to Section 2.05(b) or (ii) any earlier date which constitutes the
Termination Date pursuant to the provisions of and under the circumstances
contained in Sections 2.08 or 2.09.
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business.
"Transaction Rate" has the meaning set forth in Section
2.01(b)(ii).
"Transaction Rate Loan" means a Swing Loan to be made as a
Transaction Rate Loan pursuant to Section 2.01(b).
"Transaction Rate Request" has the meaning set forth in
Section 2.01(b)(ii).
"Transferee" has the meaning set forth in Section
9.08(d).
"Undepreciated Real Estate Assets" shall mean the cost
(original cost plus capital improvements, if any) of real estate assets of the
Borrower and its Subsidiaries, before depreciation and amortization, in
accordance with GAAP.
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Unused Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding principal
amount of its Syndicated Loans (but not, with respect to Wachovia, its Swing
Loans, or with respect to any Bank, its Money Market Loans).
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"Wachovia" means Wachovia Bank of Georgia, N.A., a national
banking association, and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of the non-voting capital stock or other equivalent ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower and/or PPI, and all of the shares of the voting
capital stock or other equivalent ownership interests of which are at the time
directly or indirectly owned by the Borrower, PPI, another Wholly Owned
Subsidiary, and/or one or more John A. Williams and John T. Glover (or, in the
event of death or disability of either of the foregoing individuals, his
respective legal representative(s)), or such individuals' successors in office
as an officer of such Subsidiary or the Secretary of such Subsidiary.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared,
in accordance with GAAP, applied on a basis consistent (except for changes
concurred in by PPI's independent public accountants or otherwise required by a
change in GAAP) with the most recent audited consolidated financial statements
of PPI or the Borrower and its Consolidated Subsidiaries, as applicable,
delivered to the Banks unless with respect to any such change concurred in by
PPI's independent public accountants or required by GAAP, in determining
compliance with any of the provisions of this Agreement or any of the other Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Required Banks shall so object in writing within 30 days after the delivery of
such financial statements, in either of which events such calculations shall be
made on a basis consistent with those used in the preparation of the latest
financial statements as to which such objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 5.01 hereof, shall mean the financial statements referred to in
Section 4.04).
SECTION 1.03. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules", "Sections"
and other Subdivisions are references to
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articles, exhibits, schedules, sections and other subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in this
Agreement shall have the same defined meanings when used in any of the other
Loan Documents, unless otherwise defined therein or unless the context shall
require otherwise.
SECTION 1.05. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend Loans.
(a) Syndicated Loans. Each Bank severally agrees, on the terms and
conditions set forth herein, to make Syndicated Loans to the Borrower from time
to time before the Termination Date; provided that, immediately after each such
Syndicated Loan is made,
(i) the aggregate principal amount of Syndicated Loans
by such Bank shall not exceed the amount of its Commitment,
and
(ii) the aggregate outstanding amount of all Syndicated Loans,
Swing Loans and Money Market Loans shall not exceed the lesser of (A)
the aggregate amount of the Commitments and (B) the Borrowing Base.
Each Syndicated Loan Borrowing under this Section shall be in an aggregate
principal amount of $5,000,000 or any larger multiple of $250,000 (except that
any such Syndicated Loan Borrowing may be in the aggregate amount of the Unused
Commitments) and shall be made from the several Banks ratably in proportion to
their respective Commitments. Within the foregoing limits, the Borrower may
borrow under this Section, repay or, to the extent
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<PAGE> 31
permitted by Section 2.10, prepay Syndicated Loans and reborrow under this
Section at any time before the Termination Date.
(b) Swing Loans. (i) In addition to the foregoing, Wachovia shall from
time to time, upon the request of the Borrower, if the applicable conditions
precedent in Article III have been satisfied, make Swing Loans to the Borrower
in an aggregate principal amount at any time outstanding not exceeding
$5,000,000; provided that, immediately after such Swing Loan is made, the
outstanding amount of the Syndicated Loans, Swing Loans and Money Market Loans
shall not exceed the lesser of (A) the aggregate amount of the Commitments and
(B) the Borrowing Base. Within the foregoing limits, the Borrower may borrow
under this Section 2.01(b), prepay and reborrow under this Section 2.01(b) at
any time before the Termination Date. All Swing Loans shall be made as either
Base Rate Loans or, subject to the provisions of clause (ii) below, Transaction
Rate Loans.
(ii) Swing Loans may be Transaction Rate Loans, if the Administrative
Agent shall have determined that such Transaction Rate Loan, including the
principal amount thereof, the Interest Period and the Transaction Rate
applicable thereto, has been expressly agreed to by the Borrower and Wachovia
(such agreement may be obtained by telephone, confirmed promptly to the
Administrative Agent in writing) pursuant to the following procedures. If the
Borrower desires a Transaction Rate Loan, (a) the Borrower shall provide
Wachovia, with a copy to the Administrative Agent, with notice of a request (a
"Transaction Rate Request") for a quote for a Transaction Rate Borrowing prior
to 1:00 p.m. (Atlanta, Georgia time) on the date (which shall be a Domestic
Business Day) of the proposed Transaction Rate Borrowing, which Transaction Rate
Request shall include the principal amount and proposed Interest Period of the
relevant Transaction Rate Borrowing, (b) prior to 1:30 p.m. (Atlanta, Georgia
time) on such date, Wachovia shall furnish the Borrower, with a copy to the
Administrative Agent, with its rate quote (a "Transaction Rate Quote") via
facsimile transmission, (c) the Borrower shall immediately inform Wachovia and
the Administrative Agent of its decision as to whether to request a Transaction
Rate Borrowing at the Transaction Rate specified in such Transaction Rate Quote
(a "Transaction Rate") (which may be done by telephone and promptly confirmed in
writing, and which decision shall be irrevocable), and (d) if the Borrower has
so informed Wachovia and the Administrative Agent that it does desire a
Transaction Rate Borrowing at the Transaction Rate specified in such
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Transaction Rate Quote, then by 2:00 p.m. (Atlanta, Georgia time) on the date of
such decision, Wachovia shall make such Transaction Rate Borrowing, with
interest accruing thereon at such Transaction Rate, available to the
Administrative Agent in accordance with the procedures set forth herein. The
Administrative Agent shall notify the Banks of any Transaction Rate Borrowing
pursuant hereto.
(iii) At any time on or after the occurrence of an Event of Default,
upon the request of Wachovia, each Bank other than Wachovia shall, on the third
Domestic Business Day after such request is made, purchase a participating
interest in Swing Loans in an amount equal to its ratable share (based upon its
respective Commitment) of such Swing Loans, and Wachovia shall furnish each Bank
with a certificate evidencing such participating interest. On such third
Domestic Business Day, each Bank will immediately transfer to Wachovia, in
immediately available funds, the amount of its participation. Whenever, at any
time after Wachovia has received from any such Bank its participating interest
in a Swing Loan, the Administrative Agent receives any payment on account
thereof, the Administrative Agent will distribute to such Bank its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Bank's participating
interest was outstanding and funded); provided, however, that in the event that
such payment received by the Administrative Agent is required to be returned,
such Bank will return to the Administrative Agent any portion thereof previously
distributed by the Administrative Agent to it. Each Bank's obligation to
purchase such participating interests shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation: (1)
any set-off, counterclaim, recoupment, defense or other right which such Bank or
any other Person may have against Wachovia requesting such purchase or any other
Person for any reason whatsoever; (2) the occurrence or continuance of a Default
or an Event of Default or the termination of the Commitments; (3) any adverse
change in the condition (financial or otherwise) of the Borrower, PPI or any
other Person; (4) any breach of this Agreement by the Borrower or any other
Bank; or (5) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
SECTION 2.02. Method of Borrowing Loans other than Transaction
Rate Loans. For all Loans other than Transaction
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Rate Loans (which shall be governed by the provisions of Section 2.01(b)(ii)):
(a) The Borrower shall give the Administrative Agent notice
(a "Notice of Borrowing"), which shall be substantially in the form of Exhibit
E, executed by the President of the General Partner or any person authorized in
writing by the President of the General Partner, prior to noon (Atlanta, Georgia
time) on the same Domestic Business Day for each Base Rate Borrowing and at
least 3 Euro-Dollar Business Days before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to be
Syndicated Dollar Loans or Swing Loans, and whether they are to be Base
Rate Loans or Euro-Dollar Loans;
(iv) in the case of a Euro-Dollar Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period; and
(v) the amount available to be borrowed under Section
2.01.
(b) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly, and not later than 1:00 P.M., (Atlanta,
Georgia time), notify each Bank of the contents thereof and, if it is a
Syndicated Loan Borrowing, of such Bank's ratable share of such Borrowing and
such Notice of Borrowing, once received by the Administrative Agent, shall not
thereafter be revocable by the Borrower.
(c) Not later than 3:00 P.M. (Atlanta, Georgia time) on the
date of each Borrowing, each Bank (or Wachovia, with respect to Swing Loans)
shall (except as provided in paragraph (d) of this Section) make available its
ratable share of such Borrowing, in Federal or other funds immediately available
in Atlanta, Georgia, to the Administrative Agent at its address determined
pursuant to Section 9.01. Unless the Administrative Agent
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determines in its reasonable business judgment that any applicable condition
specified in Article III has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Borrower at the
Administrative Agent's aforesaid address. Unless the Administrative Agent
receives notice from a Bank, at the Administrative Agent's address referred to
in or specified pursuant to Section 9.01, no later than 4:00 P.M. (local time at
such address) on the Domestic Business Day before the date of a Borrowing
stating that such Bank will not make a Syndicated Loan in connection with such
Borrowing, the Administrative Agent shall be entitled to assume that such Bank
will make a Syndicated Loan in connection with such Borrowing and, in reliance
on such assumption, the Administrative Agent may (but shall not be obligated to)
make available such Bank's ratable share of such Borrowing to the Borrower for
the account of such Bank. If the Administrative Agent makes such Bank's ratable
share available to the Borrower and such Bank does not in fact make its ratable
share of such Borrowing available on such date, the Administrative Agent shall
be entitled to recover such Bank's ratable share from such Bank or the Borrower
(and for such purpose shall be entitled to charge such amount to any account of
the Borrower maintained with the Administrative Agent), together with interest
thereon for each day during the period from the date of such Borrowing until
such sum shall be paid in full at a rate per annum equal to the rate at which
the Administrative Agent determines that it obtained (or could have obtained)
overnight Federal funds to cover such amount for each such day during such
period, provided that (i) any such payment by the Borrower of such Bank's
ratable share and interest thereon shall be without prejudice to any rights that
the Borrower may have against such Bank and (ii) until such Bank has paid its
ratable share of such Borrowing, together with interest pursuant to the
foregoing, it will have no interest in or rights with respect to such Borrowing
for any purpose hereunder. If the Administrative Agent does not exercise its
option to advance funds for the account of such Bank, it shall forthwith notify
the Borrower of such decision.
(d) If any Bank makes a new Syndicated Loan hereunder on a day
on which the Borrower is to repay all or any part of an outstanding Syndicated
Loan from such Bank, such Bank shall apply the proceeds of its new Syndicated
Loan to make such repayment as a Refunding Loan and only an amount equal to the
difference (if any) between the amount being borrowed and the amount of such
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Refunding Loan shall be made available by such Bank to the Administrative Agent
as provided in paragraph (c) of this Section, or remitted by the Borrower to the
Administrative Agent as provided in Section 2.12, as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower shall not be entitled to, and the Administrative Agent
shall not knowingly fund, a Fixed Rate Borrowing if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived.
(f) In the event that a Notice of Borrowing fails to specify
whether the Loans comprising such Borrowing are to be Base Rate Loans or
Euro-Dollar Loans, such Loans shall be made as Base Rate Loans. If the Borrower
is otherwise entitled under this Agreement to repay any Loans maturing at the
end of an Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Loans mature in an amount
equal to the principal amount of the Loans so maturing, and the Loans comprising
such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein,
there shall not be more than 8 Euro-Dollar Loans and Money Market Loans
outstanding at any given time.
SECTION 2.03. Money Market Loans. (a) In addition to making
Syndicated Loan Borrowings, the Borrower may, as set forth in this Section 2.03,
request the Banks to make offers to make Money Market Borrowings available to
the Borrower. The Banks may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section 2.03, provided that:
(i) The number of interest rates applicable to Money
Market Loans which may be outstanding at any given time is
subject to the provisions of Section 2.02(g);
(ii) the aggregate outstanding amount of all Syndicated
Loans, Swing Loans and Money Market Loans shall
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not exceed the lesser of (A) the aggregate amount of the Commitments
and (B) the Borrowing Base;
(iii) the Money Market Loans of any Bank will be deemed to be
usage of the Commitments for the purpose of calculating availability
pursuant to Section 2.01(a)(ii), 2.01(b)(ii) and 2.03(a)(ii) but will
not reduce such Bank's obligation to lend its pro rata share of the
remaining Unused Commitment; and
(iv) the aggregate principal amount of all Money Market Loans
shall not exceed fifty percent (50%) of the aggregate amount of the
Commitments of all the Banks at such time.
(b) When the Borrower wishes to request offers to make Money
Market Loans, it shall give the Administrative Agent (which shall promptly
notify the Banks) notice substantially in the form of Exhibit J hereto (a "Money
Market Quote Request") so as to be received no later than 10:00 A.M. (Atlanta,
Georgia time) at least 2 Domestic Business Days prior to the date of the Money
Market Borrowing proposed therein (or such other time and date as the Borrower
and the Administrative Agent, with the consent of the Required Banks, may
agree), specifying:
(i) the proposed date of such Money Market Borrowing, which
shall be a Domestic Business Day (the "Money Market Borrowing Date");
(ii) the maturity date (or dates) (each a "Stated Maturity
Date") for repayment of each Money Market Loan to be made as part of
such Money Market Borrowing (which Stated Maturity Date shall be that
date occurring not less than 7 days but not greater than 180 days from
the date of such Money Market Borrowing); provided that the Stated
Maturity Date for any Money Market Loan may not extend beyond the
Termination Date (as in effect on the date of such Money Market Quote
Request); and
(iv) the aggregate amount of principal to be received by the
Borrower as a result of such Money Market Borrowing, which shall be at
least $5,000,000 (and in larger integral multiples of $250,000) but
shall not cause the limits specified in Section 2.03(a) to be violated.
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The Borrower may request offers to make Money Market Loans having up to 3
different Stated Maturity Dates in a single Money Market Quote Request; provided
that the request for each separate Stated Maturity Date shall be deemed to be a
separate Money Market Quote Request for a separate Money Market Borrowing.
Except as otherwise provided in the immediately preceding sentence, after the
first Money Market Quote Request has been given hereunder, no Money Market Quote
Request shall be given until at least 5 Domestic Business Days after all prior
Money Market Quote Requests have been fully processed by the Administrative
Agent, the Banks and the Borrower pursuant to this Section 2.03.
(c) (i) Each Bank may, but shall have no obligation
to, submit a response containing an offer to make a Money Market Loan
substantially in the form of Exhibit K hereto (a "Money Market Quote")
in response to any Money Market Quote Request; provided that, if the
Borrower's request under Section 2.03(b) specified more than 1 Stated
Maturity Date, such Bank may, but shall have no obligation to, make a
single submission containing a separate offer for each such Stated
Maturity Date and each such separate offer shall be deemed to be a
separate Money Market Quote. Each Money Market Quote must be submitted
to the Administrative Agent not later than 10:00 A.M. (Atlanta, Georgia
time) on the Money Market Borrowing Date; provided that any Money
Market Quote submitted by Wachovia may be submitted, and may only be
submitted, if Wachovia notifies the Borrower of the terms of the offer
contained therein not later than 9:45 A.M. (Atlanta, Georgia time) on
the Money Market Borrowing Date (or 15 minutes prior to the time that
the other Banks must have submitted their respective Money Market
Quotes). Subject to Section 6.01, any Money Market Quote so made shall
be irrevocable except with the written consent of the Administrative
Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed Money Market Borrowing
Date and the Stated Maturity Date therefor;
(B) the principal amounts of the Money
Market Loan which the quoting Bank is willing to make
for the applicable Money Market Quote, which
principal amounts (x) may be greater than or less
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than the Commitment of the quoting Bank, (y) shall be
at least $5,000,000 or a larger integral multiple of
$250,000, and (z) may not exceed the principal amount
of the Money Market Borrowing for which offers were
requested;
(C) the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%)
offered for each such Money Market Loan (such amounts
being hereinafter referred to as the "Money Market
Rate"); and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Administrative Agent and the Borrower,
no Money Market Quote shall contain qualifying, conditional or similar
language or propose terms other than or in addition to those set forth
in the applicable Money Market Quote Request (other than setting forth
the maximum principal amounts of the Money Market Loan which the
quoting Bank is willing to make for the applicable Interest Period)
and, in particular, no Money Market Quote may be conditioned upon
acceptance by the Borrower of all (or some specified minimum) of the
principal amount of the Money Market Loan for which such Money Market
Quote is being made.
(d) The Administrative Agent shall as promptly as practicable
after the Money Market Quote is submitted (but in any event not later than 10:30
A.M. (Atlanta, Georgia time)) on the Money Market Borrowing Date, notify the
Borrower of the terms (i) of any Money Market Quote submitted by a Bank that is
in accordance with Section 2.03(c) and (ii) of any Money Market Quote that
amends, modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Administrative
Agent unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Administrative Agent's
notice to the Borrower shall specify (A) the principal amounts of the Money
Market Borrowing for which offers have been received and (B) the respective
principal amounts and Money Market Rates so offered by each Bank (identifying
the Bank that made each Money Market Quote).
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(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on the
Money Market Borrowing Date, the Borrower shall notify the Administrative Agent
of its acceptance or nonacceptance of the offers so notified to it pursuant to
Section 2.03(d) and the Administrative Agent shall promptly notify each
affected Bank. In the case of acceptance, such notice shall specify the
aggregate principal amount of offers (for each Stated Maturity Date) that are
accepted. The Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the aggregate principal amount of each Money Market Loan
comprising a Money Market Borrowing shall be at least $5,000,000 (and
in larger multiples of $250,000) but shall not cause the limits
specified in Section 2.03(a) to be violated;
(iii) acceptance of offers may only be made in ascending order
of Money Market Rates; and
(iv) the Borrower may not accept any offer where the
Administrative Agent has advised the Borrower that such offer fails to
comply with Section 2.03(c)(ii) or otherwise fails to comply with the
requirements of this Agreement (including without limitation, Section
2.03(a)).
If offers are made by 2 or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Stated Maturity Date, the principal amount of Money
Market Loans in respect of which such offers are accepted shall be allocated by
the Borrower among such Banks as nearly as possible in proportion to the
aggregate principal amount of such offers. Determinations by the Borrower of the
amounts of Money Market Loans shall be conclusive in the absence of manifest
error.
(f) Any Bank whose offer to make any Money Market Loan has
been accepted shall, not later than 12:00 P.M. (Atlanta, Georgia time) on the
Money Market Borrowing Date, make the appropriate amount of such Money Market
Loan available to the Administrative Agent at its address referred to in Section
9.01 in immediately available funds. The amount so received by the
31
<PAGE> 40
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on such date by depositing the
same, in immediately available funds, not later than 4:00 P.M. (Atlanta, Georgia
time), in an account of such Borrower maintained with the Administrative Agent.
SECTION 2.04. Notes. (a) The Syndicated Loans of
each Bank shall be evidenced by a single Syndicated Loan Note payable to the
order of such Bank for the account of its Lending Office in an amount equal to
the original principal amount of such Bank's Commitment. The Swing Loans shall
be evidenced by a single Swing Loan Note payable to the order of Wachovia in the
original principal amount of $5,000,000. Loans outstanding under the Original
Agreement on the Closing Date shall be deemed to have been made hereunder and
shall be evidenced by the Notes.
(b) The Money Market Loans made by any Bank to the Borrower
shall be evidenced by a single Money Market Loan Note payable to the order of
such Bank for the account of its Lending Office in an amount equal to 50% of the
original principal amount of the aggregate Commitments.
(c) Upon receipt of each Bank's Syndicated Loan Notes,
Wachovia's Swing Loan Note and each Bank's Money Market Loan Notes pursuant to
Section 3.01, the Administrative Agent shall deliver such Syndicated Loan Notes
to such Bank, the Swing Loan Note to Wachovia and such Money Market Loan Notes
to such Bank. Each Bank, as to the Syndicated Loans or the Money Market Loans
(or Wachovia, as to the Swing Loans), shall record, and prior to any transfer of
its Syndicated Loan Notes or Money Market Loan Notes (or Swing Loan Note) shall
endorse on the schedules forming a part thereof appropriate notations to
evidence, the date, amount and maturity of, and effective interest rate for,
each Syndicated Loan or Money Market Loan (or Swing Loan) made by it, the date
and amount of each payment of principal made by the Borrower with respect
thereto, and such schedules of each such Bank's Syndicated Loan Notes or Money
Market Loan Notes (or Wachovia's Swing Loan Note) shall constitute rebuttable
presumptive evidence of the respective principal amounts owing and unpaid on
such Bank's Syndicated Loan Notes or Money Market Loan Notes (or Wachovia's
Swing Loan Note); provided that the failure of any Bank (or Wachovia) to make
any such recordation or endorsement shall not affect the obligation of the
Borrower hereunder or under the Syndicated Loan Notes or the Money Market Loan
Notes (or Swing Loan Note) or the ability of any Bank to
32
<PAGE> 41
assign its Syndicated Loan Notes or Money Market Loan Notes or Wachovia to
assign its Swing Loan Note. Each Bank (and Wachovia, with respect to the Swing
Loan) is hereby irrevocably authorized by the Borrower so to endorse its
Syndicated Loan Notes or Money Market Loan Notes (or Swing Loan Note) and to
attach to and make a part of any Syndicated Loan Note or Money Market Loan Note
(or Swing Loan Note) a continuation of any such schedule as and when required.
SECTION 2.05. Maturity of Loans. (a) Each Loan included
in any Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding principal
amount of the Loans, if any, together with all accrued but unpaid interest
thereon, if any, shall be due and payable on the third Anniversary Date, unless
the Termination Date is otherwise extended by the Banks, in their sole and
absolute discretion. Upon the written request of the Borrower, which request
shall be delivered to the Administrative Agent at least 60 days prior to each
Extension Date (as such term is hereinafter defined), the Banks shall have the
option (without any obligation whatsoever so to do) of extending the Termination
Date for additional one-year periods on each of the first, second and third
Anniversary Dates (each, an "Extension Date"). In the event that a Bank chooses
not to extend the Termination Date for such an additional one-year period,
notice shall be given by such Bank to the Borrower and the Administrative Agent
at least 30 days prior to the relevant Extension Date; provided, that the
Termination Date shall not be extended with respect to any of the Banks unless
the Required Banks are willing to extend the Termination Date. If less than all
the Banks deliver favorable extension notices, but at least the Required Banks
do so, then:
(1) The Administrative Agent shall promptly notify those
Banks that have delivered favorable extension notices
(each an "Extending Bank") as to the amount of
Commitments held by those Banks that have elected not
to extend the Termination Date (each a "Terminating
Bank"). Each Extending Bank shall be entitled to
commit, effective as of the relevant Anniversary Date,
to purchase from the Terminating Banks, at any time
after the relevant Anniversary Date and on or before
the Termination Date (prior to its extension
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<PAGE> 42
hereunder), a ratable portion of the Commitments and
outstanding Loans of the Terminating Banks in
accordance with the Extending Bank's respective
percentage of the remaining Aggregate Commitments. In
such event, the Terminating Banks shall be required to
sell to such Extending Bank all or any portion of their
respective Commitments and outstanding Loans, at the
times specified by the Extending Banks after the
relevant Anniversary Date and on or prior to the
Termination Date (prior to its extension hereunder).
Each Extending Bank desiring to purchase a portion of
such Commitments and outstanding Loans shall notify the
Administrative Agent and the Borrower of such election
and shall deliver, in form satisfactory to the
Administrative Agent and the Borrower, a commitment to
effect such purchase, not later than fifteen (15) days
prior to the relevant Anniversary Date. If any of the
Extending Banks elect not to commit to make such a
purchase, the Administrative Agent shall again notify
the other Extending Banks as to the amount of
Commitments available to be purchased by them in the
same manner as set forth in this paragraph, with any
commitment with respect to such purchase to be
delivered to the Administrative Agent and the Borrower
prior to the relevant Anniversary Date.
(2) If on the relevant Anniversary Date, commitments to
purchase all Commitments and outstanding Loans of the
Terminating Banks pursuant to paragraph (1) above have
not been delivered to the Administrative Agent and the
Borrower, the Borrower shall be entitled to designate
another bank or banks, acceptable to the Administrative
Agent, to purchase any remaining Commitments and
outstanding Loans from any Terminating Bank at any time
after the relevant Anniversary Date and on or prior to the
Termination Date (prior to its extension hereunder). In such
event, the Terminating Bank shall be required to sell to such
designated bank or banks all or any portion of its Commitment
and outstanding Loans, at the time specified by the Borrower
after the relevant Anniversary Date and on or prior to the
Termination Date (prior to its extension hereunder).
(3) If 30 days prior to the Termination Date (prior to its
extension hereunder) any Terminating Banks hold
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<PAGE> 43
Commitments that are not subject to purchase
commitments from Extending Banks or banks designated by
the Borrower pursuant to paragraph (2) above, then the
Administrative Agent shall again notify the Extending
Banks of the Commitments available to be purchased, and
the Extending Banks shall be entitled to purchase such
Commitments in accordance with the procedure set forth
in paragraph (1) above.
(4) If on the Termination Date (prior to its extension
hereunder) any Commitments of any Terminating Banks are
not purchased as set forth above, the Aggregate
Commitments under the Facility shall be reduced by the
aggregate amount of such Commitments of such
Terminating Banks, and the Loans of such Terminating
Banks shall be paid in full.
On each Extension Date on which the Termination Date is extended pursuant to the
foregoing, the Borrower shall pay the extension fee as required by Section
2.07(a).
SECTION 2.06. Interest Rates. (a) "Applicable Margin"
means:
(i) until the first Performance Pricing Determination Date,
(x) for any Base Rate Loan, 0.25%, (y) for each Euro-Dollar Loan,
0.675%; provided, however, that Euro-Dollar Loans made under the
Original Agreement which are outstanding on the Closing Date shall be
adjusted to reflect the provisions of this Section 2.06 for the
remainder of their respective Interest Periods; and
(ii) subject to the proviso at the end of Section 2.06(a) (i),
from and after the first Performance Pricing Determination Date, (x)
for any Base Rate Loan, 0.25%, and (y) for each Euro-Dollar Loan, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth below as to (1) such type of Loan and
the Debt Rating in effect on the last day of the quarterly or annual
period ending immediately prior to such Performance Pricing
Determination Date, and (2) whether such
35
<PAGE> 44
Performance Pricing Determination Date occurs prior to or after the
third Anniversary Date; provided, that if there is no Debt Rating, the
Applicable Margin for Euro-Dollar Loans shall be based upon Level V of
the table below.
<TABLE>
<CAPTION>
=======================================================================================================
Level Level Level Level Level
I II III IV V
=======================================================================================================
<S> <C> <C> <C> <C> <C>
Debt Rating Above BBB+/ BBB/ BBB-/ Below
BBB+/ Baa Baa2 Baa3 BBB-/
Baa1 Baa3
- -------------------------------------------------------------------------------------------------------
Applicable
Margin
through 0.525% 0.675% 0.80% 0.95% 1.15%
second
Anniversary
Date
- -------------------------------------------------------------------------------------------------------
Applicable
Margin after
second 0.675% 0.825% .95% 1.10% 1.30%
Anniversary
Date
- -------------------------------------------------------------------------------------------------------
</TABLE>
In determining the amounts to be paid by the Borrower pursuant
to Sections 2.06(a), the Borrower and the Banks shall refer to PPI's
Debt Rating from time to time. For purposes hereof, "Performance
Pricing Determination Date" shall mean each date on which the Debt
Rating changes. Each change in interest and fees as a result of a
change in Debt Rating shall be effective only for Loans (including
Refunding Loans) which are made on or after the relevant Performance
Pricing Determination Date. All determinations hereunder shall be made
by the Administrative Agent unless the Required Banks shall object to
any such determination. The Borrower shall promptly notify the
Administrative Agent of any change in the Debt Rating.
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date
36
<PAGE> 45
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day less the Applicable Margin. Such interest shall be payable for
each Interest Period on the last day thereof. Any overdue principal of and, to
the extent permitted by applicable law, overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the Default Rate.
(c) Subject to the proviso at the end of Section 2.06(a) (i),
each Euro Dollar Loan shall bear interest on the outstanding principal amount
thereof, for the Interest Period applicable thereto, at a rate per annum equal
to the sum of the Applicable Margin plus the applicable London Interbank Offered
Rate for such Interest Period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than 1
month, at intervals of 1 month after the first day thereof. Any overdue
principal of and, to the extent permitted by law, overdue interest on any Euro
Dollar Loan shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan, the
rate per annum determined on the basis of the offered rate for deposits in
Dollars of amounts equal or comparable to the principal amount of such
Euro-Dollar Loan offered for a term comparable to such Interest Period, which
rates appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period,
provided that (i) if more than one such offered rate appears on the Reuters
Screen LIBO Page, the "London Interbank Offered Rate" will be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100th of 1%) of such
offered rates; (ii) if no such offered rates appear on such page, the "London
Interbank Offered Rate" for such Interest Period will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of 1%) of rates quoted
by not less than 2 major banks in New York City, selected by the Administrative
Agent, at approximately 10:00 A.M., New York City time, 2 Euro-Dollar Business
Days prior to the first day of such Interest Period, for deposits in Dollars
offered to leading European banks for a period comparable to such Interest
Period in an amount comparable to the principal amount of such Euro-Dollar Loan.
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<PAGE> 46
(d) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Money
Market Loan is made until it becomes due, at a rate per annum equal to the
applicable Money Market Rate set forth in the relevant Money Market Quote. Such
interest shall be payable on the Stated Maturity Date thereof, and, if the
Stated Maturity Date occurs more than 90 days after the date of the relevant
Money Market Loan, at intervals of 90 days after the first day thereof. Any
overdue principal of and, to the extent permitted by law, overdue interest on
any Money Market Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
(e) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder. The Administrative Agent shall give
prompt notice to the Borrower and the Banks by telecopier of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(f) After the occurrence and during the continuance of an
Event of Default, the principal amount of the Loans (and, to the extent
permitted by applicable law, all accrued interest thereon) may, at the election
of the Required Banks, bear interest at the Default Rate.
SECTION 2.07. Fees.
(a) If the Termination Date is extended pursuant to Section
2.05(b), on each Extension Date on which the Termination Date is extended, the
Borrower shall pay to the Administrative Agent, for the ratable account of each
Bank which is an Extending Bank pursuant to such Section, a fully earned and
non-refundable extension fee in the amount of 0.10% of the aggregate amount of
the Commitments so extended (after giving effect to the amount of any Commitment
which each such Extending Bank has committed to purchase pursuant to such
Section).
(b) The Borrower shall pay to the Administrative Agent for the
ratable account of each Bank a facility fee (the "Facility Fee") on the maximum
amount of the aggregate Commitments in effect for any relevant period,
irrespective of usage, calculated in the manner provided in Section 2.06(a)(ii),
at a rate per annum equal to (i) for the period commencing on the Closing Date
to and including the first Performance Pricing
38
<PAGE> 47
Determination Date, 0.125%; and (ii) from and after the first Performance
Pricing Determination Date, the percentage determined on each Performance
Pricing Determination Date by reference to the table set forth below and the
Debt Rating for the quarterly or annual period ending immediately prior to such
Performance Pricing Determination Date; provided, that if there is no Debt
Rating, the Facility Fee shall be based upon Level V of the table below. The
Facility Fee shall accrue at all times from and including the Closing Date to
but excluding the Termination Date and shall be payable, in arrears, on each
March 31, June 30, September 30 and December 31 and on the Termination Date.
<TABLE>
<CAPTION>
=============================================================================================================
Level Level Level Level Level
I II III IV V
=============================================================================================================
<S> <C> <C> <C> <C> <C>
Debt Rating Above BBB+ BBB BBB- Below
BBB+ BBB-
- -------------------------------------------------------------------------------------------------------------
Facility Fee 0.125% 0.125% 0.15% 0.15% 0.15%
=============================================================================================================
</TABLE>
(c) The Borrower shall pay to the Administrative Agent, for
the account and sole benefit of the Administrative Agent, such fees and other
amounts at such times as set forth in the Administrative Agent's Letter
Agreement.
SECTION 2.08. Optional Termination or Reduction of
Commitments. The Borrower may, upon at least 3 Domestic Business Days' notice to
the Administrative Agent, terminate at any time, or proportionately reduce the
Unused Commitments from time to time by an aggregate amount of at least
$5,000,000 or any larger multiple of $1,000,000. If the Commitments are
terminated in their entirety, the date of such termination shall be the
Termination Date for all purposes hereunder, and all Loans then outstanding,
together with accrued interest thereon and any amounts payable pursuant to
Section 8.05(a) in connection therewith, and all fees payable on the Termination
Date, shall be due and payable on such date.
SECTION 2.09. Mandatory Termination of Commitments. The
Commitments shall terminate on the Termination Date and any Loans then
outstanding, together with accrued interest thereon and any amounts payable
pursuant to Section 8.05(a) in connection therewith, and all fees payable on the
Termination Date, shall be due and payable on such date. In the event of a
Change in Control, the Administrative Agent (acting at the direction of the
39
<PAGE> 48
Required Banks) may terminate the Commitments on a date specified in a notice to
the Borrower, which date (i) must be at least 3 Domestic Business Days following
the date of such notice, and (ii) shall constitute the Termination Date for all
purposes hereunder.
SECTION 2.10. Optional Prepayments. (a) The Borrower may, upon
at least 1 Domestic Business Days' notice (or same Domestic Business Days'
notice as to Swing Loans) to the Administrative Agent, prepay any Base Rate
Borrowing in whole at any time, or from time to time in part in amounts
aggregating at least $5,000,000 or any larger multiple of $250,000 for
Syndicated Borrowings (with no minimum payment as to Swing Loan Borrowings), by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Base Rate Loans of the several Banks (or of Wachovia, as to
Swing Loans) included in such Base Rate Borrowing.
(b) Subject to the provisions of Section 8.05(a) with respect
to any prepayment not made on the last day of the relevant Interest Period, the
Borrower may, upon at least 2 Euro-Dollar Business Days' notice (or same
Domestic Business Days' notice as to Swing Loans) to the Administrative Agent,
prepay any Fixed Rate Borrowing in whole at any time, or from time to time in
part in amounts aggregating at least $5,000,000 or any larger multiple of
$250,000 as to Syndicated Borrowings and Money Market Borrowings (with no
minimum payment as to Swing Loan Borrowings), by paying the principal amount to
be prepaid together with accrued interest thereon to the date of prepayment,
together with any amount required to be paid pursuant to Section 8.05(a). Each
such optional prepayment shall be applied to prepay ratably the Fixed Rate Loans
of the several Banks (or of Wachovia, as to Swing Loans) included in such Fixed
Rate Borrowing.
(c) Upon receipt of a notice of prepayment pursuant to this
Section 2.10, the Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such prepayment and such
notice, once received by the Administrative Agent, shall not thereafter be
revocable by the Borrower.
SECTION 2.11. Mandatory Prepayments. (a) On each date on which
the Commitments are reduced pursuant to Section 2.08, the Borrower shall repay
or prepay such principal amount of the
40
<PAGE> 49
outstanding Loans, if any (together with interest accrued thereon and any amount
required to be paid pursuant to Section 8.05(a)), as may be necessary so that
after such payment the aggregate unpaid principal amount of the Loans does not
exceed the aggregate amount of the Commitments as then reduced. On the
Termination Date, the Borrower shall make the payments required to be made
pursuant to Section 2.09.
(b) On each date on which the aggregate principal amount of the Loans
outstanding exceeds the Borrowing Base on such date, the Borrower shall repay or
prepay such principal amount of the outstanding Loans (together with interest
thereon) as may be necessary so that after such payment the aggregate unpaid
principal amount of the Loans does not exceed the Borrowing Base on such date.
(c) Each such payment or prepayment shall be applied to the Swing Loans
or ratably to the Loans of the Banks outstanding on the date of payment or
prepayment in the following order of priority: (i) first, to Swing Loans which
are Base Rate Loans; (ii) secondly, to Transaction Rate Loans; (iii) thirdly, to
Syndicated Loans which are Base Rate Loans; (iv) fourthly, to Euro-Dollar Loans;
and (v) lastly, to Money Market Loans.
SECTION 2.12. General Provisions as to Payments. (a)
The Borrower shall make each payment of principal of, and interest on, the
Syndicated Loans, Money Market Loans and Swing Loans and of fees hereunder, not
later than noon (Atlanta, Georgia time) on the date when due, in Federal or
other funds immediately available in Atlanta, Georgia, to the Administrative
Agent at its address referred to in Section 9.01. The Administrative Agent will
promptly distribute to each Bank its ratable share of each such payment received
by the Administrative Agent for the account of the Banks, and to Wachovia such
payment received by the Administrative Agent on account of the Swing Loans.
(b) Whenever any payment of principal of, or interest on, the
Base Rate Loans, Transaction Rate Loans or the Money Market Loans or of fees
hereunder shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be
41
<PAGE> 50
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any taxes, imposts, levies, deductions, or withholdings now or hereafter
imposed by any governmental authority or by any taxing authority thereof or
therein, excluding in the case of each Bank, (1) any taxes imposed by the United
States or any political subdivision thereof on the effectively connected net
income of any Bank or any Bank's Lending Office or any franchise taxes imposed
by such jurisdiction, (2) taxes imposed on the net income of, or franchise taxes
imposed upon, any Bank by the jurisdiction under the laws of which such Bank is
organized or by any political subdivision thereof, (3) taxes imposed on the net
income of such Bank's Lending Office, and franchise taxes imposed on it, by the
jurisdiction of such Bank's Lending Office, or any political subdivision
thereof, (4) any taxes imposed on any Bank by Section 884(a) of the Internal
Revenue Code of 1986, as amended (and any successor statute to Section 884(a)),
and (5) any United States withholding tax payable with respect to any payments
to such Bank under the laws (including, without limitation, any treaty, ruling,
judicial or administrative determination or regulation) in effect on the
"Initial Date" (as hereinafter defined) or as a result of the Bank having
voluntarily changed the jurisdiction of its Lending Office from a jurisdiction
in which payments made to such Bank are exempt from United States withholding
tax to a jurisdiction in which such payments are not so exempt, but not
excluding any United States withholding tax payable or increased as a result of
any change in any law, treaty, ruling, judicial or administrative determination
or regulation, or interpretation thereof occurring after the Initial Date (all
such non-excluded taxes, levies, imposts, deductions, and withholdings
hereinafter referred to as "Taxes"). For purposes hereof, the term "Initial
Date" shall mean, in the case of each Bank party hereto on the date hereof, the
Closing Date, and in the case of each other Bank, the effective date of the
Assignment and Acceptance pursuant to which it became a Bank hereunder.
In the event that the Borrower is required by applicable law
to make any such withholding or deduction of Taxes
42
<PAGE> 51
with respect to any Loan or fee or other amount, the Borrower shall pay such
deduction or withholding to the applicable taxing authority, shall promptly
furnish to any Bank in respect of which such deduction or withholding is made
all receipts and other documents evidencing such payment, and shall pay to such
Bank additional amounts as may be necessary in order that the amount received by
such Bank after the required withholding or other payment shall equal the amount
such Bank would have received had no such withholding or other payment been
made. If no withholding or deduction of Taxes are payable in respect to any Loan
or fee relating thereto, the Borrower shall furnish any Bank, at such Bank's
written request, a certificate from each applicable taxing authority or an
opinion of counsel reasonably acceptable to such Bank, in either case stating
that such payments are exempt from or not subject to withholding or deduction of
Taxes. If the Borrower fails to provide such original or certified copy of a
receipt evidencing payment of Taxes or certificate(s) or opinion of counsel
described in the preceding sentence, the Borrower hereby agrees to compensate
such Bank for, and indemnify it with respect to, the tax consequences of the
Borrower's failure to provide evidence of tax payments or tax exemption;
provided, however, that the Borrower shall not be obligated to indemnify any
party for penalties, additions to tax, interest or expenses associated with the
payment of Taxes if the Bank's liability for such Taxes has arisen as a result
of the fault of such Bank; and provided, further, that the Borrower shall not be
obligated to indemnify any Bank for Taxes, penalties, additions to tax, interest
or expenses incurred as a result of such Bank having voluntarily changed its
Lending Office from a jurisdiction in which payments made to such Bank are
exempt from United States withholding tax to a jurisdiction in which such
payments are not so exempt. Such compensation or indemnification payment shall
be made within 30 days from the date such Bank makes written request therefor.
Any such request shall be made within 90 days after the date on which such
payment of Taxes was made. Each such request shall be accompanied by a copy of
the statement from the taxing authority demanding payment by such Bank of such
Taxes or by a certificate from such Bank which certificate shall set forth in
reasonable detail the basis for any additional amount payable to such party
under this Section 2.12 (together with reasonable evidence of payment of such
Taxes).
Any Bank entitled to claim any additional amounts payable
pursuant to this Section 2.12 shall use its best efforts
43
<PAGE> 52
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if the making of such change would
avoid the need for, or reduce the amount of, any such additional amounts which
may thereafter accrue and the making of such a change would not, in the
reasonable judgment of such Bank, be otherwise materially disadvantageous to
such Bank.
Each Bank which is not organized under the laws of the United
States or any state thereof agrees, as soon as practicable after receipt by it
of a request by the Borrower to do so, to file all appropriate forms and take
other appropriate action to obtain a certificate or other appropriate document
from the appropriate governmental authority in the jurisdiction imposing the
relevant Taxes, establishing that it is entitled to receive payments of
principal and interest under this Agreement and the Notes without deduction and
free from withholding of any Taxes imposed by such jurisdiction; provided, that
if it is unable, for any reason, to establish such exemption, or to file such
forms and, in any event, during such period of time as such request for
exemption is pending, the Borrower shall nonetheless remain obligated under the
terms of the immediately preceding paragraph.
In the event any Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.12(c), it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided, however, if at
any time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower and the
Banks contained in this Section 2.12(c) shall be applicable with respect to any
Transferee, subject to Section 9.08(e) as to any Participant, and any
calculations required by such provisions (i) shall be made based upon the
circumstances of such Transferee, and (ii) constitute a continuing agreement and
shall survive the termination of this Agreement and the payment in full or
cancellation of the Notes.
SECTION 2.13. Computation of Interest and Fees. Interest on
Base Rate Loans shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day). Interest
44
<PAGE> 53
on Euro-Dollar Loans and Money Market Loans shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed, calculated as
to each Interest Period from and including the first day thereof to but
excluding the last day thereof. Commitment fees and any other fees payable
hereunder shall be computed on the basis of a year of 365 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of
each Bank to make a Loan on the occasion of the first Borrowing is subject to
the satisfaction of the conditions set forth in Section 3.02 and receipt by the
Administrative Agent of the following (as to the documents described in
paragraphs (a), (c), (d) and (e) below, in sufficient number of counterparts for
delivery of a counterpart to each Bank and retention of one counterpart by the
Administrative Agent):
(a) from each of the parties hereto of either (i) a duly
executed counterpart of this Agreement signed by such party or (ii) a
facsimile transmission stating that such party has duly executed a
counterpart of this Agreement and sent such counterpart to the
Administrative Agent;
(b) a duly executed Syndicated Loan Note for the account of
each Bank, a duly executed Swing Loan Note for the account of Wachovia
and a duly executed Money Market Note for the account of each Bank,
complying with the provisions of Section 2.04, and from each Bank which
holds any of the Original Notes, such Original Notes, and a duly
executed Guaranty;
(c) an opinion letter of King & Spalding, counsel for the
Borrower and the Guarantor, dated as of the Closing Date, substantially
in the form of Exhibit B and covering such additional matters relating
to the transactions contemplated hereby as the Administrative Agent or
any Bank may reasonably request;
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(d) an opinion of Jones, Day, Reavis & Pogue, special counsel
for the Administrative Agent, dated as of the Closing Date,
substantially in the form of Exhibit C and covering such additional
matters relating to the transactions contemplated hereby as the
Administrative Agent may reasonably request;
(e) a certificate (the "Closing Certificate") substantially in
the form of Exhibit G), dated as of the Closing Date, signed by an
Executive Officer (other than the Secretary) to the effect that (i) no
Default has occurred and is continuing on the date of the first
Borrowing and (ii) the representations and warranties of the Borrower
contained in Article IV are true on and as of the date of the first
Borrowing hereunder;
(f) all documents which the Administrative Agent or any Bank
may reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement, the Notes
and the Guaranty, and any other matters relevant hereto, all in form
and substance satisfactory to the Administrative Agent, including,
without limitation, certificates of incumbency of the General Partner
and of the Guarantor, signed by the Secretary or an Assistant Secretary
of the General Partner and the Guarantor, certifying as to the names,
true signatures and incumbency of the officer or officers of the
General Partner and the Guarantor authorized to execute and deliver the
Loan Documents on behalf of the Borrower or the Guarantor, and
certified copies of the following items: (i) the Borrower's Certificate
of Limited Partnership; (ii) the Borrower's Partnership Agreement,
(iii) for the General Partner and the Guarantor, its Certificate of
Incorporation, (iv) for the General Partner and the Guarantor, its
Bylaws, (v) for the Borrower, the General Partner and the Guarantor, a
certificate of the Secretary of State of Georgia as to the
valid existence of the Borrower, the General Partner or the Guarantor
as a Georgia limited partnership or corporation, as the case may be,
and certificates of good standing or valid existence of the Borrower,
the General Partner and the Guarantor as a foreign limited partnership
or corporation, as the case may be, in each other jurisdiction in which
it is required to be qualified and (vi) the action taken by the Board
of Directors of the General Partner and the Guarantor authorizing (A)
on behalf of the Borrower, the execution,
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delivery and performance of this Agreement, the Notes and the other
Loan Documents to which the Borrower is a party, and (B) on behalf of
the Guarantor, the execution, delivery and performance of the Guaranty;
(g) a Notice of Borrowing or notification pursuant to
Section 2.03(e) of acceptance of one or more Money Market
Quotes, as applicable; and
(h) receipt of the fees then due and payable to the
Administrative Agent pursuant to the Administrative Agent's
Letter Agreement.
In addition, if the Borrower desires funding of a Euro-Dollar Loan on the
Closing Date, the Administrative Agent shall have received, the requisite number
of days prior to the Closing Date, a funding indemnification letter satisfactory
to it, pursuant to which (i) the Administrative Agent and the Borrower shall
have agreed upon the interest rate, amount of Borrowing and Interest Period for
such Euro-Dollar Loan, and (ii) the Borrower shall indemnify the Banks from any
loss or expense arising from the failure to close on the anticipated Closing
Date identified in such letter or the failure to borrow such Euro-Dollar Loan on
such date.
SECTION 3.02. Conditions to All Borrowings. The obligation of
each Bank to make a Syndicated Loan or of Wachovia to make a Swing Loan on the
occasion of each Borrowing (other than a Borrowing which consists solely of a
Refunding Loan) is subject to the satisfaction of the following conditions,
except as expressly provided in the last sentence of this Section 3.02:
(a) receipt by the Administrative Agent of a Notice of
Borrowing, acceptance of a Transaction Rate Quote or notification
pursuant to Section 2.03(e) of acceptance of one or more Money Market
Quotes, as applicable;
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties
of the Borrower contained in Article IV of this Agreement
shall be true on and as of the date of such Borrowing; and
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(d) the fact that, immediately after such Borrowing,
the conditions set forth in clauses (i) and (ii) of Section
2.01 shall have been satisfied.
Each Borrowing (Syndicated, Swing and Money Market) hereunder (other than a
Borrowing which consists solely of a Refunding Loan) shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing as to
the truth and accuracy of the facts specified in paragraphs (b), (c) and (d) of
this Section, except to the extent otherwise disclosed pursuant to Section
5.01(c) or (d).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower and (by incorporation by reference in the
Guaranty) the Guarantor, as expressly stated, each represent and warrant that:
SECTION 4.01. Partnership or Corporate Existence and Power.
The Borrower is a limited partnership, and PPI and each Subsidiary is a
corporation, duly organized, validly existing and in good standing under the
laws of Georgia, is duly qualified to transact business in every jurisdiction
where, by the nature of its business, such qualification is necessary, and has
all partnership powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted, except where
any such failure does not have and is not reasonably expected to cause a
Material Adverse Effect.
SECTION 4.02. Partnership or Corporate and Governmental
Authorization; No Contravention. The execution, delivery and performance by the
Borrower of this Agreement, the Notes and the other Loan Documents and by the
Guarantor of the Guaranty (i) are within the Borrower's partnership powers and
the Guarantor's respective corporate powers, (ii) have been duly authorized by
all necessary partnership or corporate action, (iii) require no action by or in
respect of or filing with, any governmental body, agency or official, other than
filings required by federal or state securities laws with respect to this
Agreement (iv) do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of limited partnership or
partnership agreement of
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the Borrower or the articles of incorporation or by-laws of the Guarantor or of
any material agreement, judgment, injunction, order, decree or F other
instrument binding upon the Borrower, the Guarantor or any Subsidiaries, and (v)
do not result in the creation or imposition of any Lien on any asset of the
Borrower, the Guarantor or any Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the Notes, the Guaranty and the other Loan Documents, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower and the Guarantor parties thereto,
enforceable in accordance with their respective terms, provided that the
enforceability hereof and thereof is subject in each case to general principles
of equity and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.04. Financial and Property Information. (a) The
balance sheet of PPI and the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1995 and the related consolidated
statements of income, shareholders' equity and cash flows for the Fiscal Year
then ended, in the case of PPI reported on by Price Waterhouse LLP, copies of
which have been delivered to each of the Banks, and the unaudited financial
statement of PPI and consolidated financial statements of the Borrower for the
interim period ended September 30, 1996, copies of which have been delivered to
each of the Banks, fairly present, in all material respects, in conformity with
GAAP, subject in the case of quarterly statements to normal year end audit
adjustments, the consolidated financial position of PPI and the Borrower and its
Consolidated Subsidiaries, respectively, as of such dates and their consolidated
results of operations and cash flows for such periods stated.
(b) Since December 31, 1995, there has been no event, act,
condition or occurrence having a Material Adverse Effect.
(c) All material information concerning the Properties
which has been furnished to the Banks is true and correct in all
material respects.
SECTION 4.05. No Litigation. There is no action, suit or
proceeding pending, or to the knowledge of the Executive
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Officers, threatened, against or affecting the Borrower, the Guarantor or any
Subsidiaries before any court or arbitrator or any governmental body, agency or
official which has or is reasonably expected to cause a Material Adverse Effect
or which in any manner draws into question the validity of or is reasonably
expected to impair the ability of the Borrower or the Guarantor to perform its
obligations under, this Agreement, the Notes, the Guaranty or any of the other
Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA, except where any such failure does not
involve an aggregate amount in excess of $2,500,000.
(b) Neither the Borrower nor any member of the
Controlled Group is or ever has been obligated to contribute to any
Multiemployer Plan.
SECTION 4.07. Compliance with Laws; Payment of Taxes. The
Borrower, the Guarantor and the Subsidiaries are in compliance with all
applicable laws, regulations and similar requirements of governmental
authorities, except where (i) such compliance is being contested in good faith
through appropriate proceedings or (ii) any failure to comply does not have and
is not reasonably expected to cause a Material Adverse Effect. There have been
filed on behalf of the Borrower, the Guarantor and the Subsidiaries all Federal,
state and local income, excise, property and other tax returns which are
required to be filed by them and all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of the Borrower, the
Guarantor or any Subsidiary have been paid, except: (A) ad valorem taxes not in
excess of an aggregate amount of $500,000; and (B) other liabilities, if (1)
they are being contested in good faith and against which the Borrower, the
Guarantor or Subsidiary has set up reserves in accordance with GAAP, or (2) the
aggregate amount involved is not in excess of $2,500,000. The charges, accruals
and reserves on the books of the Borrower, the Guarantor and the Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower and the Guarantor, adequate. United States income tax returns of PPI
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have been examined for the 1991 and 1992 Fiscal Years and the examination
reports with respect thereto have been accepted by the District Director of the
Internal Revenue Service.
SECTION 4.08. Subsidiaries. The Borrower has no Subsidiaries
except for those Subsidiaries listed on Schedule 4.08, as supplemented from time
to time, which accurately sets forth each such Subsidiary's complete name and
jurisdiction of incorporation.
SECTION 4.09. Investment Company Act. Neither the Borrower,
the Guarantor nor any Subsidiaries is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.10. Public Utility Holding Company Act. Neither the
Borrower, PPI nor any Subsidiary is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property. Each of the Borrower, PPI
and the Subsidiaries has title to its properties sufficient for the conduct of
its business, except where any such failure does not have and is not reasonably
expected to cause a Material Adverse Effect.
SECTION 4.12. No Default. Neither the Borrower, PPI nor any of
the Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which has or is reasonably expected to cause a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore
furnished by the Borrower or the Guarantor to the Administrative Agent or any
Bank for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter furnished by the
Borrower to the Administrative Agent or any Bank will be, true, accurate and
complete in all material respects or based on reasonable estimates on the date
as of which such information is stated or certified. The Borrower and the
Guarantor have disclosed to the
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Banks in writing any and all facts which have had or are reasonably expected to
cause a Material Adverse Effect.
SECTION 4.14. Environmental Matters. (a) Neither the Borrower,
the Guarantor nor any other Subsidiary is, to the knowledge of the Executive
Officers, subject to any Environmental Liability which has had or is reasonably
expected to cause a Material Adverse Effect and neither the Borrower, the
Guarantor nor any Subsidiary has been designated as a potentially responsible
party under CERCLA or under any state statute similar to CERCLA, except as
disclosed in writing to the Administrative Agent (and the Administrative Agent
shall promptly furnish a copy of any such disclosure to the Banks). None of the
Properties has been identified on any current or proposed (i) National
Priorities List under 40 C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list
arising from a state statute similar to CERCLA, except as disclosed in writing
to the Administrative Agent.
(b) No Hazardous Materials have been permitted or are being
permitted to be used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at, on, in or
under the Properties, or, to the best of the knowledge of the Executive
Officers, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in all material respects in
compliance with all applicable Environmental Requirements and except as
disclosed in writing to the Administrative Agent.
(c) The Borrower, the Guarantor and each of the Subsidiaries,
has procured all Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements (including,
to the best knowledge of the Executive Officers, with respect to any
Environmental Releases) in connection with the operation of the Properties and
the Borrower's, the Guarantor's and each other Subsidiary's respective
businesses, except where any such failure to comply does not have and is not
reasonably expected to cause a Material Adverse Effect.
SECTION 4.15. Partner Interests and Capital Stock. All Partner
Interests and Capital Stock, debentures, bonds, notes
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and all other securities of the Borrower, the Guarantor and each of the
Subsidiaries presently issued and outstanding are validly and properly issued in
accordance with all applicable laws, including, but not limited to, the "Blue
Sky" laws of all applicable states and the federal securities laws, except where
any such failure to comply does not and is not reasonably expected to cause a
Material Adverse Effect. The issued shares of Capital Stock of the Borrower's
Wholly Owned Subsidiaries are owned by the Borrower free and clear of any Lien
or adverse claim. At least a majority of the issued shares of non-voting Capital
Stock of each of the Borrower's Subsidiaries is owned by the Borrower free and
clear of any Lien or adverse claim.
SECTION 4.16. Margin Stock. Neither the Borrower, the
Guarantor nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or carrying any Margin
Stock, and no part of the proceeds of any Loan will be used to purchase or carry
any Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock, or be used for any purpose which violates, or which
is inconsistent with, the provisions of Regulation X.
SECTION 4.17. Insolvency. After giving effect to the execution
and delivery of the Loan Documents and the making of the Loans under this
Agreement: (i) neither the Borrower nor the Significant Subsidiary will (x) be
"insolvent," within the meaning of such term as used in O.C.G.A. ss. 18-2-22 or
as defined in ss. 101 of the "Bankruptcy Code", or Section 2 of either the
"UFTA" or the "UFCA", or as defined or used in any "Other Applicable Law" (as
those terms are defined below), or (y) be unable to pay its debts generally as
such debts become due within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA or Section 6 of the UFCA, or (z) have an unreasonably
small capital to engage in any business or transaction, whether current or
contemplated, within the meaning of Section 548 of the Bankruptcy Code, Section
4 of the UFTA or Section 5 of the UFCA; and (ii) the obligations of the Borrower
under the Loan Documents and with respect to the Loans will not be rendered
avoidable under any Other Applicable Law. For purposes of this Section 4.17,
"Bankruptcy Code" means Title 11 of the United States Code, "UFTA" means the
Uniform Fraudulent Transfer Act, "UFCA" means the Uniform Fraudulent Conveyance
Act, and "Other Applicable Law" means any other applicable state law pertaining
to fraudulent transfers or acts voidable by creditors, in each case as such law
may be amended from time to time.
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SECTION 4.18. Insurance. The Borrower, the Guarantor and each
of the Subsidiaries has (either in the name of the Borrower, the Guarantor or in
such other Subsidiary's own name), with financially sound and reputable
insurance companies having an A.M. Best rating of B+ or better, insurance on all
its property in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies of established
repute engaged in the same or similar business.
SECTION 4.19. Real Estate Investment Trust. PPI is
qualified under the Code as a real estate investment trust.
ARTICLE V
COVENANTS
The Borrower and (by incorporation by reference in the
Guaranty) the Guarantor agree that, so long as any Bank has any Commitment
hereunder or any amount payable hereunder or under any Note remains unpaid:
SECTION 5.01. Information. PPI and the Borrower will
deliver to each of the Banks:
(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, (i) a consolidated balance sheet of PPI as
of the end of its Fiscal Year and the related consolidated statements
of income, shareholders' equity and cash flows for such Fiscal Year,
setting forth in each case in comparative form the figures for the
previous Fiscal Year, all certified by Price Waterhouse LLP or other
independent public accountants of nationally recognized standing, with
such certification to be free of exceptions and qualifications as to
the scope of the audit or as to the going concern nature of the
business, and (ii) a consolidated balance sheet of Borrower and its
Consolidated Subsidiaries as of the end of its Fiscal Year and the
related consolidated statements of income, shareholders' equity and
cash flows for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, GAAP and consistency by an Executive Officer;
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(b) as soon as available and in any event within 60 days after
the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Quarter and the related
statement of income and statement of cash flows for such Fiscal Quarter
and for the portion of the Fiscal Year ended at the end of such Fiscal
Quarter, setting forth in each case in comparative form the
figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and
consistency by an Executive Officer;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit F (a "Compliance Certificate"), of
an Executive Officer (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.03 through 5.09,
inclusive, on the date of such financial statements and (ii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(d) within 5 Domestic Business Days after any Executive
Officer becomes aware of the occurrence of any Default, a certificate
of an Executive Officer setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto;
(e) promptly upon the mailing thereof to the shareholders
of PPI generally, copies of all financial statements, reports and
proxy statements so mailed;
(f) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports (excluding Form 4, Statement of Changes in
Beneficial Ownership, or its equivalent, unless they reflect a Change
in Control) which PPI shall have filed with the Securities and Exchange
Commission;
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(g) if and when any member of the Controlled Group (i) gives
or is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA, a copy of such notice; or (iii) receives
notice from the PBGC under Title IV of ERISA of an intent to terminate
or appoint a trustee to administer any Plan, a copy of such notice;
(h) within 60 days after the end of each Fiscal Quarter, a
Borrowing Base Certificate as of the last day of the Fiscal Quarter
just ended; provided, however, that at the Borrower's election,
Borrower may, and or at the Administrative Agent's election on not
less than 10 Domestic Business Days notice, Borrower shall, submit a
Borrowing Base Certificate to the Administrative Agent on or before
the fifteenth Domestic Business Day after the end of the first or
second month in any Fiscal Quarter, as of the last day of such month;
(i) by April 1 of each year, a report as of the end of such
Fiscal Year containing the following information: (i) a schedule of all
outstanding Debt, showing for each component of Debt, the lender, the
total commitment, the total Debt outstanding, the interest rate, if
fixed, or a statement that the interest rate floats, the term, the
required amortization (if any) and the security (if any); (ii) a
schedule of all interest rate protection agreements, showing for each
such agreement, the total dollar amount, the type of agreement (i.e.
cap, collar, swap, etc.) and the term thereof; and (iii) a development
schedule of the announced development pipeline, including for each
announced development project, the project name and location, the
number of units, the expected construction start date, the expected
date of delivery of the first units, the expected stabilization date,
and the total anticipated cost.
(j) from time to time such additional information regarding
the financial position or business of the Borrower
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and its Subsidiaries as the Administrative Agent, at the request of any
Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower and the Guarantor will (i) keep, and cause each other Consolidated
Subsidiary to keep, proper books of record and account in which full, true and
correct entries in conformity with GAAP shall be made of all dealings and
transactions in relation to its business and activities; and (ii) permit, and
cause each other Consolidated Subsidiary to permit, representatives of any Bank
at such Bank's expense prior to the occurrence of a Default and at the
Borrower's or the Guarantor's expense after the occurrence and during the
continuance of a Default to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants. The
Borrower and the Guarantor agree to cooperate and assist in such visits and
inspections, in each case at such reasonable times, upon reasonable prior notice
to the Borrower or the Guarantor and as often as may reasonably be desired.
SECTION 5.03. Consolidated Total Secured Debt. The amount of
Consolidated Total Secured Debt will not at any time exceed the greater of (x)
40% of Consolidated Total Assets or (y) the lesser of (i) 50% of Consolidated
Total Assets or (ii) $375,000,000.
SECTION 5.04. Ratio of Consolidated Total Debt to
Consolidated Total Assets. The ratio of Consolidated Total Debt to
Consolidated Total Assets will not at any time exceed 0.60 to 1.00.
SECTION 5.05. Interest Coverage. The ratio of (x) Consolidated
Income Available for Debt Service to (y) interest expense shall at all times
exceed 2.00 to 1.0, calculated at the end of each Fiscal Quarter, based on the
Fiscal Quarter just ended and the immediately preceding three Fiscal Quarters.
SECTION 5.06. Restricted Payments. The Borrower's Restricted
Payments in any calendar year shall not exceed 95% of Consolidated Income
Available for Distribution for such period, unless (i) the Borrower must pay out
an amount in excess of 95% of Consolidated Income Available for Distribution to
permit PPI
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to preserve its status as a real estate investment trust under the applicable
provision of the Code, or (ii) PPI declares one or more capital gains dividends
within such calendar year (in which event the amount of additional Restricted
Payments that may be made as a result of such declaration as provided in this
clause (ii) shall not exceed $30,000,000). In the event that the Borrower or PPI
receives a public debt rating of BBB- or better from Standard & Poors or Baa3 or
better from Moody's Investor's Service and so long as that rating is affirmed
during each year, the Borrower's Restricted Payments in any calendar year will
be limited to 100% of Consolidated Income Available for Distribution for such
calendar year with the same exceptions contained in clauses (i) and (ii) of this
Section 5.06.
SECTION 5.07. Loans or Advances. Neither the Borrower, the
Guarantor nor any Subsidiary shall make loans or advances to any Person except:
(i) deposits required by government agencies or public utilities; (ii) loans and
advances made to the Borrower, the Guarantor or any Subsidiary; provided, that
loans and advances from the Borrower and the Guarantor to Subsidiaries, together
with Investments in Subsidiaries permitted by clause (C) of Section 5.09, may
not exceed an aggregate amount of $50,000,000 outstanding at any time; (iii)
loans or advances to directors, officers and employees in the ordinary course of
business in the aggregate outstanding at any time not exceeding $2,500,000.00;
and (iv) other loans or advances made in the ordinary course of business in the
aggregate outstanding at any time not exceeding $20,000,000 minus all amounts
outstanding under clause (iii) of this Section 5.07 and minus Investments made
and permitted pursuant to Section 5.09(D); provided that after giving effect to
the making of any loans, advances or deposits permitted by clauses (i), (ii),
(iii) or (iv), the Borrower will be in full compliance with all the provisions
of this Agreement.
SECTION 5.08. Purchases of Stock by the Significant
Subsidiaries. Except for purchases or acquisitions of shares of PPI's Capital
Stock made for purposes of having such shares available for purchase by PPI
shareholders pursuant to the Post Properties, Inc. Dividend Reinvestment and
Stock Purchase Plan, as amended as of the Closing Date, and, subject to the
approval of the Required Banks (not to be unreasonably withheld), as it may
thereafter be amended, the Significant Subsidiaries shall not purchase or
acquire any shares of PPI's
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Capital Stock during any 12 month period in excess of the lesser of (i) 2.25%
of all PPI's Capital Stock outstanding on the first day of such period, or (ii)
an aggregate purchase price of $30,000,000.
SECTION 5.09. Investments. Neither the Borrower nor the
Guarantor shall make Investments in any Person except: (A) Investments in (i)
direct obligations of the United States Government maturing within one year,
(ii) certificates of deposit issued by a commercial bank whose credit is
satisfactory to the Administrative Agent, (iii) commercial paper rated A1 or the
equivalent thereof by Standard & Poor's Corporation or P1 or the equivalent
thereof by Moody's Investors Service, Inc. and in either case maturing within 9
months after the date of acquisition, (iv) tender bonds the payment of the
principal of and interest on which is fully supported by a letter of credit
issued by a United States bank whose long-term certificates of deposit are rated
at least AA or the equivalent thereof by Standard & Poor's Corporation and Aa or
the equivalent thereof by Moody's Investors Service, Inc. and/or (v) Investments
in debt or equity securities rated at least BBB+ or the equivalent thereof by
Standard & Poor's Corporation or at least Baa1 or the equivalent thereof by
Moody's Investors Service not exceeding an aggregate amount outstanding at any
time of $5,000,000; (B) Investments permitted by clauses (i), (ii) and (iii) of
Section 5.07 or by Section 5.08; (C) Investments made after July 26, 1995 in
Subsidiaries in an aggregate amount, together with the aggregate outstanding
amount of loans and advances from the Borrower and the Guarantor to Subsidiaries
permitted by clause (ii) of Section 5.07, not in excess of $50,000,000.
SECTION 5.10. Dissolution. Neither the Borrower, the Guarantor
nor any of the Subsidiaries shall suffer or permit dissolution or liquidation
either in whole or in part or redeem or retire any shares of its own stock or
that of any Subsidiary, except to the extent permitted by Section 5.11 and
except for purchases by PPI of its own Capital Stock to the extent permitted by
Section 5.08, and subject to the rights of limited partners of the Borrower to
convert or exchange their Partner Interests in the Borrower to stock in PPI.
SECTION 5.11. Consolidations, Mergers and Sales of Assets.
The Borrower and the Guarantor will not, nor will the Borrower permit any other
Subsidiary to, consolidate or merge with or into, or sell, lease or otherwise
transfer all or any substantial part of its assets to, any other Person, or
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discontinue or eliminate any business line or segment, provided that
(a) the Borrower, the Guarantor and any Subsidiary may merge with
another Person if (i) such Person was organized under the laws of the United
States of America or one of its states, (ii) the Borrower or the Guarantor or
other Subsidiary is the corporation surviving such merger and (iii) immediately
after giving effect to such merger, no Default shall have occurred and be
continuing,
(b) the Guarantor may merge with or transfer assets to the Borrower
(with the Borrower as the survivor of any such merger), and any Subsidiary may
merge with or transfer assets to the Borrower, the Guarantor, or another
Subsidiary (with the Borrower or the Guarantor, as the case may be, as the
survivor in any such merger in which the Borrower or the Guarantor is involved),
and
In the case of any Subsidiary which transfers substantially all of its
assets pursuant to clause (c) of the preceding sentence, and in the case of any
Subsidiary the stock of which is being sold and with respect to which clause (c)
would have been satisfied if the transaction had been a sale of assets of such
Subsidiary, such Subsidiary may dissolve.
SECTION 5.12. Use of Proceeds. The proceeds of the Loans may
be used for general corporate and partnership purposes of the Borrower and the
Guarantor, and the Subsidiaries. No portion of the proceeds of the Loans will be
used by the Borrower or the Guarantor (i) in connection with, whether directly
or indirectly, any tender offer for, or other acquisition of, stock of any
corporation with a view towards obtaining control of such other corporation,
unless such tender offer or other acquisition is to be made on a negotiated
basis with the approval of the Board of Directors of the Person to be acquired
or (ii) for any purpose in violation of any applicable law or regulation.
SECTION 5.13. Compliance with Laws; Payment of Taxes. (a) The
Borrower and the Guarantor will, and will cause each of the Subsidiaries and
each member of the Controlled Group to, comply with applicable laws (including
but not limited to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where (i) the necessity
of such compliance is being contested in good faith through appropriate
proceedings, or (ii) any failure to comply
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which does not have and is not reasonably expected to cause a Material Adverse
Effect. The Borrower and the Guarantor will, and will cause each of the
Subsidiaries to, pay promptly when due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a Lien against the Property of the Borrower, the Guarantor
or any other Subsidiary, except (A) liabilities being contested in good faith
and against which, if requested by the Administrative Agent, the Borrower, the
Guarantor or Subsidiary will set up reserves in accordance with GAAP, and (B)
liabilities in an aggregate amount not in excess of $2,500,000.
(b) If the Borrower or any other member of the Controlled
Group shall enter into a Multiemployer Plan, the Borrower and the Guarantor
shall not permit the aggregate complete or partial withdrawal liability under
Title IV of ERISA with respect to Multiemployer Plans incurred by the Borrower,
the Guarantor and members of the Controlled Group to exceed $5,000,000 at any
time. For purposes of this Section 5.13(b), the amount of withdrawal liability
of the Borrower and members of the Controlled Group at any date shall be the
aggregate present value of the amount claimed to have been incurred less any
portion thereof which the Borrower, the Guarantor and members of the Controlled
Group have paid or as to which the Borrower and the Guarantor reasonably
believe, after appropriate consideration of possible adjustments arising under
Sections 4219 and 4221 of ERISA, it and members of the Controlled Group will
have no liability, provided that the Borrower and the Guarantor shall obtain
prompt written advice from independent actuarial consultants supporting such
determination. The Borrower and the Guarantor agree (i) once in each year,
beginning with the first year in which the Borrower or any other member of the
Controlled Group enters into a Multiemployer Plan, to request and use its best
efforts to obtain a current statement (addressed to the Borrower and the
Administrative Agent) of the withdrawal liability of the Borrower and the
Guarantor and members of the Controlled Group from each Multiemployer Plan, if
any, and (ii) to transmit a copy of such statement to the Administrative Agent
and the Banks within 15 days after the Borrower receives the same.
SECTION 5.14. Insurance. The Borrower and the Guarantor will
maintain, and will cause each of the Subsidiaries to maintain (either in the
name of the Borrower or the Guarantor's or such other Subsidiary's own name),
with
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financially sound and reputable insurance companies having an A.M. Best
rating of B+ or better, insurance on all its property in at least such amounts
and against at least such risks as are usually insured against in the same
general area by companies of established repute engaged in the same or similar
business.
SECTION 5.15. Change in Fiscal Year. The Borrower and the
Guarantor will not, and will cause the Subsidiaries to not, change its Fiscal
Year without the consent of the Required Banks.
SECTION 5.16. Maintenance of Property; Principal Business. The
Borrower and the Guarantor shall, and shall cause each other Subsidiary to,
maintain all of its properties and assets in good condition, repair and working
order, ordinary wear and tear excepted, and maintain all Property consisting of
apartment communities (other than Property consisting of land acquired with
existing improvements which are to be substantially demolished) in a first class
manner. The principal business operations of the Borrower and the Subsidiaries,
taken as a whole, will be directly or indirectly related to multi-family
residential Properties.
SECTION 5.17. Environmental Notices. Promptly upon any
Executive Officer's becoming aware thereof, the Borrower and the Guarantor shall
furnish to the Banks and the Administrative Agent prompt written notice of all
Environmental Liabilities, pending, threatened or anticipated Environmental
Proceedings, Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way affecting the Properties
or any adjacent property, which has had or is reasonably expected to cause a
Material Adverse Effect.
SECTION 5.18. Environmental Matters. The Borrower and the
Guarantor will not, and will cause the Subsidiaries to not, and will not permit
any Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for Hazardous
Materials such as cleaning solvents, pesticides and other materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed, managed, or otherwise handled in compliance in all material respects
with all applicable Environmental Requirements.
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SECTION 5.19. Environmental Release. The Borrower and the
Guarantor agree that upon any Executive Officer's becoming aware of the
occurrence of an Environmental Release at or on any of the Properties the
Borrower will act immediately to investigate the extent of, and to take
appropriate action to remediate such Environmental Release, whether or not
ordered or otherwise directed to do so by any Environmental Authority.
SECTION 5.20. Transactions with Affiliates. Neither the
Borrower, the Guarantor nor any of the Subsidiaries shall enter into, or be a
party to, any transaction with any Affiliate of the Borrower, the Guarantor or
such other Subsidiary (which Affiliate is not PPI, the Borrower, the Guarantor
or a Wholly Owned Subsidiary), except as permitted by law and in the ordinary
course of business and pursuant to reasonable terms which are no less favorable
to Borrower or such Subsidiary than would be obtained in a comparable arm's
length transaction with a Person which is not an Affiliate.
SECTION 5.21. Qualification as a Real Estate Investment Trust;
General Partner. PPI shall at all times (i) remain qualified under the Code as a
real estate investment trust and (ii) be the General Partner. The Borrower will
not agree to amend or waive the requirements of Section 7.5A of the limited
partnership agreement of the Borrower, as in effect on the date of this
Agreement, as such requirements are applicable to the General Partner, without
the prior written consent of the Required Banks (which consent the Banks hereby
agree not to unreasonably withhold or delay).
SECTION 5.22. Certain Covenants Concerning Subsidiaries. The
Borrower and the Guarantor shall not permit:
(a) the Subsidiary Consolidated Total Assets at any
time to exceed $50,000,000;
(b) any of the Subsidiaries to Guarantee the Debt of another
Person; provided, that any Subsidiary can Guarantee the Debt of another
Subsidiary, so long as the aggregate amount of Debt of Subsidiaries which is
Guaranteed by Subsidiaries does not exceed $500,000; or
(c) any Significant Subsidiary to (x) be "insolvent," within
the meaning of such term as used in O.C.G.A. ss. 18-2-22 or as defined in ss.
101 of the "Bankruptcy Code", or Section 2 of
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either the "UFTA" or the "UFCA", or as defined or used in any "Other Applicable
Law" (as those terms are defined below), or (y) be unable to pay its debts
generally as such debts become due within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA or Section 6 of the UFCA, or (z) have an
unreasonably small capital to engage in any business or transaction in which it
is engaged or about to be engaged, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA. For purposes of
this Section 5.22(c), "Bankruptcy Code" means Title 11 of the United States
Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the Uniform
Fraudulent Conveyance Act, and "Other Applicable Law" means any other applicable
state law pertaining to fraudulent transfers or acts voidable by creditors, in
each case as such law may be amended from time to time.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan or shall fail to pay any interest on any Loan within 5
Domestic Business Days after such interest shall become due, or shall
fail to pay any fee or other amount payable hereunder within 5 Domestic
Business Days after such fee or other amount becomes due; or
(b) the Borrower or the Guarantor shall fail to observe or
perform any covenant contained in Sections 5.01(d), 5.02(ii), 5.03 to
5.06, inclusive, 5.08, 5.10 to 5.12, inclusive, 5.15 or 5.21; or
(c) the Borrower or the Guarantor shall fail to observe or
perform any covenant or agreement contained in this Agreement (other
than those covered by paragraph (a) or (b) above) and such failure
shall not have been cured within 30 days after the earlier to occur of
(i) written notice thereof has been given to the Borrower or the
Guarantor by the Administrative Agent at the request of any Bank or
(ii)
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an Executive Officer otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement
made by the Borrower or the Guarantor in Article IV of this Agreement
or in any certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Borrower or the Guarantor shall fail to make any
payment in respect of Debt in an aggregate amount in excess of
$2,500,000 outstanding (other than the Notes) when due or within any
applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or the
Guarantor in an aggregate amount in excess of $2,500,000 (including,
without limitation, any required mandatory prepayment or "put" of such
Debt to the Borrower or the Guarantor) or enables (with any condition
for the giving of notice or the lapse of time, or both, having been
satisfied) the holders of such Debt or any Person acting on such
holders' behalf to accelerate the maturity thereof (including, without
limitation, any required mandatory prepayment or "put" of such Debt to
the Borrower or the Guarantor); or
(g) the Borrower or the Guarantor shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or the Guarantor seeking
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liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
the Guarantor under the federal bankruptcy laws as now or hereafter in
effect; or
(i) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans shall be filed under
Title IV of ERISA by the Borrower, any member of the Controlled Group,
any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any such Plan or Plans or
a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding
shall not have been dismissed within 30 days thereafter; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any such Plan or Plans must be terminated; in
each of the foregoing cases, where the aggregate amount not so paid or
the resulting withdrawal liability of the Borrower, PPI or any
Subsidiary is in excess of $2,500,000; or
(j) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $2,500,000 shall be rendered
against the Borrower or the Guarantor and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against any Property of
the Borrower or any Subsidiary under Section 6323 of the Code or a lien
of the PBGC shall be filed against any Property of the Borrower or the
Guarantor under Section 4068 of ERISA and in either case such lien
shall remain undischarged for a period of 25 days after the date of
filing, except where in either such case (i) the aggregate amount
involved is not in excess of $2,500,000, or
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(ii) such lien did not arise in connection with a capital gains
transaction and is being contested in good faith and against which the
Borrower or Subsidiary has set up reserves in accordance with GAAP.
then, and in every such event, the Administrative Agent shall (i) if requested
by the Required Banks, by notice to the Borrower terminate the Commitments and
the obligation to make Swing Loans and they shall thereupon terminate, (ii) any
Bank may terminate its obligation to fund a Money Market Loan in connection with
any relevant Money Market Quote, and (iii) if requested by the
Required Banks (but not otherwise), by notice to the Borrower declare the
Syndicated Loan Notes, the Swing Loan Note and the Money Market Loan Notes
(together with accrued interest thereon) to be, and the Syndicated Loan Notes,
together with the Swing Loan Note and the Money Market Loan Notes, shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower together with interest at the Default Rate accruing on the principal
amount thereof from and after the date of such Event of Default; provided that
if any Event of Default specified in paragraph (g) or (h) above occurs with
respect to the Borrower, without any notice to the Borrower or any other act by
the Administrative Agent or the Banks, the Commitments and the obligation to
make Swing Loans shall thereupon terminate and the Syndicated Loan Notes, the
Swing Loan Note and the Money Market Loan Notes (together with accrued interest
thereon) shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower together with interest thereon at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of Default.
Notwithstanding the foregoing, the Administrative Agent shall have available to
it all other remedies at law or equity, and shall exercise any one or all of
them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Administrative Agent
shall give notice to the Borrower of any Default under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
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EXHIBIT 10._
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment; Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Administrative Agent to act as
its agent hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Administrative Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental thereto.
The Administrative Agent: (a) shall have no duties or responsibilities except as
expressly set forth in this Agreement and the other Loan Documents, and shall
not by reason of this Agreement or any other Loan Document be a trustee for any
Bank; (b) shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or in any certificate or other document referred to or provided for
in, or received by any Bank under, this Agreement or any other Loan Document, or
for the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by the Borrower to perform any
of its obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Banks,
and then only on terms and conditions satisfactory to the Administrative Agent,
and (d) shall not be responsible for any action taken or omitted to be taken by
it hereunder or under any other Loan Document or any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or wilful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article VII are solely for the benefit of the Administrative Agent and the
Banks, and the Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties under
this Agreement and under the other Loan Documents, the Administrative Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Borrower. The duties of the Administrative Agent shall be
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ministerial and administrative in nature, and the Administrative Agent shall not
have by reason of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Bank, except that it will hold in trust for the
account of each Bank any monies received by it which are payable to such Bank
hereunder.
SECTION 7.02. Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely upon any certification, notice or
other communication (including any thereof by telephone, telecopier, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants or other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement or any other Loan Document, the Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Required Banks, and
such instructions of the Required Banks in any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
SECTION 7.03. Defaults. The Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default or an Event of Default
(other than the nonpayment of principal of or interest on the Loans) unless the
Administrative Agent has received notice from a Bank or the Borrower specifying
such Default or Event of Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of a Default or an Event of Default, or actually becomes aware of
the existence of an Event of Default, the Administrative Agent shall give prompt
notice thereof to the Banks. The Administrative Agent shall give each Bank
prompt notice of each nonpayment of principal of or interest on the Syndicated
Loans or the Swing Loan, whether or not it has received any notice of the
occurrence of such nonpayment. The Administrative Agent shall (subject to
Section 9.06) take such action hereunder with respect to such Default or Event
of Default as shall be directed by the Required Banks, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
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Default as it shall deem advisable in the best interests of the Banks.
SECTION 7.04. Rights of Administrative Agent as a Bank. With
respect to the Loans made by it, Wachovia in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as the Administrative Agent, and
the term "Bank" or "Banks" shall, unless the context otherwise indicates,
include Wachovia in its individual capacity. The Administrative Agent may
(without having to account therefor to any Bank) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with PPI or Borrower (and any of its Subsidiaries and Affiliates) as if it were
not acting as the Administrative Agent, and the Administrative Agent may accept
fees and other consideration from the Borrower (in addition to any agency fees
and arrangement fees heretofore agreed to between the Borrower and the
Administrative Agent) for services in connection with this Agreement or any
other Loan Document or otherwise without having to account for the same to the
Banks.
SECTION 7.05. Indemnification. Each Bank severally agrees to
indemnify the Administrative Agent, to the extent the Administrative Agent shall
not have been reimbursed by the Borrower, ratably in accordance with its
Commitment, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements, but not including fees payable
pursuant to the Administrative Agent's Letter Agreement), or disbursements of
any kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(excluding, unless an Event of Default has occurred and is continuing, the
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided that no Bank shall be liable for
any of the foregoing to the extent they arise from the negligence or wilful
misconduct of the Administrative Agent. If any indemnity furnished to the
Administrative Agent for any purpose shall, in the opinion of the Administrative
Agent, be insufficient or become impaired, the
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Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
SECTION 7.06. Consequential Damages. THE ADMINISTRATIVE AGENT
SHALL NOT BE RESPONSIBLE OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON
OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. Payee of Note Treated as Owner. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent and the provisions of Section 9.08(c) have been satisfied. Any requests,
authority or consent of any Person who at the time of making such request or
giving such authority or consent is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of that Note or of
any Note or Notes issued in exchange therefor or replacement thereof.
SECTION 7.08. Nonreliance on Administrative Agent and Other
Banks. Each Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any of the other
Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any other
Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Administrative Agent
hereunder or under the other Loan Documents, the Administrative Agent shall not
have any duty or responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of the
Borrower or any other Person (or any
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of their Affiliates) which may come into the possession of the Administrative
Agent.
SECTION 7.09. Failure to Act. Except for action expressly
required of the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Banks of their indemnification
obligations under Section 7.05 against any and all liability and expense which
may be incurred by the Administrative Agent by reason of taking, continuing to
take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by giving notice
thereof to the Banks and the Borrower and the Administrative Agent may be
removed at any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Required Banks shall have the right to appoint a
successor Administrative Agent, subject to the right of the Borrower, so long as
no Event of Default is in existence, to approve any such successor
Administrative Agent which is not then a Bank or an Affiliate thereof, which
approval shall not be unreasonably withheld or delayed. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's notice of resignation or the Required Banks' removal of
the retiring Administrative Agent, then the retiring Administrative Agent may,
on behalf of the Banks, appoint a successor Administrative Agent. Any successor
Administrative Agent shall be a bank which has a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's resignation or
removal hereunder as Administrative Agent, the provisions of this Article VII
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent
hereunder.
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ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period:
(a) the Administrative Agent determines that deposits in
Dollars (in the applicable amounts) are not being offered in the
relevant market for such Interest Period, or
(b) the Required Banks advise the Administrative Agent that
the London Interbank Offered Rate, as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Banks of
funding the relevant type of Euro-Dollar Loans for such Interest
Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Administrative Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist, the
obligations of the Banks to make the type of Euro-Dollar Loans specified in such
notice shall be suspended. Unless the Borrower notifies the Administrative Agent
at least 2 Domestic Business Days before the date of any Borrowing of such type
of Euro-Dollar Loans for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof (any such agency being referred to as an "Authority" and
any such event being referred to as a "Change of Law"), or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful or impossible
for any Bank (or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Administrative Agent, the Administrative
Agent shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Administrative Agent
that the circumstances
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giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Bank, be otherwise disadvantageous
to such Bank. If such Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall
so specify in such notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each Euro-Dollar Loan of such Bank,
together with accrued interest thereon. Concurrently with prepaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after
the date hereof, a Change of Law or compliance by any Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority:
(i) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Euro-Dollar Loan any
such requirement which is compensated by the payment of additional
interest pursuant to the last paragraph of this Section 8.03(a))
against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Lending Office); or
(ii) shall impose on any Bank (or its Lending Office) or the
London interbank market any other condition affecting its Fixed Rate
Loans, its Syndicated Loan Notes or its Money Market Loan Notes or its
obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Syndicated Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Syndicated Loan Notes or Money Market
Loan
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Notes with respect thereto, by an amount deemed by such Bank to be material,
then, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction, but in no event shall the Borrower be liable for amounts incurred
more than 90 days prior to receipt of such demand.
In addition, if at any time a Euro-Dollar Reserve Percentage
greater than 0% is imposed on any Bank, the Borrower shall pay to such Bank
additional interest on the unpaid principal amount of the Euro-Dollar Loans of
such Bank until such principal amount is paid in full at an interest rate per
annum equal at all times to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Euro-Dollar Loan for such Interest Period
by (ii) 1.00 minus the Euro-Dollar Reserve Percentage, payable on each date on
which interest is payable on such Euro-Dollar Loan. Such additional interest, if
any, shall be determined by such Bank and notified to the Borrower through the
Administrative Agent.
(b) If any Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Bank (or its Lending Office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any Authority, has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank, the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction, but in no event shall the Borrower be
liable for amounts incurred more than 90 days prior to receipt of such demand.
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a
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different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth in reasonable detail the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
(d) Notwithstanding the foregoing, in the event the Borrower
is required to pay any Bank amounts pursuant to Section 2.12(c) or this Section
8.03 and the designation of a different Lending Office pursuant to Section
2.12(c) or Section 8.03(c) will not avoid the need for compensation to such Bank
(an "Affected Bank"), the Borrower may give notice to such Affected Bank (with
copies to the Administrative Agent) that it wishes to seek one or more assignees
(which may be one or more of the Banks) to assume the Commitment of such
Affected Bank and to purchase its outstanding Loans and Notes; provided, that if
there is more than one Affected Bank which has requested substantially and
proportionally equal compensation hereunder, the Borrower shall elect to seek an
assignee to assume the Commitments of all such Affected Banks. Each Affected
Bank agrees to sell its Commitment, Loans, Notes and interest in this Agreement
in accordance with Section 9.08(c) to any such assignee for an amount equal to
the sum of the outstanding unpaid principal of and accrued interest on such
Loans and Notes, plus all other fees and amounts (including, without limitation,
any compensation due to such Affected Banks under Section 2.12(c) or this
Section 8.03) due to such Affected Bank hereunder calculated, in each case, to
the date such Loans, Notes and interest are purchased. Upon such sale or
prepayment, each such Affected Bank shall have no further commitment or other
obligation to the Borrower hereunder or under any Note.
(e) The provisions of this Section 8.03 shall be applicable
with respect to any Transferee, subject to Section 9.08(e) as to any
Participant, and any calculations required by such provisions shall be made
based upon the circumstances of such Transferee.
SECTION 8.04. Base Rate Loans or Other Euro-Dollar Loans
Substituted for Affected Euro-Dollar Loans. If (i) the obligation of any Bank to
make or maintain any type of Euro-
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Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03, and the Borrower shall, by at least 5
Euro-Dollar Business Days' prior notice to such Bank through the Administrative
Agent, have elected that the provisions of this Section shall apply to such
Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer apply:
(a) all Syndicated Loans which would otherwise be made by such
Bank as Euro-Dollar Loans shall be made instead as Base Rate Loans and
interest and principal on such Syndicated Loans shall be payable
contemporaneously with the related Euro-Dollar Loans of the other
Banks, and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead.
SECTION 8.05. Compensation. Upon the request of any Bank,
delivered to the Borrower and the Administrative Agent, the Borrower shall pay
to such Bank such amount or amounts as shall compensate such Bank for any loss,
cost or expense (not including lost profits) reasonably and actually incurred by
such Bank (except solely such as result from such Bank's breach of its
obligations under the Loan Documents or gross negligence or wilful misconduct)
as a result of:
(a) any payment or prepayment (pursuant to Section 2.08, 2.09,
2.10, 2.11, 6.01, 8.02 or otherwise) of a Euro-Dollar Loan on a date other than
the last day of an Interest Period for such Loan; or
(b) any failure by the Borrower to prepay a Euro- Dollar Loan
on the date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan
or Money Market Loan on the date for the Euro-Dollar Borrowing or Money Market
Borrowing of which such Euro-Dollar Loan or Money Market Borrowing is a part
specified in the applicable Notice of Borrowing delivered pursuant to Section
2.02 or notification of acceptance of Money Market Quotes pursuant to Section
2.03(e).
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telecopier or similar writing) and shall be given to such party at its address
or telecopier number set forth on the signature pages hereof or such other
address or telecopier number as such party may hereafter specify for the purpose
by notice to each other party. Each such notice, request or other communication
shall be effective (i) if given by telecopier, when such telecopy is transmitted
to the telecopier number specified in this Section and the appropriate
confirmation is received, (ii) if given by mail, 3 Domestic Business Days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the
Administrative Agent under Article II or Article VIII shall not be effective
until received.
SECTION 9.02. No Waivers. No failure or delay by the
Administrative Agent or any Bank in exercising any right, power or privilege
hereunder or under any Note or other Loan Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes. The Borrower shall
pay (i) all reasonable out-of-pocket expenses actually incurred by the
Administrative Agent, including reasonable fees and disbursements of special
counsel for the Banks and the Administrative Agent, in connection with the
preparation of this Agreement and the other Loan Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof or any
Default hereunder or thereunder and (ii) if a Default occurs, all reasonable
out-of-pocket expenses actually incurred by the Administrative Agent and the
Banks, including reasonable fees and disbursements of counsel, in connection
with such Default and collection and other enforcement proceedings resulting
therefrom, including reasonable out-of-pocket expenses actually incurred in
enforcing this Agreement and the other Loan
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Documents. The Borrower shall indemnify the Administrative Agent and each Bank
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Loan Documents.
SECTION 9.04. Indemnification. The Borrower shall indemnify
the Administrative Agent, the Banks and each Affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages to which
any of them may become subject, insofar as such losses, liabilities, claims or
damages arise out of or result from any actual or proposed use by the Borrower
of the proceeds of any extension of credit by any Bank hereunder or breach by
the Borrower of this Agreement or any other Loan Document or from any
investigation, litigation (including, without limitation, any actions taken by
the Administrative Agent or any of the Banks to enforce this Agreement or any of
the other Loan Documents) or other proceeding (including, without limitation,
any threatened investigation or proceeding) relating to the foregoing, and the
Borrower shall reimburse the Administrative Agent and each Bank, and each
Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any out-of-pocket expenses (including, without
limitation, reasonable legal fees) actually incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities, claims,
damages or expenses incurred solely by reason of the breach of obligations under
the Loan Documents or gross negligence or wilful misconduct of the Person to be
indemnified.
SECTION 9.05. Setoff; Sharing of Setoffs. (a) The Borrower
agrees that the Administrative Agent and each Bank (and Wachovia, as to the
Swing Loans) shall have a right of setoff for all indebtedness and obligations
owing to them from the Borrower upon all deposits or deposit accounts, of any
kind, or any interest in any deposits or deposit accounts thereof, now or
hereafter pledged, mortgaged, transferred or assigned to the Administrative
Agent or any such Bank or otherwise in the possession or control of the
Administrative Agent or any such Bank for any purpose for the account or benefit
of the Borrower and including any balance of any deposit account or of any
credit of the Borrower with the Administrative Agent or any such Bank, whether
now existing or hereafter established, and the Borrower hereby authorizes the
Administrative Agent and each Bank at any
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time or times with or without prior notice to apply such balances or any part
thereof to any indebtedness and obligations owing by the Borrower to the Banks
and/or the Administrative Agent during the existence of an Event of Default and
in such amounts as they may elect, and whether or not the collateral, if any, or
the responsibility of other Persons primarily, secondarily or otherwise liable
may be deemed adequate; provided, however, nothing herein contained shall
authorize or entitle the Administrative Agent or any Bank to exercise any right
of setoff against any accounts, monies, government securities, or other
Investments held by such Person under any escrow, trust, special purpose
account, or other similar arrangement established with such Person by the
Borrower or the Guarantor or Subsidiary for the purpose of (i) implementing a
defeasance or "in substance" defeasance of Debt of the Borrower or the Guarantor
or Subsidiary, or (ii) maintaining security deposits of tenants of any of the
Properties. For the purposes of this paragraph, all remittances and property
shall be deemed to be in the possession of the Administrative Agent or any such
Bank as soon as the same may be put in transit to it by mail or carrier or by
other bailee.
(b) Each Bank agrees that if it shall, by exercising any right
of setoff or counterclaim or otherwise (including, without limitation, from any
collateral hereafter obtained), receive payment of a proportion of the aggregate
amount of principal and interest owing with respect to the Syndicated Loan Note
held by it which is greater than the proportion received by any other Bank in
respect of the aggregate amount of all principal and interest owing with respect
to the Syndicated Loan Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Syndicated Loan Notes held by the other Banks owing to such other Banks, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Syndicated Loan Notes
held by the Banks owing to such other Banks shall be shared by the Banks pro
rata; provided that (i) nothing in this Section shall impair the right of any
Bank to exercise any right of setoff or counterclaim it may have and to apply
the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Syndicated Loan Notes, and (ii)
if all or any portion of such payment received by the purchasing Bank is
thereafter recovered from such purchasing Bank, such purchase from each other
Bank shall be
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rescinded and such other Bank shall repay to the purchasing Bank the purchase
price of such participation to the extent of such recovery together with an
amount equal to such other Bank's ratable share (according to the proportion of
(x) the amount of such other Bank's required repayment to (y) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Syndicated Loan Note or Money
Market Loan Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of setoff or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
SECTION 9.06. Amendments and Waivers. (a) Any provision of
this Agreement, the Notes or any other Loan Documents, may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the
Administrative Agent are affected thereby, by the Administrative Agent);
provided that, no such amendment or waiver shall:
(1) unless signed by Banks having at least 75% of the aggregate amount
of the Commitments or, if the Commitments are no longer in effect, Banks holding
at least 75% of the aggregate outstanding principal amount of the sum of the
Syndicated Loans, change the definition of "Borrowing Base"; or
(2) unless signed by all Banks, (i) change the Commitment of any Bank
or subject any Bank to any additional obligation, (ii) change the principal of
or rate of interest on any Loan or any fees (other than fees payable to the
Administrative Agent) hereunder, (iii) change the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv) change the
amount of principal, interest or fees due on any date fixed for the payment
thereof, (v) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the percentage of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement, (vi) change the manner of application of
any payments made under this Agreement or the Notes, (vii) release or substitute
all or any substantial part of the collateral (if any) held as security for the
Loans, or (viii)
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release any Guarantee given to support payment of the Loans, except as expressly
provided in the last sentence of Section 5.11.
(b) The Borrower will not obtain from any Bank its written
agreement to waive or amend any of the provisions of this Agreement except
through the Administrative Agent, and the Administrative Agent shall be supplied
by the Borrower with sufficient information to enable the Banks to make an
informed decision with respect thereto. Executed or true and correct copies of
any waiver or consent effected pursuant to the provisions of this Agreement
shall be delivered by the Borrower to the Administrative Agent for redelivery to
each Bank forthwith following the date on which the same shall have been
executed and delivered by the requisite percentage of Banks. The Borrower will
not, directly or indirectly, pay or cause to be paid any remuneration, whether
by way of supplemental or additional interest, fee or otherwise, to any Bank (in
its capacity as such) as consideration for or as an inducement to the entering
into by such Bank of any waiver or amendment of any of the terms and provisions
of this Agreement unless such remuneration is concurrently paid, on the same
terms, ratably to all such Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the Banks
represents to the Administrative Agent and each of the other Banks that it in
good faith is not, directly or indirectly (by negative pledge or otherwise),
relying upon any Margin Stock as collateral in the extension or maintenance of
the credit provided for in this Agreement.
SECTION 9.08. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each
a "Participant") participating interests in any Loan owing to such Bank, any
Note held by such Bank, any Commitment hereunder or any other interest of such
Bank hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under
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this Agreement, and the Borrower and the Administrative Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the related
Loan or Loans, (ii) the change of the amount of any principal, interest or fees
due on any date fixed for the payment thereof with respect to the related Loan
or Loans, (iii) the change of the principal of the related Loan or Loans, (iv)
any change in the rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) fee is payable hereunder from the
rate at which the Participant is entitled to receive interest or fee (as the
case may be) in respect of such participation, (v) the release or substitution
of all or any substantial part of the collateral (if any) held as security for
the Loans, or (vi) the release of any Guarantee given to support payment of the
Loans, except as expressly provided in the last sentence of Section 5.11. Each
Bank selling a participating interest in any Loan, Note, Commitment or other
interest under this Agreement, other than a Money Market Loan or Money Market
Note or participating interest therein, shall, within 10 Domestic Business Days
of such sale, provide the Borrower and the Administrative Agent with written
notification stating that such sale has occurred and identifying the Participant
and the interest purchased by such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Sections 8.03 and 8.05, subject
to the provisions of Section 9.08(e), with respect to its participation in Loans
outstanding from time to time.
(c) Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or in the case of its Loans and
Commitments, a proportionate part of all its Loans and Commitments, of its
rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance, executed by such Assignee, such
transferor Bank and the Administrative Agent (and, in the case of an Assignee
that is not then a Bank (or an Affiliate of a Bank), subject to clause (iii)
below, by the Borrower); provided that (i) no interest may be sold by a Bank
pursuant to this paragraph (c) unless the Assignee shall agree to
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assume ratably equivalent portions of the transferor Bank's Commitment, (ii) if
a Bank is assigning only a portion of its Commitment, then, the amount of the
Commitment being assigned (determined as of the effective date of the
assignment) shall be in an amount not less than $10,000,000, (iii) except during
the continuance of an Event of Default, no interest may be sold by a Bank
pursuant to this paragraph (c) to any Assignee that is not then a Bank (or an
Affiliate of a Bank) without the consent of the Borrower and the Administrative
Agent, which consent shall not be unreasonably withheld, and (iv) except during
the existence of an Event of Default, each Bank may make only two assignments to
a Person which, prior to the assignment, was not a Bank (or an Affiliate of such
Bank), unless the Borrower has consented thereto in its sole discretion. Upon
(A) execution of the Assignment and Acceptance by such transferor Bank, such
Assignee, the Administrative Agent and (if applicable) the Borrower, (B)
delivery of an executed copy of the Assignment and Acceptance to the Borrower
and the Administrative Agent, (C) payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, and (D) payment by such Assignee of a processing and
recordation fee of $2,500 to the Administrative Agent, such Assignee shall for
all purposes be a Bank party to this Agreement and shall have all the rights and
obligations of a Bank under this Agreement to the same extent as if it were an
original party hereto with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent, and no further consent or action by the
Borrower, the Banks or the Administrative Agent shall be required. Upon the
consummation of any transfer to an Assignee pursuant to this paragraph (c), the
transferor Bank, the Administrative Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to such
Assignee.
(d) Subject to the provisions of Section 9.09, the Borrower
authorizes each Bank to disclose to any Participant or Assignee (each a
"Transferee") and any prospective Transferee any and all financial information
in such Bank's possession concerning the Borrower which has been delivered to
such Bank by the Borrower pursuant to this Agreement or which has been delivered
to such Bank by the Borrower in connection with such Bank's credit evaluation
prior to entering into this Agreement.
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(e) No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrower's prior written consent or by reason of the provisions of
Section 8.02 or 8.03 requiring such Bank to designate a different Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(f) Anything in this Section 9.08 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loans and/or obligations to
the extent of such payment. No such assignment shall release the assigning
and/or pledging Bank from its obligations hereunder.
SECTION 9.09. Confidentiality. Each Bank agrees to exercise
commercially reasonable efforts to keep any information delivered or made
available by the Borrower to it confidential from anyone other than persons
employed or retained by such Bank who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans; provided that
nothing herein shall prevent any Bank from disclosing such information (i) to
any other Bank, (ii) upon the order of any court or administrative agency, (iii)
upon the request or demand of any regulatory agency or authority having
jurisdiction over such Bank, (iv) which has been publicly disclosed without
breach of these or any other applicable confidentiality provisions, (v) to the
extent reasonably required in connection with any litigation to which the
Administrative Agent, any Bank or their respective Affiliates may be a party,
(vi) to the extent reasonably required in connection with the exercise of any
remedy hereunder, (vii) to such Bank's legal counsel and independent auditors
(whom the Bank agrees to advise as to the confidential nature of such
information) and (viii) to any actual or proposed Transferee of all or part of
its rights hereunder which has agreed in writing to be bound by the provisions
of this Section 9.09; provided that should disclosure of any such confidential
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information be required by virtue of clause (ii) or clause (v) of the
immediately preceding sentence, any relevant Bank shall promptly notify the
Borrower of same so as to allow the Borrower to seek a protective order or to
take any other appropriate action; provided, further, that, no Bank shall be
required to delay compliance with any directive to disclose any such information
so as to allow the Borrower to effect any such action.
SECTION 9.10. Representation by Banks. Each Bank hereby
represents that it is a commercial lender or financial institution which makes
Syndicated Loans and Money Market Loans in the ordinary course of its business
and that it will make its Syndicated Loans and Money Market Loans hereunder for
its own account in the ordinary course of such business; provided that, subject
to Section 9.08, the disposition of the Note or Notes held by that Bank shall at
all times be within its exclusive control.
SECTION 9.11. Obligations Several. The obligations of each
Bank hereunder are several, and no Bank shall be responsible for the obligations
or commitment of any other Bank hereunder. Nothing contained in this Agreement
and no action taken by the Banks pursuant hereto shall be deemed to constitute
the Banks to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Bank shall be a
separate and independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document and
it shall not be necessary for any other Bank to be joined as an additional party
in any proceeding for such purpose.
SECTION 9.12. Georgia Law. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of Georgia.
SECTION 9.13. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
86
<PAGE> 95
SECTION 9.14. Interest. In no event shall the amount of
interest, and all charges, amounts or fees contracted for, charged or collected
pursuant to this Agreement, the Notes or the other Loan Documents and deemed to
be interest under applicable law (collectively, "Interest") exceed the highest
rate of interest allowed by applicable law (the "Maximum Rate"), and in the
event any such payment is inadvertently received by any Bank, then the excess
sum (the "Excess") shall be credited as a payment of principal, unless the
Borrower shall notify such Bank in writing that it elects to have the Excess
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law. The right to accelerate maturity of any of the Loans does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the Administrative Agent and the Banks do not
intend to collect any unearned interest in the event of any such acceleration.
All monies paid to the Administrative Agent or the Banks hereunder or under any
of the Notes or the other Loan Documents, whether at maturity or by prepayment,
shall be subject to rebate of unearned interest as and to the extent required by
applicable law. By the execution of this Agreement, the Borrower covenants that
(i) the credit or return of any Excess shall constitute the acceptance by the
Borrower of such Excess, and (ii) the Borrower shall not seek or pursue any
other remedy, legal or equitable , against the Administrative Agent or any Bank,
based in whole or in part upon contracting for charging or receiving any
Interest in excess of the Maximum Rate. For the purpose of determining whether
or not any Excess has been contracted for, charged or received by the
Administrative Agent or any Bank, all interest at any time contracted for,
charged or received from the Borrower in connection with this Agreement, the
Notes or any of the other Loan Documents shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Commitments. The Borrower, the Administrative
Agent and each Bank shall, to the maximum extent permitted under applicable law,
(i) characterize any non-principal payment as an expense, fee or premium rather
than as Interest and (ii) exclude voluntary prepayments and the effects thereof.
The provisions of this Section shall be deemed to be incorporated into each Note
and each of the other Loan Documents (whether or not any provision of this
Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by the Borrower
87
<PAGE> 96
and all figures set forth therein shall, for the sole purpose of computing the
extent of obligations hereunder and under the Notes and the other Loan Documents
be automatically recomputed by the Borrower, and by any court considering the
same, to give effect to the adjustments or credits required by this Section.
SECTION 9.15. Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision.
SECTION 9.16. Waiver of Jury Trial; Consent to Jurisdiction.
The Borrower (a) and each of the Banks and the Administrative Agent irrevocably
waives, to the fullest extent permitted by law, any and all right to trial by
jury in any legal proceeding arising out of this Agreement, any of the other
Loan Documents, or any of the transactions contemplated hereby or thereby, (b)
submits to the nonexclusive personal jurisdiction in the State of Georgia, the
courts thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Notes and the other Loan Documents, (c)
waives any and all personal rights under the law of any jurisdiction to object
on any basis (including, without limitation, inconvenience of forum) to
jurisdiction or venue within the State of Georgia for the purpose of litigation
to enforce this Agreement, the Notes or the other Loan Documents, and (d) agrees
that service of process may be made upon it in the manner prescribed in Section
9.01 for the giving of notice to the Borrower. Nothing herein contained,
however, shall prevent the Administrative Agent from bringing any action or
exercising any rights against any security and against the Borrower personally,
and against any assets of the Borrower, within any other state or jurisdiction.
SECTION 9.17. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.18. Source of Funds -- ERISA. Each of the Banks
hereby severally (and not jointly) represents to the Borrower that no part of
the funds to be used by such Bank to fund the Syndicated Loans and Money Market
Loans hereunder from time to time constitutes (i) assets allocated to any
separate
88
<PAGE> 97
account maintained by such Bank in which any employee benefit plan (or its
related trust) has any interest nor (ii) any other assets of any employee
benefit plan. As used in this Section, the terms "employee benefit plan" and
"separate account" shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
[Signatures are contained on the following pages.]
89
<PAGE> 98
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post Properties, Inc., its
sole general partner
By: /s/ Timothy A. Petersen
-------------------------------
Timothy A. Petersen
Executive Vice President
Post Corporate Services
Post Apartment Homes, L.P.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339-3363
Attention: John T. Glover, President
Telecopier number: 404-951-1825
Confirmation number: 404-850-4400
COMMITMENTS WACHOVIA BANK OF GEORGIA, N.A.,
as Administrative Agent and
as a Bank (SEAL)
$60,000,000
By: /s/
----------------------------------------
Title:
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Telecopier number: 404-332-4005
Confirmation number: 404-332-6971
90
<PAGE> 99
FIRST UNION NATIONAL
BANK OF GEORGIA, as
Co-Agent and as a Bank (SEAL)
$60,000,000 By: /s/
----------------------------------------
Title:
Lending Office
First Union National
Bank of Georgia
999 Peachtree Street, N.E.
Suite 610
Atlanta, GA 30309
Attention: Ms. Susan T. Miller
Telecopier number: 404-225-4113
Confirmation number: 404-225-4030
SUNTRUST BANK, ATLANTA (SEAL)
$30,000,000 By: /s/
----------------------------------------
Title:
Lending Office
SunTrust Bank, Atlanta
25 Park Place, MC-081
Atlanta, GA 30303
Attention: Mr. W. John Neill
Telecopier number: 404-827-6774
Confirmation number: 404-588-8248
91
<PAGE> 100
CORESTATES BANK (SEAL)
$20,000,000 By: /s/
----------------------------------------
Title:
Lending Office
CoreStates Bank
Real Estate Department
1339 Chestnut Street
Philadelphia, PA 19107-7618
Attention: Mr. Glen Gallager
Telecopier number: 215-786-6381
Confirmation number: 215-786-4221
COMMERZBANK AG, ATLANTA AGENCY
(SEAL)
$10,000,000 By: /s/
----------------------------------------
Title:
By: /s/
----------------------------------------
Title:
Lending Office
Commerzbank AG, Atlanta Agency
1230 Peachtree Street
35th Floor
Atlanta, GA 30309
Attention: Mr. Andreas K. Bremer
Telecopier number: 404-888-6539
Confirmation number: 404-888-6500
92
<PAGE> 101
EXHIBIT A-1
SYNDICATED LOAN NOTE
Atlanta, Georgia
April 9, 1997
For value received, POST APARTMENT HOMES, L.P., a Georgia
limited partnership (the "Borrower"), promises to pay to the order of
__________________________________________________, a ____________________ (the
"Bank"), for the account of its Lending Office, the principal sum of
___________________________________ AND NO/100 DOLLARS ($__________), or such
lesser amount as shall equal the unpaid principal amount of each Syndicated Loan
made by the Bank to the Borrower pursuant to the Amended and Restated Credit
Agreement referred to below, on the dates and in the amounts provided in the
Amended and Restated Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of this Syndicated Loan Note on the dates and at the
rate or rates provided for in the Amended and Restated Credit Agreement.
Interest on any overdue principal of and, to the extent permitted by law,
overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Amended and Restated Credit Agreement. All
such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office of
Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time pursuant
to the Amended and Restated Credit Agreement.
All Syndicated Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto, and
all repayments of the principal thereof shall be recorded by the Bank and, prior
to any transfer hereof, endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Amended and
Restated Credit Agreement.
93
<PAGE> 102
This Syndicated Loan Note is one of the Syndicated Loan Notes
referred to in the Amended and Restated Credit Agreement dated as of April 9,
1997 among the Borrower, the Banks listed on the signature pages thereof, First
Union National Bank of Georgia, as Co-Agent and Wachovia Bank of Georgia, N.A.,
as Administrative Agent (as the same may be amended and modified from time to
time, the "Amended and Restated Credit Agreement"). Terms defined in the Amended
and Restated Credit Agreement are used herein with the same meanings. Reference
is made to the Amended and Restated Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and the acceleration
of the maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this Syndicated
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post Properties, Inc., its sole
general partner
By:
-----------------------------------
Timothy A. Petersen
Executive Vice President
Post Corporate Services
94
<PAGE> 103
Syndicated Loan Note (cont'd)
<TABLE>
<CAPTION>
Syndicated Loans AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Base Rate Amount Amount of
or Euro- of Principal Maturity Notation
Date Dollar Loan Loan Repaid Date Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
95
<PAGE> 104
EXHIBIT A-2
SWING LOAN NOTE
Atlanta, Georgia
April 9, 1997
For value received, POST APARTMENT HOMES, L.P., a Georgia
limited partnership (the "Borrower"), promises to pay to the order of WACHOVIA
BANK OF GEORGIA, N.A., a national banking association (the "Bank"), for the
account of its Lending Office, the principal sum of Five Million and No/100
Dollars ($5,000,000), or such lesser amount as shall equal the unpaid principal
amount of each Swing Loan made by the Bank to the Borrower pursuant to the
Amended and Restated Credit Agreement referred to below, on the dates and in the
amounts provided in the Amended and Restated Credit Agreement. The Borrower
promises to pay interest on the unpaid principal amount of this Swing Loan Note
at the rate provided for Base Rate Loans or Transaction Rate Loans, as the case
may be, on the dates provided for in the Amended and Restated Credit Agreement.
Interest on any overdue principal of and, to the extent permitted by law,
overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Amended and Restated Credit Agreement. All
such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office of
Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time pursuant
to the Amended and Restated Credit Agreement.
All Swing Loans made by the Bank, the respective maturities
thereof, and all repayments of the principal thereof shall be recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Amended and Restated Credit Agreement.
This Swing Loan Note is the Swing Loan Note referred to in the
Amended and Restated Credit Agreement dated as of even
96
<PAGE> 105
date herewith among the Borrower, the Banks listed on the signature pages
thereof, First Union National Bank of Georgia, as Co-Agent and Wachovia Bank of
Georgia, N.A., as Administrative Agent (as the same may be amended and modified
from time to time, the "Amended and Restated Credit Agreement"). Terms defined
in the Amended and Restated Credit Agreement are used herein with the same
meanings. Reference is made to the Amended and Restated Credit Agreement for
provisions for the optional and mandatory prepayment and the repayment hereof
and the acceleration of the maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this Swing Loan Note
to be duly executed, under seal, by its duly authorized officer as of the day
and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post Properties, Inc., its sole
general partner
By:
------------------------------------
Timothy A. Petersen
Executive Vice President
Post Corporate Services
97
<PAGE> 106
Swing Loan Note (cont'd)
<TABLE>
<CAPTION>
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount Base Rate Amount of
of or Trans- Principal Maturity Notation
Date Loan action Rate Repaid Date Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
98
<PAGE> 107
EXHIBIT A-3
MONEY MARKET LOAN NOTE
As of April 9, 1997
For value received, POST APARTMENT HOMES, L.P., a Georgia
limited partnership (the "Borrower"), promises to pay to the order of , a
_______________ (the "Bank"), for the account of its Lending Office, the
principal sum of NINETY MILLION AND NO/100 DOLLARS ($90,000,000), or such lesser
amount as shall equal the unpaid principal amount of each Money Market Loan made
by the Bank to the Borrower pursuant to the Amended and Restated Credit
Agreement referred to below, on the dates and in the amounts provided in the
Amended and Restated Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of this Money Market Loan Note on the dates and at
the rate or rates provided for in the Amended and Restated Credit Agreement
referred to below. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Amended and Restated Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303-1757, or such other address as may be specified from time
to time pursuant to the Amended and Restated Credit Agreement.
All Money Market Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto, and
all repayments of the principal thereof shall be recorded by the Bank and, prior
to any transfer hereof, endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Amended and
Restated Credit Agreement.
This Money Market Loan Note is one of the Money Market Loan
Notes referred to in the Amended and Restated Credit
99
<PAGE> 108
Agreement dated as of April 9, 1997 among the Borrower, the Banks listed on the
signature pages thereof, Wachovia Bank of Georgia, N.A., as Agent (as the same
may be amended and modified from time to time, the "Amended and Restated Credit
Agreement"). Terms defined in the Amended and Restated Credit Agreement are used
herein with the same meanings. Reference is made to the Amended and Restated
Credit Agreement for provisions for the optional and mandatory prepayment and
the repayment hereof and the acceleration of the maturity hereof.
IN WITNESS WHEREOF, the Borrower has caused this Money Market
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post Properties, Inc., its
sole general partner
By:
-----------------------------------
Timothy A. Petersen
Executive Vice President
Post Corporate Services
100
<PAGE> 109
Money Market Loan Note (cont'd)
<TABLE>
<CAPTION>
MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount Amount of Stated
Interest of Principal Maturity Notation
Date Rate Loan Repaid Date Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
101
<PAGE> 110
EXHIBIT B
OPINION OF KING & SPALDING,
COUNSEL FOR THE BORROWER
[Dated as provided in
Section 3.01 of the Amended
and Restated Credit
Agreement]
To the Banks and the Administrative Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Syndications Group
Dear Sirs:
We have acted as counsel for Post Apartments, L.P., a Georgia
limited partnership (the "Borrower") and Post Properties, Inc., a Georgia
corporation (the "Guarantor") in connection with the Amended and Restated Credit
Agreement (the "Amended and Restated Credit Agreement") dated as of April 9,
1997 among the Borrower, the banks listed on the signature pages thereof, First
Union National Bank of Georgia, as Co-Agent and Wachovia Bank of Georgia, N.A.,
as Administrative Agent. Terms defined in the Amended and Restated Credit
Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion. We have assumed for purposes of our opinions set
forth below that the execution and delivery of the Amended and Restated Credit
Agreement by each Bank and by the Administrative Agent have been duly authorized
by each Bank and by the Administrative Agent.
102
<PAGE> 111
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower is a limited partnership duly organized and
validly existing under the laws of Georgia and has all partnership powers
required to carry on its business as now conducted. The Guarantor is a
corporation duly organized and validly existing under the laws of Georgia and
has all corporate powers required to carry on its business as not conducted. The
Guarantor is the sole and managing general partner of the Borrower.
2. The execution, delivery and performance by the Borrower of
the Amended and Restated Credit Agreement and the Notes and by the Guarantor of
the Guaranty (i) are within the Borrower's partnership and the Guarantor's
corporate powers, (ii) have been duly authorized by all necessary partnership or
corporate action, (iii) require no action by or in respect of, or filing with,
any governmental body, agency or official, (iv) do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or Guarantor or of any
agreement, judgment, injunction, order, decree or other instrument which to our
knowledge is binding upon the Borrower or the Guarantor and (v) to our
knowledge, except as provided in the Amended and Restated Credit Agreement, do
not result in the creation or imposition of any Lien on any asset of the
Borrower, the Guarantor or any of the Subsidiaries.
3. Each of the Amended and Restated Credit Agreement and the
Guaranty constitutes a valid and binding agreement of the Borrower and the
Guarantor, respectively, enforceable against the Borrower and the Guarantor in
accordance with its terms, and the Notes constitute valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms, except as such enforceability may be limited by: (i) bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
4. To our knowledge, there is no action, suit or proceeding
pending, or threatened, against or affecting the Borrower, the Guarantor or any
of the Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an adverse
decision which could materially adversely affect the business, consolidated
financial position or consolidated results of operations of PPI,
103
<PAGE> 112
the Borrower and its Consolidated Subsidiaries, considered as a whole, or which
in any manner questions the validity or enforceability of the Amended and
Restated Credit Agreement or any Note.
5. Each of the Borrower's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
6. Neither the Borrower nor the Guarantor nor any of the
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
7. Neither the Borrower nor the Guarantor nor any of the
Subsidiaries is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
We are qualified to practice in the State of Georgia and do not purport
to be experts on any laws other than the laws of the United States and the State
of Georgia and this opinion is rendered only with respect to such laws. We have
made no independent investigation of the laws of any other jurisdiction.
This opinion is delivered to you in connection with the transaction
referenced above and may only be relied upon by you, any Transferee under the
Amended and Restated Credit Agreement, and Jones, Day, Reavis & Pogue without
our prior written consent.
Very truly yours,
104
<PAGE> 113
EXHIBIT C
OPINION OF
JONES, DAY, REAVIS & POGUE, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
[Dated as provided in
Section 3.01 of the Amended
and Restated Credit
Agreement]
To the Banks and the Administrative Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Syndications Group
Dear Sirs:
We have participated in the preparation of the Amended and
Restated Credit Agreement (the "Amended and Restated Credit Agreement") dated as
of April 9, 1997 among Post Apartment Homes, L.P., a Georgia limited partnership
(the "Borrower"), the banks listed on the signature pages thereof (the "Banks"),
First Union National Bank of Georgia, as Co-Agent and Wachovia Bank of Georgia,
N.A., as Administrative Agent (the "Administrative Agent"), and have acted as
special counsel for the Administrative Agent for the purpose of rendering this
opinion pursuant to Section 3.01(d) of the Amended and Restated Credit
Agreement. Terms defined in the Amended and Restated Credit Agreement are used
herein as therein defined.
This opinion letter is limited by, and is in accordance with,
the January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia
which Interpretive Standards are incorporated herein by this reference.
105
<PAGE> 114
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, and assuming the due
authorization, execution and delivery of the Amended and Restated Credit
Agreement and each of the Notes by or on behalf of the Borrower, we are of the
opinion that the Amended and Restated Credit Agreement constitutes a valid and
binding agreement of the Borrower and each Note constitutes valid and binding
obligations of the Borrower, in each case enforceable in accordance with its
terms except as: (i) the enforceability thereof may be affected by bankruptcy,
insolvency, reorganization, fraudulent conveyance, voidable preference,
moratorium or similar laws applicable to creditors' rights or the collection of
debtors' obligations generally; (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability; and (iii) the enforceability of certain of the remedial, waiver
and other provisions of the Amended and Restated Credit Agreement and the Notes
may be further limited by the laws of the State of Georgia; provided that such
additional laws do not, in our opinion, substantially interfere with the
practical realization of the benefits expressed in the Amended and Restated
Credit Agreement and the Notes, except for the economic consequences of any
procedural delay which may result from such laws.
In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction except the State of Georgia.
We express no opinion as to the effect of the compliance or noncompliance of the
Administrative Agent or any of the Banks with any state or federal laws or
regulations applicable to the Administrative Agent or any of the Banks by reason
of the legal or regulatory status or the nature of the business of the
Administrative Agent or any of the Banks.
This opinion is delivered to you in connection with the
transaction referenced above and may only be relied upon by you and any
Transferee under the Amended and Restated Credit Agreement without our prior
written consent.
Very truly yours,
106
<PAGE> 115
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Dated ______ ___, _____
Reference is made to the Amended and Restated Credit Agreement
dated as of April 9, 1997 (together with all amendments and modifications
thereto, the "Amended and Restated Credit Agreement") among Post Apartment
Homes, L.P., a Georgia limited partnership (the "Borrower"), the Banks (as
defined in the Amended and Restated Credit Agreement), First Union National Bank
of Georgia, as Co-Agent and Wachovia Bank of Georgia, N.A., as Administrative
Agent (the "Administrative Agent"). Terms defined in the Amended and Restated
Credit Agreement are used herein with the same meaning.
______________________________________ (the "Assignor") and
________________________________(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
without recourse to the Assignor, and the Assignee hereby purchases and assumes
from the Assignor, a ____% interest in and to all of the Assignor's rights and
obligations under the Amended and Restated Credit Agreement as of the Effective
Date (as defined below) (including, without limitation, a ____% interest (which
on the Effective Date hereof is $___________) in the Assignor's Commitment and a
___ interest (which on the Effective Date hereof is $__________) in the
Syndicated Loans [and Swing Loans] [and Money Market Loans] owing to the
Assignor and a ____% interest in the Syndicated Loan Note [and Swing Loan Note]
[and Money Market Loan Note] held by the Assignor (which on the Effective Date
hereof is $__________) [and $__________, respectively].
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Amended and Restated Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Amended and Restated Credit Agreement or any other
instrument or document furnished pursuant thereto, other than that it is the
legal and beneficial owner of the interest being assigned by it hereunder, that
such interest is free and clear of any adverse
107
<PAGE> 116
claim and that as of the date hereof its Commitment (without giving effect to
assignments thereof which have not yet become effective) is $____________ and
the aggregate outstanding principal amount of Syndicated Loans [and Swing Loans]
[and Money Market Loans] owing to it (without giving effect to assignments
thereof which have not yet become effective) is $_________ [and $__________,
respectively]; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Amended and Restated Credit Agreement or any other instrument or document
furnished pursuant thereto; and (iii) attaches the Note[s] referred to in
Paragraph 1 above and requests that the Agent exchange such Note[s] [for a new
Syndicated Loan Note dated _________, ____ in the principal amount of
$____________ payable to the order of the Assignee, a new Swing Loan Note dated
___________, ____ in the principal amount of $____________ payable to the order
of the Assignee, and a new Money Market Loan Note dated ___________, ____ in the
principal amount of $____________ payable to the order of the Assignee] [and for
new Notes as follows: a (i) Syndicated Loan Note dated ___________, ____ in the
principal amount of $___________ payable to the order of the Assignor (ii) Swing
Loan Note dated ____________, ____ in the principal amount of $__________
payable to the order of the Assignor, and (iii) Money Market Loan Note dated
_________, ____ in the principal amount of $_____________ payable to the order
of the Assignor].
3. The Assignee (i) confirms that it has received a copy of
the Amended and Restated Credit Agreement, together with copies of the financial
statements referred to in Section 4.04(a) thereof (or any more recent financial
statements of the Borrower delivered pursuant to Section 5.01(a) or (b) thereof)
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance upon
the Administrative Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Amended
and Restated Credit Agreement; (iii) confirms that it is a bank or financial
institution; (iv) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Amended and
Restated Credit Agreement as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably incidental
108
<PAGE> 117
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Amended and Restated Credit Agreement
are required to be performed by it as a Bank; (vi) specifies as its Lending
Office (and address for notices) the office set forth beneath its name on the
signature pages hereof, (vii) represents and warrants that the execution,
delivery and performance of this Assignment and Acceptance are within its
corporate powers and have been duly authorized by all necessary corporate
action, (viii) makes the representation and warranty contained in Section 9.18
of the Amended and Restated Credit Agreement, and (ix) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Amended and Restated Credit Agreement and the Notes.
4. The Effective Date for this Assignment and Acceptance shall
be ___________, _____ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
execution and acceptance by the Administrative Agent and to the Borrower for
execution by the Borrower.
5. Upon such execution and acceptance by the Administrative
Agent, and execution by the Borrower, if required by the Amended and Restated
Credit Agreement, from and after the Effective Date, (i) the Assignee shall be a
party to the Amended and Restated Credit Agreement and, to the extent rights and
obligations have been transferred to it by this Assignment and Acceptance, have
the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to
the extent its rights and obligations have been transferred to the Assignee by
this Assignment and Acceptance, relinquish its rights (other than under Sections
8.03, 9.03 and 9.04 of the Amended and Restated Credit Agreement) and be
released from its obligations under the Amended and Restated Credit Agreement,
except as expressly provided therein.
6. Upon such execution and acceptance by the Administrative
Agent, and execution by the Borrower, if required by the Amended and Restated
Credit Agreement, from and after the Effective Date, the Administrative Agent
shall make all payments in respect of the interest assigned hereby to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
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<PAGE> 118
payments for periods prior to such acceptance by the Administrative Agent
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
[NAME OF ASSIGNOR]
By:
---------------------------------------
Title:
[NAME OF ASSIGNEE]
By:
---------------------------------------
Title:
Lending Office:
[Address]
110
<PAGE> 119
WACHOVIA BANK OF GEORGIA, N.A.,
As Administrative Agent
By:
---------------------------------------
Title:
POST APARTMENT HOMES, L.P.
IF REQUIRED BY THE AMENDED AND
RESTATED CREDIT AGREEMENT.
By: Post Properties, Inc., its sole
general partner
By:
------------------------------------
[Name and title of Executive
Officer]
111
<PAGE> 120
EXHIBIT E
NOTICE OF BORROWING
_____________________, ______
Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Amended and Restated Credit Agreement (as amended and modified
from time to time, the "Amended and Restated Credit
Agreement") dated as of April 9, 1997 among Post Apartment
Homes, L.P., the Banks from time to time parties thereto,
First Union National Bank of Georgia, as Co-Agent and Wachovia
Bank of Georgia, N.A., as Administrative Agent.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Amended and Restated Credit
Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Amended and Restated Credit Agreement.
The Borrower hereby requests a [Euro-Dollar Borrowing] [Syndicated Loan
Borrowing at a Base Rate] [Swing Loan Borrowing] in the aggregate principal
amount of $_________(1) to be made on __________, _____, and for interest to
accrue thereon at the rate established by the Amended and Restated Credit
Agreement for [Euro-Dollar Loans] [Base Rate Loans]. The duration of the
Interest Period with respect thereto shall be [1 month] [2 months] [3 months] [6
months] [30 days].
- ----------
(1)Not to exceed the amount available to be borrowed as set forth in the next
paragraph.
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<PAGE> 121
The amount available to be borrowed under Section 2.01 of the Amended
and Restated Credit Agreement, net of amounts to be paid with the proceeds of
this Borrowing, is as follows:
<TABLE>
<S> <C>
(a) Aggregate amount of Commitments $_____________
(b) Borrowing Base per most recent
Borrowing Base Certificate $_____________
(c) Principal amount outstanding under
Syndicated Loans $_____________
(d) Principal amount outstanding under
Swing Loans $_____________
(e) Principal amount outstanding under
Money Market Loans $_____________
(f) Amount available to be borrowed
(lesser of (a) or (b), less sum
of (c), (d) and (e) $_____________
</TABLE>
The Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer this____ day of ___________, _____.
POST APARTMENT HOMES, L.P.(SEAL)
By: Post Properties, Inc., its sole
general partner
By:
-----------------------------------
[President or other authorized
designee]
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<PAGE> 122
EXHIBIT F
COMPLIANCE CERTIFICATE
Reference is made to the Amended and Restated Credit Agreement
dated as of April 9, 1997 (as modified and supplemented and in effect from time
to time, the "Amended and Restated Credit Agreement") among Post Apartment
Homes, L.P., the Banks from time to time parties thereto, First Union National
Bank of Georgia, as Co-Agent and Wachovia Bank of Georgia, N.A., as
Administrative Agent. Capitalized terms used herein shall have the meanings
ascribed thereto in the Amended and Restated Credit Agreement.
Pursuant to Section 5.01(c) of the Amended and Restated Credit
Agreement, _____ , the duly authorized [title of Executive Officer, other than
Secretary] of the General Partner, hereby (i) certifies to the Administrative
Agent and the Banks that the information contained in the Compliance Check List
attached hereto is true, accurate and complete as of _____, _____ , and that no
Default is in existence on and as of the date hereof and (ii) restates and
reaffirms that the representations and warranties contained in Article IV of the
Amended and Restated Credit Agreement are true on and as of the date hereof as
though restated on and as of this date.
POST APARTMENT HOMES, L.P.(SEAL)
By: Post Properties, Inc., its sole
general partner
By:
----------------------------------
[Name and title of Executive
Officer, other than
Secretary]
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<PAGE> 123
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
1. Consolidated Total Secured Debt (Section 5.03)
The amount of Consolidated Total Secured Debt will not at any time
exceed the greater of (x) 40% of Consolidated Total Assets or (y) the
lesser of (i) 50% of Consolidated Total Assets or (ii) $375,000,000.
<TABLE>
<S> <C> <C> <C>
(a) Consolidated Total Secured
Debt Schedule - 1 $__________
(b) Consolidated Total Assets
Schedule - 2 $__________
(c) 40% of (b) $__________
(d) 50% of (b) $__________
(e) lesser of (d) and $375,000,000 $__________
</TABLE>
Maximum Consolidated Total Secured
Debt (greater of (c) and (e)) $__________
2. Ratio of Consolidated Total Debt to Consolidated Total Assets
(Section 5.04)
The ratio of Consolidated Total Debt to Consolidated Total Assets will
not at any time exceed 0.60 to 1.00.
<TABLE>
<S> <C> <C>
(a) Consolidated Total Liabilities at end
of most recent Fiscal Quarter $__________
(b) Aggregate amount of Debt Guaranteed
by Borrower, the Guarantor and the
other Subsidiaries (other than of Debt of
</TABLE>
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<PAGE> 124
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
<TABLE>
<S> <C> <C>
any of them) at end of most recent
Fiscal Quarter $__________
(c) Total Consolidated Total Debt (sum
of (a) plus (b)) $__________
</TABLE>
116
<PAGE> 125
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
<TABLE>
<S> <C> <C>
(d) Consolidated Total Assets Schedule - 1 $__________
Actual Ratio of (c) to (d) ____ to 1.00
Maximum Ratio 0.60 to 1.00
</TABLE>
3. Interest Coverage (Section 5.05)
The ratio of (x) Consolidated Income Available for Debt Service to (y)
interest expense shall at all times exceed 2.00 to 1.0, calculated at
the end of each Fiscal Quarter, based on the Fiscal Quarter just ended
and the immediately preceding three Fiscal Quarters.
<TABLE>
<S> <C> <C>
(a) Consolidated Income Available
for Debt Service Schedule - 3 $__________
(b) Interest expense Schedule - 3 $__________
Actual Ratio of (a) to (b) ____ to 1.00
Minimum Ratio 2.00 to 1.00
</TABLE>
4. Restricted Payments (Section 5.06)
The Borrower's Restricted Payments in any calendar year shall not exceed
95% of Consolidated Income Available for Distribution for such period,
unless (i) the Borrower must pay out an amount in excess of 95% of
Consolidated Income Available for Distribution to permit PPI to preserve
its status as a real estate investment trust under the applicable
provision of the Code, or (ii) PPI declares one or more capital gains
dividends in an amount not to exceed $30,000,000 within such calendar
year. In the event that the Borrower or PPI receives a public debt
rating of BBB-or better from Standard & Poors or Baa3 or
117
<PAGE> 126
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
better from Moody's Investor Service and so long as that rating is
affirmed during each year, the Borrower's Restricted Payments in any
calendar year will be limited to 100% of Consolidated Income Available
for Distribution for such calendar year with the same exceptions
contained in clauses (i) and (ii) of this Section 5.06.
<TABLE>
<S> <C> <C>
(a) Consolidated Income Available
for Debt Service Schedule - 4 $___________
(b) interest expense Schedule - 4 $___________
(c) taxes included in
Consolidated Income
Available for Debt Service $___________
(d) sum of (a) less (b) less (c) $___________
Maximum Restricted Payments generally
[95%][100%] of (d) $___________
Additional Restricted Payments permitted
by clause (i) $___________
Additional Restricted Payments permitted
by clause (ii), not to exceed $30,000,000 $___________
Calendar year distributions to date $___________
</TABLE>
5. Loans and Advances (Section 5.07)
Neither the Borrower, the Guarantor nor any other Subsidiary shall make
loans or advances to any Person except: (i) deposits required by
government agencies or public utilities; (ii) loans and advances made to
the Borrower, the Guarantor or any Subsidiary; provided, that loans and
advances from the Borrower and the Guarantor to Subsidiaries, together
with Investments in Subsidiaries permitted by clause (C) of Section
5.09, may not exceed an aggregate amount of $50,000,000 outstanding at
any
118
<PAGE> 127
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
time; (iii) loans or advances to directors, officers and employees
in the ordinary course of business in the aggregate outstanding at any
time not exceeding $2,500,000.00; and (iv) other loans or advances made
in the ordinary course of business in the aggregate outstanding at any
time not exceeding $20,000,000 minus all amounts outstanding under
clause (iii) of this Section 5.07 and minus Investments made and
permitted pursuant to Section 5.09(D); provided that after giving effect
to the making of any loans, advances or deposits permitted by clauses
(i), (ii), (iii) or (iv), the Borrower will be in full compliance with
all the provisions of this Agreement.
<TABLE>
<S> <C> <C>
(a) To Subsidiaries $__________
(b) Sum of (a) and amount $__________
in paragraph 7(b) below
Limitation $50,000,000
(c) To directors, officers and
employees $__________
Limitation $ 2,500,000
(d) other $__________
Limitation $__________(1)
</TABLE>
6. Purchases of Stock by the Guarantor (Section 5.08)
Except for purchases or acquisitions of shares of PPI's Capital Stock
made for purposes of having such shares available for
- --------
(1)20,000,000 less amount in (c) of this paragraph 5 and amount in line (d) of
paragraph 7 below.
119
<PAGE> 128
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
purchase by PPI shareholders pursuant to the Post Properties, Inc.
Dividend Reinvestment and Stock Purchase Plan, as amended as of the
Closing Date, and, subject to the approval of the Required Banks (not
to be unreasonably withheld), as it may thereafter be amended, the
Guarantor shall not purchase or acquire any shares of PPI's Capital
Stock during any 12 month period in excess of the lesser of (i) 2.25%
of all PPI's Capital Stock outstanding on the first day of such period,
or (ii) an aggregate purchase price of $30,000,000.
<TABLE>
<S> <C> <C>
(a) Aggregate number of shares of _____________
PPI's Capital Stock outstanding
on first day of last 12 month period
(b) 2.25% of (a) (based on the $____________
closing price on such first
day as set forth in the
Wall Street Journal)
(c) Aggregate number of shares of _____________
PPI's Capital Stock purchased
by Significant Subsidiaries
in last 12 months
(d) Aggregate purchase price of shares $____________
described in (c)
Limitation (lesser of (b) and $30,000,000) [$]__________
</TABLE>
7. Investments (Section 5.09)
Neither the Borrower nor the Guarantor shall make Investments in any
Person except: (A) Investments in (i) direct obligations of the United
States Government maturing within one year, (ii) certificates of deposit
issued by a commercial bank whose credit is satisfactory to the
Administrative Agent, (iii) commercial paper rated A1 or the equivalent
thereof by Standard
120
<PAGE> 129
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
& Poor's Corporation or P1 or the equivalent thereof by Moody's
Investors Service, Inc. and in either case maturing within 9 months
after the date of acquisition, (iv) tender bonds the payment of the
principal of and interest on which is fully supported by a letter of
credit issued by a United States bank whose long-term certificates of
deposit are rated at least AA or the equivalent thereof by Standard &
Poor's Corporation and Aa or the equivalent thereof by Moody's
Investors Service, Inc. and/or (v) Investments in debt or equity
securities rated at least BBB+ or the equivalent thereof by Standard &
Poor's Corporation or at least Baa1 or the equivalent thereof by
Moody's Investors Service not exceeding at any time an aggregate amount
of $5,000,000; (B) Investments permitted by clauses (i), (ii) and (iii)
of Section 5.07 or by Section 5.08; (C) Investments in Significant
Subsidiaries and (D) other Investments not exceeding an aggregate
amount outstanding at any time of $20,000,000, less loans and advances
outstanding and permitted by clause (iv) of Section 5.07.
<TABLE>
<S> <C> <C>
(a) debt or equity securities rated $__________
at least BBB+ or Baa1
Limitation $ 5,000,000
(b) Investments in Subsidiaries $__________
after July 26, 1995
(c) Sum of (b) and amount $__________
in paragraph 5(a) above
Limitation $50,000,000
(d) Other $__________
</TABLE>
121
<PAGE> 130
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
<TABLE>
<S> <C>
Limitation $____________(2)
</TABLE>
- --------
(2) $20,000,000 less amount on line (d) of paragraph 5 above.
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<PAGE> 131
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
Schedule - 1
Consolidated Total Secured Debt
<TABLE>
<CAPTION>
INTEREST FINAL
RATE(3) MATURITY TOTAL
------- -------- -----
<S> <C> <C> <C> <C>
Money Borrowed
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
Total Money Borrowed $___________
Deferred Purchase Price
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
___________________________ ___________ ___________ $___________
Total Deferred Purchase Price $___________
</TABLE>
- --------
(3) If rate is fixed, insert contract rate. If rate is floating, state that.
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<PAGE> 132
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
Capitalized Leases
<TABLE>
<S> <C>
$
- ---------------------------------------------------------- -----------
$
- ---------------------------------------------------------- -----------
Total Capitalized Leases $
-----------
Total Consolidated Total Secured Debt $
===========
</TABLE>
124
<PAGE> 133
COMPLIANCE CHECK LIST
Post Apartment Homes, L.P.
--------------------------
_________________, _____
Schedule - 2
Consolidated Total Assets
<TABLE>
<S> <C>
(a) net real estate assets $
----------
(b) depreciation on fixed assets $
----------
(c) other tangible assets $
----------
Consolidated Total Assets (sum of (a)
plus (b) plus (c) $
==========
</TABLE>
125
<PAGE> 134
Schedule - 3
Income Available For Debt Service
(for Fiscal Quarter just ended and immediately preceding 3 Fiscal
Quarters)
<TABLE>
<S> <C>
___ quarter ___
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
___ quarter ___
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
___ quarter ___
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
</TABLE>
126
<PAGE> 135
<TABLE>
<S> <C>
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
</TABLE>
127
<PAGE> 136
<TABLE>
<S> <C>
___ quarter ___
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
Income Available for Debt Service
(last 4 Fiscal Quarters) $
=============
</TABLE>
128
<PAGE> 137
Schedule - 4
Income Available For Debt Service
(for the current calendar year)
<TABLE>
<S> <C>
first quarter
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
second quarter
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
third quarter
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
</TABLE>
129
<PAGE> 138
<TABLE>
<S> <C>
and non-cash items $
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
</TABLE>
130
<PAGE> 139
<TABLE>
<S> <C>
fourth quarter
net income $
-------------
plus Minority Interests $
-------------
less extraordinary gains ($ )
-------------
plus extraordinary losses $
-------------
plus depreciation and amortization $
-------------
plus losses from sales or joint ventures $
-------------
less gains from sales or joint ventures ($ )
-------------
less decreases in deferred taxes
and non-cash items ($ )
-------------
plus increases in deferred taxes
and non-cash items $
-------------
plus interest expense $
-------------
plus taxes $
-------------
Income Available for Debt Service
(current calendar year) $
=============
</TABLE>
131
<PAGE> 140
EXHIBIT G
[NAME OF BORROWER]
CLOSING CERTIFICATE
Reference is made to the Amended and Restated Credit Agreement (the
"Amended and Restated Credit Agreement") dated as of April 9, 1997 among Post
Apartment Homes, L.P., the Banks listed therein, First Union National Bank of
Georgia, as Co-Agent and Wachovia Bank of Georgia, N.A., as Administrative
Agent. Capitalized terms used herein have the meanings ascribed thereto in the
Amended and Restated Credit Agreement.
Pursuant to Section 3.01(e) of the Amended and Restated Credit
Agreement, _______________________, the duly authorized ____________ of
____________ hereby certifies to the Administrative Agent and the Banks that (i)
no Default has occurred and is continuing as of the date hereof, and (ii) the
representations and warranties contained in Article IV of the Amended and
Restated Credit Agreement are true on and as of the date hereof.
Certified as of April 9, 1997.
By:
---------------------------------
[Name and title of Executive
Officer]
132
<PAGE> 141
EXHIBIT H
GUARANTY
THIS GUARANTY (this "Guaranty") is made April 9, 1997, by POST
PROPERTIES, INC., a Georgia corporation (the "Guarantor") in favor of the
Administrative Agent, for the ratable benefit of the Banks, under the Amended
and Restated Credit Agreement referred to below;
W I T N E S S E T H
WHEREAS, POST APARTMENT HOMES, L.P., a Georgia limited
partnership (the "Borrower"), First Union National Bank of Georgia, as Co-Agent
(the "Co-Agent") and WACHOVIA BANK OF GEORGIA, N.A., as Administrative Agent
(the "Administrative Agent"), and certain other Banks from time to time party
thereto have entered into a certain Amended and Restated Credit Agreement dated
as of even date herewith (as it may be amended or modified further from time to
time, the "Amended and Restated Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by the Banks
to the Borrower which will the benefit the Guarantor;
WHEREAS, it is required by Section 3.01(b) of the Amended and
Restated Credit Agreement, that the Guarantor execute and deliver this Guaranty
whereby the Guarantor shall guarantee the payment when due of all principal,
interest and other amounts that shall be at any time payable by the Borrower
under the Amended and Restated Credit Agreement, the Notes and the other Loan
Documents; and
WHEREAS, in consideration of the financial and other support
that the Borrower has provided, and such financial and other support as the
Borrower may in the future provide, to the Guarantor, whether directly or
indirectly, and in order to induce the Banks, the Co-Agent and the
Administrative Agent to enter into the Amended and Restated Credit Agreement,
the Guarantor is willing to guarantee the obligations of the Borrower under the
133
<PAGE> 142
Amended and Restated Credit Agreement, the Notes, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Amended and
Restated Credit Agreement and not otherwise defined herein have, as used herein,
the respective meanings provided for therein.
SECTION 2. Representations and Warranties. The Guarantor
incorporates herein by reference as fully as if set forth herein all of the
representations and warranties pertaining to the Guarantor contained in Article
IV of the Amended and Restated Credit Agreement (which representations and
warranties shall be deemed to have been renewed by the Guarantor upon each
Borrowing under the Amended and Restated Credit Agreement).
SECTION 3. Covenants. The Guarantor covenants that, so long as
any Bank has any Commitment outstanding under the Amended and Restated Credit
Agreement or any amount payable under the Amended and Restated Credit Agreement
or any Note shall remain unpaid, the Guarantor will fully comply with those
covenants set forth in Article V of the Amended and Restated Credit Agreement
pertaining to the Guarantor, and the Guarantor incorporates herein by reference
as fully as if set forth herein all of such covenants.
SECTION 4. The Guaranty. The Guarantor hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Note issued
by the Borrower pursuant to the Amended and Restated Credit Agreement, and the
full and punctual payment of all other amounts payable by the Borrower under the
Amended and Restated Credit Agreement (including, without limitation, all
Syndicated Loans and Swing Loans and interest thereon, and all compensation and
indemnification amounts and fees payable pursuant to the Amended and Restated
Credit Agreement and the Administrative Agent's Letter Agreement (all of the
foregoing obligations being referred to collectively as the "Guaranteed
Obligations"). Upon failure by the Borrower to pay punctually any such amount,
the Guarantor
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<PAGE> 143
agrees that it shall forthwith on demand pay the amount not so paid at the place
and in the manner specified in the Amended and Restated Credit Agreement, the
relevant Note or the relevant Loan Document, as the case may be.
SECTION 5. Guaranty Unconditional. The obligations of
the Guarantor hereunder shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Borrower under the
Amended and Restated Credit Agreement, any Note, or any other Loan
Document, by operation of law or otherwise or any obligation of any
other guarantor of any of the Guaranteed Obligations;
(ii) any modification or amendment of or
supplement to the Amended and Restated Credit Agreement, any Note, or
any other Loan Document;
(iii) any release, nonperfection or invalidity of any
direct or indirect security for any obligation of the Borrower under the
Amended and Restated Credit Agreement, any Note, any Loan Document, or
any obligations of any other guarantor of any of the Guaranteed
Obligations;
(iv) any change in the partnership structure or
ownership of the Borrower or corporate structure or ownership of the
Guarantor, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or the Guarantor, or any of
their assets or any resulting release or discharge of any obligation of
the Borrower or the Guarantor;
(v) the existence of any claim, setoff or other
rights which the Guarantor may have at any time against the Borrower,
the Administrative Agent, the Co-Agent, any Bank or any other Person,
whether in connection herewith or any unrelated transactions, provided
that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
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<PAGE> 144
(vi) any invalidity or unenforceability relating to or
against the Borrower for any reason related to the Amended and Restated
Credit Agreement, any other Loan Document, or any other Guaranty, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower of the principal of or interest on any Note or
any other amount payable by the Borrower under the Amended and Restated
Credit Agreement, the Notes, or any other Loan Document; or
(vii) any other act or omission to act or delay of any
kind by the Borrower, the Co-Agent, any Bank or any other Person or any
other circumstance whatsoever which might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of the
Guarantor's obligations hereunder.
SECTION 6. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. The Guarantor's obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full and the Commitments under the Amended and Restated Credit Agreement shall
have terminated or expired. If at any time any payment of the principal of or
interest on any Note or any other amount payable by the Borrower under the
Amended and Restated Credit Agreement or any other Loan Document is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
SECTION 7. Waiver of Notice by the Guarantor. The Guarantor
irrevocably waives, acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Borrower or any other Person.
SECTION 8. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Principal under the Amended and Restated
Credit Agreement, any Note or any other Loan Document is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Amended and
136
<PAGE> 145
Restated Credit Agreement, any Note or any other Loan Document shall nonetheless
be payable by the Guarantor hereunder forthwith on demand by the Administrative
Agent made at the request of the Required Banks.
SECTION 9. Notices. All notices, requests and other
communications to any party hereunder shall be given or made by telecopier or
other writing and telecopied or mailed or delivered to the intended recipient at
its address or telecopier number set forth on the signature pages hereof or such
other address or telecopy number as such party may hereafter specify for such
purpose by notice to the Administrative Agent in accordance with the provisions
of Section 9.01 of the Amended and Restated Credit Agreement. Except as
otherwise provided in this Guaranty, all such communications shall be deemed to
have been duly given when transmitted by telecopier, or personally delivered or,
in the case of a mailed notice, 3 Domestic Business Days after such
communication is deposited in the mails with first class postage prepaid, in
each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by the
Administrative Agent, the Co-Agent or any Banks in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Guaranty, the Amended and Restated Credit Agreement, the Notes,
and the other Loan Documents shall be cumulative and not exclusive of any rights
or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the
benefit of the Administrative Agent, the Co-Agent and the Banks and their
respective successors and assigns and in the event of an assignment of any
amounts payable under the Amended and Restated Credit Agreement, the Notes, or
the other Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty may not be assigned by the Guarantor without the prior written consent
of the Administrative Agent and the Required Banks, and shall be binding upon
the Guarantor and its respective successors and permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any
provision hereof may be changed, waived, discharged or
137
<PAGE> 146
terminated orally, but only in writing signed by the Guarantor and the
Administrative Agent, with the consent of the Required Banks.
SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF GEORGIA. THE GUARANTOR AND THE ADMINISTRATIVE AGENT
HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT
SITTING IN ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE GUARANTOR
AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by the
Guarantor hereunder shall be made without setoff or counterclaim and free and
clear of and without deduction or withholding for or on account of, any present
or future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any government or any political or taxing authority pursuant and
subject to the provisions of Section 2.12(c) of the Amended and Restated Credit
Agreement, the terms of which are incorporated herein by reference as to the
Guarantor as fully as if set forth herein, and for such purposes, the rights and
obligations of the Borrower under such Section shall devolve to the Guarantor as
to payments required to be made by the Guarantor hereunder.
138
<PAGE> 147
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed, under seal, by its authorized officer as of the date first above
written.
POST PROPERTIES, INC. (SEAL)
By:
----------------------------
Timothy A. Petersen
Executive Vice President
Post Corporate Services
Address:
Post Properties, Inc.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339-3363
Attention: John T. Glover,
President
Telecopier number: 770-951-1825
Confirmation number: 770-850-4400
139
<PAGE> 148
EXHIBIT I
BORROWING BASE CERTIFICATE
Reference is made to the Amended and Restated Credit Agreement
dated as of April 9, 1997 (as modified and supplemented and in effect from time
to time, the "Amended and Restated Credit Agreement") among Post Apartment
Homes, L.P., the Banks from time to time parties thereto, First Union National
Bank of Georgia, as Co-Agent and Wachovia Bank of Georgia, N.A., as
Administrative Agent. Capitalized terms used herein shall have the meanings
ascribed thereto in the Amended and Restated Credit Agreement.
Pursuant to Section [3.01(i)][5.01(h)] of the Amended and
Restated Credit Agreement, ____________, the duly authorized [title of Executive
Officer] of the General Partner, hereby (i) certifies to the Administrative
Agent and the Banks that the calculation of the Borrowing Base contained in this
Borrowing Base Certificate is true, accurate and complete in all material
respects as of ____________, _____.
The calculation of the Borrowing Base is as follows:
<TABLE>
<S> <C>
(i) (a) Net Operating Income for the 12 month period
ending on the last day of the month just
ended, from each Eligible Property which is
not subject to a Mortgage and which either
was on average at least 90% economically
occupied during, or with respect to which the
Construction Period Termination Date occurred
prior to the commencement of, such 12 month
period $____________
(b) product of 7.42857 times (i)(a) $____________
(ii) (a) Net Operating Income for the 12 month period
ending on the last day of the month just
ended, from each Eligible Property which is
financed as to Debt only by bonds,
debentures, notes or other similar
instruments which have been fully in
substance defeased in accordance
with GAAP $____________
</TABLE>
140
<PAGE> 149
<TABLE>
<S> <C>
(b) product of 7.42857 times (ii)(a) $____________
(iii)(a) Net Operating Income for the 3 month period
ending on the last day of the month just
ended, from each Eligible Property which is
not subject to a Mortgage and with respect to
which the Construction Period Termination
Date did not occur prior to the commencement
of the 12 month period ending on the last day
of the month just ended prior to the date of
determination $____________
(b) product of 29.71428 times (iii)(a) $____________
(iv) (a) aggregate amount of cash expenditures
(including indirect costs internally
allocated in accordance with GAAP) on all
Eligible Properties which are not subject to
a Mortgage and which consist of apartment
communities as to which the Construction
Period Termination Date has not
occurred $____________
(b) 50% of (iv)(a) $____________
(c) amount in (v)(k) $____________
(d) $75,000,000 less (iv)(c) $____________
(e) lesser of (iv)(b) and (iv)(d) $____________
(v) (a) aggregate cost of all Eligible Properties
which consist of raw land not subject to
a Mortgage
or which consist of land acquired
with existing improvements which
are to be substantially demolished
and the demolition of such
improvements has commenced $____________
(b) 45% of (v)(a) $____________
</TABLE>
141
<PAGE> 150
<TABLE>
<S> <C>
(c) aggregate cost of land acquired
with existing improvements to be
substantially demolished $____________
(d) 45% of (v)(c) $____________
(e) Net Operating Income for the 12
month period ending on the last day
of the month just ended, from each
Eligible Property not subject to a
Mortgage consisting of land acquired
with existing improvements which are
to be substantially demolished, so
long as such Eligible Property was
on average at least 50% economically
occupied during such 12 month period
and demolition of such improvements
has not commenced $____________
(f) product of 5.71429 times (v)(e) $____________
(g) greater of (v)(d) and (v)(f) $____________
(h) sum of (v)(b) plus (v)(g) $____________
(i) sum of (i)(b), plus (ii)(b), plus
(iii)(b), plus (iv)(b) $____________
(j) 33% of (v)(i) $____________
(k) lesser of (v)(h), $25,000,000
and (v)(j) $____________
(vi) (a) outstanding Debt of the Borrower and the
Guarantor (other than the Loans and any Debt
owing to the
Borrower or the Guarantor) which
is not secured by a Lien $____________
(b) commitments (other than the Commitments) to
the Borrower and the Guarantor, available to
be advanced, to fund Debt of the type
described in (vi)(a) $____________
(c) greater of (vi)(a) and (vi)(b) $____________
</TABLE>
142
<PAGE> 151
BORROWING BASE (sum of (i)(b), (ii)(b), (iii)(b),
(iv)(e) and (v)(k), less (vi)(c)) $____________
POST APARTMENT HOMES, L.P.(SEAL)
By: Post Properties, Inc., its sole
general partner
By:
-------------------------------
[Name and title of
Executive Officer]
143
<PAGE> 152
EXHIBIT J
MONEY MARKET QUOTE REQUEST
Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Money Market Quote Request
This Money Market Quote Request is given in accordance with
Section 2.03 of the Amended and Restated Credit Agreement (as amended or
modified from time to time, the "Amended and Restated Credit Agreement") dated
as of April 9, 1997 among POST APARTMENT HOMES, L.P., the Banks from time to
time parties thereto, and FIRST UNION NATIONAL BANK OF GEORGIA, as Co-Agent, and
WACHOVIA BANK OF GEORGIA, N.A., as Administrative Agent. Terms defined in the
Amended and Restated Credit Agreement are used herein as defined therein.
The Borrower hereby requests that the Administrative Agent obtain
quotes for a Money Market Borrowing or Borrowings based upon the following:
1. The proposed date of the Money Market Borrowing(s)
shall be ______________, 19_____ (the "Money Market
Borrowing Date").(1)*
2. The aggregate amount of the Money Market Borrowing(s)
shall be $_____________.(2)
3. The Stated Maturity Date(s) applicable to the Money
Market Borrowing shall be _______ days [_______ days and
_______ days, respectively].(3)
- ----------
* All numbered footnotes appear on the last page of this
Exhibit J.
144
<PAGE> 153
Very truly yours,
POST APARTMENT HOMES, L.P.
By: Post Properties, Inc. its
sole general partner
By:
---------------------------
[President or other
authorized designee]
- ----------
(1) The date must be a Euro-Dollar Business Day.
(2) The amount of the Money Market Borrowing is subject to Section 2.03(a)
and (b).
(3) The Stated Maturity Dates are subject to Section 2.03(b)(iii). The
Borrower may request that up to 3 different Stated Maturity Dates be
applicable to any Money Market Borrowing, provided that (i) each such
Stated Maturity Date shall be deemed to be a separate Money Market
Quote Request and (ii) the Borrower shall specify the amounts of such
Money Market Borrowing to be subject to each such different Stated
Maturity Date.
145
<PAGE> 154
EXHIBIT K
MONEY MARKET QUOTE
Wachovia Bank of Georgia, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Money Market Quote to __________________________
This Money Market Quote is given in accordance with Section
2.03(c)(ii) of the Amended and Restated Credit Agreement (as amended or modified
from time to time, the "Amended and Restated Credit Agreement") dated as of
April 9, 1997 among POST APARTMENT HOMES, L.P. (the "Borrower"), the Banks from
time to time parties thereto, FIRST UNION NATIONAL BANK OF GEORGIA, as Co-Agent,
and WACHOVIA BANK OF GEORGIA, N.A., as Administrative Agent. Terms defined in
the Amended and Restated Credit Agreement are used herein as defined therein.
In response to the Borrower's Money Market Quote Request dated
, 19 , we hereby make the following Money Market Quote on the following terms:
1. Quoting Bank:
2. Person to contact
at Quoting Bank:
3. Date of Money Market Borrowing:1*
4. We hereby offer to make Money Market Loan(s) in the following
maximum principal amounts for the following Interest Periods and at the
following rates:
<TABLE>
<CAPTION>
Maximum Stated
Principal Maturity
Amount(2) Date (3) Rate Per Annum(4)
- --------- -------- -----------------
<S> <C> <C>
</TABLE>
- ----------
* All numbered footnotes appear on the last page of this Exhibit K.
146
<PAGE> 155
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
Amended and Restated Credit Agreement, irrevocably obligate(s) us to make the
Money Market Loan(s) for which any offer(s) [is] [are] accepted, in whole or in
part (subject to the last sentence of Section 2.03(c)(i) of the Amended and
Restated Credit Agreement).
Very truly yours,
[Name of Bank]
Dated: By:
--------------------- ----------------------------
Authorized
Officer
- --------------------------
(1) As specified in the related Money Market Quote Request.
147
<PAGE> 156
(2) The principal amount bid for each Stated Maturity Date may not exceed
the principal amount requested. Money Market Quotes must be made for at
least $5,000,000 or a larger multiple of $250,000.
(3) The Stated Maturity Dates are subject to Section 2.03(b)(iii).
(4) Subject to Section 2.03(c)(ii)(C).
148
<PAGE> 157
Schedule 4.08
Subsidiaries
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation/Creation
- ---- --------------------------------------
<S> <C>
Post Services, Inc. Georgia
Post Asset Management, Inc. Georgia
Post Landscape Services, Inc. Georgia
RAM Partners, Inc. Georgia
Cumberland Lake, Inc. Georgia
A.T. Aviation, Inc. Georgia
Rocky Point Management, Inc. Georgia
Post Development Services Limited
Partnership Georgia
</TABLE>
149
<PAGE> 1
EXHIBIT 10.31
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"First Amendment") is dated as of the 17th day of December, 1997 among POST
APARTMENT HOMES, L.P. (the "Borrower"), WACHOVIA BANK, N.A., as Administrative
Agent (the "Administrative Agent"), First Union National Bank, as Co-Agent, and
WACHOVIA BANK, N.A., FIRST UNION NATIONAL BANK, SUNTRUST BANK, ATLANTA,
CORESTATES BANK, COMMERZBANK AG, ATLANTA AGENCY, BANK ONE, TEXAS, N.A. and TEXAS
COMMERCE BANK, N.A. (collectively, the "Banks");
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent, the Co-Agent and
Wachovia Bank, N.A. (formerly Wachovia Bank of Georgia, N.A.), First Union
National Bank (formerly First Union National Bank of Georgia), Suntrust Bank,
Atlanta, Corestates Bank and Commerzbank AG, Atlanta Agency, executed and
delivered that certain Amended and Restated Credit Agreement, dated as of April
9, 1997 (the "Credit Agreement");
WHEREAS, the Borrower has requested and the Administrative Agent, the
Co-Agent and the Banks have agreed to certain amendments to the Credit
Agreement, subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the above premises and
other good and valuable consideration, the receipt and sufficiency of which
hereby is acknowledged by the parties hereto, the Borrower, the Administrative
Agent, the Co-Agent and the Banks hereby covenant and agree as follows:
1. Definitions. Unless otherwise specifically defined herein, each term
used herein which is defined in the Credit Agreement shall have the meaning
assigned to such term in the Credit Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference contained in the
Credit Agreement shall from and after the date hereof refer to the Credit
Agreement as amended hereby.
<PAGE> 2
2. Global Amendment. The term "Guarantor", wherever used in the
Credit Agreement, hereby is deleted, and the term "Guarantors" hereby is
substituted therefor.
3. Amendments to Section 1.01. (A) The following new definitions are
hereby added in appropriate alphabetical order to Section 1.01 of the Credit
Agreement:
"Designated Bank" means a special purpose corporation sponsored
by its Designating Bank that is identified as such on the signature
pages hereto next to the caption "Designated Bank" as well as each
special purpose corporation sponsored by its Designating Bank that (i)
shall have become a party to this Agreement pursuant to Section
9.08(g), and (ii) is not otherwise a Bank.
"Designated Bank Note" means a Money Market Loan Note,
evidencing the obligation of the Borrower to repay Money Market Loans
made by a Designated Bank, and "Designated Bank Notes" means any and
all such Money Market Loan Notes to Designated Banks issued hereunder.
"Designating Bank" shall mean each Bank that is identified as
such on the signature pages hereto next to the caption "Designating
Bank" and immediately above the signature of its Designated Bank as
well as each Bank that shall designate a Designated Bank pursuant to
Section 9.08(g).
"Designation Agreement" means a designation agreement in
substantially the form of Exhibit L, entered into by a Bank and a
Designated Bank and acknowledged by the Borrower and the Administrative
Agent.
"First Amendment" means the First Amendment to Amended and
Restated Credit Agreement dated as of December 17, 1997, among the
Borrower, the Banks listed on the signature pages thereof, Wachovia
Bank, N.A., as Administrative Agent and First Union National Bank, as
Co- Agent.
"GP Sub" means Post GP Holdings, Inc., a Georgia corporation
which is a direct Subsidiary of PPI and the owner of a 1% general
partner interest in the Borrower.
2
<PAGE> 3
"Liquidity Bank" means for any Designated Bank, at any date of
determination, the collective reference to the financial institutions
which at such date are providing liquidity or credit support facilities
to or for the account of such Designated Bank to fund such Designated
Bank's obligations hereunder or to support the securities, if any,
issued by such Designated Bank to fund such obligations.
"LP Sub" means Post LP Holdings, Inc., a Georgia corporation
which is a direct Subsidiary of PPI and the owner (as of the date of
the First Amendment) of approximately 84% of the limited partner
interests in the Borrower.
(B) The definitions of "Bank", "Commitment", "Guaranty", "Lending
Office", "Money Market Loan Note" and Subsidiary Consolidated Total Assets" set
forth in Section 1.01 are deleted in their entirety and the following new
definitions thereof are substituted therefor:
"Bank" means each bank listed on the signature pages of the
First Amendment and the Designated Banks, if any; provided, however,
that the term "Bank" shall exclude each Designated Bank when used in
reference to a Syndicated Loan, the Commitments or terms relating to
the Syndicated Loans and the Commitments.
"Commitment" means, with respect to each Bank, (i) the amount
set forth opposite the name of such Bank on the signature pages of the
First Amendment, and (ii) as to any Bank which enters into any
Assignment and Acceptance (whether as transferor Bank or as Assignee
thereunder), the amount of such Bank's Commitment after giving effect
to such Assignment and Acceptance, in each case as such amount may be
reduced from time to time pursuant to Sections 2.07 and 2.08.
"Guarantor" means, individually and collectively, as the
context shall require, GP Sub, LP Sub and PPI.
"Lending Office" means, as to each Bank, its office located at
its address set forth on the signature pages of the First Amendment (or
identified on the signature pages hereof as its Lending Office) or such
other office as such Bank may hereafter designate as its Lending Office
by notice to the Borrower and the Administrative Agent.
3
<PAGE> 4
"Money Market Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-3, including any
Designated Bank Notes, evidencing the obligation of the Borrower to
repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Subsidiary Consolidated Total Assets" means Consolidated Total
Assets, but without including assets of the Borrower.
4. Amendment to Section 2.03. Section 2.03 of the Credit Agreement
hereby is amended by adding a new paragraph (g) at the end thereof, as follows:
(g) Money Market Loans by Designated Banks. For any Bank which
is a Designating Bank, any Money Market Loan to be made by such Bank
may from time to time be made by its Designated Bank in such Designated
Bank's sole discretion, and nothing herein shall constitute a
commitment to make Money Market Loans by such Designated Bank; provided
that if any Designated Bank elects not to, or fails to, make any such
Money Market Loan pursuant to a Money Market Quote that has been
accepted by the Borrower in accordance with the foregoing, its
Designating Bank hereby agrees that it shall make such Money Market
Loan pursuant to the terms hereof on the date such Money Market Loan is
otherwise required to be made to the Borrower hereunder.
5. Amendment to Section 5.07. Section 5.07 of the Credit agreement
hereby is amended by deleting it in its entirety, and substituting the following
therefor:
SECTION 5.07. Loans or Advances. Neither the Borrower, the
Guarantor nor any Subsidiary shall make loans or advances to any Person
except: (i) deposits required by government agencies or public
utilities; (ii) without duplication, loans and advances made to the
Borrower, the Guarantor or any Subsidiary; provided, that loans and
advances from the Borrower and the Guarantor to Subsidiaries, together
with Investments in Subsidiaries permitted by clause (C) of Section
5.09, may not exceed an aggregate amount equal to 5% of Consolidated
Total Assets at any time; (iii) loans or advances to directors,
officers and employees in the ordinary course of business in the
aggregate outstanding at any time not exceeding
4
<PAGE> 5
$2,500,000.00; and (iv) without duplication, other loans or advances
made in the ordinary course of business in the aggregate outstanding at
any time not exceeding $20,000,000 minus all amounts outstanding under
clause (iii) of this Section 5.07 and minus Investments made and
permitted pursuant to Section 5.09(D); provided that after giving
effect to the making of any loans, advances or deposits permitted by
clauses (i), (ii), (iii) or (iv), the Borrower will be in full
compliance with all the provisions of this Agreement.
6. Amendment to Section 5.09. Section 5.09 of the Credit
agreement hereby is amended by deleting it in its entirety, and
substituting the following therefor:
SECTION 5.09. Investments. Neither the Borrower nor
the Guarantor shall make Investments in any Person except: (A)
Investments in (i) direct obligations of the United States Government
maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Administrative
Agent, (iii) commercial paper rated A1 or the equivalent thereof by
Standard & Poor's Corporation or P1 or the equivalent thereof by
Moody's Investors Service, Inc. and in either case maturing within 9
months after the date of acquisition, (iv) tender bonds the payment of
the principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term certificates
of deposit are rated at least AA or the equivalent thereof by Standard
& Poor's Corporation and Aa or the equivalent thereof by Moody's
Investors Service, Inc. and/or (v) Investments in debt or equity
securities rated at least BBB+ or the equivalent thereof by Standard &
Poor's Corporation or at least Baa1 or the equivalent thereof by
Moody's Investors Service not exceeding an aggregate amount outstanding
at any time of $5,000,000; (B) Investments permitted by clauses (i),
(ii) and (iii) of Section 5.07 or by Section 5.08; (C) without
duplication, Investments made after July 26, 1995 in Subsidiaries in an
aggregate amount, together with the aggregate outstanding amount of
loans and advances from the Borrower and the Guarantor to Subsidiaries
permitted by clause (ii) of Section 5.07, not in excess of 5% of
Consolidated Total Assets; and (D) without duplication, other
Investments in an aggregate amount outstanding at any time not
exceeding $20,000,000 minus all
5
<PAGE> 6
amounts outstanding under clauses (iii) and (iv) of Section 5.07.
7. Amendment to Section 7.05. Section 7.05 of the Credit agreement
hereby is amended by deleting the proviso at the end of the second to last
sentence thereof, and substituting the following therefor:
provided that (i) no Bank shall be liable for any of the foregoing to
the extent they arise from the negligence or wilful misconduct of the
Administrative Agent and (ii) no Designated Bank shall be liable for
any payment under this Section 7.05 so long as, and to the extent that,
its Designating Bank makes such payments.
8. Amendment to Section 9.01. Section 9.01 of the Credit Agreement
hereby is amended by deleting the word "hereof" in the fifth line thereof, and
substituting therefor the words "of the First Amendment".
9. Amendment to Section 9.06. Section 9.06 of the Credit greement
hereby is amended by adding thereto a new paragraph (c), as follows:
(c) Each Designated Bank hereby appoints its
Designating Bank as such Designated Bank's agent and attorney in fact
and grants to its Designating Bank an irrevocable power of attorney,
coupled with an interest, to receive payments made for the benefit of
such Designated Bank under the Credit Agreement, to deliver and receive
all communications and notices under this Agreement and other Loan
Documents and to exercise on such Designated Bank's behalf all rights
to vote and to grant and make approvals, waivers, consents, releases
and amendments to or under this Agreement or the other Loan Documents.
Any document executed by such agent on such Designated Bank's behalf in
connection with this Agreement or the other Loan Documents shall be
binding on such Designated Bank. The Borrower, the Administrative
Agent, the Co-Agent and each of the Banks may rely on and are
beneficiaries of the preceding provisions.
10. Amendment to Section 9.08. Section 9.08 of the Credit agreement
hereby is amended by adding thereto a new paragraph (g), as follows:
6
<PAGE> 7
(g) Any Bank may at any time designate not more than
one Designated Bank to fund Money Market Loans on behalf of such
Designating Bank subject to the terms of this Section 9.08(g), and the
provisions of Section 9.08(c) shall not apply to such designation. No
Bank may have more than one Designated Bank at any time. Such
designation may occur either by the execution of the signature pages of
the First Amendment by such Bank and Designated Bank next to the
appropriate "Designating Bank" and "Designated Bank" captions, or by
execution by such parties of a Designation Agreement subsequent to the
date of the First Amendment; provided, that any Bank and its Designated
Bank executing the signatures pages of the First Amendment as
"Designating Bank" and "Designated Bank", respectively, on the date
hereof shall be deemed to have executed a Designation Agreement, and
shall be bound by the respective representations, warranties and
covenants contained therein, and such designation shall be conclusively
deemed to be acknowledged by the Borrower and the Administrative Agent.
The parties to each such designation occurring subsequent to the
execution date hereof shall execute and deliver to the Administrative
Agent and the Borrower for their acknowledgment a Designation
Agreement. Upon such receipt of an appropriately completed Designation
Agreement executed by a Designating Bank and a designee representing
that it is a Designated Bank and acknowledged by the Borrower, the
Administrative Agent will acknowledge such Designation Agreement and
will give prompt notice thereof to the Borrower and the other Banks,
whereupon, (i) the Borrower shall execute and deliver to the
Designating Bank a Designated Bank Note payable to the order of the
Designated Bank, (ii) from and after the effective date specified in
the Designation Agreement, the Designated Bank shall become a party to
this Agreement with a right to make Money Market Loans on behalf of its
Designating Bank pursuant to Section 2.03(g), and (iii) the Designated
Bank shall not be required to make payments with respect to any
obligations in this Agreement except to the extent of excess cash flow
of such Designated Bank which is not otherwise required to repay
obligations of such Designated Bank which are then due and payable;
provided, however, that regardless of such designation and assumption
by the Designated Bank, the Designating Bank shall be and remain
obligated to the Borrower, the Administrative Agent, the Co-Agent and
the Banks for each and every obligation of the Designating Bank and its
related Designated Bank with respect to this
7
<PAGE> 8
Agreement, including, without limitation, any indemnification
obligations under Section 7.05 and any sums otherwise payable to the
Borrower by the Designated Bank. Each Designating Bank shall serve as
the administrative agent of its Designated Bank and shall on behalf of
its Designated Bank: (i) receive any and all payments made for the
benefit of such Designated Bank and (ii) give and receive all
communications and notices and take all actions hereunder, including,
without limitation, votes, approvals, waivers, releases, consents and
amendments under or relating to this Agreement and the other Loan
Documents. Any such notice, communication, vote, approval, waiver,
consent or amendment shall be signed by a Designating Bank as
administrative agent for its Designated Bank and need not be signed by
such Designated Bank on its own behalf. The Borrower, the
Administrative Agent, the Co-Agent and the Banks may rely thereon
without any requirement that the Designated Bank sign or acknowledge
the same. No Designated Bank may assign or transfer all or any portion
of its interest hereunder or under any other Loan Document, other than
via an assignment to its Designating Bank or Liquidity Bank (but any
assignment to a Liquidity Bank shall not curtail or affect the
appointment or rights of the Designating Bank pursuant to Section
9.06(c) or Section 4 of the Designation Agreement, which appointment
and rights are irrevocable), if any, or otherwise in accordance with
the provisions of Section 2.03(g).
11. Amendment to Section 9.09. Section 9.09 of the Credit agreement
hereby is amended by (i) deleting the word "and" immediately before clause
(viii) thereof and (ii) adding a new clause (ix) thereto, immediately after
clause (viii) and before the first proviso, as follows:
and (ix) by any Designated Bank to any rating agency, commercial paper
dealer, or provider of a surety, guaranty or credit or liquidity
enhancement to such Designated Bank which has agreed in writing to be
bound by the provisions of this Section 9.09 and to use such
information solely for purposes of evaluating the creditworthiness of
the Borrower and the Guarantor and their abilities to perform their
obligations under this Agreement and the other Loan Documents.
8
<PAGE> 9
12. New Section 9.18. A new Section 9.18 hereby is added
to the Credit Agreement following Section 9.17 thereof, as follows:
9.18 No Bankruptcy Proceedings. Each of the Borrower, the
Banks, the Administrative Agent and the Co-Agent agrees that it will
not institute against any Designated Bank or join any other Person in
instituting against any Designated Bank any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the
payment in full of the latest maturing commercial paper note issued by
such Designated Bank.
13. Replacement of Form of Money Market Loan Note. Exhibit
A-3 to the Credit Agreement hereby is deleted, and Exhibit A-3 hereto is
substituted therefor.
14. Amendment to Exhibit F. Exhibit F to the Credit Agreement (the
Compliance Certificate) hereby is amended by deleting paragraphs 5 and 7
thereof, and substituting therefor paragraphs 5 and 7 below:
5. Loans and Advances (Section 5.07)
Neither the Borrower, the Guarantor nor any Subsidiary shall
make loans or advances to any Person except: (i) deposits
required by government agencies or public utilities; (ii)
without duplication, loans and advances made to the Borrower,
the Guarantor or any Subsidiary; provided, that loans and
advances from the Borrower and the Guarantor to Subsidiaries,
together with Investments in Subsidiaries permitted by clause
(e) of Section 5.09, may not exceed an aggregate amount equal
to 5% of Consolidated Total Assets at any time; (iii) loans or
advances to directors, officers and employees in the ordinary
course of business in the aggregate outstanding at any time
not exceeding $2,500,000.00; and (iv) without duplication,
other loans or advances made in the ordinary course of
business in the aggregate outstanding at any time not
exceeding $20,000,000 minus all amounts outstanding under
clause (iii) of this Section 5.07 and minus Investments made
and permitted pursuant to Section 5.09(D); provided that after
giving effect to the making of any loans, advances or deposits
permitted by clauses (i), (ii),
9
<PAGE> 10
(iii) or (iv), the Borrower will be in full compliance with
all the provisions of this Agreement.
<TABLE>
<S> <C>
(a) To Subsidiaries $
----------
(b) Sum of (a) and amount $
in paragraph 7(b) below ----------
(c) Consolidated Total Assets
Schedule 2 $
----------
(d) 5% of (c) $
----------
Limitation (b) may not exceed (d)
(e) To directors, officers and
employees $
----------
Limitation $2,500,000
(f) other $
----------
Limitation $ (1)
----------
</TABLE>
7. Investments (Section 5.09)
Neither the Borrower nor the Guarantor shall make Investments
in any Person except: (A) Investments in (i) direct
obligations of the United States Government maturing within
one year, (ii) certificates of deposit issued by a commercial
bank whose credit is satisfactory to the Administrative Agent,
(iii) commercial paper rated A1 or the equivalent thereof by
Standard & Poor's Corporation or P1 or the equivalent thereof
by Moody's Investors Service, Inc. and in either case maturing
within 9 months after the date of acquisition, (iv) tender
bonds the payment of the principal of and interest on which is
fully supported by a letter of credit issued by a United
States bank whose long-term certificates of deposit are rated
at least AA or the equivalent thereof by Standard & Poor's
- --------------
(1)$20,000,000 less amount in (e) of this paragraph 5 and amount in line (f) of
paragraph 7 below.
10
<PAGE> 11
Corporation and Aa or the equivalent thereof by Moody's
Investors Service, Inc. and/or (v) Investments in debt or
equity securities rated at least BBB+ or the equivalent
thereof by Standard & Poor's Corporation or at least Baa1 or
the equivalent thereof by Moody's Investors Service not
exceeding an aggregate amount outstanding at any time of
$5,000,000; (B) Investments permitted by clauses (i), (ii) and
(iii) of Section 5.07 or by Section 5.08; (C) without
duplication, Investments made after July 26, 1995 in
Subsidiaries in an aggregate amount, together with the
aggregate outstanding amount of loans and advances from the
Borrower and the Guarantor to Subsidiaries permitted by clause
(ii) of Section 5.07, not in excess of 5% of Consolidated
Total Assets; and (D) without duplication, other Investments
in an aggregate amount outstanding at any time not exceeding
$20,000,000 minus all amounts outstanding under clauses (iii)
and (iv) of Section 5.07.
<TABLE>
<S> <C>
(a) debt or equity securities rated $
at least BBB+ or Baa1 ---------
Limitation $5,000,000
(b) Investments in Subsidiaries $
after July 26, 1995 ---------
(c) Sum of (b) and amount $
in paragraph 5(a) above ---------
(d) Consolidated Total Assets
Schedule 2 $
---------
(e) 5% of (d) $
---------
Limitation (c) may not exceed (e)
(f) Other $
---------
Limitation $ (2)
---------
</TABLE>
- ---------------
(2)$20,000,000 less amount in (e) of this paragraph 5 and amount in line (f) of
paragraph 7 below.
11
<PAGE> 12
15. Replacement of Form of Guaranty. Exhibit H to the Credit Agreement
hereby is deleted, and Exhibit H hereto is substituted therefor.
16. New Exhibit L. Exhibit L (form of Designation Agreement) hereto
hereby is added to the Credit Agreement as Exhibit L thereto.
17. Restatement of Representations and Warranties. The Borrower hereby
restates and renews each and every representation and warranty heretofore made
by it in the Credit Agreement and the other Loan Documents as fully as if made
on the date hereof and with specific reference to this First Amendment and all
other loan documents executed and/or delivered in connection herewith, except to
the extent otherwise disclosed pursuant to Section 5.01(c) or (d) of the Credit
Agreement.
18. Effect of Amendment. Except as set forth expressly hereinabove, all
terms of the Credit Agreement and the other Loan Documents shall be and remain
in full force and effect, and shall constitute the legal, valid, binding and
enforceable obligations of the Borrower. The amendments contained herein shall
be deemed to have prospective application only, unless otherwise specifically
stated herein.
19. Ratification. The Borrower hereby restates, ratifies and reaffirms
each and every term, covenant and condition set forth in the Credit Agreement
and the other Loan Documents effective as of the date hereof.
20. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
21. Section References. Section titles and references used in this
First Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto
evidenced hereby.
22. No Default. To induce the Administrative Agent, the Co-Agent and
the Banks to enter into this First Amendment and to continue to make advances
pursuant to the Credit Agreement, the Borrower hereby acknowledges and agrees
that, as of the date
12
<PAGE> 13
hereof, and after giving effect to the terms hereof, there exists (i) no Default
or Event of Default and (ii) no right of offset, defense, counterclaim, claim or
objection in favor of the Borrower arising out of or with respect to any of the
Loans or other obligations of the Borrower owed to the Banks under the Credit
Agreement.
23. Further Assurances. The Borrower agrees to take such further
actions as the Administrative Agent shall reasonably request in connection
herewith to evidence the amendments herein contained to the Borrower.
24. Governing Law. This First Amendment shall be governed by and
construed and interpreted in accordance with, the laws of the State of Georgia.
25. Conditions Precedent. This First Amendment shall become effective
only upon execution and delivery to the Administrative Agent:
(i) by each of the parties hereto, of this First Amendment;
(ii) by the Borrower, of Syndicated Loan Notes payable to Bank One,
Texas, N.A. and Texas Commerce Bank, N.A., respectively, each in the original
principal amount of $10,000,000;
(iii) by the Borrower, of new Money Market Loan Notes in substantially
the form of Exhibit A-3 hereto in favor of the Banks (including a Designated
Bank Note in favor of Four Winds Corporation, as the Designated Bank of
Commerzbank AG, Atlanta Agency);
(iv) by the Guarantors, of the Guaranty in substantially the
form of Exhibit H;
(v) of an opinion letter of King & Spalding, counsel for the Borrower
and the Guarantors, dated as of the date hereof, substantially in the form
delivered on the Closing Date of the Credit Agreement, but addressing the First
Amendment Loan Documents and covering such additional matters relating to the
transactions contemplated hereby as the Administrative Agent or any Bank may
reasonably request;
(vi) of a certificate, dated as of the date hereof, signed by an
Executive Officer (other than the Secretary) to the effect
13
<PAGE> 14
that (a) no Default has occurred and is continuing on the date hereof and (b)
the representations and warranties of the Borrower contained in Article IV are
true on and as of the date hereof, except to the extent otherwise disclosed
pursuant to Section 5.01(c) or (d) of the Credit Agreement; and
(vii) of all other documents which the Administrative Agent or any Bank
may reasonably request relating to the existence of the Borrower and the
Guarantors, the corporate authority for and the validity of this First
Amendment, the new Syndicated Loan Notes described in clause (ii) above, the new
Money Market Loan Notes described in clause (iii) above and the Guaranty
(collectively, the "First Amendment Loan Documents"), and any other matters
relevant hereto, all in form and substance satisfactory to the Administrative
Agent, including, without limitation, certificates of incumbency of the General
Partner and each of the Guarantors, signed by the Secretary or an Assistant
Secretary of the General Partner and such Guarantor, certifying as to the names,
true signatures and incumbency of the officer or officers of the General Partner
and such Guarantor authorized to execute and deliver the First Amendment Loan
Documents on behalf of the Borrower or such Guarantor, and certified copies of
the following items:
(a) the Borrower's Certificate of Limited Partnership;
(b) the Borrower's Partnership Agreement,
(c) for the General Partner and each of the Guarantors, its
Certificate of Incorporation,
(d) for the General Partner and each of the Guarantor, its
Bylaws,
(e) for the Borrower, the General Partner and each of the
Guarantors, a certificate of the Secretary of State of Georgia as to
the valid existence of the Borrower, the General Partner or such
Guarantor as a Georgia limited partnership or corporation, as the case
may be, and
(f) the action taken by the Board of Directors of the General
Partner and each of the Guarantors authorizing the execution, delivery
and performance of First Amendment Loan Documents to which it is a
party.
14
<PAGE> 15
IN WITNESS WHEREOF, the Borrower, the Administrative Agent, the
Co-Agent and each of the Banks has caused this First Amendment to be duly
executed, under seal, by its duly authorized officer as of the day and year
first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post GP Holdings, Inc., its
sole general partner
By: /s/ Timothy A. Peterson
----------------------------------------
Timothy A. Peterson
Vice President
Post Apartment Homes, L.P.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339-3363
Attention: John T. Glover,
President
Telecopier number: 404-951-1825
Confirmation number: 404-850-4400
COMMITMENTS WACHOVIA BANK, N.A.,
as Administrative Agent and
as a Bank (SEAL)
$60,000,000
By: /s/
----------------------------------------
Title:
Lending Office
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Telecopier number: 404-332-4005
Confirmation number: 404-332-6971
15
<PAGE> 16
FIRST UNION NATIONAL
BANK, as
Co-Agent and as a Bank (SEAL)
$60,000,000 By: /s/
----------------------------------------
Title:
Lending Office
First Union National Bank
999 Peachtree Street, N.E.
Suite 610
Atlanta, GA 30309
Attention: Ms. Susan T. Miller
Telecopier number: 404-225-4113
Confirmation number: 404-225-4030
SUNTRUST BANK, ATLANTA (SEAL)
$30,000,000 By: /s/
----------------------------------------
Title:
Lending Office
SunTrust Bank, Atlanta
25 Park Place, MC-081
Atlanta, GA 30303
Attention: Mr. W. John Neill
Telecopier number: 404-827-6774
Confirmation number: 404-588-8248
16
<PAGE> 17
CORESTATES BANK (SEAL)
$20,000,000 By: /s/
------------------------------------------------
Title:
Lending Office
CoreStates Bank
Real Estate Department
1339 Chestnut Street
Philadelphia, PA 19107-7618
Attention: Mr. Glen Gallager
Telecopier number: 215-786-6381
Confirmation number: 215-786-4221
COMMERZBANK AG, ATLANTA AGENCY
(SEAL)
$10,000,000 By: /s/
------------------------------------------------
Title:
By: /s/
------------------------------------------------
Title:
Lending Office
Commerzbank AG, Atlanta Agency
1230 Peachtree Street
35th Floor
Atlanta, GA 30309
Attention: Mr. Mark Wortman
Telecopier number: 404-888-6539
Confirmation number: 404-888-6500
Designating Bank with respect to
Four Winds Funding Corporation
FOUR WINDS FUNDING CORPORATION
(SEAL)
$0 By: Commerzbank AG, New York Branch,
as Administrator and Attorney-in-
Fact
By: /s/
------------------------------------------------
Title:
By: /s/
------------------------------------------------
Title:
17
<PAGE> 18
Lending Office
Four Winds Funding Corporation
c/o Commerzbank AG, New York Branch
2 World Financial Center
New York, New York 10281-1050
Attention: Mr. Howard Thompson
Telecopier number: 212-266-7661
Confirmation number: 212-266-7474
Designated Bank of Commerzbank AG,
Atlanta Agency
BANK ONE, TEXAS, N.A. (SEAL)
$10,000,000 By: /s/
-----------------------------------------------
Title:
Lending Office
Bank One, Texas, N.A.
1717 Main Street
Dallas, Texas 75201
Attention: Mr. Dale Renner
Telecopier number: 214-290-2275
Confirmation number: 214-290-2891
TEXAS COMMERCE BANK, N.A. (SEAL)
$10,000,000 By: /s/
-----------------------------------------------
Title:
Lending Office
Texas Commerce Bank, N.A.
2200 Ross Avenue
Dallas, Texas 75201
Attention: Mr. Joseph F. Griffith
Telecopier number: 214-965-2290
Confirmation number: 214-965=2790
TOTAL COMMITMENTS
$200,000,000
18
<PAGE> 19
EXHIBIT A-3
MONEY MARKET LOAN NOTE
As of December 17, 1997
For value received, POST APARTMENT HOMES, L.P., a Georgia
limited partnership (the "Borrower"), promises to pay to the order of , a
_______________ (the "Bank"), for the account of its Lending Office, the
principal sum of ONE HUNDRED MILLION AND NO/100 DOLLARS ($100,000,000), or such
lesser amount as shall equal the unpaid principal amount of each Money Market
Loan made by the Bank to the Borrower pursuant to the Amended and Restated
Credit Agreement referred to below, on the dates and in the amounts provided in
the Amended and Restated Credit Agreement. The Borrower promises to pay interest
on the unpaid principal amount of this Money Market Loan Note on the dates and
at the rate or rates provided for in the Amended and Restated Credit Agreement
referred to below. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Amended and Restated Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time pursuant
to the Amended and Restated Credit Agreement.
All Money Market Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto, and
all repayments of the principal thereof shall be recorded by the Bank and, prior
to any transfer hereof, endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Amended and
Restated Credit Agreement.
This Money Market Loan Note is one of the Money Market Loan
Notes referred to in the Amended and Restated Credit Agreement dated as of April
9, 1997 among the Borrower, the Banks listed on the signature pages thereof,
Wachovia Bank, N.A. (formerly Wachovia Bank of Georgia, N.A.), as Administrative
Agent (as amended on even date herewith and as the same may hereafter be amended
and modified from time to time, the "Amended and Restated Credit Agreement").
Terms defined in the Amended and Restated Credit Agreement are used herein with
the same meanings. Reference is made to the Amended and Restated Credit
Agreement for provisions for the optional and mandatory prepayment and the
repayment hereof and the acceleration of the maturity hereof.
19
<PAGE> 20
IN WITNESS WHEREOF, the Borrower has caused this Money Market
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
POST APARTMENT HOMES, L.P. (SEAL)
By: Post GP Holdings, Inc., its sole general
partner
By:
-------------------------------------
Timothy A. Petersen
Executive Vice President
20
<PAGE> 21
Money Market Loan Note (cont'd)
<TABLE>
<CAPTION>
MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount Amount of Stated
Interest of Principal Maturity Notation
Date Rate Loan Repaid Date Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
EXHIBIT H
GUARANTY
THIS GUARANTY (this "Guaranty") is made December 17, 1997, by
POST PROPERTIES, INC., POST GP HOLDINGS, INC. and POST LP HOLDINGS, INC., each a
Georgia corporation (each individually a "Guarantor", and collectively, the
"Guarantors") in favor of the Administrative Agent, for the ratable benefit of
the Banks, under the Amended and Restated Credit Agreement referred to below;
W I T N E S S E T H
WHEREAS, POST APARTMENT HOMES, L.P., a Georgia limited
partnership (the "Borrower"), FIRST UNION NATIONAL BANK (formerly First Union
National Bank of Georgia), as Co-Agent (the "Co-Agent") and WACHOVIA BANK, N.A.
(formerly Wachovia Bank of Georgia, N.A.), as Administrative Agent (the
"Administrative Agent"), and certain other Banks from time to time party thereto
have entered into a certain Amended and Restated Credit Agreement dated as of
April 9, 1997 (as amended as of even date herewith and as it may be amended or
modified further from time to time, the "Amended and Restated Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit to be made by the Banks to the Borrower which will the
benefit the Guarantors;
WHEREAS, it is required by the First Amendment that the
Guarantors execute and deliver this Guaranty whereby the Guarantors shall,
unconditionally and jointly and severally, guarantee the payment when due of all
principal, interest and other amounts that shall be at any time payable by the
Borrower under the Amended and Restated Credit Agreement, the Notes and the
other Loan Documents; and
WHEREAS, in consideration of the direct and indirect ownership
interests of the Guarantors in the Borrower and the financial and other support
that the Borrower has provided, and such financial and other support as the
Borrower may in the future provide, to the Guarantors, whether directly or
indirectly, and in order to induce the Banks, the Co-Agent and the
Administrative Agent to enter into the Amended and Restated Credit Agreement,
the Guarantors are willing to guarantee the obligations of the Borrower under
the Amended and Restated Credit Agreement, the Notes, and the other Loan
Documents;
22
<PAGE> 23
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Amended and
Restated Credit Agreement and not otherwise defined herein have, as used herein,
the respective meanings provided for therein.
SECTION 2. Representations and Warranties. The Guarantors
incorporate herein by reference as fully as if set forth herein all of the
representations and warranties pertaining to the Guarantors contained in Article
IV of the Amended and Restated Credit Agreement (which representations and
warranties shall be deemed to have been renewed by the Guarantors upon each
Borrowing under the Amended and Restated Credit Agreement), except to the extent
otherwise disclosed to the Banks pursuant to Section 5.01(c) or (d) of the
Credit Agreement).
SECTION 3. Covenants. The Guarantors covenant that, so long as
any Bank has any Commitment outstanding under the Amended and Restated Credit
Agreement or any amount payable under the Amended and Restated Credit Agreement
or any Note shall remain unpaid, the Guarantors will fully comply with those
covenants set forth in Article V of the Amended and Restated Credit Agreement
pertaining to the Guarantors, and the Guarantors incorporate herein by reference
as fully as if set forth herein all of such covenants.
SECTION 4. The Guaranty. The Guarantors hereby unconditionally
and jointly and severally guarantee the full and punctual payment (whether at
stated maturity, upon acceleration or otherwise) of the principal of and
interest on each Note issued by the Borrower pursuant to the Amended and
Restated Credit Agreement, and the full and punctual payment of all other
amounts payable by the Borrower under the Amended and Restated Credit Agreement
(including, without limitation, all Syndicated Loans, Swing Loans and Money
Market Loans and interest thereon, and all compensation and indemnification
amounts and fees payable pursuant to the Amended and Restated Credit Agreement
and the Administrative Agent's Letter Agreement (all of the foregoing
obligations being referred to collectively as the "Guaranteed Obligations").
Upon failure by the Borrower to pay punctually any such amount, each Guarantor
agrees that it shall forthwith on demand pay the amount not so paid at the place
and in the manner specified in the Amended and Restated Credit Agreement, the
relevant Note or the relevant Loan Document, as the case may be.
SECTION 5. Guaranty Unconditional. The obligations of the
Guarantors hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
23
<PAGE> 24
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Borrower under
the Amended and Restated Credit Agreement, any Note, or any other
Loan Document, by operation of law or otherwise or any obligation of
any other guarantor of any of the Guaranteed Obligations;
(ii) any modification or amendment of or supplement
to the Amended and Restated Credit Agreement, any Note, or any other
Loan Document;
(iii) any release, nonperfection or invalidity of any
direct or indirect security for any obligation of the Borrower under
the Amended and Restated Credit Agreement, any Note, any Loan
Document, or any obligations of any other Guarantor or guarantor of
any of the Guaranteed Obligations;
(iv) any change in the partnership structure or
ownership of the Borrower or corporate structure or ownership of any
of the Guarantors, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Borrower or any of the
Guarantors, or any of their assets or any resulting release or
discharge of any obligation of the Borrower or any of the Guarantors;
(v) the existence of any claim, setoff or other
rights which any of the Guarantors may have at any time against the
Borrower, the Administrative Agent, the Co-Agent, any Bank or any
other Person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to
or against the Borrower for any reason related to the Amended and
Restated Credit Agreement, any other Loan Document, or any other
guaranty, or any provision of applicable law or regulation purporting
to prohibit the payment by the Borrower of the principal of or
interest on any Note or any other amount payable by the Borrower
under the Amended and Restated Credit Agreement, the Notes, or any
other Loan Document; or
(vii) any other act or omission to act or delay of
any kind by the Borrower, the Co-Agent, any Bank or any other Person
or any other circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or equitable
discharge of the Guarantors' obligations hereunder.
24
<PAGE> 25
SECTION 6. Discharge Only Upon Payment In Full; Reinstatement
In Certain Circumstances. The Guarantors' obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full and the Commitments under the Amended and Restated Credit Agreement shall
have terminated or expired. If at any time any payment of the principal of or
interest on any Note or any other amount payable by the Borrower under the
Amended and Restated Credit Agreement or any other Loan Document is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, the Guarantors' obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
SECTION 7. Waiver of Notice by the Guarantors. Each of the
Guarantors irrevocably waives, acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for herein,
as well as any requirement that at any time any action be taken by any Person
against the Borrower or any other Person.
SECTION 8. Stay of Acceleration. If acceleration of the time
for payment of any amount payable by the Borrower under the Amended and Restated
Credit Agreement, any Note or any other Loan Document is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Amended and Restated
Credit Agreement, any Note or any other Loan Document shall nonetheless be
payable by the Guarantors hereunder forthwith on demand by the Administrative
Agent made at the request of the Required Banks.
SECTION 9. Notices. All notices, requests and other
communications to any party hereunder shall be given or made by telecopier or
other writing and telecopied or mailed or delivered to the intended recipient at
its address or telecopier number set forth on the signature pages hereof or such
other address or telecopy number as such party may hereafter specify for such
purpose by notice to the Administrative Agent in accordance with the provisions
of Section 9.01 of the Amended and Restated Credit Agreement. Except as
otherwise provided in this Guaranty, all such communications shall be deemed to
have been duly given when transmitted by telecopier, or personally delivered or,
in the case of a mailed notice, 3 Domestic Business Days after such
communication is deposited in the mails with first class postage prepaid, in
each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by the
Administrative Agent, the Co-Agent or any Banks in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Guaranty, the
25
<PAGE> 26
Amended and Restated Credit Agreement, the Notes, and the other Loan Documents
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the
benefit of the Administrative Agent, the Co-Agent and the Banks and their
respective successors and assigns and in the event of an assignment of any
amounts payable under the Amended and Restated Credit Agreement, the Notes, or
the other Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty may not be assigned by the Guarantors without the prior written consent
of the Administrative Agent and the Required Banks, and shall be binding upon
the Guarantors and its respective successors and permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Guarantors and the Administrative Agent, with the
consent of the Required Banks.
SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF GEORGIA. EACH OF THE GUARANTORS AND THE
ADMINISTRATIVE AGENT HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY
GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH OF THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE GUARANTORS AND THE ADMINISTRATIVE AGENT HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by
the Guarantors hereunder shall be made without setoff or counterclaim and free
and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority pursuant
and subject to the provisions of Section 2.12(c) of the Amended and Restated
Credit Agreement, the terms of which are incorporated herein by reference as to
the Guarantors as fully as if set forth herein, and for such purposes, the
rights and obligations of the Borrower under such Section shall devolve to the
Guarantors as to payments required to be made by the Guarantors hereunder.
26
<PAGE> 27
IN WITNESS WHEREOF, each of the Guarantors has caused this
Guaranty to be duly executed, under seal, by its authorized officer as of the
date first above written.
POST PROPERTIES, INC. (SEAL)
By:
-------------------------------------
Timothy A. Petersen
Executive Vice President
Post Corporate Services
Address:
Post Properties, Inc.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339-3363
Attention: John T. Glover,
President
Telecopier number: 770-951-1825
Confirmation number: 770-850-4400
POST GP HOLDINGS, INC. (SEAL)
By:
-------------------------------------
Title:
Address:
Post GP Holdings, Inc.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339-3363
Attention: John T. Glover,
President
Telecopier number: 770-951-1825
Confirmation number: 770-850-4400
POST LP HOLDINGS, INC. (SEAL)
By:
-------------------------------------
Title:
Address:
Post LP Holdings, Inc.
3350 Cumberland Circle
Suite 2200
Atlanta, Georgia 30339-3363
Attention: John T. Glover,
President
Telecopier number: 770-951-1825
Confirmation number: 770-850-4400
27
<PAGE> 28
EXHIBIT L
Form of Designation Agreement
Dated __________________, _____
Reference is made to that certain Amended and Restated Credit
Agreement dated as of April 9, 1997 (as amended prior to the date hereof and as
it may hereafter be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") by and among Post Apartment Homes, L.P., as the
Borrower, the Banks parties thereto, Wachovia Bank, N.A. (formerly Wachovia Bank
of Georgia, N.A.), as Administrative Agent (the "Administrative Agent") and
First Union National Bank (formerly First Union National Bank of Georgia), as
Co- Agent. Terms defined in the Credit Agreement are used herein with the same
meaning.
[NAME OF DESIGNATING BANK] (the "Designating Bank") and [NAME OF
DESIGNEE] (the "Designee") agree as follows:
1. Pursuant to Section 9.08(g) of the Credit Agreement, the
Designating Bank hereby designates the Designee, and the Designee hereby accepts
such designation, to have a right to make Money Market Loans pursuant to Section
2.03(g) of the Credit Agreement. Any assignment by Designating Bank to Designee
of its rights to make a Money Market Loan pursuant to such Section 2.03(g) shall
be effective at the time of the funding of such Money Market Loan and not before
such time.
2. Except as set forth in Section 7, below, the Designating Bank
makes no representation or warranty and assumes no responsibility pursuant to
this Designation Agreement with respect to (a) any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Loan Document or any other instrument and document furnished pursuant
thereto and (b) the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under any Loan Document or
any other instrument or document furnished pursuant thereto.
3. The Designee (a) confirms that it has received a copy of each Loan
Document, together with copies of the financial statements referred to in
Sections 4.04 and 5.01(a) and (b) (for periods for which such financial
statements are available) of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Designation Agreement; (b) agrees that it will
independently and without reliance upon the Administrative Agent, the Co-Agent,
the Designating Bank or any other Bank and based on such documents and
28
<PAGE> 29
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under any Loan Document; (c)
confirms that it is a Designated Bank; (d) appoints and authorizes the
Administrative Agent to take such action as the Administrative Agent on its
behalf and to exercise such powers and discretion under any Loan Document as are
delegated to the Administrative Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; and (e) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of any Loan Document are required to be performed by it as a Bank.
4. The Designee hereby appoints the Designating Bank as Designee's
agent and attorney in fact and grants to the Designating Bank an irrevocable
power of attorney, coupled with an interest, to receive payments made for the
benefit of Designee under the Credit Agreement, to deliver and receive all
communications and notices under the Credit Agreement and other Loan Documents
and to exercise on Designee's behalf all rights to vote and to grant and make
approvals, waivers, consents, releases and amendments to or under the Credit
Agreement or other Loan Documents. Any document executed by such agent on the
Designee's behalf in connection with the Credit Agreement or other Loan
Documents shall be binding on the Designee. The Borrower, the Administrative
Agent, the Co-Agent and each of the Banks may rely on and are beneficiaries of
the preceding provisions.
5. Following the execution of this Designation Agreement by the
Designating Bank and its Designee, it will be delivered to the Borrower for
acknowledgment and to the Administrative Agent for acknowledgment and recording
by the Administrative Agent. The effective date for this Designation Agreement
(the "Effective Date") shall be the date of acknowledgment hereof by the
Administrative Agent, unless otherwise specified on the signature page thereto.
6. The Designating Bank and, by execution of their respective
acknowledgments below, the Borrower and the Administrative Agent, each hereby
(i) acknowledges that the Designee is relying on the non-petition provisions of
Section 9.18 of the Credit Agreement as agreed to by all signatories thereto and
(ii) reaffirms that it will not institute against the Designee or join any other
Person in instituting against the Designee any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any federal or state
bankruptcy or similar law for one year and done day after the payment in full of
the latest maturing commercial paper note issued by the Designee.
7. The Designating Bank unconditionally agrees to pay or reimburse
the Designee and save the Designee harmless against all liabilities,
obligations, losses, damages, penalties, actions,
29
<PAGE> 30
judgments, suits, costs, expenses or disbursements of any kind or mature
whatsoever which may be imposed or asserted by any of the parties to the Loan
Documents against the Designee, in its capacity as such, in any way relating to
or arising out of this Agreement or any other Loan Documents or any action taken
or omitted by the Designee hereunder or thereunder, provided that the
Designating Bank shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements if the same results from the Designee's gross
negligence or willful misconduct.
8. Upon such acceptance and recording by the Administrative Agent,
as of the Effective Date, the Designee shall be a party to the Credit Agreement
with a right to make Money Market Loans as a Designated Bank pursuant to Section
2.03(g) of the Credit Agreement and the rights and obligations of a Designated
Bank related thereto; provided, however, that the Designee shall not be required
to make payments with respect to such obligations except to the extent of excess
cash flow of the Designee which is not otherwise required to repay obligations
of the Designee Bank which are then due and payable. Notwithstanding the
foregoing, the Designating Bank shall be and remain obligated to the Borrower,
the Administrative Agent, the Co-Agent and the Banks for each and every of the
obligations of the Designee and the Designating Bank with respect to the Credit
Agreement, including, without limitation, any indemnification obligations under
Section 7.05 of the Credit Agreement and any sums otherwise payable to the
Borrower by the Designee.
9. This Designation Agreement shall be governed by and construed in
accordance with the laws of the State of [GEORGIA][NEW YORK][OTHER JURISDICTION
CHOSEN BY DESIGNATING BANK AND DESIGNATED BANK].
10. This Designation Agreement may be executed in any number of
counterparts and by different 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. Delivery of an executed
counterpart of a signature page to this Designation Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Designation Agreement.
IN WITNESS WHEREOF, the Designating Bank and the Designee intending
to be legally bound, have caused this Designation Agreement to be executed by
their officers thereunto duly authorized as of the date first above written.
[NAME OF DESIGNATING BANK]
as Designating Bank
30
<PAGE> 31
By:
Title:
[NAME OF DESIGNEE], as Designee
By:
Title:
Lending Office (and address for
notices):
Acknowledged this _____ day Acknowledged this _____ day
of ________________, ____ of ________________, ____
(the "Effective Date")
WACHOVIA BANK, N.A. POST APARTMENT HOMES, L.P.
as the Administrative Agent as the Borrower
By: By: Post GP Holdings, Title:
Inc., its sole
general partner
By:
-------------------------
Timothy A. Petersen
Executive Vice
President
31
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF POST PROPERTIES, INC.
<TABLE>
<CAPTION>
Name Incorporation
---- -------------
<S> <C>
1. Post Apartment Homes, L.P. Georgia
2. Post Services, Inc. Georgia
3. Post LP Holdings, Inc. Georgia
4. Post GP Holdings, Inc. Georgia
5. A.T. Aviation, Inc. Georgia
6. Post Landscape Services, Inc. Georgia
7. RAM Partners, Inc. Georgia
8. Post Asset Management, Inc. Georgia
9. Rocky Point Management, Inc. Georgia
10. Cumberland Lake, Inc. Georgia
11. Briarcliff Commercial Property, LLC Georgia
12. Armada Homes, Inc. Delaware
13. Post Development Services
Limited Partnership Georgia
14. Addison Circle Access, Inc. Delaware
15. Akard-McKinney Investment
Company, LLC Texas
16. Post Uptown, LLC Texas
17. Greenwood Residential, LLC Texas
18 Columbus Management Services, LLC Texas
19. Uptown Denver, LLC Colorado
20. Addison Circle One, Ltd. Texas
21. Addison Circle Two, Ltd. Texas
22. Post Mississippi Properties, LLC Texas
23. Post Knox Park, LLC Texas
24. Post Rice Lofts, LLC Texas
25. Rice Lofts, L.P. Texas
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-38725) of Post Properties, Inc. of our report
dated March 20, 1998 appearing on Page 32 of this Form 10-K.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-86674) of Post Properties, Inc. of our report
dated March 20, 1998 appearing on Page 32 of this Form 10-K.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-81772) of
Post Properties, Inc. of our report dated March 20, 1998 appearing on Page 32 of
this Form 10-K.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-39461) of
Post Properties, Inc. of our report dated March 20, 1998 appearing on Page 32 of
this Form 10-K.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-36595) of
Post Properties, Inc. and Post Apartment Homes, L.P. of our reports dated March
20, 1998 appearing on Pages 32 and 50 of this Form 10-K, respectively.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-47399) of
Post Properties, Inc. of our report dated March 20, 1998 appearing on Page 32 of
this Form 10-K.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-00020) of Post Properties, Inc. of our report
dated March 20, 1998 appearing on Page 32 of this Form 10-K.
Price Waterhouse LLP
Atlanta, Georgia
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST PROPERTIES, INC. FOR THE PERIOD ENDED DECEMBER 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000903127
<NAME> POST PROPERTIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 12,421,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,936,011,000
<DEPRECIATION> 201,095,000
<TOTAL-ASSETS> 1,780,563,000
<CURRENT-LIABILITIES> 0
<BONDS> 821,209,000
0
30,000
<COMMON> 306,000
<OTHER-SE> 756,584,000
<TOTAL-LIABILITY-AND-EQUITY> 1,780,563,000
<SALES> 0
<TOTAL-REVENUES> 200,116,000
<CGS> 0
<TOTAL-COSTS> 101,750,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,658,000
<INCOME-PRETAX> 64,308,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 50,040,000
<DISCONTINUED> 0
<EXTRAORDINARY> 75,000
<CHANGES> 0
<NET-INCOME> 49,965,000
<EPS-PRIMARY> 2.11<F1>
<EPS-DILUTED> 2.09
<FN>
<F1>REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST APARTMENT HOMES, L.P. FOR THE PERIOD ENDED DECEMBER
31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0001012271
<NAME> POST APARTMENT HOMES, L.P.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 12,421,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,936,011,000
<DEPRECIATION> 201,095,000
<TOTAL-ASSETS> 1,780,563,000
<CURRENT-LIABILITIES> 0
<BONDS> 821,209,000
0
0
<COMMON> 0
<OTHER-SE> 869,304,000
<TOTAL-LIABILITY-AND-EQUITY> 1,780,563,000
<SALES> 0
<TOTAL-REVENUES> 200,116,000
<CGS> 0
<TOTAL-COSTS> 101,750,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,658,000
<INCOME-PRETAX> 64,308,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 61,171,000
<DISCONTINUED> 0
<EXTRAORDINARY> 93,000
<CHANGES> 0
<NET-INCOME> 61,078,000
<EPS-PRIMARY> 2.11<F1>
<EPS-DILUTED> 2.09
<FN>
<F1>REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST PROPERTIES, INC. FOR THE PERIOD ENDED DECEMBER 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000903127
<NAME> POST PROPERTIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,381,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,109,342,000
<DEPRECIATION> 177,672,000
<TOTAL-ASSETS> 958,675,000
<CURRENT-LIABILITIES> 0
<BONDS> 434,319,000
10,000
0
<COMMON> 219,000
<OTHER-SE> 398,764,000
<TOTAL-LIABILITY-AND-EQUITY> 958,675,000
<SALES> 0
<TOTAL-REVENUES> 170,708,000
<CGS> 0
<TOTAL-COSTS> 85,983,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,131,000
<INCOME-PRETAX> 52,599,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 432,406,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,406,000
<EPS-PRIMARY> 1.95<F1>
<EPS-DILUTED> 1.94
<FN>
<F1>REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF POST APARTMENT HOMES, L.P. FOR THE PERIOD ENDED DECEMBER
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0001012271
<NAME> POST APARTMENT HOMES, L.P.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,381,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,109,342,000
<DEPRECIATION> 177,672,000
<TOTAL-ASSETS> 958,675,000
<CURRENT-LIABILITIES> 0
<BONDS> 434,319,000
0
0
<COMMON> 0
<OTHER-SE> 482,434,000
<TOTAL-LIABILITY-AND-EQUITY> 958,675,000
<SALES> 0
<TOTAL-REVENUES> 170,708,000
<CGS> 0
<TOTAL-COSTS> 85,983,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,131,000
<INCOME-PRETAX> 52,599,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 52,390,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,390,000
<EPS-PRIMARY> 1.95<F1>
<EPS-DILUTED> 1.94
<FN>
<F1>REPRESENTS BASIC EARNINGS PER SHARE
</FN>
</TABLE>
