UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1998 OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________________
to _______________
Commission File Number 1-12358
COLONIAL PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Alabama 59-7007599
(State of organization) (I.R.S. employer
identification no.)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive
offices)
Registrant's telephone number, including area code: (205) 250-8700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Shares of Beneficial New York Stock Exchange
Interest,
$.01 par value per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES 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 25,625,610 Common Shares held by
non-affiliates of the Registrant was approximately $674,594,183 based on the
closing price on the New York Stock Exchange for such Common Shares on March 10,
1999.
Number of the Registrant's Common Shares of Beneficial Interest
outstanding as of March 10, 1999: 26,314,504.
Documents Incorporated by Reference
Portions of the annual report to shareholders for the year ended
December 31, 1998, are incorporated by reference into Part II. Portions of the
proxy statement for the annual shareholders meeting to be held in 1999 are
incorporated by reference into Part III.
<PAGE>
Item 1. Business.
As used herein, the term "Company" includes Colonial Properties
Trust, an Alabama real estate investment trust, and one or more of its
subsidiaries and other affiliates (including, Colonial Realty Limited
Partnership, Colonial Properties Services Limited Partnership and Colonial
Properties Services, Inc.) or, as the context may require, Colonial Properties
Trust only or Colonial Realty Limited Partnership only. As used herein, the
terms "we", "us", and "our" refer to Colonial Properties Trust only.
This annual report on Form 10-K contains certain "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,
including but not limited to anticipated timetables for acquisitions,
developments and expansions, expected economic growth in geographic markets
where the Company owns or expects to own properties, and plans for continuing
the Company's diversified strategy. These statements involve risks and
uncertainties that may cause actual results to be materially different from
those anticipated. Prospective investors should specifically consider, in
connection with these forward-looking statements, the various risk factors
identified herein and in the Company's filings with the SEC which could cause
actual results to differ, including downturns in local or national economies,
competitive factors, the availability of suitable properties for acquisition at
favorable prices, and other risks inherent in the real estate business.
The Company is one of the largest owners, developers and
operators of multifamily, retail and office properties in the Sunbelt region of
the United States. It is a fully-integrated real estate company, whose
activities include ownership of a diversified portfolio of 106 properties as of
December 31, 1998, located in Alabama, Florida, Georgia, Mississippi, North
Carolina, South Carolina, Tennessee, Texas, and Virginia, development of new
properties, acquisition of existing properties, build-to-suit development, and
the provision of management, leasing, and brokerage services for commercial real
estate. The Company is a self-administered equity real estate investment trust
(a "REIT") that, as of December 31, 1998, owned 49 multifamily apartment
communities containing a total of 15,381 apartment units (the "Multifamily
Properties"), 40 retail properties containing a total of approximately 13.5
million square feet of retail space (the "Retail Properties"), 17 office
properties containing a total of approximately 2.7 million square feet of office
space (the "Office Properties"), and certain parcels of land adjacent to or near
three of these properties (the "Land"). (The Multifamily Properties, the Retail
Properties, the Office Properties and the Land are referred to collectively as
the "Properties"). As of December 31, 1998, the Multifamily Properties that had
achieved stabilized occupancy, the Retail Properties, and the Office Properties
were 93.5%, 91.9% and 92.2% leased, respectively.
The Company is the direct general partner of, and holds
approximately 71% of the interests in, Colonial Realty Limited Partnership, a
Delaware limited partnership ("Colonial Realty" or the "Operating Partnership").
The Operating Partnership owns all of the Properties (or interests therein). The
Company conducts all of its business through the Operating Partnership and
Colonial Properties Services Limited Partnership (the "Management Partnership"),
which provides management services for the Properties, and Colonial Properties
Services, Inc. (the "Management Corporation"), which provides management
services for properties owned by third parties.
The Company's executive offices are located at 2101 Sixth Avenue North,
Suite 750, Birmingham, Alabama, 35203 and its telephone number is (205)
250-8700. The Company was formed in Maryland on July 9, 1993. On August 21,
1995, the Company reorganized as an Alabama real estate investment trust under a
new Alabama REIT statute.
Formation of the Company
The Company and the Operating Partnership were formed to succeed
to substantially all of the interests of Colonial Properties, Inc., an Alabama
corporation ("Colonial"), its affiliates and certain others in a diversified
portfolio of multifamily, retail, and office properties located in Alabama,
Florida, and Georgia and to the development, acquisition, management, leasing,
and brokerage businesses of Colonial.
On September 29, 1993, (i) the Company consummated an initial
public offering (the "IPO") of 8,480,000 of its common shares of beneficial
interest, $.01 par value per share ("Common Shares"), (ii) the Operating
Partnership assumed ownership of 36 Properties (or interests therein) held by
Thomas H. Lowder, James K. Lowder, Robert E. Lowder, and their mother, Catherine
Lowder (the "Lowder family"), and third-party partners of the Lowder family, and
the operating businesses of Colonial, (iii) the Company transferred the net
proceeds from the IPO through Colonial Properties Holding Company, Inc.
("CPHC"), which was dissolved in 1998, to the Operating Partnership, in exchange
for 8,480,000 units of limited partnership interest in the Operating Partnership
("OP Units"), (iv) the Operating Partnership repaid approximately $150.2 million
of indebtedness and prepayment penalties associated therewith secured by certain
of the Properties, and (v) the Operating Partnership established a $35.0 million
line of credit with SouthTrust Bank, which has since been increased to $250.0
million, to fund development activities and property acquisitions and for
general corporate purposes (collectively, the "Formation Transactions"). On
October 28, 1993, the underwriters of the IPO exercised an over-allotment option
to purchase an additional 686,200 shares.
The Company owns substantially all of the economic interests in
the Management Corporation, but in order to permit the Company to qualify as a
REIT, voting control of the Management Corporation is held by the Lowder family.
Recent Developments
Since the IPO, the Company has significantly expanded its
portfolio of Properties and its operating businesses. Acquisitions by the
Company of new properties represent a total investment of over $1.3 billion. The
Company has also completed the expansion of eleven multifamily properties since
the IPO, adding a total of 2,348 units to its multifamily portfolio. The Company
currently has 12 active expansion and development projects in progress for
Multifamily Properties, one Retail Property development, and two Office Property
developments . The Company has also disposed of six Multifamily Properties
representing 2,464 apartment units, one Office Property representing 25,000
square feet of office space, and entered into two joint ventures.
The following is a summary of the Company's acquisition,
disposition, joint venture, and development activity in 1998.
Acquisition and Disposition Activity
The Company acquired four Multifamily Properties, including one
in Florida, one in Georgia, one in Texas and one in South Carolina containing
1,026 units for a total purchase price of $48.2 million.
The Company added 2.9 million square feet of retail shopping
space (including 1.5 million square feet in two joint ventures) through the
acquisition of a community shopping center, an enclosed mall, and investment in
two joint ventures, at a net cost of $117.5 million.
The Company also acquired five Office Properties, including three
in Alabama, one in Florida and one in Georgia, containing 827,000 square feet of
office space for a total purchase price of $87.9 million.
Joint Ventures
During the fourth quarter of 1998, the Company entered into two
joint ventures. On December 9, 1998, the Company and CBL & Associates
Properties, Inc. formed a joint venture to acquire Parkway City Mall in
Huntsville, Alabama for $11.4 million. In addition to the purchase of the
property, the joint venture will redevelop the mall, with all related costs
being shared equally by both venture partners. At December 31, 1998, the Company
had invested approximately $5.7 million in the joint venture and had an ending
net investment balance of $5.9 million.
On December 29, 1998, the Company and Prudential Real Estate
Investors ("Prudential"), through its Property Investment Separate Account fund
entered into a joint venture to own Orlando Fashion Square. In connection with
the formation of the joint venture, Prudential acquired a 50% interest in
Orlando Fashion Square from the Company for $52 million. Subsequent to
formation, the joint venture leveraged the property with a $65 million
non-recourse note and the proceeds from the issuance of the note were
distributed equally to the joint venture partners. The Company's investment in
the joint venture at December 31, 1998 was $20.2 million. The Company used the
proceeds from the Prudential joint venture to fund acquisition and development
activities.
Development Activity
During 1998 the Company constructed 596 new apartment units in
seven multifamily communities and acquired land on which it intends to develop
additional multifamily communities during 1999. The aggregate cost of this
multifamily development activity was $90.4 million. As of December 31, 1998, the
Company had 2,426 apartment units in 12 multifamily communities under
development or expansion. Management anticipates that the 12 multifamily
projects will be completed during 1999 through 2001. Management expects to
invest an additional $115 million over this period to complete these multifamily
projects.
During 1998 the Company began development of a community shopping
center in Birmingham, Alabama. The aggregate investment in the retail
development during 1998 was $8.8 million. Management anticipates that it will
invest an additional $25.7 million to complete the retail development.
During 1998 the Company began development of two office
properties. The aggregate investment in the office developments during 1998 was
$5.3 million. Management estimates that it will invest an additional $24.3
million to complete these projects.
The table below provides an overview of the Company's acquisition
and development activity during 1998:
<PAGE>
Summary of 1998
Acquisition and Development
Activity
<TABLE>
<CAPTION>
Completion or Type of Units (M) Cost or
Anticipated Name of Property GLA (R/O) Anticipated
Completion Date Property (1) Location (2) (3) Cost (4)
- ----------------- ---------------------------------- ----------------- --------- ----------- --------------
Acquisitions:
<S> <C> <C> <C> <C> <C> <C>
1st Qtr 98 Perimeter Corporate Park Huntsville, AL O 233,000 $ 19,500
1st Qtr 98 Independence Plaza Birmingham, AL O 106,000 7,500
2nd Qtr 98 CV at Ashley Plantation Bluffton, SC M 200 13,700
2nd Qtr 98 Orlando Fashion Square (6)Orlando, FL R 1,100,000 (5) 104,000
3rd Qtr 98 CV at River Hills I Tampa, FL M 248 8,500
3rd Qtr 98 CV at Haverhill San Antonio, TX M 322 17,200
3rd Qtr 98 Mansell Overlook 200 Atlanta, GA O 163,000 27,700
3rd Qtr 98 Shoppes at Mansell Atlanta, GA R 21,000 3,700
3rd Qtr 98 Shades Brook Building Birmingham, AL O 35,000 3,100
3rd Qtr 98 Concourse Center Tampa, FL O 290,000 30,100
3rd Qtr 98 CV at Walton Way Augusta, GA M 256 8,800
4th Qtr 98 Bel Air Mall Mobile, AL R 1,434,000 89,100
4th Qtr 98 Parkway City Mall (6)Huntsville, AL R 414,000 11,400
Developments:
1st Qtr 98 CV at River Hills III Tampa, FL M 276 14,186
1st Qtr 98 CV at Inverness Birmingham, AL M 84 6,631
2nd Qtr 98 CG at Hunter's Creek Orlando, FL M 496 33,426
2nd Qtr 98 CG at Bayshore II Bradenton, FL M 164 9,289
1st Qtr 98 CG at Wesleyan I Macon, GA M 240 13,503
1st Qtr 99 CG at Inverness Lakes II (expansion) Mobile, AL M 132 8,900
4th Qtr 99 CV at Ashley Plantation (expansion) Bluffton, SC M 214 13,800
2nd Qtr 99 CG at Edgewater II (expansion) Huntsville, AL M 192 12,600
3rd Qtr 99 CG at Wesleyan II (expansion) Macon, GA M 88 6,200
2nd Qtr 00 CG at Liberty Park Birmingham, AL M 300 26,218
2nd Qtr 00 CV at Heather Glen Orlando, FL M 448 31,234
2nd Qtr 99 CG at Citrus Park Tampa, FL M 176 12,300
2nd Qtr 99 CG at Lakewood Ranch Sarasota, FL M 288 20,300
1st Qtr 99 CG at Cypress Crossing Orlando, FL M 250 20,000
1st Qtr 00 CV at Madison Huntsville, AL M 336 23,000
3rd Qtr 00 CG at Promenade Montgomery, AL M 384 27,878
1st Qtr 00 CG at Ridgeland Jackson, MS M 170 12,400
1st Qtr 00 Colonial Promenade Trussville Birmingham, AL R 386,000 31,000
4th Qtr 99 1800 International Park Birmingham, AL O 149,457 16,600
4th Qtr 99 Colonial Center at Research Park Huntsville, AL O 133,368 13,000
==============
Total $ 696,765
==============
</TABLE>
(1)In the listing of Multifamily Property names, CG has been used as an
abbreviation for Colonial Grand and CV has been used as an abbreviation for
Colonial Village.
(2)M refers to Multifamily Properties, R refers to Retail Properties, and O
refers to Office Properties.
(3)Units (in this table only) refers to multifamily apartment units and GLA
refers to gross leasable area of retail and office space.
(4)Amounts in thousands.
(5)Includes 739,000 square feet of GLA and 361,000 square feet of tenant owned
space.
(6)Properties are 50% owned by the Company at December 31, 1998.
<PAGE>
Multifamily Property Acquisitions
Colonial Village at Ashley Plantation--On May 1, 1998, the
Company acquired Colonial Village at Ashley Plantation, a 200-unit apartment
complex developed in 1997 on approximately 21 acres of land in Bluffton, South
Carolina. The average unit size is 1,026 square feet, and the average unit
market rent is $768 per month. The purchase price of $13.7 million was financed
through an advance on the Company's unsecured line of credit.
Colonial Village at River Hills I--On July 1, 1998, the Company
acquired Colonial Village at River Hills I, a 248-unit phase of the River Hills
apartment complex on approximately 30 acres of land in Tampa, Florida. The
multifamily community was developed in 1985 and was 90% leased at the time of
acquisition. The average unit size is 907 square feet with average unit market
rent of $549 per month. The purchase price of $8.5 million was funded through an
advance on the Company's unsecured line of credit.
Colonial Village at Haverhill--On July 1, 1998, the Company
acquired a 79.8% interest in Colonial Village at Haverhill , a 322-unit
apartment complex on approximately 19 acres of land in San Antonio, Texas. The
multifamily community was developed in 1998 and was 90% leased at the time of
acquisition. The average unit size is 1,019 square feet with average unit market
rent of $857 per month. The purchase price of $17.2 million was funded through
an advance on the Company's unsecured line of credit. The remaining 20.2%
ownership in this property is reflected as "minority interest in consolidated
operating property" in the Company's statement of income, and is included in
"minority interest" on the Company's balance sheet and statement of cash flows.
Colonial Village at Walton Way --On July 30, 1998, the Company
acquired Colonial Village at Walton Way, a 256-unit multifamily apartment
community on approximately 22 acres of land in Augusta, Georgia. The community
was developed in 1970 and 1988, and was 98% leased at the time of acquisition.
The average unit size is 993 square feet with average unit market rent of $671
per month. The purchase price of $8.8 million was funded through an advance on
the Company's unsecured line of credit.
The Company intends to continue to pursue acquisitions in the
Sunbelt region of the United States that meet the Company's acquisition criteria
for property quality, market strength, and investment return.
Completed Multifamily Expansion and Development Activity
Colonial Village at River Hills III--The Company completed
construction on a 276-unit expansion of Colonial Village at River Hills located
in Tampa, Florida. The community amenities include a clubhouse, a swimming pool,
an exercise center, an air-conditioned racquetball court, tennis courts, and
laundry facilities. Project development costs, including land acquisition costs,
totaled $14.2 million and were funded through advances on the Company's line of
credit. The Company completed construction in the first quarter of 1998.
Colonial Village at Inverness--The Company completed construction
on an 84-unit expansion of Colonial Village at Inverness located in Birmingham,
Alabama. This expansion phase offers the same amenities as the existing
community. Project development costs, including land acquisition costs, totaled
$6.6 million and were funded through advances on the Company's line of credit.
The Company completed construction in the first quarter of 1998.
Colonial Grand at Bayshore II--The Company completed construction
on a 164-unit expansion to this development located in Bradenton, Florida. The
Company acquired the land (12.5 acres) at a cost of $1.0 million pursuant to an
option acquired at the time the Company purchased the land for the existing
Colonial Grand at Bayshore development in November 1995. This expansion phase
offers the same amenities as the existing community. Project development costs,
including land acquisition costs, totaled $9.3 million and were funded through
advances on the Company's line of credit. The Company completed construction in
the second quarter of 1998.
Colonial Grand at Hunter's Creek--The Company completed
construction on a 496-unit development located in Orlando, Florida. The Company
acquired the land (36 acres) at a cost of $4.0 million. The new apartment
community offers a variety of amenities, including a swimming pool and spa, an
exercise room, enclosed garages, tennis courts, and a car wash. Project
development costs, including land acquisition costs, totaled $33.4 million and
were funded through advances on the Company's line of credit. The Company
completed construction in the second quarter of 1998.
Colonial Grand at Wesleyan I--The Company completed construction
on a 240-unit development of Colonial Grand at Wesleyan located in Macon,
Georgia during 1998. Project development costs, including land acquisition
costs, totaled $13.5 million and were funded through advances on the Company's
line of credit. The Company completed construction in the first quarter of 1998.
Continuing Multifamily Expansion and Development Activity
Colonial Grand at Inverness Lakes II--The Company continued
construction on a 132-unit expansion of Colonial Grand at Inverness Lakes
located in Mobile, Alabama during 1998. Project development costs, including
land acquisition costs, are expected to total $8.9 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the first quarter of 1999.
Colonial Grand at Edgewater II--The Company continued
construction on a 192-unit expansion of Colonial Grand at Edgewater in
Huntsville, Alabama during 1998. Project development costs, including land
acquisition costs, are expected to total $12.6 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the first quarter of 1999.
Colonial Grand at Wesleyan II--The Company continued construction
on an 88-unit expansion of Colonial Grand at Wesleyan located in Macon, Georgia
during 1998. This expansion phase offers the same amenities as the existing
community. Project development costs, including land acquisition costs, are
expected to total $6.2 million and will be funded through advances on the
Company's line of credit. The Company expects to complete construction in the
second quarter of 1999.
Colonial Village at Citrus Park--The Company continued
construction on a 176-unit development located in Tampa, Florida during 1998.
The new apartment community will offer a variety of amenities, including a
swimming pool, fitness center, resident business center, garages and a gated
entry. Project development costs, including land acquisition costs, are expected
to total $12.3 million and will be funded through advances on the Company's line
of credit. The Company expects to complete construction in the second quarter of
1999.
Colonial Grand at Lakewood Ranch--The Company continued
construction on a 288-unit development located in Sarasota, Florida during 1998.
The new apartments will feature numerous luxuries including a security system,
automated climate control, highest-speed Internet access, and home theatre
pre-wiring. Amenities will include a swimming pool, fitness center, tennis
courts and a gated entry. Project development costs, including land acquisition
costs, are expected to total $20.3 million and will be funded through advances
on the Company's line of credit. The Company expects to complete construction in
the second quarter of 1999 and to complete lease-up during the second quarter of
2000.
New Multifamily Expansion and Development Activity
Colonial Village at Ashley Plantation--The Company began
construction on a 214-unit expansion of Colonial Village at Ashley Plantation
located in Bluffton, South Carolina during the second quarter of 1998. Project
development costs, including land acquisition costs, are expected to total $13.8
million and will be funded through advances on the Company's line of credit. The
Company expects to complete construction in the fourth quarter of 1999.
Colonial Grand at Liberty Park-- The Company began construction
on a 300-unit development located in Birmingham, Alabama during the third
quarter of 1998. The new apartments will feature numerous luxuries including a
security system, automated climate control, highest-speed Internet access, and
home theatre pre-wiring. Project development costs, including land acquisition
costs, are expected to total $26.2 million and will be funded through advances
on the Company's line of credit. The Company expects to complete construction in
the second quarter of 2000.
Colonial Village at Heather Glen-- The Company began construction
on a 448-unit development located in Orlando, Florida during the third quarter
of 1998. The new apartments will offer a variety of amenities, including a
clubhouse, car-care center, fitness center with a child play area, two swimming
pools, tennis courts, and a picnic area. Project development costs, including
land acquisition costs, are expected to total $31.2 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the second quarter of 2000.
Colonial Grand at Cypress Crossing-- The Company began
construction on a 250-unit development located in Orlando, Florida during the
third quarter of 1998. The new apartments will feature numerous luxuries
including a security system, automated climate control, highest-speed Internet
access, and home theatre pre-wiring. Project development costs, including land
acquisition costs, are expected to total $20.0 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the first quarter of 1999.
Colonial Grand at Madison-- The Company began construction on a
336-unit development located in Huntsville, Alabama. The new apartments will
offer a variety of amenities, including a swimming pool, an exercise room,
tennis courts, and a car wash. Project development costs, including land
acquisition costs, are expected to total $23.0 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the first quarter of 2000.
Colonial Grand at Promenade-- The Company began construction on a
384-unit development located in Montgomery, Alabama. The new apartments will
feature numerous luxuries including a security system, automated climate
control, highest-speed Internet access, and home theatre pre-wiring. Project
development costs, including land acquisition costs, are expected to total $27.9
million and will be funded through advances on the Company's line of credit. The
Company expects to complete construction in the second quarter of 2000.
Colonial Grand at Ridgeland-- The Company began construction on a
170-unit development located in Jackson, Mississippi. The new apartments will
offer a variety of amenities, including a fitness center, swimming pool,
garages, and tennis courts. Project development costs, including land
acquisition costs, are expected to total $12.4 million and will be funded
through advances on the Company's line of credit. The Company expects to
complete construction in the first quarter of 2000.
Retail Property Acquisitions and Mergers
Orlando Fashion Square--On May 29, 1998, the Company acquired
Orlando Fashion Square, a 1.1 million square foot regional mall (including
361,000 square feet of tenant-owned space) in Orlando, Florida, for a total
purchase price of $104 million. The mall anchors include Burdine's, Sears,
Gayfers, JC Penney and General Cinemas. The entire purchase price was funded
through an advance on the Company's unsecured line of credit.
Shoppes at Mansell--On July 1, 1998, the Company completed the
final phase of its merger with certain affiliates of Johnson Development
Company. The final phase included the Shoppes at Mansell, a 21,000 square foot
community shopping center. The Shoppes at Mansell was developed in 1997 and was
95% occupied at the time of the merger. The merger of Shoppes at Mansell, valued
at $3.7 million, was funded through the issuance of 76,809 limited partnership
units in Colonial Realty Limited Partnership valued at $2.3 million, and an
advance on the Company's unsecured line of credit.
Bel Air Mall--On December 29, 1998, the Company acquired Bel Air
Mall, a 1.4 million square foot regional mall in Mobile, Alabama, for a total
purchase price of $89.1 million. The mall anchors include Parisian, Dillard's,
Sears, JC Penney, and Target. The purchase price was funded through the proceeds
received in connection with the formation of the Orlando Fashion Square Joint
Venture and an advance on the Company's unsecured line of credit.
Retail Development Activity
Colonial Promenade Trussville--During the third quarter of 1998,
the Company began the development of a 386,000 square foot retail shopping
center in Birmingham, Alabama. The shopping center development will be anchored
by a Wal-Mart Supercenter, Regal Cinemas, Marshall's Department Store, and
Goody's Family Clothing. Project expansion costs are expected to total $31.0
million and will be funded through advances on the Company's line of credit. The
Company expects to complete the development during the first quarter of 2000.
Office Property Acquisitions
Perimeter Corporate Park--On January 1, 1998, the Company
acquired Perimeter Corporate Park, an office park comprised of two multi-tenant
buildings in Huntsville, Alabama totaling 233,000 square feet of leasable area.
Major tenants include Mevatec, Schafer Corporation, Computer Systems
Technology, EER Systems Corporation, and Silicon Graphics. The purchase price
of $19.5 million was funded by the assumption of $5.7 million of debt and an
advance on the Company's unsecured line of credit.
Independence Plaza--Also on January 1, 1998, the Company acquired
Independence Plaza, a 106,000 square foot office building in Birmingham,
Alabama, for a purchase price of $7.5 million. Major tenants include AmSouth
Bank, the Cooney, Rikard & Curtin insurance firm and Wall Street Deli (executive
offices). The entire purchase price was funded through an advance on the
Company's unsecured line of credit.
Mansell Overlook 200--On July 1, 1998, the Company completed the
final phase of its merger with certain affiliates of Johnson Development
Company. The final phase included Mansell Overlook 200, a six-story office
building containing 163,000 square feet of space. Mansell Overlook 200 was
developed in 1997 and was 95% occupied at the time of the merger. This part of
the merger, valued at $27.7 million, was funded through the issuance of 396,365
limited partnership units in Colonial Realty Limited Partnership valued at $11.7
million, and an advance on the Company's unsecured line of credit.
Shades Brook Building--On July 13, 1998, the Company acquired the
Shades Brook Building, a three-story office building containing 35,000 square
feet of space in Birmingham, Alabama. Shades Brook was acquired for a total
purchase price of $3.1 million, which was financed through the issuance of
28,492 limited partnership units in Colonial Realty Limited Partnership valued
at $871,000, and an advance on the Company's unsecured line of credit. Shades
Brook was built in 1979 and was 93% occupied at the time of acquisition.
Concourse Center--On July 23, 1998, the Company acquired
Concourse Center, an office park comprised of four multi-tenant buildings in
Tampa, Florida totaling 290,000 square feet of leasable area. The purchase
price of $30.1 million was financed through an advance on the Company's
unsecured line of credit. Concourse Center was built between 1981 and 1985 and
was 99% occupied at the time of acquisition.
Office Property Development Activity
1800 International Park--In August 1998, the Company began
development of a six story multi-tenant office building in Birmingham, Alabama
with a total of 149,457 square feet of leasable area. Project development costs
are expected to total $16.6 million and will be funded through advances on the
Company's unsecured line of credit. The Company expects to complete
construction in the fourth quarter of 1999.
Colonial Center at Research Park--Also in August 1998, the
Company began development of two office buildings in Huntsville, Alabama with a
total of 133,368 square feet of leasable area. Colonial Center features Class A
office space with first-class amenities. Project development costs are expected
to total $13.0 million and will be funded through advances on the Company's
unsecured line of credit. The Company expects to complete construction in the
fourth quarter of 1999.
Financing Activity
The Company funded a large portion of its acquisitions and
developments through the issuance of common shares and debt securities. During
1998, the Company completed the following equity and debt transactions:
Common Share Offerings
(in thousands)
--------------------------------
Number of Price Per Gross Offering Net
Date ............... Common Share Proceeds Costs Proceeds
- -------------------- --------- ------- --------- --------- ---------
February ........... 375,540 $ 30.00 $ 11,266 $ 627 $ 10,639
March .............. 806,452 $ 31.00 $ 25,000 $ 1,389 $ 23,611
March .............. 381,046 $ 31.00 $ 11,182 $ 656 $ 11,156
April .............. 3,046,400 $ 30.12 $ 91,773 $ 4,973 $ 86,800
Debt Offering
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- -------------- -------- ---------- ---- --------
July Senior July, 2007 7.00% $175,000
On July 10, 1998, the Company increased the borrowing capacity under its
unsecured line of credit from $200 million to $250 million. The credit facility,
which is used by the Company primarily to finance additional property
investments, bears interest at a rate ranging between 80 and 135 basis points
above LIBOR and is renewable in July 2000. The line of credit agreement includes
a competitive bid feature that will allow the Company to convert up to $125
million under the line of credit to a fixed rate, for a fixed term not to exceed
90 days. As of December 31, 1998, the balance outstanding on the Company's line
of credit was $174.5 million.
<PAGE>
Business Strategy
The general business strategy of the Company is to generate
stable and increasing cash flow and portfolio value for its shareholders. The
Company (and its predecessor) has implemented this strategy principally by (i)
realizing growth in income from its existing portfolio of properties, (ii)
developing, expanding, and selectively acquiring additional multifamily, retail,
and office properties in growth markets located in the Sunbelt region of the
United States, where the Company has first-hand knowledge of growth patterns and
local economic conditions, (iii) managing its own properties, which has enabled
it to better control operating expenses and establish long-term relationships
with its retail and office tenants, (iv) maintaining its third-party property
management business, which has increased cash flow and established additional
relationships with tenants, and (v) employing a comprehensive capital
maintenance program to maintain properties in first-class condition. The
Company's business strategy and the implementation of that strategy are
determined by the Company's board of trustees and may be changed from time to
time.
Financing Strategy
The Company's strategy is to maintain coverage ratios in order to
sustain its investment grade status. The Company's total market capitalization
as of December 31, 1998, was $2.0 billion, and its ratio of debt to total market
capitalization was 45.1%. At December 31, 1998, the Company's total debt
included fixed-rate debt of $681.2 million, or 74.9% of total debt, and
floating-rate debt of $228.1 million, or 25.1% of total debt. The Company has
obtained interest rate protection for $50.0 million of the floating-rate debt.
The Company may from time to time reevaluate its borrowing
policies in light of then current economic conditions, relative costs of debt
and equity capital, market values of properties, growth and acquisition
opportunities, and other factors. The Company may modify its borrowing policy
and may increase or decrease its ratio of debt to total market capitalization.
To the extent that the board of trustees of the Company determines to seek
additional capital, the Company may raise such capital through additional equity
offerings, debt financings, or retention of cash flow (subject to provisions in
the Code requiring the distribution by a REIT of a certain percentage of taxable
income and taking into account taxes that would be imposed on undistributed
taxable income) or a combination of these methods.
Property Management
The Company is experienced in the management and leasing of
multifamily, retail, and office properties and believes that the management and
leasing of its own portfolio has helped the Properties maintain consistent
income growth and has resulted in reduced operating expenses from the
Properties. The third-party management, leasing, and brokerage businesses
conducted through the Management Corporation have provided the Company both with
a source of cash flow that is relatively stable and with the benefits of
economies of scale in conjunction with the management and leasing of its own
properties. These businesses also allow the Company to establish additional
relationships with tenants who may require additional retail or office space and
to identify potential acquisitions.
Operational Structure
Multifamily Division--The multifamily division of the Company is
responsible for all aspects of the Company's multifamily operations, including
day-to-day management and leasing of the 49 Multifamily Properties, as well as
the provision of third-party management services for apartment communities in
which the Company does not have an ownership interest. The multifamily division
utilizes centralized functions of accounting, information technology, due
diligence and administrative services. Decisions for investments in acquisitions
and developments and for dispositions are also centralized. The multifamily
division has regional offices in Birmingham, Mobile and Montgomery, Alabama,
Orlando and Tampa, Florida, and Stockbridge, Georgia.
Retail Division--The Company's retail division is responsible for
all aspects of the Company's retail operations, including the provision of
management and leasing services for the 40 Retail Properties, as well as the
provision of third-party management services for retail properties in which the
Company does not have an ownership interest and for brokerage services in other
retail property transactions. The retail division utilizes centralized functions
of accounting, information technology, due diligence and administrative
services. Decisions for investments in acquisitions and developments and for
dispositions are also centralized. The retail division has regional offices in
Birmingham, Alabama, Orlando, Florida, Macon, Georgia and Burlington, North
Carolina.
Office Division--The Company's office division is responsible for
all aspects of the Company's commercial office operations, including the
provision of management and leasing services for the 17 Office Properties, as
well as the provision of third-party management services for office properties
in which the Company does not have an ownership interest and for brokerage
services in other office property transactions. The office division utilizes
centralized functions of accounting, information technology, due diligence and
administrative services. Decisions for investments in acquisitions and
developments and for dispositions are also centralized. The office division has
regional offices in Birmingham, Alabama and Atlanta, Georgia.
Employees
The Company employs approximately 900 persons, including on-site
property employees who provide services for the Properties that the Company owns
and/or manages.
Tax Status
The Company has made an election to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"), commencing with its taxable year ending December 31, 1993. If the
Company qualifies for taxation as a REIT, the Company generally will not be
subject to Federal income tax to the extent it distributes at least 95% of its
REIT taxable income to its shareholders. Even if the Company qualifies for
taxation as a REIT, the Company may be subject to certain state and local taxes
on its income and property and to federal income and excise taxes on its
undistributed income.
<PAGE>
Executive Officers of the Company
The following is a biographical summary of the executive
officers of the Company:
Thomas H. Lowder, 49, has been President and Chief Executive
Officer of the Company and a trustee of the Company, since 1993. Mr. Lowder
became President of Colonial Properties Inc., the Company's predecessor, in 1976
and since that time has been actively engaged in the acquisition, development,
management, leasing, and sale of multifamily, retail, and office properties for
Colonial. Mr. Lowder is a member and past president of the Alabama Chapter of
the Commercial Investment Real Estate Institute. Mr. Lowder is a former state
Chairman of the Young Presidents' Organization and a member of the Birmingham
Area Board of Realtors, the National Association of Industrial Office Parks, the
International Council of Shopping Centers, and the National Association of Real
Estate Investment Trusts. He serves on the board of directors for, among other
companies, the Children's Hospital of Alabama, American Red Cross-Birmingham
Area Chapter, and the United Way of Central Alabama. He graduated with honors
from Auburn University with a Bachelor of Science Degree.
Howard B. Nelson, Jr., 51, has been Chief Financial Officer of
the Company, with general responsibility for financing matters since May 1997.
Mr. Nelson was Senior Vice President and Chief Operating Officer of the Company,
with responsibility for the day-to-day management of the Company, from September
1993 to May 1997. He joined Colonial in 1984 as a vice president and became
Senior Vice President-Finance in 1987. Mr. Nelson has served as treasurer, vice
president, president, and board member of the Birmingham Chapter of the National
Association of Industrial and Office Parks as well as vice president and board
member of the Building Owners and Managers Association of Metropolitan
Birmingham. He also serves on the Board of Directors of the Children's Harbor
Family Center and the College of Business Advisory Council of Auburn University.
He holds a Bachelor of Science Degree from Auburn University.
C. Reynolds Thompson, III, 36, has been Chief Investment Officer
of the Company, with the responsibility for the Company's investment strategy,
since May 1998. Mr. Thompson was Executive Vice President--Office Division, with
responsibility for management of all office properties owned and/or managed by
the Company, from May 1997 to May 1998. Mr. Thompson joined the Company in
February 1997 as Senior Vice President--Office Acquisitions, with responsibility
for all acquisitions of office properties. Prior to joining Colonial, Mr.
Thompson worked for CarrAmerica Realty Corporation in office building
acquisitions and due diligence. Mr. Thompson's twelve year real estate
background includes acquisitions, development, leasing, and management of office
properties in the south. He is an active member of the National Association of
Industrial and Office Parks, serves on the Board of Trustees for the Alabama
Real Estate Research and Education Center, and holds a Bachelor of Science
Degree from Washington and Lee University.
Paul F. Earle, 41, has been Executive Vice-President-Multifamily
Division of the Company, with responsibility for management of all multifamily
properties owned and/or managed by the Company, since May 1997. He joined
Colonial in 1991 and has served as Vice President-Acquisitions, as well as
Senior Vice President--Multifamily Division. Mr. Earle serves as Chairman of the
Alabama Multifamily Council and is an active member of the National Apartment
Association. He also serves on the Board of Directors of Big Brother/Big Sisters
and is a Board member of the National Multifamily Housing Council. Before
joining Colonial, Mr. Earle was the President and Chief Operating Officer of
American Residential Management, Inc., Executive Vice President of Great
Atlantic Management, Inc., and Senior Vice President of Balcor Property
Management, Inc.
John N. Hughey, 39, has been Executive Vice President-Retail
Division of the Company, with responsibility for all retail properties owned
and/or managed by the Company, since May 1997. He joined Colonial in 1982 and
assumed responsibility for an increasing number of shopping centers until being
named to Senior Vice President-Retail Division of Colonial in 1991. Mr. Hughey
served as the Alabama/Mississippi State Operations Chairman for the
International Council of Shopping Centers from 1993-1995. He holds a Bachelor of
Science Degree from Auburn University.
Charles A. McGehee, 53, has been Executive Vice President-Land
Acquisitions, Brokerage and Dispositions of the Company, with responsibility for
the Company's acquisitions and dispositions and the sales brokerage departments,
since May 1997. Mr. McGehee was Senior Vice President--Multifamily
Acquisitions/Development from September 1993 to May 1997 and Senior Vice
President--Office Division from January 1990 to September 1993. He joined
Colonial in 1976 as vice president of retail leasing and was responsible for
leasing all retail space owned and/or managed by Colonial. Mr. McGehee has
served as president and a board member of the National Association of Industrial
and Office Parks as well as a member of the Board of Directors of the Birmingham
Area Board of Realtors. He holds a Bachelor of Science Degree from Auburn
University.
Robert A. "Bo" Jackson, 44, has been Executive Vice
President-Office Division of the Company, with general responsibility for
management of all office properties owned and/or managed by the Company since
May 1998. Prior to joining the Company, Mr. Jackson worked for Beacon Properties
as a vice president responsible for leasing performance, new office development
and acquisitions. He has received professional accolades from The Atlanta Board
of Realtors, The Downtown Developers Group and NAIOP. He holds a Bachelor of
Science Degree in Business Administration from the University of Delaware.
Kenneth E. Howell, 49, has been Senior Vice President-Chief
Accounting Officer of the Company, with general responsibility for the
supervision of accounting for all of the properties owned and/or managed by the
Company, since August 1998. He joined the Company in 1981 and was Vice
President, Controller from 1981 to 1998. Mr. Howell holds a Bachelor of Science
Degree in Business Administration from Auburn University.
RISK FACTORS
Set forth below are the risks that we believe are material to
investors who purchase or own our common or preferred shares of beneficial
interest or units of limited partnership interest in Colonial Realty Limited
Partnership, which is our "operating partnership."
Our performance and share value are subject to risks associated
with the real estate industry. If our assets do not generate income sufficient
to pay our expenses, service our debt and maintain our properties, we may not be
able to make expected distributions to our shareholders. Whether our properties
will generate sufficient revenue to pay our expenses and permit us to make
distributions to our shareholders will depend on whether we can attract tenants
at favorable rental rates and whether we can adequately control our costs.
Factors that may adversely affect our ability to attract tenants or to generate
sufficient revenue include:
o local conditions such as an oversupply of multifamily, retail or
office properties or a reduction in demand for multifamily,
retail or office properties;
o the attractiveness of our properties to residents, shoppers
and tenants;
o decreases in market rental rates; and
o our ability to collect rent from our tenants.
Factors that may adversely affect our operating costs include:
o the need to pay for adequate insurance and other operating costs,
including real estate taxes, which could increase over time; and
o the need to periodically repair, renovate and relet space.
Our expenses may remain constant even if our revenues drop. The
expenses of owning and operating a property are not necessarily reduced when
circumstances such as market factors and competition cause a reduction in income
from the property. As a result, if revenues drop, we may not be able to reduce
our expenses accordingly. Loan payments are an example of a cost that will not
be reduced simply because our revenues drop. If a property is mortgaged and we
are unable to meet the mortgage payments, the lender could foreclose on the
mortgage and take the property, resulting in a further reduction in revenues.
We may be unable to renew leases or relet space as leases expire.
When our tenants decide not to renew their leases upon their expiration, we may
not be able to relet the space. Even if the tenants do renew or we can relet the
space, the terms of renewal or reletting, including the cost of required
renovations, may be less favorable than current lease terms. If we are unable to
promptly renew the leases or relet the space, or if the rental rates upon such
renewal or reletting are significantly lower than expected rates, then our cash
flow and ability to service debt and make distributions to shareholders would be
adversely affected.
We depend on local economic conditions in our primary markets.
All of our properties are located in the Sunbelt region of the United States and
44 of our properties are located in Birmingham and Montgomery, Alabama, Orlando,
Florida and Macon, Georgia. Our performance and ability to make debt service
payments or distributions to shareholders could be adversely affected by
economic conditions in the Sunbelt region and in Birmingham, Montgomery, Orlando
and Macon in particular.
New acquisitions may fail to perform as expected. Assuming we are
able to obtain capital on commercially reasonable terms, we intend to
selectively acquire multifamily, retail or office properties where we perceive
strategic opportunities consistent with our strategy. Newly acquired properties
may fail to perform as expected. We may underestimate the costs necessary to
bring an acquired property up to the standards we have established for its
intended market position. In addition, we may not be in a position or have the
opportunity in the future to make suitable property acquisitions on favorable
terms. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
Competition for acquisitions could result in increased prices for
properties. We expect other major real estate investors with significant capital
to compete with us for attractive investment opportunities. These competitors
include publicly traded REITs, private REITs, investment banking firms and
private institutional investment funds. This competition could increase prices
for multifamily, retail or office properties.
Our development and expansion activities subject us to risks. We
intend to continue to develop new properties and expand existing properties
where we believe that development or expansion is consistent with our business
strategies. New projects subject us to a number of risks, including risks that:
o construction delays or cost overruns may increase project costs;
o permanent debt or equity financing may not be available on
acceptable terms to finance new development or expansion
projects;
o we may fail to meet anticipated occupancy or rent levels;
o we may fail to secure required zoning, occupancy and other
governmental permits and authorizations; and
o changes in applicable zoning and land use laws may require us to
abandon projects prior to their completion, resulting in the loss
of development costs incurred prior to abandonment.
Because real estate investments are illiquid, we may not be able
to sell properties when appropriate. Real estate investments generally cannot be
sold quickly. We may not be able to vary our portfolio promptly in response to
economic or other conditions. This inability to respond to changes in the
performance of our investments could adversely affect our ability to service
debt and make distributions to our shareholders.
Scheduled debt payments could adversely affect our financial
condition. Our business is subject to risks normally associated with debt
financing. If principal payments due at maturity cannot be refinanced, extended
or paid with proceeds of other capital transactions, such as new equity capital,
our cash flow will not be sufficient in all years to repay all maturing debt. If
prevailing interest rates or other factors at the time of refinancing, such as
the possible reluctance of lenders to make commercial real estate loans, result
in higher interest rates, increased interest expense would adversely affect cash
flow and our ability to service our debt and make distributions to shareholders.
Our obligation to comply with financial covenants in our debt
agreements could restrict our range of operating activities. Our credit facility
contains customary restrictions, requirements and other limitations on our
ability to incur indebtedness, including:
o debt to assets ratios;
o secured debt to total assets ratios;
o debt service coverage ratios; and
o minimum ratios of unencumbered assets to unsecured debt.
The indenture under which our senior unsecured indebtedness is
issued contains financial and operating covenants including coverage ratios. Our
indenture also limits our ability to (1) incur secured and unsecured
indebtedness, (2) sell all or substantially all or our assets and (3) engage in
mergers, consolidations and acquisitions.
Our degree of leverage could limit our ability to obtain
additional financing. Our "debt to market capitalization" ratio, which we
calculate as total debt as a percentage of total debt plus the market value of
our outstanding common shares and the outstanding units of Colonial Realty, was
approximately 45.1% as of December 31, 1998. Increases in our leverage could
adversely affect our ability to obtain additional financing in the future for
(1) working capital, (2) capital expenditures, (3) acquisitions, (4) development
or (4) other general corporate purposes, and may make us more vulnerable to a
downturn in business or the economy generally.
Rising interest rates could adversely affect our cash flow.
Advances under our credit facility bear interest at a variable rate ranging
between 80 and 135 basis points above LIBOR. We may borrow additional money with
variable interest rates in the future, and may enter into other transactions to
limit our exposure to rising interest rates as appropriate and cost effective.
Increases in interest rates, or the loss of the benefits of hedging agreements,
would increase our interest expense, which would adversely affect cash flow and
our ability to service our debt and make distributions to shareholders.
Environmental problems are possible and can be costly. Federal,
state and local laws and regulations relating to the protection of the
environment may require a current or previous owner or operator of real property
to investigate and clean up hazardous or toxic substances or petroleum product
releases at the property, without regard to whether the owner or operator knew
or caused the presence of the contaminants. If unidentified environmental
problems arise at one of our properties, we may have to make substantial
payments to a governmental entity or third parties for property damage and for
investigation and clean-up costs. Even if more that one person may have been
responsible for the contamination, we may be held responsible for all of the
clean-up costs incurred. Our liability under environmental laws could adversely
affect our cash flow and our ability to make distributions to our shareholders.
<PAGE>
At one of our properties, the Gadsden Mall in Gadsden, Alabama,
four underground storage tanks were removed in 1989. In connection with the
removal of these gasoline storage tanks, associated petroleum contamination was
discovered in the soil and groundwater. We are currently working with the state
regulatory agency to remediate the contamination in accordance with applicable
requirements. Because the tanks were registered with the Alabama Department of
Environmental Management and the facility was in compliance with regulations
prior to the incident, we have been reimbursed under the Alabama Underground
Storage Tank Trust Fund for the costs incurred to date in connection with the
ongoing cleanup, and expect to be reimbursed for the remaining costs as well. We
have received a "no further action" letter from the the Alabama Department of
Environmental Management.
On December 29, 1998, we acquired Bel Air Mall in Mobile,
Alabama. During the course of our environmental due diligence, we identified
several different areas of the property in which contamination is present. One
of those areas involves drycleaner solvent; the others involve petroleum
contamination. The Alabama Department of Environmental Management is overseeing
the investigation and cleanup of the drycleaner contamination. It is possible
that a claim could be asserted against us, as owner of the property, for the
investigation and remediation of the contamination. Pursuant to the purchase and
sale agreement, the former owner of the property purchased a $10 million
insurance policy and established escrow accounts totaling $1,275,000 to cover
the costs associated with investigating and remediating the contaminated areas.
In addition, subject to limitations, the seller will be performing all required
remediation of the drycleaner contamination.
Some of our trustees and officers have conflicts of interest and
could exercise influence in a manner inconsistent with shareholders' best
interests. As a result of their substantial ownership of our common shares and
units of Colonial Realty, Messrs. Thomas Lowder, our Chairman of the Board,
Chief Executive Officer and President, and James Lowder, Harold Ripps, Herbert
Meisler and William Johnson, each of whom is a trustee, might seek to exert
influence over our decisions as to sales or refinancings of particular
properties we own. Any such exercise of influence might produce decisions which
are not in the best interest of all of our shareholders.
The Lowder family, which includes Thomas, James, Robert and
Catherine Lowder and their affiliates, holds interests in companies that have
performed construction management, insurance brokerage and other services with
respect to our properties. These companies may perform similar services for us
in the future. As a result, the Lowder family may realize benefits from
transactions between such companies and us that are not realized by other
shareholders. In addition, Thomas Lowder and his brother, James Lowder, as
trustees, may be in a position to influence us to do business with companies in
which the Lowder family has a financial interest. Our policies may not be
successful in eliminating the influence of conflicts. Moreover, transactions
with companies controlled by the Lowder family, if any, may not be on terms as
favorable to us as we could obtain in an arms-length transaction with a third
party.
We do not control our management, leasing and brokerage
businesses. To facilitate maintenance of our REIT qualification, we have a
"non-controlled subsidiary" which conducts management, leasing and brokerage
business for properties we do not wholly own. While we own 99% of the economic
interest in the noncontrolled subsidiary, 99% of its voting stock is owned by
members of the Lowder family. We therefore do not control the timing or amount
of distributions or the management and operation of the noncontrolled
subsidiary. We also lack the ability to set the business policies and operations
of the noncontrolled subsidiary.
We are subject to risks associated with the property management,
leasing and brokerage businesses. In addition to the risks we face as a result
of our ownership of real estate, we face risks relating to the property
management, leasing and brokerage businesses of our "non-controlled subsidiary,"
including risks that:
o management contracts or service agreements with third-party
owners will be lost to competitors;
o contracts will not be renewed upon expiration or will not be
renewed on terms consistent with current terms; and
o leasing and brokerage activity generally may decline.
Each of these developments could adversely affect our ability to
make debt service payments or expected distributions to shareholders.
The large number of our shares available for future sale could
adversely affect the market price of our publicly traded securities. We have
reserved a large number of common shares for future issuance upon redemption of
units of Colonial Realty. These common shares may be sold in the public market
pursuant to registration rights or pursuant to Rule 144 under the Securities Act
or other available exemptions from registration. We cannot predict the effect
that future sales of these common shares, or the perception that sales could
occur, will have on the market prices of our equity securities. In addition, we
have reserved a number of common shares for issuance pursuant to our employee
benefit plans, and these common shares will be available for sale from time to
time. We have granted options to purchase additional common shares to executive
officers, employees and trustees. To the extent we issue any common shares upon
exercise of options, the interests of our shareholders will be further diluted.
Our earnings and cash distributions will affect the market price
of our publicly traded securities. We believe that the market value of a REIT's
equity securities depends primarily on the market's perception of the REIT's
growth potential and its current and potential future cash distributions, and is
secondarily based on the real estate market value of the underlying assets. For
that reason, our shares may trade at prices that are higher or lower than our
net asset value per share. To the extent we retain operating cash flow for
investment purposes, working capital reserves or other purposes, these retained
funds, while increasing the value of our underlying assets, may not
correspondingly increase the market price of our shares. Our failure to meet the
market's expectations with regard to future earnings and cash distributions
would likely adversely affect the market price of our publicly traded
securities.
Market interest rates may have an effect on the value of our
publicly traded securities. One of the factors that investors consider important
in deciding whether to buy or sell shares of a REIT is the distribution rate on
the shares, considered as a percentage of the price of the shares, relative to
market interest rates. If market interest rates go up, prospective purchasers of
REIT shares may expect a higher distribution per share, causing the market price
of our publicly traded securities to go down.
We are dependent on external sources of capital. To qualify as a
REIT, we must distribute to our shareholders each year at least 95% of our net
taxable income, excluding any net capital gain. Because of these distribution
requirements, it is not likely that we will be able to fund all future capital
needs from income from operations. We therefore will have to rely on third-party
sources of capital which may or may not be available on favorable terms or at
all. Our access to third-party sources of capital depends on a number of things,
including the market's perception of our growth potential and our current and
potential future earnings. Moreover, additional equity offerings may result in
substantial dilution of shareholders' interests, and additional debt financing
may substantially increase our leverage.
If we fail to qualify as a REIT our shareholders would be
adversely affected. We believe that we have qualified for taxation as a REIT for
federal income tax purposes commencing with our taxable year ended December 31,
1993. We plan to continue to meet the requirements for taxation as a REIT, but
we cannot assure shareholders that we will qualify as a REIT. Many of the REIT
requirements are highly technical and complex. The determination that we are a
REIT requires an analysis of various factual matters and circumstances that may
not be totally within our control. For example, to qualify as a REIT, at least
95% of our gross income must come from certain sources that are itemized in the
REIT tax laws. We also are required to distribute to shareholders at least 95%
of our REIT taxable income, excluding capital gains. The fact that we hold our
assets through Colonial Realty further complicates the application of the REIT
requirements. Even a technical or inadvertent mistake could jeopardize our REIT
status. Furthermore, Congress and the IRS might make changes to the tax laws and
regulations, and the courts might issue new rulings that make it more difficult,
or impossible, for us to remain qualified as a REIT. We do not believe, however,
that any pending or proposed tax law changes would jeopardize our REIT status.
If we fail to qualify as a REIT, we would be subject to federal
income tax at regular corporate rates. Also, unless the IRS granted us relief
under certain statutory provisions, we would remain disqualified as a REIT for
the four years following the year we first failed to qualify. If we failed to
qualify as a REIT, we would have to pay significant income taxes and would
therefore have less money available for investments or for distributions to
shareholders. This would likely have a significant adverse affect on the value
of our securities. In addition, we would no longer be required to make any
distributions to shareholders.
We pay some taxes. Even if we qualify as a REIT, we are required
to pay certain federal, state and local taxes on our income and property. In
addition, any net taxable income earned directly by our noncontrolled subsidiary
is subject to federal and state corporate income tax.
We have a share ownership limit for REIT tax purposes. Primarily
to facilitate maintenance of our REIT qualification, our Declaration of Trust
generally prohibits ownership by any single shareholder, other than members of
the Lowder family, of more than (1) 5% of our issued and outstanding common
shares, and (2) 9.8% in value or number of shares, whichever is more
restrictive, of any class or series of our outstanding shares. We refer to this
as the "ownership limit." The federal tax laws include complex stock ownership
and attribution rules that apply in determining whether a shareholder exceeds
the ownership limit. These rules may cause a shareholder to be treated as owning
the shares that are actually owned by others, including family members and
entities in which a shareholder has an ownership interest. In limited
circumstances, our Declaration of Trust permits the Board of Trustees to waive
or modify the ownership limit with respect to a shareholder. Absent any such
modification or waiver, shares acquired or held in violation of the ownership
limit will be transferred to a trust for the exclusive benefit of a designated
charitable beneficiary, and the shareholder's rights to distributions and to
vote would terminate.
Provisions of our charter may inhibit changes in control. Various
provisions of our Declaration of Trust restrict the possibility for acquisition
or change in control, even if such acquisition or change in control were in our
shareholders' interest. These provisions include:
o the ownership limit;
o the staggered terms of our trustees; and
o the ability of our Board of Trustees to classify and issue new
series of our authorized preferred shares.
We have adopted a shareholder rights plan which could delay or
prevent a change of control. Our rights plan provides, among other things, that
upon the occurrence of certain events, shareholders will be entitled to purchase
shares of our stock, subject to the ownership limit. These purchase rights would
cause substantial dilution to a person or group that acquires or attempts to
acquire 15% or more of our common shares on terms not approved by the Board of
Trustees and, as a result, could delay or prevent a change in control or other
transaction that could provide our shareholders with a premium over the
then-prevailing market price of their shares or which might otherwise be in
their best interests.
Proposed legislation, if enacted, could require us to restructure
our ownership of Colonial Properties Services, Inc. The Clinton Administration's
fiscal year 2000 budget proposal could require us to restructure our ownership
of Colonial Properties Services, Inc. The budget proposal, announced February 1,
1999, includes a proposal that would prohibit a REIT from owning more than 10%
of the vote or value of the outstanding securities of any corporation, except
for a qualified REIT subsidiary or another REIT. Currently, a REIT cannot own
more than 10% of the outstanding securities of any one issuer. A REIT can,
however, own more than 10% of the value of the stock of a corporation, so long
as not more than 25% of the REIT's total assets are comprised stock of
corporations, except for qualified REIT subsidiaries or other REIT's, and the
stock of any single corporation does not account for more than 5% of the value
of the REIT's total assets. The proposal also contains an exception to the 5%
and 10% asset tests that would allow a REIT to have "taxable REIT subsidiaries,"
including both "qualified independent contractor subsidiaries," which could
perform noncustomary and other currently prohibited services for tenants and
other customers, and "qualified business subsidiaries," which could undertake
third-party management and development activities as well as other non-related
real estate activities. Under the proposal, no more than 15% of a REIT's total
assets could consist of taxable REIT subsidiaries and no more than 5% of a
REIT's total assets could consist of qualified independent contractor
subsidiaries. Under the budget proposal, a taxable REIT subsidiary would not be
entitled to deduct any interest on debt funded directly or indirectly by the
REIT. This proposal would be effective after the date of enactment and a REIT
would be allowed to combine and convert existing corporate subsidiaries into
taxable REIT subsidiaries tax-free prior to a certain date. A transition period
would allow for conversion of existing corporate subsidiaries before the 10%
vote or value test would become effective. For Colonial Properties Trust's
taxable years after the effective date of the proposal and after any applicable
transition period, the 10% vote or value test would apply to Colonial Properties
Trust's ownership in Colonial Properties Services, Inc. unless Colonial
Properties Services, Inc. is converted into a taxable REIT subsidiary. It is
presently uncertain whether any proposal regarding REIT subsidiaries, including
the budget proposal, will be enacted or, if enacted, what the terms, including
the effective date, of such proposal will be.
Our operations could be adversely affected by the year 2000
problem. Our revenues may be adversely affected if the year 2000 problem poses
significant problems for any of our tenants which prevent them from paying us
rent as it comes due. The year 2000 problem could also adversely affect us
should any of our lenders, manufacturers, vendors or suppliers cease to conduct
business, as we would be forced to contract with alternate providers at rates
which might not be favorable to us. Moreover, our plans do not address a
"doomsday" scenario which would require a contingency process for restoration of
our existing systems and components in the event of a complete failure due to
the year 2000 problem.
<PAGE>
Item 2. Properties.
General
The Company acquired 36 properties in connection with the
Formation Transactions, and acquired or developed 19 additional properties and
an additional phase of an existing property in 1994, six additional properties
in 1995, 11 additional properties in 1996, 25 additional properties in 1997, and
14 additional properties in 1998. Since the Company's initial public offering
("IPO"), the Company has developed eleven additional Multifamily Properties and
has disposed of eight properties, all through tax-deferred, like-kind exchanges.
The 106 Properties owned by the Company at December 31, 1998, consisted of 49
Multifamily Properties, 40 Retail Properties, and 17 Office Properties, as
described in more detail below.
Summary of Properties
<TABLE>
<CAPTION>
Total 1998 Percent of
Units/ Property Total 1998 Percentage
Number of GLA/ Revenue (2) Property Occupancy at
Type of Property Properties NRA (1) (in thousands) Revenue (2) Dec. 31, 1998 (3)
- ---------------- ---------- ----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Multifamily 49 15,381 $ 104,462 40.7% 93.5%
Retail 40 13,478,000 117,572 45.9% 91.9%
Office 17 2,707,000 34,409 13.4% 92.2%
--- ----------- ----------
Total 106 $ 256,443 100.0%
=== =========== ==========
</TABLE>
(1)Units (in this table only) refers to multifamily apartment units, GLA refers
to gross leasable area of retail space and NRA refers to net rentable area of
office space. Information is presented as of December 31, 1998.
(2)Includes the Company's proportionate share of revenue from those Office and
RetailProperties accounted for under the equity method, and the Company's
share of the properties disposed of in 1998.
(3)Excludes 1,842 units of expansion phases of seven Multifamily Properties that
had not achieved stabilized occupancy as of December 31, 1998.
Multifamily Properties
The 49 Multifamily Properties owned by the Company at December
31, 1998, contain a total of 15,381 garden-style apartments and range in size
from 120 to 1,080 apartment units. Fourteen of the Multifamily Properties were
acquired by the Company in connection with the Formation Transactions, 13
Properties and one additional phase of an existing Property were acquired during
1994, seven Properties were acquired during 1996, five Properties were acquired
during 1997, and four Properties were acquired in 1998. Also, since its IPO the
Company has developed eleven additional Multifamily Properties. Twenty
Multifamily Properties (containing a total of 7,293 apartment units) are located
in Alabama, 16 Multifamily Properties (containing a total of 5,014 apartment
units) are located in Florida, nine Multifamily Properties (containing a total
of 1,874 apartments units) are located in Georgia, one Multifamily Property
(containing a total of 328 apartment units) are located in Mississippi, two
Multifamily Properties (containing a total of 550 apartment units) are located
in South Carolina, and one Multifamily Property (containing 322 apartment units)
is located in Texas. Each of the Multifamily Properties is established in its
local market and provides residents with numerous amenities, which may include a
swimming pool, exercise room, jacuzzi, clubhouse, laundry room, tennis court(s),
and/or a playground. All of the Multifamily Properties are managed by the
Company.
The following table sets forth certain additional information
relating to the Multifamily Properties as of and for the year ended December 31,
1998.
<PAGE>
Multifamily Properties
<TABLE>
<CAPTION>
Total
Average Multifamily Percent of
Year Number Approximate Rental Property Total 1998
Multifamily Completed of Rentable Area Percent Rate Revenue for Property
Property (1) Location (2) Units (3) (Square Feet) Occupied Per Unit 1998 Revenue (4)
- ----------------------- ------------ ---------- ---------- ------------ ------- ----------------------- ----------
Alabama:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CV at Ashford Place Mobile 1983 168 139,000 96.4% $ 514 $ 995,008 0.4%
CV at Rocky Ridge Birmingham 1984 226 259,000 92.9% 612 1,504,737 0.6%
Colony Park Mobile 1975 201 130,000 86.1% 414 882,172 0.3%
CG at Galleria Woods Birmingham 1994 244 261,000 97.0% 665 1,685,198 0.7%
CG at Mountain Brook Birmingham 1987/91 392 393,000 96.7% 688 2,805,188 1.1%
CV at Trussville Birmingham 1996/97 376 410,000 97.1% 685 2,662,530 1.0%
CV at Cahaba Heights Birmingham 1992 125 131,000 100.0% 695 957,168 0.4%
CG at Edgewater Huntsville 1990 500 423,000 (7) 693 2,542,056 1.0%
CV at Inverness Birmingham 1986/87/90 586 395,000 98.6% 595 3,545,719 1.4%
CV at Huntleigh Woods Mobile 1978 233 199,000 94.4% 457 1,222,101 0.5%
CG/CV at Inverness Lakes Mobile 1983/96 482 477,000 (7) 630 2,932,495 1.1%
CV at McGehee Place Montgomery 1986/95 468 404,000 90.1% 608 2,679,894 1.0%
CV at Monte D'Oro Birmingham 1977 200 296,000 98.5% 659 1,547,956 0.6%
Patio Auburn 1966/83/84 240 179,000 87.9% 424 1,057,375 0.4%
CV at Hillcrest Mobile 1981 104 114,000 97.0% 610 684,919 0.3%
CG at Galleria Birmingham 1986/96 1,080 1,195,000 93.9% 617 7,487,917 2.9%
CG at Research Park Huntsville 1987/94 736 809,000 75.3% 655 4,585,282 1.8%
CG at Riverchase Birmingham 1984/91 468 746,000 95.5% 721 3,794,680 1.5%
Ski Lodge Tuscaloosa Tuscaloosa 1976/92 304 273,000 94.4% 415 1,498,359 0.6%
CV at Hillwood Montgomery 1984 160 151,000 95.0% 534 1,035,246 0.4%
---------- ------------ ------- ------- ------------- ----------
Subtotal - Alabama (20 Properties) 7,293 7,384,000 92.4% 613 46,106,000 18.0%
---------- ------------ ------- ------- ------------- ----------
Florida:
CG at Kirkman Orlando 1991 370 337,000 93.0% 771 3,363,400 1.3%
CG at Carrollwood Tampa 1966 244 286,000 95.5% 827 2,239,291 0.9%
CG at Bayshore Bradenton 1997 376 369,000 (7) 720 2,558,815 1.0%
CG at Heathrow Orlando 1997 312 370,000 100.0% 833 3,197,016 1.2%
CG at Hunter's Creek Orlando 1997 496 624,000 95.4% 868 5,010,829 2.0%
CG at Palma Sola Bradenton 1992 340 292,000 92.0% 699 2,409,968 0.9%
CG at Palm Aire Sarasota 1991 248 252,000 97.2% 806 2,363,955 0.9%
CG at Gainesville Gainesville 1989/93/94 560 489,000 98.8% 757 4,688,565 1.8%
CG at Ponte Vedra Jacksonville 1988 240 212,000 92.8% 680 1,717,797 0.7%
CV at Oakleigh Pensacola 1997 176 186,000 94.0% 738 1,512,500 0.6%
CV at River Hills Tampa 1991/97 776 465,000 92.3% 663 4,350,077 1.7%
CV at Lake Mary Orlando 1991/95 504 431,000 99.0% 645 3,873,508 1.5%
CV at Cordova Pensacola 1983 152 116,000 95.0% 492 874,374 0.3%
CG at Lakewood Ranch Sarasota 1999 64 64,000 (7) 937 27,955 (6) 0.0%
CG at Citrus Park Tampa 1999 16 48,000 (7) 851 5,074 (6) 0.0%
CG at Cypress Crossing Orlando 1999 140 183,000 (7) 1,138 314,498 (6) 0.1%
---------- ------------ ------- ------- ------------- ----------
Subtotal - Florida (16 Properties) 5,014 4,724,000 95.5% 701 38,507,622 14.9%
---------- ------------ ------- ------- ------------- ----------
Georgia:
CG at Barrington Macon 1996 176 201,000 96.0% 655 1,204,779 0.5%
CG at Wesleyan Macon 1997 264 288,000 (7) 668 1,675,365 0.7%
CV at North Ingle Macon 1983 140 133,000 88.6% 562 750,802 0.3%
CV at White Bluff Savannah 1986 120 108,000 95.0% 668 857,625 0.3%
CV at Vernon Marsh Savannah 1986/87 178 151,000 92.7% 662 1,267,517 0.5%
CG at Spring Creek Macon 1992/94 296 328,000 96.3% 622 2,096,104 0.8%
CV at Stockbridge Stockbridge 1993/94 240 253,000 97.9% 686 1,881,614 0.7%
CV at Timothy Woods Athens 1996 204 211,000 97.6% 737 1,591,704 0.6%
CV at Walton Way Augusta 1984 256 254,000 91.5% 561 751,423 (6) 0.3%
---------- ------------ ------- ------- ------------- ----------
Subtotal - Georgia (9 Properties) 1,874 1,927,000 90.1% 642 12,076,933 4.7%
---------- ------------ ------- ------- ------------- ----------
Mississippi:
CG at Natchez Trace Jackson 1995/97 328 343,000 93.0% 636 2,477,790 1.0%
---------- ------------ ------- ------- ------------- ----------
Subtotal - Mississippi (1 Property) 328 343,000 93.0% 636 2,477,790 1.0%
---------- ------------ ------- ------- ------------- ----------
South Carolina:
CV at Ashley Plantation Bluffton 1998 200 205,000 99.0% 824 1,295,982 (6) 0.5%
CV at Caledon Wood Greenville 1995/96 350 367,000 82.9% 857 2,433,183 0.9%
---------- ------------ ------- ------- ------------- ----------
Subtotal - South Carolina (2 Properties) 550 572,000 88.8% 845 3,729,165 1.4%
---------- ------------ ------- ------- ------------- ----------
Texas:
CV at Haverhill San Antonio 1997 322 327,000 92.0% 923 1,564,509 (6) 0.6%
---------- ------------ ------- ------- ------------- ----------
Subtotal - Texas (1 Property) 322 327,000 92.0% 923 1,564,509 0.6%
---------- ------------ ------- ------- ------------- ----------
TOTAL (49 Properties) 15,381 15,277,000 93.5% $ 642(5)$104,462,019 40.6%
========== ============ ======= ======= ============= ==========
</TABLE>
(footnotes on next page)
<PAGE>
(1)All Multifamily Properties are 100% owned by the Company with the exception
of CV at Haverhill, which is 79.8% owned by the Company. In the listing of
Multifamily Property names, CG has been used as an abbreviation for Colonial
Grand and CV as an abbreviation for Colonial Village.
(2)Year initially completed and, where applicable, year(s) in which additional
phases were completed at the Property.
(3)Units (in this table only) refers to multifamily apartment units. Number of
Units includes all apartment units occupied or available for occupancy at
December 31, 1998.
(4)Percent of Total 1998 Property Revenue represents the Multifamily Property's
proportionate share of all revenue from the Company's 106 Properties.
(5)Represents weighted average rental rate per unit of the 49 Multifamily
Properties at December 31, 1998.
(6)Represents revenues from the date of the Company's acquisition/expansion of
this Property in 1998 through December 31, 1998.
(7)Expanded or newly developed property currently undergoing lease-up.
The following table sets forth the total number of apartment units, percent
leased and average base rental rate per apartment unit as of the end of each of
the last five years for the Multifamily Properties:
<TABLE>
<CAPTION>
Average Base
Number Percent Rental Rate
Year-End of Units Leased (2) Per Unit
- -------------------- ------ ---------- ----------
<S> <C> <C> <C>
December 31, 1998 15,381 93.5% $ 642
December 31, 1997 13,759 93.8% $ 631
December 31, 1996 13,617 94.8% $ 579
December 31, 1995 11,239 95.7% $ 552
December 31, 1994 10,972 96.0% $ 531
</TABLE>
(1) Units (in this table only) refers to multifamily apartment units owned at
year end.
(2) Represents weighted average occupancy of the Multifamily Properties that had
achieved stabilized occupancy at the end of the respective period.
Retail Properties
The 40 Retail Properties owned by the Company at December 31,
1998, contain a total of approximately 13.5 million square feet (including space
owned by anchor tenants). Twelve of the Retail Properties are located in
Alabama, twelve are located in Florida, seven are located in Georgia, five are
located in North Carolina, one is located in South Carolina, one is located in
Tennessee, and two Retail Properties are located in Virginia. The Retail
Properties consist of 15 enclosed regional malls, two power centers, and 23
neighborhood shopping centers. Nine of the 40 Retail Properties were originally
developed by the Company, two were acquired in 1994, six were acquired in 1995,
four were acquired in 1996, 16 were acquired in 1997, and three were acquired in
1998. All of the Retail Properties are managed by the Company.
The following table sets forth certain information relating to
the Retail Properties as of and for the year ended December 31, 1998.
<PAGE>
Retail Properties
<TABLE>
Average
Base
Gross Rent
Leasable Per Total Retail % of
Year Area Number Total Leased Property Total1998
Retail Completed (Square Of Percent Annualized Square Revenue for Prop.
Property (1) Location (2) Feet) (3) Stores Leased (3) Base Rent Foot (4) 1998 Rev.(5)
- ------------------------------------------------------------------------------------------------------------------------------------
Alabama:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Colonial Mall Decatur Decatur 1979/89 494,000 55 88.1% $ 3,464,000 $ 17.48 $ 5,157,527 2.0%
81,000 (6)
Brookwood Village Birmingham 1973/91 463,000 64 88.2% 3,827,000 13.99 6,303,392 2.5%
231,000 (6)
Colonial Mall Gadsden Gadsden 1974/91 492,000 57 96.6% 2,623,000 17.09 4,881,547 1.9%
Colonial Mall Auburn/Opelika Auburn 1973/84/89 399,000 54 89.8% 2,409,000 16.53 4,215,395 1.6%
Colonial Promenade Montgomery Montgomery 1990/97 274,000 39 97.8% 2,242,000 12.70 3,080,774 1.2%
174,000 (6)
Colonial Shoppes McGehee Montgomery 1986 55,000 14 100.0% 581,000 12.23 741,873 0.3%
50,000 (6)
Colonial Shoppes Bellwood Montgomery 1988 37,000 15 94.5% 462,000 11.43 538,858 0.2%
50,000 (6)
Old Springville Shopping Center Birmingham 1982 64,000 9 94.0% 170,000 7.75 537,756 0.2%
Colonial Shoppes Inverness Birmingham 1984 28,000 5 100.0% 400,000 12.58 509,360 0.2%
Olde Town Shopping Village Montgomery 1978/90 39,000 15 89.6% 324,000 9.37 395,500 0.2%
Bel Air Mall Mobile 1966/90/97 1,434,000 92 87.8% 7,394,000 15.11 63,889 (7) 0.0%
Parkway City Mall Huntsville 1975 414,000 44 86.0% 1,423,000 11.35 62,267 (7) 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-Alabama (12 Properties) 4,779,000 463 90.2% 25,319,000 14.39 26,488,138 10.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Florida:
Colonial Promenade University Park Orlando 1986/89 399,000 41 96.2% 2,961,000 12.56 4,237,886 1.7%
Colonial Promenade Tuskawilla Orlando 1990 217,000 28 100.0% 1,084,000 10.27 1,847,793 0.7%
Colonial Promenade Burnt Store Punta Gorda 1990 199,000 21 91.6% 1,199,000 10.69 1,529,212 0.6%
Colonial Promenade Winter Haven Orlando 1986 197,000 26 92.0% 1,329,000 9.03 1,626,772 0.6%
Northdale Court Tampa 1988 193,000 19 75.1% 1,107,000 10.38 1,941,326 0.8%
55,000 (6)
Colonial Promenade Bear Lake Orlando 1990 125,000 18 70.7% 627,000 8.18 1,737,043 0.7%
Colonial Shoppes Paddock Park Ocala 1988 87,000 20 91.6% 658,000 12.82 847,439 0.3%
Colonial Promenade Bardmoor St. Petersbu1981 158,000 25 74.0% 1,108,000 15.53 1,810,622 0.7%
Colonial Promenade Hunter's Creek Orlando 1993/95 222,000 24 100.0% 1,944,000 15.65 2,622,659 1.0%
Colonial Promenade Wekiva Orlando 1990 209,000 21 80.3% 1,824,000 17.82 2,459,186 1.0%
Colonial Promenade Lakewood Jacksonville1995 195,000 45 93.2% 1,078,000 12.56 2,391,810 0.9%
Orlando Fashion Square Orlando 1973/89/93 711,000 227 94.6% 9,722,000 16.49 10,212,704 (7) 4.0%
361,000 (6)
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-Florida (12 Properties) 3,328,000 515 90.6% 24,641,000 13.76 33,264,452 13.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Georgia:
Macon Mall Macon 1975/88/97 757,000 150 92.4% 10,047,000 23.95 17,000,938 6.6%
682,000 (6)
Beechwood Center Athens 1963/92 336,000 41 98.5% 2,411,000 10.56 3,028,040 1.2%
Britt David Shopping Center Columbus 1990 110,000 9 100.0% 711,000 12.85 947,982 0.4%
Lakeshore Mall Gainesville 1984-97 518,000 66 92.8% 3,375,000 17.44 5,636,174 2.2%
Valdosta Mall Valdosta 1982-85 325,000 51 95.1% 2,884,000 16.99 5,625,802 2.2%
74,000 (6)
Glynn Place Mall Brunswick 1986 285,000 47 84.0% 2,443,000 16.32 3,868,983 1.5%
226,000 (6)
Shoppes at Mansell (8) Atlanta 1996/97 - 8 92.9% 366,000 18.78 190,369 (7) 0.1%
Village at Roswell Summit Atlanta 1988 25,000 9 80.4% 371,000 14.56 399,001 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-Georgia (7 Properties) 3,338,000 381 92.9% 22,608,000 18.69 36,697,289 14.4%
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina:
Holly Hill Mall Burlington 1969/86/94 422,000 51 95.7% 2,549,000 15.50 5,168,367 2.0%
Mayberry Mall Mount Airy 1968/86 150,000 17 94.6% 713,000 10.64 1,040,238 0.4%
55,000 (6)
Quaker Village Greensboro 1968/88/97 114,000 33 100.0% 1,078,000 12.38 1,480,977 0.6%
Yadkin Town Center Yadkinville 1971/97 94,000 12 100.0% 636,000 7.71 726,603 0.3%
Stanly Plaza Locust 1987/96 47,000 7 100.0% 250,000 7.33 303,020 0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-North Carolina (5 Properties) 882,000 120 96.8% 5,226,000 12.59 8,719,205 3.4%
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina:
Briarcliffe Mall Myrtle Beach1986 488,000 64 94.5% 2,999,000 19.68 7,603,861 3.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-South Carolina (1 Property) 488,000 64 94.5% 2,999,000 19.68 7,603,861 3.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee:
Rivermont Shopping Center Chattanooga 1986/97 75,000 9 97.1% 210,000 6.72 491,315 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-Tennessee (1 Property) 75,000 9 97.1% 210,000 6.72 491,315 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Virginia:
Staunton Mall Staunton 1969/86/97 422,000 46 93.5% 1,808,000 8.62 3,116,642 1.2%
Abingdon Towne Centre Abingdon 1987/96 166,000 19 100.0% 1,024,000 10.03 1,191,174 0.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal-Virginia (2 Properties) 588,000 65 95.3% 2,832,000 8.92 4,307,816 1.7%
- -----------------------------------------------------------===========---====================================================-======
Total (40 Properties) 13,478,000 1,617 91.9% $ 83,835,000 $ 14.48 $ 117,572,076 46.0%
- -----------------------------------------------------------===========---===========================================================
</TABLE>
(footnotes on next page)
<PAGE>
(1) All Retail Properties are 100% owned by the Company, with the exception
of Orlando Fashion Square and Parkway City mall, which are owned
50% by the Company.
(2) Year initially completed and, where applicable, year(s) in which
the Property was substantially renovated or an additional phase of the
Property was completed.
(3) Total GLA includes space owned by anchor tenants, but Percent
Leased excludes such space.
(4) Includes specialty store space only.
(5) Percent of Total 1998 Property Revenue represents the Retail Property's
proportionate share of all revenue from the 106 Properties.
(6) Represents space owned by anchor tenants.
(7) Represents revenues from the date of the Company's acquisitions of
the Property in 1998 through December 31, 1998.
(8) This Property is located within the Mansell Office Park and is included
in propertytotal with the Mansell Office Park.
The following table sets forth the total gross leasable area, percent
leased and average base rent per leased square foot as of the end of each of the
last five years for the Retail Properties:
<TABLE>
<CAPTION>
Gross Average
Leasable Area Percent Base Rent Per
Year-End (Square Feet) Leased Leased Square Foot (2)
- -------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
December 31, 1998 11,105,000 91.9% $ 14.48
December 31, 1997 8,880,000 93.3% $ 14.38
December 31, 1996 4,856,000 93.8% $ 14.66
December 31, 1995 3,758,000 93.1% $ 13.23
December 31, 1994 2,467,000 95.8% $ 12.61
</TABLE>
(1) Excludes 2,373,000 square feet of space owned by anchor tenants.
(2) Average base rent per leased square foot is calculated using specialty
store year-end base rent figures.
The following table sets out a schedule of the lease expirations
for leases in place as of December 31, 1998, for the Retail Properties:
<TABLE>
<CAPTION>
Net Rentable Annualized Percent of Total
Year of Number of Area Of Base Rent of Annual Base Rent
Lease Tenants with Expiring Leases Expiring Represented by
Expiration Expiring Leases (Square Feet) (1) Leases (1)(2) Expiring Leases (1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 242 632,000 7,196,000 8.0%
2000 276 1,352,000 11,308,000 12.5%
2001 198 689,000 8,054,000 8.9%
2002 216 745,000 9,587,000 10.6%
2003 154 639,000 6,874,000 7.6%
2004 91 1,065,000 6,135,000 6.8%
2005 102 316,000 6,120,000 6.8%
2006 93 689,000 7,590,000 8.4%
2007 115 706,000 8,407,000 9.3%
2008 65 611,000 5,325,000 5.9%
Thereafter 66 2,357,000 13,884,000 15.3%
=============== ================ ============== ===========
1,618 9,801,000 $ 90,480,000 100.0%
=============== ================ ============== ===========
<FN>
(1) Excludes 2,373,000 square feet of space owned by anchor tenants and
1,304,000 square feet of space not leased as of December 31, 1998.
(2) Annualized base rent is calculated using base rents as of December 31, 1998.
</FN>
</TABLE>
Office Properties
The 17 Office Properties owned by the Company at December 31,
1998, contain a total of approximately 2.7 million rentable square feet.
Fourteen of the Office Properties are located in Alabama (representing 67% of
the office portfolio's net rentable square feet) , one is located in Atlanta,
Georgia and two are located in Florida. The Office Properties range in size from
approximately 30,000 square feet to 536,000 square feet. Four of the Office
Properties were developed by Colonial, five of the Properties were acquired at
various times between 1980 and 1990, four of the Properties were acquired in
1997, and four of the Properties were acquired in 1998. All of the Office
Properties are managed by the Company.
The following table sets forth certain additional information
relating to the Office Properties as of and for the year ended December 31,
1998.
Office Properties
<TABLE>
<CAPTION>
Average
Base
Rent
Rentable Per Total Office Percent of
Year Area Total Leased Property Total 1998
Office Completed Square Percent Annualized Square Revenue for Property
Property (1) Location (2) Feet Leased Base Rent Foot2) 1998 (3) Revenue (4)
- -------------------- ---------- --------- ----------- -------- ----------- -------- ---------- --------
Alabama:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interstate Park Montgomery 1982-85/89 227,000 92.5% $ 2,816,000 $ 13.71 $ 3,104,381 1.1%
Riverchase Center Birmingham 1984-88 306,000 92.7% 2,727,000 10.05 3,150,860 1.1%
International Park Birmingham 1987/89 93,000 100.0% 2,588,000 14.24 1,432,125 0.6%
Colonial Plaza Birmingham 1982 168,000 34.0% 1,010,000 14.73 2,913,954 1.1%
Progress Center Huntsville 1983-91 225,000 91.0% 1,681,000 9.08 2,093,690 0.8%
Lakeside Office Park Huntsville 1989/90 121,000 100.0% 1,370,000 12.72 1,624,128 0.6%
AmSouth Center Huntsville 1990 157,000 94.2% 2,516,000 17.74 2,973,182 1.2%
P&S Building Gadsden 1946/76/91 40,000 100.0% 178,000 4.50 178,020 0.1%
250 Commerce St Montgomery 1904/81 35,000 100.0% 366,000 10.50 419,008 0.2%
Anderson Block Bldg(5)Montgomery 1981/83 34,000 97.8% 334,000 10.39 121,413 0.0%
Land Title Bldg. Birmingham 1975 30,000 100.0% 393,000 13.19 148,880 0.1%
Independence Plaza Birmingham 1979 106,000 97.0% 1,294,000 13.07 1,460,438 (6) 0.6%
Shades Brook Building Birmingham 1979 35,000 92.5% 151,000 13.82 225,724 (6) 0.1%
Perimeter Corporate
Park Huntsville 1986/89 233,000 99.7% 2,834,000 13.96 3,200,829 (6) 1.2%
----------- -------- ----------- -------- ---------- --------
Subtotal-Alabama (14 Properties) 1,810,000 89.7% 20,258,000 12.58 23,046,632 8.8%
----------- -------- ----------- -------- ---------- --------
Florida:
Concourse Center Tampa 1981/85 290,000 97.7% 2,580,000 14.95 2,344,572 (6) 0.9%
University Park Orlando 1985 71,000 99.4% 769,000 13.47 913,686 0.4%
----------- -------- ----------- -------- ---------- --------
Subtotal-Florida (2 Properties) 361,000 98.0% 3,349,000 14.65 3,258,258 1.3%
----------- -------- ----------- -------- ---------- --------
Georgia:
Mansell Business Park Atlanta 1987/96/97 536,000 96.6% 7,277,000 20.53 8,104,019 3.2%
----------- -------- ----------- -------- ---------- --------
Subtotal-Georgia (1 Property) 536,000 96.6% 7,277,000 20.53 8,104,019 3.2%
=========== ======== =========== ======== ========== ========
TOTAL (17 Properties) 2,707,000 92.2% $ 30,884,000 $ 14.58 $34,408,909 13.3%
=========== ======== =========== ======== ========== ========
<FN>
(1) All Office Properties are 100% owned by the Company with the exceptions of
Anderson Block and Land Title Building, which are each 33.33% owned by the
Company.
(2) Year initially completed and, where applicable, most recent year in which
the Property was substantially renovated or in which an additional phase of
the Property was completed.
(3) Total 1998 Office Property revenue is the Company's share (based on its
percentage ownership of the property) of total Office Property revenue,
unless otherwise noted.
(4) Percent of Total 1998 Property Revenue represents the Office Property's
proportionate share of all revenue from the Company's 106 Properties.
(5) The Company has a leasehold interest in this Property.
(6) Represents revenues from the date of the Company's acquisition of this
Property in 1997 through December 31, 1998.
</FN>
</TABLE>
The following table sets out a schedule of the lease expirations for leases
in place as of December 31, 1998, for the Office Properties (including all lease
expirations for partially-owned Properties).
<TABLE>
<CAPTION>
Net Rentable Annualized Percent of Total
Year of Number of Area Of Base Rent of Annual Base Rent
Lease Tenants with Expiring Leases Expiring Represented by
Expiration Expiring Leases(Square Feet) (1) Leases (1)(2) Expiring Leases (1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 84 455,000 5,900,000 19.1%
2000 107 487,000 6,348,000 20.6%
2001 62 332,000 3,638,000 11.8%
2002 44 294,000 3,814,000 12.3%
2003 43 347,000 4,867,000 15.8%
2004 14 126,000 1,784,000 5.8%
2005 5 148,000 2,131,000 6.9%
2006 4 110,000 1,253,000 4.1%
2007 2 39,000 636,000 2.1%
2008 2 26,000 494,000 1.6%
Thereafter 3 2,000 19,000 0.1%
========== ============= =============== ============
370 2,366,000 $ 30,884,000 100.0%
========== ============= =============== ============
<FN>
(1) Excludes 341,000 square feet of space not leased as of December 31, 1998.
(2) Annualized base rent is calculated using base rents as of December 31, 1998.
</FN>
</TABLE>
The following sets forth the net rentable area, total percent
leased and average base rent per leased square foot for each of the last five
years for the Office Properties: <TABLE> <CAPTION>
Total Average Base
Rentable Area Percent Rent Per Leased
Year-end (Square Feet) Leased Square Foot (1)
- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1998 2,707,000 92.2% $ 14.58
December 31, 1997 1,859,000 95.5% $ 12.18
December 31, 1996 1,009,000 97.4% $ 13.80
December 31, 1995 1,009,000 94.0% $ 13.52
December 31, 1994 1,009,000 95.0% $ 12.99
</TABLE>
(1) Average base rent per leased square foot is calculated using base rents as
of December 31 for each respective year.
Undeveloped Land
The Company owns five undeveloped land parcels consisting of
approximately 144.7 acres (collectively, the "Land"). These parcels are adjacent
to three of the Properties and are suitable for potential expansion at those
Properties. The Land suitable for expansion is located adjacent to a Multifamily
Property and two Retail Properties. Land adjacent to Multifamily Properties
typically will be considered for potential development of another phase of an
existing Multifamily Property if the Company determines that the particular
market can absorb additional apartment units. The Company currently owns one
such parcel. For expansions at Retail Properties, the Company owns parcels both
contiguous to the boundaries of Retail Properties, which would accommodate
expansion of the mall or shopping center, and outparcels which are suitable for
restaurants, financial institutions or free standing retailers. The Company owns
three such parcels.
<PAGE>
Property Markets
The table below sets forth certain information with respect to
the geographic concentration of the Properties as of December 31, 1998.
Geographic Concentration of Properties
<TABLE>
<CAPTION>
Percent
Units Total Of Total
(Multifamily) GLA NRA 1998 Property 1998 Property
State (1) (Retail) (2) (Office)(3) Revenue Revenue
- -------------------- ---------- ------------ ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
Alabama 7,293 4,779,000 1,810,000 $ 95,640,770 37.4%
Florida 5,014 3,328,000 361,000 75,030,332 29.5%
Georgia 1,874 3,338,000 536,000 56,878,241 22.3%
Mississippi 328 -0- -0- 2,477,790 1.0%
North Carolina -0- 882,000 -0- 8,719,205 3.4%
South Carolina 550 488,000 -0- 11,333,026 3.9%
Tennessee -0- 75,000 -0- 491,315 0.2%
Texas 322 -0- -0- 1,564,509 0.6%
Virginia -0- 588,000 -0- 4,307,816 1.7%
---------- ------------ ----------- ------------ --------
Total 15,381 13,478,000 2,707,000 $256,443,004 100.0%
========== ============ =========== ============ ========
<FN>
(1) Units (in this table only) refer to multifamily apartment units.
(2) GLA refers to gross leaseable area of retail space.
(3) NRA refers to net rentable area of office space.
</FN>
</TABLE>
The Company believes that the demographic and economic trends and
conditions in the markets where the Properties are located indicate a potential
for continued growth in property net operating income. The Properties are
located in a variety of distinct submarkets within Alabama, Florida, Georgia,
Mississippi, North Carolina, South Carolina, Tennessee, Texas and Virginia;
however, Birmingham, Huntsville and Montgomery, Alabama, Orlando, Tampa and
Sarasota/Bradenton, Florida, and Macon and Atlanta, Georgia, are the Company's
primary markets. The Company believes that its markets in these nine states,
which are characterized by stable and increasing population and employment
growth, should continue to provide a steady demand for multifamily, retail, and
office properties.
<PAGE>
Mortgage Financing
Certain of the Properties are subject to mortgage indebtedness.
The Properties whose financial results are consolidated in the financial
statements of the Company are subject to existing mortgage indebtedness and
other notes payable in an aggregate amount as of December 31, 1998, of
approximately $909.3 million carrying a weighted average interest rate of 7.07%
and a weighted average maturity of 6.6 years. The mortgage indebtedness on the
Properties as of December 31, 1998, is set forth in the table below:
Mortgage Debt and Notes Payable
<TABLE>
<CAPTION>
Anticipated
Annual Debt
Principal Service Estimated
Interest Balance (as of (1/1/99- Maturity Balance Due
Property (1) Rate 12/31/98) 12/31/99) Date (2) on Maturity
- ------------------------------------ ----------- ---------------- --------------- ------------ ----------------
Multifamily Properties:
<S> <C> <C> <C> <C> <C> <C>
CG at Carrollwood 8.870% 6,230,000 $ 552,601 03/05/05 $ 6,230,000
CG at Natchez Trace 7.950% 6,830,143 574,150 09/01/35 47,813
CG at Natchez Trace 8.000% 4,066,699 339,941 02/01/37 29,071
CV at Rocky Ridge 5.900% 6,000,000 354,000 08/01/02 (5) 6,000,000
CV at Rocky Ridge 7.625% 1,245,000 190,137 08/01/02 (3) 841,667
CG at Galleria Woods 6.875% 7,101,608 7,345,726 06/15/99 7,035,235
CG at Mountain Brook 8.000% 11,929,545 1,141,187 01/10/00 11,742,632
CV at Cahaba Heights 8.060% 3,607,835 374,615 05/10/00 3,502,055
CV at Inverness 4.520% 9,900,000 447,480 06/15/26 (4) 9,685,749
CV at Inverness Lakes 5.900% 4,000,000 236,000 08/01/02 (5) 4,000,000
CV at Inverness Lakes 7.625% 1,583,333 206,257 08/01/02 (6) 1,234,167
CG at Galleria 4.440% 22,400,000 994,560 06/15/26 (4) 22,400,000
CG at Research Park 4.490% 12,775,000 573,598 06/15/26 (4) 12,775,000
CV at White Bluff 4.520% 4,500,000 203,400 07/01/26 (4) 4,500,000
CV at Vernon Marsh 4.570% 3,400,000 155,380 07/01/26 (4) 3,400,000
CV at Hillwood 5.900% 3,330,000 196,470 08/01/02 (5) 3,300,000
CV at Hillwood 7.625% 1,515,000 197,820 08/01/02 (6) 1,179,167
Retail Properties:
Colonial Promenade Hunter's Creek 8.800% 10,089,395 1,061,620 10/01/01 9,578,044
Mayberry Mall 9.220% 3,350,078 363,445 10/01/01 3,237,064
Colonial Promenade Montgomery 9.250% 10,810,000 999,925 07/01/00 10,810,000
Rivermont Shopping Center 10.125% 1,693,400 273,553 09/01/08 52,091
Colonial Promenade University Park 8.870% 14,445,000 1,281,272 03/05/05 14,445,000
Village at Roswell Summit 8.930% 1,628,831 170,306 09/01/05 1,401,860
Office Properties:
2100 International Park 8.650% 1,967,410 2,095,046 10/01/99 1,931,425
1800 International Park 6.500% 1,793,554 1,880,990 10/01/99 1,793,554
Interstate Park 8.500% 4,208,107 642,311 08/01/03 2,648,144
Riverchase Center 7.880% 8,238,096 902,959 12/01/00 7,766,043
Mansell Overlook 100 8.250% 17,419,860 1,589,386 01/10/08 15,285,811
Mansell One Story Bldg. 10 8.625% 13,876,373 1,331,115 06/01/00 13,682,324
Perimeter Corporate Park 8.680% 5,536,731 609,507 12/01/03 4,858,772
Other debt:
Land Loan 7.020% 642,641 45,113 09/30/00 649,897
Line of Credit, incl. Comp. Bid 6.492% (7) 174,489,000 11,327,826 07/10/00 (8) 174,489,000
Unsecured Senior Notes 7.500% 64,916,320 4,868,724 07/15/01 65,000,000
Unsecured Senior Notes 8.050% 64,770,044 5,213,989 07/15/06 65,000,000
Medium Term Notes 7.050% 50,000,000 3,525,000 12/15/03 50,000,000
Medium Term Notes 7.160% 50,000,000 3,580,000 01/17/03 50,000,000
Medium Term Notes 6.960% 75,000,000 5,220,000 07/26/04 75,000,000
Medium Term Notes 6.960% 25,000,000 1,740,000 08/01/05 25,000,000
Medium Term Notes 6.980% 25,000,000 1,745,000 09/26/05 25,000,000
Senior Notes 7.000% 174,033,125 12,182,319 07/14/07 175,000,000
================ =============== ================
TOTAL $ 909,322,129 $ 76,732,725 $ 890,531,585
================ =============== ================
(footnotes presented on the next page)
<PAGE>
<FN>
(1) As noted in the table, certain Properties were developed in phases and
separate mortgage indebtedness may encumber each of the various phases. In
the listing of property names, CG has been used as an abbreviation for
Colonial Grand and CV as an abbreviation for Colonial Village.
(2) All of the mortgages can be prepaid at any time, subject to prepayment
penalties calculated typically on a percentage basis, except for the
mortgages encumbering CV at Rocky Ridge, CV at Inverness Lakes, and CV at
Hillwood, which are closed to prepayment for varying lengths of time.
(3) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2007.
(4) These loans are financed through tax-exempt bonds which are credit enhanced
by Fannie Mae. The loans, which bear interest at a weekly variable interest
rate, require monthly interest payments through June 2006 and principal and
interest payments from July 2006 through June 2026. The weighted average
interest rate of these three was 4.51% at December 31, 1998. On February
15, 1999, the Company entered into an interest rate swap for these bonds at
a rate of 3.23%.
(5) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2022.
(6) The maturity date noted represents the date on which credit enhancement
expires for the tax-exempt municipal bonds put in place as part of the
original financing for the Property. The stated maturity date for the loans
is August 1, 2010.
(7) This line of credit facility bears interest at a variable rate, based on
LIBOR plus a spread that ranges from 80 to 135 basis points. At December
31, 1998, line of credit facility bore interest at a rate of 95 basis
points above LIBOR. The facility also includes a competitive bid feature
that allows the Company to convert up to $125 million under the line of
credit to a fixed rate, for a fixed term not to exceed 90 days. At December
31, 1998, $65 million was outstanding under a competitive bid loan which
bore interest at a weighted average rate of 6.29%.
(8) This credit facility has a term of two years beginning in July 1998 and
provides for a two-year amortization in the event of non-renewal.
</FN>
</TABLE>
In addition to the foregoing mortgage debt, the two Office
Properties and one Retail Property in which the Company owns partial interests
(and which therefore are not consolidated in the financial statements of the
Company) also are subject to existing mortgage indebtedness. The Company's
pro-rata share of such indebtedness as of December 31, 1998, was $33,512,000
which carried a weighted average interest rate of 6.9%. The maturity dates of
these loans range from May 31, 1999 to January 15, 2006 and as of December 31,
1998, the loans had a weighted average maturity of 6.6 years.
Item 3. Legal Proceedings.
Neither the Company nor the Properties are presently subject to
any material litigation nor, to the Company's knowledge, is any material
litigation threatened against the Company or the Properties, other than routine
litigation arising in the ordinary course of business which is expected to be
covered by liability insurance.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the Company's shareholders during
the fourth quarter of 1998.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.
The following sets forth the high and low sale prices for the
Common Shares for each quarter in the two-year period ended December 31, 1998,
as reported by the New York Stock Exchange Composite Tape, and the dividends
paid by the Company with respect to each such period.
Calendar Period High Low Distribution
-----------------------------------------------------------------
1998:
First Quarter...... $ 31.875 $ 29.438 $.55
Second Quarter..... $ 32.188 $ 29.188 $.55
Third Quarter...... $ 31.188 $ 24.000 $.55
Fourth Quarter..... $ 29.000 $ 24.625 $.55
1997:
First Quarter...... $ 31.875 $ 28.125 $.52
Second Quarter..... $ 30.125 $ 26.625 $.52
Third Quarter...... $ 31.375 $ 27.500 $.52
Fourth Quarter..... $ 30.750 $ 27.750 $.52
On March 10, 1999, the last reported sale price of the Common
Shares on the NYSE was $26.375. On March 10, 1999, the Company had 626
shareholders of record.
Item 6. Selected Financial Data.
The information required by this item is hereby incorporated by
reference to the material appearing in the 1998 annual report to shareholders
(the "Annual Report to Shareholders"), filed as Exhibit 13.1 hereto, under the
caption "Selected Financial Information."
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information required by this item is hereby incorporated by
reference to the material appearing in the Annual Report to Shareholders, filed
as Exhibit 13.1 hereto, under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" , except that the material
under the subcaption "Year 2000 Issue--Information Systems--Accounting and
Property Management" is revised to read as follows:
The general ledger software systems are not currently compliant.
New versions of these software systems were written and delivered to the Company
during the first quarter of 1999. The Company found the new versions would not
run in the current environment. The vendor continues to develop the software
systems and has represented to the Company that it expects to deliver Y2K
compliant systems during the early part of the third quarter. Upon receipt the
Company will test the systems and the software upgrades and, assuming that the
systems and upgrades are found to be operational, will install the systems in
the third and fourth quarters with a goal of becoming fully compliant during the
early part of the fourth quarter. While the vendor is revising the systems, the
Company intends to pursue alternative software systems offered by other vendors.
If the Company finds an acceptable alternative software system that is Y2K
compliant, it may implement that system instead of the system being revised by
the Company's current vendor. If the Company were to implement an alternative
system, the Company may be able to achieve full Y2K compliance as early as the
third quarter.
Item 8. Financial Statements and Supplementary Data.
The financial statements of the Company are hereby incorporated
by reference to the Consolidated Financial Statements of Colonial Properties
Trust appearing in the Annual Report to Shareholders, filed as Exhibit 13.1
hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Trustees and Executive Officers of the Registrant.
The information required by this item with respect to trustees
and compliance with the Section 16(a) reporting requirements is hereby
incorporated by reference to the material appearing in the Company's definitive
proxy statement for the annual meeting of shareholders to be held in 1999 (the
"Proxy Statement") under the captions "Election of Trustees" and "Section 16(a)
Beneficial Ownership Reporting Compliance." Information required by this item
with respect to executive officers is provided in Item 1 of this report. See
"Executive Officers of the Company."
Item 11. Executive Compensation.
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the caption
"Executive Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the caption
"Voting Securities and Principal Holders Thereof."
Item 13. Certain Relationships and Related Transactions.
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Executive Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions."
<PAGE>
Part IV
Item 14. Exhibits, Financial Schedules, and Reports on Form 8-K.
14(a)(1) and (2) Financial Statements and Schedules
Index to Financial Statements and Financial Statement Schedules
Financial Statements:
The following financial statements of the Company are hereby
incorporated by reference to the Consolidated Financial Statements of Colonial
Properties Trust appearing in the Annual Report to Shareholders:
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Income for the years ended
December 31, 1998, 1997, and 1996
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1998, 1997, and 1996
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997, and 1996
Notes to Consolidated Financial Statements
Report of Independent Accountants
Financial Statement Schedules:
Schedule III Real Estate and Accumulated Depreciation
Report of Independent Accountants
All other schedules have been omitted because the required
information of such other schedules is not present in amounts sufficient to
require submission of the schedule or because the required information is
included in the consolidated financial statements.
14(a)(3) Exhibits
* 3.1 Declaration of Trust of Company.
* 3.2 Bylaws of the Company.
(phi) 4.1 Articles Supplementary of 83/4% Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest of
the Company.
4.2 Articles Supplementary of Series 1998 Junior Participating
Preferred Shares of Beneficial Interest of the Company.
4.3 Articles Supplementary of 8.875% Series B Cumulative
Redeemable Perpetual Preferred Shares of the Company.
** 10.1 Second Amended and Restated Agreement of Limited
Partnership of the Operating Partnership, as amended.
+ 10.2.1 Registration Rights and Lock-Up Agreement dated
September 29, 1993, among the Company and the persons named
therein.
(psi) 10.2.2 Registration Rights and Lock-Up Agreement dated
March 25, 1997, among the Company and the persons named
therein. (EDGAR Version Only)
(psi) 10.2.3 Registration Rights and Lock-Up Agreement dated
November 4, 1994, among the Company and the persons named
therein. (EDGAR Version Only)
(psi) 10.2.4 Registration Rights and Lock-Up Agreement dated
August 20, 1997, among the Company and the persons named
therein. (EDGAR Version Only)
(psi) 10.2.5 Registration Rights and Lock-Up Agreement dated
November 1, 1997, among the Company and the persons named
therein. (EDGAR Version Only)
(psi) 10.2.6 Registration Rights and Lock-Up Agreement dated
July 1, 1997, among the Company and the persons named
therein. (EDGAR Version Only)
(psi) 10.2.7 Registration Rights and Lock-Up Agreement dated
July 1, 1996, among the Company and the persons named
therein. (EDGAR Version Only)
10.2.8 Registration Rights Agreement dated February 23, 1999,
among the Company, Belcrest Realty Corporation, and Belair
Real Estate Corporation. (EDGAR Version Only)
10.2.9 Registration Rights and Lock-Up Agreement dated
July 1, 1998, among the Company and the persons named
therein. (EDGAR Version Only)
10.2.10 Registration Rights and Lock-Up Agreement dated
July 31, 1997, among the Company and the persons named
therein. (EDGAR Version Only)
10.2.11 Registration Rights and Lock-Up Agreement dated
November 18, 1998, among the Company and the persons named
therein. (EDGAR Version Only)
10.2.12 Registration Rights and Lock-Up Agreement dated
December 29, 1994, among the Company and the persons named
therein. (EDGAR Version Only)
(PI) 10.3.1 ++ Second Amended and Restated Employee Share
Option and Restricted Share Plan.
+/- 10.3.2 ++ Non-employee Trustee Share Option Plan.
+/-+/- 10.3.3 ++ Non-employee Trustee Share Plan.
(OMEGA) 10.3.4 ++ Employee Share Purchase Plan.
+ 10.4++ Non-employee Trustee Option Agreement.
+ 10.5++ Employment Agreement between the Company and Thomas H.
Lowder.
+ 10.6++ Officers and Trustees Indemnification Agreement.
+ 10.7 Partnership Agreement of the Management Partnership.
** 10.8 Articles of Incorporation of the Management Corporation,
as amended.
+ 10.9 Bylaws of the Management Corporation.
++ 10.10 Credit Agreement between the Colonial Realty Limited
Partnership and SouthTrust Bank, National Association,
AmSouth Bank, N.A., Wells Fargo Bank, National
Association, Wachovia Bank, N.A., First National Bank of
Commerce, N.A., and PNC Bank, Ohio, National Association
dated July 10, 1997, as amended on July 10, 1997 and
related promissory notes.
10.11.1 Amendment to Credit Agreement dated July 10,1998.
10.11.2 Second Amendment to Credit Agreement dated
August 21, 1998.
+ 10.12 ++ Annual Incentive Plan.
++++10.13 Indenture dated as of July 22, 1996, by and between
Colonial Realty Limited Partnership and Bankers Trust
Company, as amended.
10.13.1 First Supplemental Indenture dated as of December 31,1998,
by and between Colonial Realty Limited Partnership and
Bankers Trust Company.
10.14 Rights Agreement dated as of November 2, 1998 between
Colonial Properties Trust and BankBoston, N.A.
13.1 Portions of the Annual Report to Shareholders incorporated
by reference in Part II of this Form 10-K.
(EDGAR Version Only)
21.1 List of Subsidiaries. (EDGAR Version Only)
23.1 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedules (EDGAR Version Only)
- --------------------
* Incorporated by reference to the Company's Form 8-K dated November 5,1997.
** Incorporated by reference to the same titled and number exhibit in
the Company's Annual Report on Form 10-K dated December 31, 1994.
(psi) Incorporated by reference to the same titled and number exhibit in
the Company's Annual Report on Form 10-K dated December 31, 1997.
+ Incorporated by reference to the same titled and numbered exhibit in the
Company's Registration Statement on Form S-11, No. 33-65954.
++ Management contract or compensatory plan required to be filed pursuant to
Item 14(c) of Form 10-K.
++ Incorporated by reference to the same titled and number exhibit in the
Company's Quarterly Report on Form 10-Q dated June 30, 1997.
++++ Incorporated by reference to (i) Exhibit D to the Form 8-K dated July 19,
1996, filed by Colonial Realty Limited Partnership, and (ii) Exhibit B to
the Form 8-K dated December 6,1996, filed by Colonial Realty Limited
Partnership.
(PI) Incorporated by reference to Exhibit 99.1 to the Company's Registration
Statement on Form S-8, No. 333-60333.
+/- Incorporated by reference to the Company's Registration Statement on
Form S-8, No. 333-27203.
+/-+/-Incorporated by reference to the Company's Registration Statement on
Form S-8, No. 333-27205.
(OMEGA)Incorporated by reference to the Company's Registration Statement on
Form S-8, No. 333-27201.
(phi) Incorporated by reference to the Company's Registration Statement
Amendment No. 1 on Form S-3 dated November 20, 1997.
14(b) Reports on Form 8-K
Reports on Form 8-K filed during the last quarter of 1998: Form
8-K dated October 26, 1998 reported the authorization of the Form of Rights
Agreement between the Company and BankBoston N.A. under Item 5, "Other Events".
14(c) Exhibits
The list of Exhibits filed with this report is set forth in
response to Item 14(a)(3).
14(d) Financial Statements
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized,
on March 30, 1999.
Colonial Properties Trust
By: /s/ Thomas H. Lowder
-------------------
Thomas H. Lowder
Chairman of the Board,
President, and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the following persons on
behalf of the registrant and the capacities indicated on March 30, 1999.
Signature
/s/ Thomas H. Lowder Chairman of the Board, President,
- -------------------------- and Chief Executive Officer
Thomas H. Lowder
/s/ Howard B. Nelson, Jr. Chief Financial Officer
- --------------------------
Howard B. Nelson, Jr.
/s/ Kenneth E. Howell Senior Vice President-Chief
- -------------------------- Accounting Officer
Kenneth E. Howell
/s/ Carl F. Bailey Trustee
- --------------------------
Carl F. Bailey
/s/ M. Miller Gorrie Trustee
- --------------------------
M. Miller Gorrie
/s/ William M. Johnson Trustee
- --------------------------
William M. Johnson
/s/ James K. Lowder Trustee
- --------------------------
James K. Lowder
/s/ Herbert A. Meisler Trustee
- --------------------------
Herbert A. Meisler
/s/ Claude B. Nielsen Trustee
- --------------------------
Claude B. Nielsen
/s/ Harold W. Ripps Trustee
- --------------------------
Harold W. Ripps
/s/ Donald T. Senterfitt Trustee
- --------------------------
Donald T. Senterfitt
<PAGE>
<TABLE>
SCHEDULE III
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
December 31, 1998
<CAPTION>
Initial Cost to Cost Gross Amount at Which
Company Capitalized Carried at Close of Period
Buildings and Subsequent to Buildings and
Description Encumbrances Land Improvements Acquisition Land Improvements
- ------------------------------ ------------- -------------- -------------- -------------- -------------- --------------
S-1
Multifamily:
<S> <C> <C> <C> <C> <C> <C> <C>
CG at Barrington $ -0- $ 880,000 $ 8,605,143 $ 168,569 $ 880,000 $ 8,773,712 $ 9,653,712
CG at Bayshore -0- 2,044,100 -0- 18,885,484 1,265,561 19,664,023 20,929,584
CG at Carrollwood 6,230,000 1,464,000 10,657,840 887,864 1,464,000 11,545,704 13,009,704
CG at Edgewater -0- 1,540,000 12,671,606 560,342 1,540,000 13,231,948 14,771,948
CG at Gainesville -0- 3,360,000 24,173,649 3,304,425 3,361,850 27,476,224 30,838,074
CG at Galleria 22,400,000 4,600,000 39,078,925 2,318,735 4,600,000 41,397,660 45,997,660
CG at Galleria II -0- 758,439 7,902,382 26,890 758,439 7,929,272 8,687,711
CG at Galleria Woods 7,101,608 1,220,000 12,480,949 347,858 1,220,000 12,828,807 14,048,807
CG at Heathrow -0- 2,560,661 17,612,990 379,575 2,560,661 17,992,565 20,553,226
CG at Hunter's Creek -0- 3,949,850 -0- 29,885,576 4,725,936 29,109,490 33,835,426
CG at Inverness Lakes -0- 641,334 8,873,906 2,683,421 641,334 7,684,466 8,325,800
CG at Kirkman -0- 2,220,000 21,747,240 885,192 2,220,000 22,632,432 24,852,432
CG at Mountain Brook 11,929,545 1,960,000 21,181,118 1,125,328 1,960,000 22,306,446 24,266,446
CG at Natchez Trace 10,896,842 1,312,000 16,568,050 176,568 1,312,000 16,744,618 18,056,618
CG at Palm Aire -0- 1,488,000 13,515,075 292,594 1,489,500 13,806,169 15,295,669
CG at Palma Sola -0- 1,479,352 -0- 12,571,483 1,479,352 12,571,483 14,050,835
CG at Ponte Vedra -0- 1,440,000 10,038,593 948,276 1,440,000 10,986,869 12,426,869
CG at Research Park 12,775,000 3,680,000 29,322,067 1,054,756 3,680,000 30,376,823 34,056,823
CG at Riverchase -0- 2,340,000 25,248,548 1,105,212 2,340,000 26,353,760 28,693,760
CG at Spring Creek -0- 1,184,000 13,243,975 319,662 1,184,000 13,563,637 14,747,637
CG at Wesleyan -0- 720,000 12,760,587 40,537 720,000 12,801,124 13,521,124
Colony Park -0- 409,401 4,345,599 404,085 409,406 4,749,680 5,159,085
CV at Ashford Place -0- 537,600 5,839,838 142,174 537,600 5,982,012 6,519,612
CV at Ashley Plantation -0- 1,160,000 12,540,387 115,604 1,160,000 12,655,991 13,815,991
CV at Cahaba Heights 3,607,835 625,000 6,548,683 177,084 625,000 6,725,767 7,350,767
CV at Caledon Wood -0- 2,100,000 19,482,210 251,926 2,100,000 19,734,136 21,834,136
CV at Cordova -0- 134,000 3,986,304 393,665 134,000 4,379,969 4,513,969
CV at Haverhill -0- 1,771,000 19,749,176 18,546 1,771,000 19,767,722 21,538,722
CV at Hillcrest -0- 332,800 4,310,671 227,385 332,800 4,538,056 4,870,856
CV at Hillwood 4,845,000 511,700 5,508,300 381,894 511,700 5,890,194 6,401,894
CV at Huntleigh Woods -0- 745,600 4,908,990 750,730 745,600 5,659,720 6,405,320
CV at Inverness 9,900,000 1,713,668 10,352,151 132,842 1,713,668 10,484,993 12,198,661
CV at Inverness II/III -0- 635,819 5,927,265 8,381,975 635,819 14,309,240 14,945,059
CV at Inverness Lakes 5,583,333 735,080 7,254,920 1,807,530 735,080 9,062,450 9,797,530
CV at Lake Mary -0- 2,145,480 -0- 19,409,367 3,634,094 17,920,753 21,554,847
CV at McGehee Place -0- 795,627 -0- 17,163,015 842,321 17,116,321 17,958,642
CV at Monte D'Oro -0- 1,000,000 6,994,227 1,326,469 1,000,000 8,320,696 9,320,696
CV at North Ingle -0- 497,574 4,122,426 406,424 497,574 4,528,850 5,026,424
CV at Oakleigh -0- 880,000 9,685,518 200,802 1,024,334 9,741,986 10,766,320
CV at River Hills -0- 15,319,754 7,474,784 11,171,763 2,551,154 31,415,147 33,966,301
CV at Rocky Ridge 7,245,000 644,943 8,325,057 499,329 644,943 8,824,386 9,469,329
CV at Stockbridge -0- 960,000 11,975,947 382,176 960,000 12,358,123 13,318,123
CV at Timothy Woods -0- 1,020,000 11,910,546 82,777 1,020,000 11,993,323 13,013,323
CV at Trussville -0- 1,504,000 18,800,253 871,867 1,504,000 19,672,120 21,176,120
CV at Vernon Marsh 3,400,000 960,984 3,511,596 3,149,558 960,984 6,661,154 7,622,138
CV at Walton Way -0- 1,024,000 7,877,766 104,791 1,024,000 7,982,557 9,006,557
CV at White Bluff 4,500,000 699,128 4,920,872 330,315 699,128 5,251,187 5,950,315
Patio I, II & III -0- 249,876 3,305,124 1,945,935 366,717 5,134,218 5,500,935
Ski Lodge - Tuscaloosa -0- 1,064,000 6,636,685 880,414 1,064,000 7,517,099 8,581,099
<PAGE>
S-2
Retail:
Abingdon Town Centre -0- 2,051,250 6,687,616 66,883 2,051,250 6,754,499 8,805,749
Colonial Mall Auburn-Opelika -0- 103,480 -0- 15,553,538 723,715 14,933,303 15,657,018
Colonial Shoppes Bardmoor -0- 1,989,019 9,047,663 105,743 2,143,152 8,999,273 11,142,425
Colonial Promenade Bear Lake -0- 2,134,440 6,551,683 94,660 2,134,440 6,646,343 8,780,783
Beechwood Shopping Center -0- 2,565,550 19,647,875 786,371 2,565,550 20,434,246 22,999,796
Bel Air Mall -0- 7,517,000 81,585,057 -0- 7,517,000 81,585,057 89,102,057
Colonial Shoppes Bellwood -0- 330,000 -0- 3,209,650 330,000 3,209,650 3,539,650
Briarcliffe Mall -0- 9,099,972 33,663,654 12,953 9,099,972 33,676,607 42,776,579
Britt David Shopping Center -0- 1,755,000 4,951,852 1,194 1,755,000 4,953,046 6,708,046
Brookwood Village -0- 8,136,700 24,435,002 1,673,055 8,136,700 26,108,057 34,244,757
Colonial Promenade Burnt Store -0- 3,750,000 8,198,677 83,847 3,750,000 8,282,524 12,032,524
Colonial Promenade Tuskawilla -0- 3,659,040 6,783,697 113,066 3,659,040 6,896,763 10,555,803
Colonial Mall Decatur -0- 3,262,800 23,636,229 1,566,670 3,262,800 25,202,899 28,465,699
Colonial Mall Gadsden -0- 639,577 -0- 19,561,774 639,577 19,561,774 20,201,351
Glynn Place Mall -0- 3,588,178 22,514,121 1,054,761 3,588,178 23,568,882 27,157,060
Holly Hill Mall -0- 4,120,000 25,632,587 393,711 4,120,000 26,026,298 30,146,298
Colonial Promenade Hunter's Creek 10,089,395 4,181,760 13,023,401 151,399 4,181,760 13,174,800 17,356,560
Lakeshore Mall -0- 4,646,300 30,973,239 2,076,687 4,646,300 33,049,926 37,696,226
Lakewood Plaza -0- 2,984,522 11,482,512 1,900,323 2,984,522 13,382,835 16,367,357
Macon Mall -0- 1,684,875 -0- 91,501,975 5,591,743 87,595,107 93,186,850
Mayberry Mall 3,350,078 862,500 3,778,590 133,806 862,500 3,912,396 4,774,896
Colonial Shoppes McGehee -0- 197,152 -0- 3,954,077 197,152 3,954,077 4,151,229
Colonial Promenade Montgomery 10,810,000 3,788,913 11,346,754 1,200,517 4,332,432 12,003,752 16,336,184
Colonial Promenade Montgomery Nor -0- 2,400,000 5,664,858 560,392 2,400,000 6,225,250 8,625,250
Northdale Court -0- 3,059,760 8,054,090 850,077 3,059,760 8,904,167 11,963,927
Old Springville Shopping Center -0- 272,594 -0- 3,364,134 277,975 3,358,753 3,636,728
Olde Town Shopping Village -0- 343,325 -0- 2,470,994 343,325 2,470,994 2,814,319
Colonial Shoppes Paddock Park -0- 1,532,520 3,754,879 110,214 1,532,520 3,865,093 5,397,613
Quaker Village -0- 931,000 7,901,874 163,198 931,000 8,065,072 8,996,072
Rivermont Shopping Center 1,693,400 515,250 2,332,486 128,741 515,250 2,461,227 2,976,477
Colonial Shoppes Inverness -0- 1,680,000 1,387,055 93,216 1,680,000 1,480,271 3,160,271
Shoppes at Mansell -0- 600,000 3,089,565 21,041 600,000 3,110,606 3,710,606
Stanly Plaza -0- 450,000 1,657,870 58,196 450,000 1,716,066 2,166,066
Staunton Mall -0- 2,895,000 15,083,542 254,735 2,895,000 15,338,277 18,233,277
Colonial Promenade University Par 14,445,000 6,946,785 20,104,517 414,563 6,946,785 20,519,080 27,465,865
Valdosta Mall -0- 5,377,000 30,239,796 857,786 5,377,000 31,097,582 36,474,582
Village at Roswell Summit 1,628,831 450,000 2,563,642 126,073 450,000 2,689,715 3,139,715
Colonial Promenade Wekiva -0- 2,817,788 15,302,375 127,375 2,817,788 15,429,750 18,247,538
Colonial Promenade Winter Haven -0- 1,768,586 3,928,903 4,574,790 4,045,045 6,227,234 10,272,279
Yadkin Town Center -0- 1,080,000 1,224,136 3,211,391 1,080,000 4,435,527 5,515,527
<PAGE>
S-3
Office:
250 Commerce Street -0- 25,000 200,200 2,280,668 25,000 2,480,868 2,505,868
AmSouth Center -0- 764,961 -0- 18,150,464 764,961 18,150,464 18,915,425
Colonial Plaza -0- 1,001,375 12,381,023 228,170 1,001,375 12,609,193 13,610,568
Concourse Center -0- 4,875,000 25,702,552 42,002 4,875,000 25,744,554 30,619,554
Independence Plaza -0- 1,505,000 6,018,476 180,678 1,505,000 6,199,154 7,704,154
International Park 1,967,410 1,279,355 5,668,186 150,575 1,279,355 5,818,761 7,098,116
Interstate Park 4,208,107 1,125,990 7,113,558 8,924,443 1,125,988 16,038,003 17,163,991
Lakeside Office Park -0- 423,451 8,313,291 235,247 423,451 8,548,538 8,971,989
Mansell Office Park 31,296,233 4,540,000 71,712,971 954,671 4,540,000 72,667,642 77,207,642
P&S Building -0- 104,089 558,646 214,930 104,089 773,576 877,665
Perimeter Corporate Park 5,536,731 1,422,169 18,377,648 261,614 1,422,169 18,639,262 20,061,431
Progress Center -0- 521,037 14,710,851 683,654 521,037 15,394,505 15,915,542
Riverchase Center 8,238,096 1,916,727 22,091,651 1,074,586 1,916,727 23,166,237 25,082,964
Shades Brook Building -0- 873,000 2,240,472 -0- 873,000 2,240,472 3,113,472
University Park -0- 396,960 2,971,049 1,644,998 396,960 4,616,047 5,013,007
Active Development Projects:
CG at Citrus Park -0- 1,223,652 -0- 8,258,914 1,223,652 8,258,914 9,482,566
CG at Cypress Crossing -0- 1,942,202 -0- 17,233,557 1,942,202 17,233,557 19,175,759
CG at Edgewater II -0- 999,221 -0- 11,487,365 999,221 11,487,365 12,486,586
CG at Heather Glen -0- 3,836,003 -0- 5,964,285 3,836,003 5,964,285 9,800,288
CG at Inverness Lakes II -0- 477,259 -0- 8,360,459 477,259 8,360,459 8,837,718
CG at Lakewood Ranch -0- 1,831,987 -0- 16,007,271 1,831,987 16,007,271 17,839,258
CG at Liberty Park -0- 2,115,340 -0- 808,388 2,115,340 808,388 2,923,728
CG at Promenade -0- 1,536,313 -0- 2,783,611 1,536,313 2,783,611 4,319,924
CG at Research Park II -0- 3,538 -0- 51,299 3,538 51,299 54,837
CG at Ridgeland -0- 1,025,720 -0- 428,564 1,025,720 428,564 1,454,284
CG at Wesleyan II -0- 550,991 -0- 5,393,690 550,991 5,393,690 5,944,681
CV at Ashley Plantation II -0- 1,383,770 -0- 1,565,180 1,383,770 1,565,180 2,948,950
CV at Madison -0- 1,695,369 -0- 2,995,140 1,695,369 2,995,140 4,690,509
CV at McGehee Place -0- 60,438 -0- 53,018 60,438 53,018 113,456
Colonial Promenade Trussville -0- 4,199,186 -0- 1,121,816 4,285,842 1,035,160 5,321,002
1800 International Park -0- 1,793,000 -0- 2,156,857 3,949,857 -0- 3,949,857
Colonial Center at Research Park -0- 1,000,000 -0- 373,238 1,373,238 -0- 1,373,238
Other Miscellaneous Projects -0- -0- -0- 1,470,351 -0- 1,470,351 1,470,351
Unimproved Land:
Briarcliffe Mall -0- 1,433,596 -0- -0- 1,433,596 -0- 1,433,596
Valdosta Mall -0- 975,506 -0- -0- 975,506 -0- 975,506
McGehee Place Land 668,364 436,471 -0- -0- 436,471 -0- 436,471
North Heathrow Land -0- 9,553,734 -0- 2,167,333 9,553,734 2,167,333 11,721,067
============= =========== =========== =========== =========== =========== ===========
$ 204,345,808 $246,033,816$1,186,268,309 $435,369,401 $245,185,945$1,618,612,721$1,863,798,665
============= =========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
(INFORMATION CONTINUED FROM PREVIOUS TABLE)
SCHEDULE III, CONTINUED
COLONIAL PROPERTIES TRUST
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
<CAPTION>
Date
Acquired/
Accumulated Date Placed In Depreciable
Description Depreciation Completed Service Lives-Year
- -------------------------------------------------------------------------------------
S-1
Multifamily:
<S> <C> <C> <C> <C>
CG at Barrington $ 790,514 1996 1996 7-40 Years
CG at Bayshore 1,196,831 1997 1985/97/98 7-40 Years
CG at Carrollwood 2,062,188 1966 1994 7-40 Years
CG at Edgewater 2,289,403 1990 1994 7-40 Years
CG at Gainesville 4,318,899 1989/93/94 1994 7-40 Years
CG at Galleria 4,278,059 1986 1994 7-40 Years
CG at Galleria II 679,141 1996 1996 7-40 Years
CG at Galleria Woods 1,206,846 1994 1996 7-40 Years
CG at Heathrow 1,586,655 1997 1994/97 7-40 Years
CG at Hunter's Creek 1,632,756 1996 1996 7-40 Years
CG at Inverness Lakes 994,984 1996 1996 7-40 Years
CG at Kirkman 3,272,298 1991 1994 7-40 Years
CG at Mountain Brook 1,549,053 1987/91 1996 7-40 Years
CG at Natchez Trace 830,133 1995/97 1997 7-40 Years
CG at Palm Aire 2,229,216 1991 1994 7-40 Years
CG at Palma Sola 4,054,758 1992 1992 7-40 Years
CG at Ponte Vedra 1,388,793 1988 1994 7-40 Years
CG at Research Park 3,760,816 1987/94 1994 7-40 Years
CG at Riverchase 3,067,215 1984/91 1994 7-40 Years
CG at Spring Creek 1,267,969 1992/94 1996 7-40 Years
CG at Wesleyan 668,831 1997 1996/97 7-40 Years
Colony Park 665,854 1975 1993 7-40 Years
CV at Ashford Place 414,703 1983 1996 7-40 Years
CV at Ashley Plantation 297,331 1997 1998 7-40 Years
CV at Cahaba Heights 559,259 1992 1996 7-40 Years
CV at Caledon Wood 844,822 1995/96 1997 7-40 Years
CV at Cordova 2,337,725 1983 1983 7-40 Years
CV at Haverhill 227,776 1998 1998 7-40 Years
CV at Hillcrest 319,714 1981 1996 7-40 Years
CV at Hillwood 797,130 1984 1993 7-40 Years
CV at Huntleigh Woods 655,991 1978 1994 7-40 Years
CV at Inverness 1,503,594 1986/87/90 1986/87/90 7-40 Years
CV at Inverness II/III 3,049,894 1997 1997 7-40 Years
CV at Inverness Lakes 1,045,135 1983/96 1993 7-40 Years
CV at Lake Mary 4,252,705 1991/95 1991/95 7-40 Years
CV at McGehee Place 4,266,205 1986/95 1986/95 7-40 Years
CV at Monte D'Oro 913,566 1977 1994 7-40 Years
CV at North Ingle 630,407 1983 1983 7-40 Years
CV at Oakleigh 532,147 1997 1997 7-40 Years
CV at River Hills 3,860,203 1985 1998 7-40 Years
CV at Rocky Ridge 1,134,717 1984 1993 7-40 Years
CV at Stockbridge 1,835,157 1993/94 1994 7-40 Years
CV at Timothy Woods 637,961 1996 1997 7-40 Years
CV at Trussville 1,200,635 1996/97 1997 7-40 Years
CV at Vernon Marsh 1,685,612 1986/87 1986/93 7-40 Years
CV at Walton Way 83,691 1970/88 1998 7-40 Years
CV at White Bluff 713,076 1986 1993 7-40 Years
Patio I, II & III 699,322 1966/83/84 1994/93/93 7-40 Years
Ski Lodge - Tuscaloosa 866,439 1976/92 1994 7-40 Years
<PAGE>
S-2
Retail:
Abingdon Town Centre 202,618 1987/96 1997 7-40 Years
Colonial Mall Auburn-Opelika 8,286,927 1973/84/89 1973/84/89 7-40 Years
Colonial Shoppes Bardmoor 545,346 1981 1996 7-40 Years
Colonial Promenade Bear Lake 607,055 1990 1995 7-40 Years
Beechwood Shopping Center 923,225 1963/92 1997 7-40 Years
Bel Air Mall 12,114 1966/90/97 1998 7-40 Years
Colonial Shoppes Bellwood 1,039,508 1988 1988 7-40 Years
Briarcliffe Mall 2,017,547 1986 1996 7-40 Years
Britt David Shopping Center 515,845 1990 1994 7-40 Years
Brookwood Village 1,164,788 1973/91 1997 7-40 Years
Colonial Promenade Burnt Store 935,279 1990 1994 7-40 Years
Colonial Promenade Tuskawilla 610,478 1990 1995 7-40 Years
Colonial Mall Decatur 2,262,361 1979/89 1993 7-40 Years
Colonial Mall Gadsden 9,004,107 1974/91 1974 7-40 Years
Glynn Place Mall 784,516 1986 1997 7-40 Years
Holly Hill Mall 791,409 1969/86/94 1997 7-40 Years
Colonial Promenade Hunter's Creek 811,823 1993/95 1996 7-40 Years
Lakeshore Mall 1,148,848 1984-87 1997 7-40 Years
Lakewood Plaza 375,609 1995 1997 7-40 Years
Macon Mall 18,411,197 1975/88/97 1975/88 7-40 Years
Mayberry Mall 115,584 1968/86 1997 7-40 Years
Colonial Shoppes McGehee 1,265,015 1986 1986 7-40 Years
Colonial Promenade Montgomery 2,431,972 1990 1993 7-40 Years
Colonial Promenade Montgomery Nor 148,361 1997 1995 7-40 Years
Northdale Court 642,677 1988 1995 7-40 Years
Old Springville Shopping Center 2,700,536 1982 1982 7-40 Years
Olde Town Shopping Village 699,057 1978/90 1978/90 7-40 Years
Colonial Shoppes Paddock Park 312,079 1988 1995 7-40 Years
Quaker Village 265,428 1968/88/97 1997 7-40 Years
Rivermont Shopping Center 69,521 1986/97 1997 7-40 Years
Colonial Shoppes Inverness 69,468 1984 1997 7-40 Years
Shoppes at Mansell 32,183 1996/97 1998 7-40 Years
Stanly Plaza 52,617 1987/96 1997 7-40 Years
Staunton Mall 452,286 1969/86/97 1997 7-40 Years
Colonial Promenade University Par 6,331,114 1986/89 1993 7-40 Years
Valdosta Mall 1,054,291 1982-85 1997 7-40 Years
Village at Roswell Summit 66,061 1988 1997 7-40 Years
Colonial Promenade Wekiva 913,009 1990 1996 7-40 Years
Colonial Promenade Winter Haven 485,229 1986 1995 7-40 Years
Yadkin Town Center 102,084 1971/97 1997 7-40 Years
<PAGE>
S-3
Office:
250 Commerce Street 2,326,569 1904/81 1980 7-40 Years
AmSouth Center 6,108,744 1990 1990 7-40 Years
Colonial Plaza 339,665 1982 1997 7-40 Years
Concourse Center 270,075 1981/85 1998 7-40 Years
Independence Plaza 143,234 1979 1998 7-40 Years
International Park 246,545 1987/89 1997 7-40 Years
Interstate Park 4,822,534 1982-85/89 1982-85/89 7-40 Years
Lakeside Office Park 342,092 1989/90 1997 7-40 Years
Mansell Office Park 1,844,656 1987/96/97 1997 7-40 Years
P&S Building 442,562 1946/76/91 1974 7-40 Years
Perimeter Corporate Park 422,730 1986/89 1998 7-40 Years
Progress Center 584,073 1983/91 1997 7-40 Years
Riverchase Center 1,097,429 1984-88 1997 7-40 Years
Shades Brook Building 23,338 1979 1998 7-40 Years
University Park 1,811,232 1985 1985 7-40 Years
Active Development Projects:
CG at Citrus Park -0- N/A 1997 N/A
CG at Cypress Crossing 123,830 N/A 1998 N/A
CG at Edgewater II 318,451 N/A 1997 N/A
CG at Heather Glen -0- N/A 1998 N/A
CG at Inverness Lakes II 349,674 N/A 1994 N/A
CG at Lakewood Ranch 17,320 N/A 1997 N/A
CG at Liberty Park -0- N/A 1998 N/A
CG at Promenade -0- N/A 1998 N/A
CG at Research Park II -0- N/A 1985 N/A
CG at Ridgeland -0- N/A 1998 N/A
CG at Wesleyan II 1,744 N/A 1996 N/A
CV at Ashley Plantation II -0- N/A 1998 N/A
CV at Madison -0- N/A 1998 N/A
CV at McGehee Place -0- N/A 1987 N/A
Colonial Promenade Trussville -0- N/A 1998 N/A
1800 International Park -0- N/A 1998 N/A
Colonial Center at Research Park -0- N/A 1998 N/A
Other Miscellaneous Projects -0- N/A 1993 N/A
Unimproved Land:
Briarcliffe Mall -0- N/A 1981 N/A
Valdosta Mall -0- N/A 1982/85 N/A
McGehee Place Land -0- N/A 1981 N/A
North Heathrow Land -0- N/A 1997 N/A
- ---------------------------------------------------------------------------------------
$ 169,451,798
=======================================================================================
</TABLE>
<PAGE>
NOTES TO SCHEDULE III
COLONIAL PROPERTIES TRUST
December 31, 1998
(1) The aggregate cost for Federal Income Tax purposes was approximately
$1,464,775,000 at December 31, 1998.
(2) See description of mortgage notes payable in Note 8 of Notes to
Consolidated Financial Statements.
(3) The following is a reconciliation of real estate to balances reported
at the beginning of the year:
<TABLE>
Reconciliation of Real Estate
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
Real estate investments:
<S> <C> <C> <C>
Balance at beginning of year $ 1,489,114,015 $ 1,017,009,315 $ 736,937,703
Acquisitions of new property 346,267,522 451,256,964 173,276,789
Improvements and development 134,804,450 97,564,705 107,834,251
Dispositions of property (106,387,322) (76,716,969) (1,039,428)
--------------- --------------- ---------------
Balance at end of year $ 1,863,798,665 $ 1,489,114,015 $ 1,017,009,315
=============== =============== ===============
</TABLE>
<TABLE>
Reconciliation of Accumulated Depreciation
<CAPTION>
1998 1997 1996
------------- ------------- -------------
Accumulated depreciation:
<S> <C> <C> <C>
Balance at beginning of year $ 124,236,057 $ 101,541,658 $ 79,780,292
Depreciation 46,787,982 31,945,960 22,015,054
Depreciation of disposition of property (1,572,241) (9,251,561) (253,688)
------------- ------------- -------------
Balance at end of year $ 169,451,798 $ 124,236,057 $ 101,541,658
============= ============= =============
S-4
</TABLE>
<PAGE>
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Trustees
of Colonial Properties Trust
Our audits of the consolidated financial statements referred to in our report
dated January 13, 1998 (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedules listed in Item 14(a)(2) of this Form
10-K. In our opinion, these financial statement schedules present fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ PricewaterhouseCoopers L.L.P.
PricewaterhouseCoopers L.L.P.
Birmingham, Alabama
January 13, 1999
S-5
Exhibit 4.2
ARTICLES SUPPLEMENTARY OF
SERIES 1998 JUNIOR PARTICIPATING PREFERRED SHARES
OF BENEFICIAL INTEREST OF
COLONIAL PROPERTIES TRUST
Pursuant to Sections 10-13-7 of the
Code of Alabama 1975
Colonial Properties Trust, an Alabama real estate investment trust (the
"Company"), hereby certifies that on October 22, 1998, pursuant to authority
conferred by Sections 3.2(e) and 6.3 of the Declaration of Trust of the Company,
as amended to the date hereof and as the same may be amended hereafter from time
to time (the "Declaration of Trust"), and in accordance with Section 10-13-7 of
the Code of Alabama 1975, the Board of Trustees duly classified unissued
preferred shares of beneficial interest ("Preferred Shares") of the Company, and
the description of such Preferred Shares, including the designation and amount
thereof and the voting rights or powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof, as set by the Board
of Trustees, are as follows:
Section 1. Designation and Amount. The shares of such series of
Preferred Shares, par value $.01 per share, shall be designated as "Series 1998
Junior Participating Preferred Shares of Beneficial Interest" (the "Series 1998
Junior Participating Preferred Shares"), and the number of shares constituting
such series shall be 6,500. Such number of shares may be increased or decreased
by resolution of the Board of Trustees; provided, that no decrease shall reduce
the number of Series 1998 Junior Participating Preferred Shares to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Company
convertible into Series 1998 Junior Participating Preferred Shares.
Section 2. Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Shares ranking prior and superior to the
Series 1998 Junior Participating Preferred Shares with respect to distributions,
the holders of Series 1998 Junior Participating Preferred Shares shall be
entitled to receive, when, as and if declared by the Board of Trustees out of
funds legally available for the purpose, quarterly distributions payable in cash
on the 15th day of November, February, May and August in each year (each such
date being referred to herein as a "Quarterly Distribution Payment Date"),
commencing on the first Quarterly Distribution Payment Date after first issuance
of a share or fraction of a share of Series 1998 Junior Participating Preferred
Shares, in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $100.00 or (b) subject to the provision for adjustment
hereinafter set forth, 10,000 times the aggregate per share amount of all cash
distributions, and 10,000 times the aggregate per share amount (payable in kind)
of all non-cash distributions or other distributions, other than a distribution
payable in common shares of beneficial interest, par value $.01 per share, of
the Company (the "Common Shares"), or a subdivision of the outstanding Common
Shares (by reclassification or otherwise), declared on the Common Shares, since
the immediately preceding Quarterly Distribution Payment Date, or, with respect
to the first Quarterly Distribution Payment Date, since the first issuance of
any share or fraction of a share of Series 1998 Junior Participating Preferred
Shares. In the event the Company shall at any time after October 22, 1998 (the
"Rights Dividend Declaration Date") (i) declare or pay any distribution on
Common Shares payable in Common Shares, (ii) subdivide the outstanding Common
Shares, or (iii) combine the outstanding Common Shares into a smaller number of
shares, then in each such case the amount to which holders of Series 1998 Junior
Participating Preferred Shares were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
(B) The Company shall declare a distribution on the Series 1998 Junior
Participating Preferred Shares as provided in paragraph (A) above immediately
after it declares a distribution on the Common Shares (other than a distribution
payable in Common Shares); provided that, in the event no distribution shall
have been declared on the Common Shares during the period between any Quarterly
Distribution Payment Date and the next subsequent Quarterly Distribution Payment
Date, a distribution of $100.00 per share on the Series 1998 Junior
Participating Preferred Shares shall nevertheless be payable on such subsequent
Quarterly Distribution Payment Date.
(C) Distributions shall begin to accrue and be cumulative on
outstanding Series 1998 Junior Participating Preferred Shares from the Quarterly
Distribution Payment Date next preceding the date of issue of such Series 1998
Junior Participating Preferred Shares, unless the date of issue of such shares
is prior to the record date set for the first Quarterly Distribution Payment
Date, in which case distributions on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Distribution Payment Date or is a date after the record date for the
determination of holders of Series 1998 Junior Participating Preferred Shares
entitled to receive a quarterly distribution and before such Quarterly
Distribution Payment Date, in either of which events such distributions shall
begin to accrue and be cumulative from such Quarterly Distribution Payment Date.
Accrued but unpaid distributions shall not bear interest. Distributions paid on
the Series 1998 Junior Participating Preferred Shares in an amount less than the
total amount of such distributions at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Trustees may fix a record date for
the determination of holders of Series 1998 Junior Participating Preferred
Shares entitled to receive payment of a distribution declared thereon, which
record date shall be no more than 50 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. The holders of Series 1998 Junior
Participating Preferred Shares shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Series 1998 Junior Participating Preferred Share shall entitle the holder
thereof to one vote on all matters submitted to a vote of the shareholders of
the Company. In the event the Company shall at any time after the Rights
Dividend Declaration Date (i) declare any distribution on Common Shares payable
in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine
the outstanding Common Shares into a smaller number of shares, then in each such
case the number of votes per share to which holders of Series 1998 Junior
Participating Preferred Shares were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(B) Except as otherwise provided by law or in any other Articles
Supplementary of the Company creating a series of Preferred Shares, whether now
existing or hereafter created, the holders of Series 1998 Junior Participating
Preferred Shares and the holders of Common Shares shall vote together as one
class on all matters submitted to a vote of shareholders of the Company.
(C) Except as set forth herein, holders of Series 1998 Junior
Participating Preferred Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Shares as set forth herein) for taking any trust action.
Section 4. Certain Restrictions.
(A) Whenever distributions payable on the Series 1998 Junior
Participating Preferred Shares as provided in Section 2 are not paid, thereafter
and until such distributions, whether or not declared, on Series 1998 Junior
Participating Preferred Shares outstanding shall have been paid in full, the
Company shall not:
(i) declare or pay distributions on, or make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of beneficial interest ranking junior (either as to distributions or
upon liquidation, dissolution or winding up) to the Series 1998 Junior
Participating Preferred Shares; or
(ii) declare or pay distributions on, or make any other
distributions on, any shares of beneficial interest ranking on a parity (either
as to distributions or upon liquidation, dissolution or winding up) with the
Series 1998 Junior Participating Preferred Shares, except distributions paid
ratably on the Series 1998 Junior Participating Preferred Shares and all such
parity shares of beneficial interest on which distributions are payable in
proportion to the total amounts to which the holders of all such shares are then
entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration shares of beneficial interest ranking on a parity (either as to
distributions or upon liquidation, dissolution or winding up) with the Series
1998 Junior Participating Preferred Shares, provided that the Company may at any
time redeem, purchase or otherwise acquire any such parity shares of beneficial
interest in exchange for any shares of beneficial interest of the Company
ranking junior (either as to distributions or upon dissolution, liquidation or
winding up) to the Series 1998 Junior Participating Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for consideration
any Series 1998 Junior Participating Preferred Shares, or any shares of
beneficial interest ranking on a parity with the Series 1998 Junior
Participating Preferred Shares, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Trustees) to all
holders of such shares upon such terms as the Board of Trustees, after
consideration of the respective annual distribution rates and other relative
rights and preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of beneficial
interest of the Company unless the Company could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any Series 1998 Junior Participating
Preferred Shares purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Shares and may be reissued as part of a new series of
Preferred Shares to be created by resolution or resolutions of the Board of
Trustees, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of beneficial interest ranking junior (either as to distributions or upon
liquidation, dissolution or winding up) to the Series 1998 Junior Participating
Preferred Shares unless, prior thereto, the holders of Series 1998 Junior
Participating Preferred Shares shall have received $920,000 per share, plus any
unpaid distributions payable thereon, whether or not declared, to the date of
such payment (the "Series 1998 Liquidation Preference"). Following the payment
of the full amount of the Series 1998 Liquidation Preference, no additional
distributions shall be made to the holders of Series 1998 Junior Participating
Preferred Shares unless, prior thereto, the holders of Common Shares shall have
received an amount per share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series 1998 Liquidation Preference by (ii) 10,000
(as appropriately adjusted as set forth in subparagraph (C) below to reflect
such events as share splits, share distributions and recapitalizations with
respect to the Common Shares) (such number in clause (ii) immediately above
being referred to as the "Adjustment Number"). Following the payment of the full
amount of the Series 1998 Liquidation Preference and the Common Adjustment in
respect of all outstanding Series 1998 Junior Participating Preferred Shares and
Common Shares, respectively, holders of Series 1998 Junior Participating
Preferred Shares and holders of Common Shares shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to one (1) with respect to such Preferred Shares and
Common Shares, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series 1998 Liquidation Preference
and the liquidation preferences of all other series of Preferred Shares, if any,
which rank on a parity with the Series 1998 Junior Participating Preferred
Shares, then such remaining assets shall be distributed ratably to the holders
of such parity shares of beneficial interest in proportion to their respective
liquidation preferences. In the event, however, that there are sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Shares.
(C) In the event the Company shall at any time after the Rights
Dividend Declaration Date (i) declare any distribution on Common Shares payable
in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine
the outstanding Common Shares into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
Common Shares are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the Series 1998 Junior
Participating Preferred Shares shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 10,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each Common Share is changed or exchanged. In the
event the Company shall at any time after the Rights Dividend Declaration Date
(i) declare any distribution on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of Series
1998 Junior Participating Preferred Shares shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
Section 8. Redemption. The outstanding Series 1998 Junior Participating
Preferred Shares may be redeemed as a whole, but not in part, at any time, or
from time to time, at the option of the Board of Trustees, at a cash price per
share equal to 105 percent of (i) the product of the Adjustment Number times the
Average Market Value (as such term is hereinafter defined) of the Common Shares,
plus (ii) all distributions which on the redemption date are payable on the
shares to be redeemed and have not been paid or declared, and a sum sufficient
for the payment thereof set apart, without interest. The "Average Market Value"
is the average of the closing sale prices of the Common Shares during the 30 day
period immediately preceding the date before the redemption date on the New York
Stock Exchange, or if the Common Shares are not listed on the New York Stock
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934, as amended, on which the Common Shares are
listed, or, if the Common Shares are not listed on any such exchange, or if no
such quotations are available, the fair market value of the Common Shares as
determined by the Board of Trustees in good faith.
Section 9. Ranking. Notwithstanding anything contained herein to the
contrary, the Series 1998 Junior Participating Preferred Shares shall rank
junior to all other series of the Company's Preferred Shares as to the payment
of distributions and the distribution of assets in liquidation, unless the terms
of any such series shall provide otherwise.
Section 10. Amendment. The Declaration of Trust shall not be further
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series 1998 Junior Participating Preferred
Shares so as to affect them adversely without the affirmative vote of the
holders of at least a majority of the outstanding Series 1998 Junior
Participating Preferred Shares, voting separately as a class.
Section 11. Fractional Shares. Series 1998 Junior Participating
Preferred Shares may be issued in fractions of a share which shall entitle the
holders, in proportion to such holders fractional shares, to exercise voting
rights, receive distributions, participate in distributions and to have the
benefit of all other rights of holders of Series 1998 Junior Participating
Preferred Shares.
Section 12. Restrictions on Ownership and Transfer. The beneficial
ownership and transfer of the Series 1998 Junior Participating Preferred Shares
shall in all respects be subject to the applicable provisions of Section 6.7 of
the Declaration of Trust.
IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to be
signed in its name and on its behalf by its Chief Financial Officer as of
October 26, 1998.
COLONIAL PROPERTIES TRUST
By: /s/Howard B. Nelson, Jr.
Howard B. Nelson, Jr.
Chief Financial Officer
Exhibit 4.3
COLONIAL PROPERTIES TRUST
ARTICLES SUPPLEMENTARY
2,000,000 SHARES
8.875% SERIES B CUMULATIVE REDEEMABLE PERPETUAL
PREFERRED SHARES
Colonial Properties Trust, an Alabama real estate investment
trust (the "Company"), hereby certifies that on February 23, 1999, pursuant to
authority conferred by Sections 3.2(e) and 6.3 of the Declaration of Trust of
the Company, as amended to the date hereof and as the same may be amended
hereafter from time to time (the "Declaration of Trust"), and in accordance with
Section 10-13-7 of the Code of Alabama 1975, the Board of Trustees duly
classified unissued preferred shares of beneficial interest ("Preferred Shares")
of the Company, and the description of such Preferred Shares, including the
designation and amount thereof and the voting rights or powers, preferences and
relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof, as set by
the Board of Trustees, are as follows:
FIRST: The Board of Trustees unanimously adopted resolutions
designating the aforesaid class of Preferred Shares as the "8.875% Series B
Cumulative Redeemable Perpetual Preferred Shares," setting the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms and conditions of redemption and other terms
and conditions of such 8.875% Series B Cumulative Redeemable Perpetual Preferred
Shares and authorizing the issuance of up to 2,000,000 shares of 8.875% Series B
Cumulative Redeemable Perpetual Preferred Shares.
SECOND: The class of Preferred Shares of the Company created
by the resolutions duly adopted by the Board of Trustees of the Company referred
to in the FIRST Article of these Articles Supplementary shall have the following
designation, number of shares, preferences, conversion and other rights, voting
powers, restrictions and limitation as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions:
Section 1. Designation and Number. A series of Preferred
Shares, designated the "8.875% Series B Cumulative Redeemable Perpetual
Preferred Shares" (the "Series B Preferred Shares") is hereby established. The
number of shares of Series B Preferred Shares shall be 2,000,000.
Section 2. Rank. The Series B Preferred Shares will, with
respect to distributions and rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Company, or both, rank senior to all classes or
series of Common Shares (as defined in the Declaration of Trust) and to all
classes or series of equity securities of the Company now or hereafter
authorized, issued or outstanding, other than any class or series of equity
securities of the Company expressly designated as ranking on a parity with or
senior to the Series B Preferred Shares as to distributions and rights upon
voluntary or involuntary liquidation, winding-up or dissolution of the Company.
For purposes of these Articles Supplementary, the term "Parity Preferred Shares"
shall be used to refer to any class or series of equity securities of the
Company now or hereafter authorized, issued or outstanding expressly designated
by the Company to rank on a parity with Series B Preferred Shares with respect
to distributions and rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Company including, without limitation, that
certain "8 3/4% Series A Cumulative Redeemable Preferred Shares" of the Company,
authorized pursuant to Articles Supplementary dated November 3, 1997. The term
"equity securities" does not include debt securities, which will rank senior to
the Series B Preferred Shares prior to conversion.
Section 3. Distributions. (a) Payment of Distributions.
Subject to the rights of holders of Parity Preferred Shares and holders of
equity securities ranking senior to the Series B Preferred Shares, holders of
Series B Preferred Shares shall be entitled to receive, when, as and if declared
by the Board of Trustees of the Company, out of funds legally available for the
payment of distributions, cumulative preferential cash distributions at the rate
per annum of 8.875% of the $50 liquidation preference per share of Series B
Preferred Shares. Such distributions shall be cumulative, shall accrue from the
original date of issuance and will be payable (A) quarterly (such quarterly
periods for purposes of payment and accrual will be the quarterly periods ending
on the dates specified in this sentence and not calendar quarters) in arrears,
on March 31, June 30, September 30 and December 31 of each year commencing on
the first of such dates to occur after the original date of issuance and, (B) in
the event of a redemption, on the redemption date (each a "Preferred Shares
Distribution Payment Date"). The amount of the distribution payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months
and for any period shorter than a full quarterly period for which distributions
are computed, the amount of the distribution payable will be computed on the
basis of the actual number of days elapsed in such a 30-day month. If any date
on which distributions are to be made on the Series B Preferred Shares is not a
Business Day (as defined herein), then payment of the distribution to be made on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. Distributions on the Series B
Preferred Shares will be made to the holders of record of the Series B Preferred
Shares on the relevant record dates to be fixed by the Board of Trustees of the
Company, which record dates shall in no event exceed 15 Business Days prior to
the relevant Preferred Shares Distribution Payment Date (each a "Distribution
Record Date"). Notwithstanding anything to the contrary set forth herein, each
share of Series B Preferred Shares shall also continue to accrue all accrued and
unpaid distributions, whether or not declared, up to the exchange date on any
Series B Preference Unit (as defined in the Second Amended and Restated
Agreement of Limited Partnership of Colonial Realty Limited Partnership (the
"Partnership Agreement"), as amended through the date hereof) validly exchanged
into such share of Series B Preferred Shares in accordance with the provisions
of such Partnership Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
(b) Distributions Cumulative. Distributions on the Series B
Preferred Shares will accrue whether or not the terms and provisions of any
agreement of the Company, including any agreement relating to its indebtedness
at any time prohibit the current payment of distributions, whether or not the
Company has earnings, whether or not there are funds legally available for the
payment of such distributions and whether or not such distributions are
authorized or declared. Accrued but unpaid distributions on the Series B
Preferred Shares will accumulate as of the Preferred Shares Distribution Payment
Date on which they first become payable. Distributions on account of arrears for
any past distribution periods may be declared and paid at any time, without
reference to a regular Preferred Shares Distribution Payment Date to holders of
record of the Series B Preferred Shares on the record date fixed by the Board of
Trustees which date shall not exceed 15 Business Days prior to the payment date.
Accumulated and unpaid distributions will not bear interest.
(c) Priority as to Distributions. (i) So long as any Series B
Preferred Shares are outstanding, no distribution of cash or other property
shall be authorized, declared, paid or set apart for payment on or with respect
to any class or series of Common Shares or any class or series of other shares
of the Company ranking junior as to the payment of distributions or rights upon
voluntary or involuntary dissolution, liquidation or winding up of the
Partnership to the Series B Preferred Shares (such Common Shares or other junior
shares, including, without limitation Series 1998 Junior Participating Preferred
Shares authorized pursuant to Articles Supplementary dated October 26, 1998,
collectively, "Junior Shares"), nor shall any cash or other property be set
aside for or applied to the purchase, redemption or other acquisition for
consideration of any Series B Preferred Shares, any Parity Preferred Shares or
any Junior Shares, unless, in each case, all distributions accumulated on all
Series B Preferred Shares and all classes and series of outstanding Parity
Preferred Shares have been paid in full. The foregoing sentence will not
prohibit (i) distributions payable solely in Junior Shares (or options, warrants
or rights to subscribe for Junior Shares), (ii) the conversion of Series B
Preferred Shares, Junior Shares or Parity Preferred Shares into shares of the
Company ranking junior to the Series B Preferred Shares as to distributions and
upon liquidation, winding-up or dissolution, and (iii) purchase by the Company
of such Series B Preferred Shares, Parity Preferred Shares or Junior Shares
pursuant to Article VI of the Declaration of Trust to the extent required to
preserve the Company's status as a real estate investment trust.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series B Preferred Shares, all distributions authorized and
declared on the Series B Preferred Shares and all classes or series of
outstanding Parity Preferred Shares with respect to distributions shall be
authorized and declared so that the amount of distributions authorized and
declared per share of Series B Preferred Shares and such other classes or series
of Parity Preferred Shares shall in all cases bear to each other the same ratio
that accrued distributions per share on the Series B Preferred Shares and such
other classes or series of Parity Preferred Shares (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Preferred Shares do not have cumulative
distribution rights) bear to each other.
(e) No Further Rights. Holders of Series B Preferred Shares
shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
Section 4. Liquidation Preference. (a) Payment of Liquidating
Distributions. Subject to the rights of holders of Parity Preferred Shares with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company and subject to equity securities ranking senior to the
Series B Preferred Shares with respect to rights upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the holders
of Series B Preferred Shares shall be entitled to receive out of the assets of
the Company legally available for distribution or the proceeds thereof, after
payment or provision for debts and other liabilities of the Company, but before
any payment or distributions of the assets shall be made to holders of Common
Shares or any other class or series of shares of the Company that ranks junior
to the Series B Preferred Shares as to rights upon liquidation, dissolution or
winding-up of the Company, an amount equal to the sum of (i) a liquidation
preference of $50.00 per share of Series B Preferred Shares, and (ii) an amount
equal to any accumulated and unpaid distributions thereon, whether or not
declared, to the date of payment. In the event that, upon such voluntary or
involuntary liquidation, dissolution or winding-up, there are insufficient
assets to permit full payment of liquidating distributions to the holders of
Series B Preferred Shares and any Parity Preferred Shares as to rights upon
liquidation, dissolution or winding-up of the Company, all payments of
liquidating distributions on the Series B Preferred Shares and such Parity
Preferred Shares shall be made so that the payments on the Series B Preferred
Shares and such Parity Preferred Shares shall in all cases bear to each other
the same ratio that the respective rights of the Series B Preferred Shares and
such other Parity Preferred Shares (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Shares do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Company bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Company, stating the
payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by (i) fax
and (ii) by first class mail, postage pre-paid, not less than 30 and not more
than 60 days prior to the payment date stated therein, to each record holder of
the Series B Preferred Shares at the respective addresses of such holders as the
same shall appear on the share transfer records of the Company.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series B
Preferred Shares will have no right or claim to any of the remaining assets of
the Company.
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares,
securities or other consideration) of all or substantially all of the property
or assets of the Company to, or the consolidation or merger or other business
combination of the Company with or into, any corporation, trust or other entity
(or of any corporation, trust or other entity with or into the Company) or a
statutory share exchange shall not be deemed to constitute a liquidation,
dissolution or winding-up of the Company.
Section 5. Optional Redemption. (a) Right of Optional
Redemption. The Series B Preferred Shares may not, subject to Section 7 hereof,
be redeemed prior to February 23, 2004. On or after such date, the Company shall
have the right to redeem the Series B Preferred Shares, in whole or in part, at
any time or from time to time, upon not less than 30 nor more than 60 days'
written notice, at a redemption price, payable in cash, equal to $50.00 per
share of Series B Preferred Shares plus accumulated and unpaid distributions,
whether or nor declared, to the date of redemption. If fewer than all of the
outstanding shares of Series B Preferred Shares are to be redeemed, the shares
of Series B Preferred Shares to be redeemed shall be selected pro rata (as
nearly as practicable without creating fractional units).
(b) Limitation on Redemption. (i) The redemption price of the
Series B Preferred Shares (other than the portion thereof consisting of
accumulated but unpaid distributions) will be payable solely out of the sale
proceeds of capital shares of the Company and from no other source. For purposes
of the preceding sentence, "capital shares" means any equity securities
(including Common Shares and Preferred Shares), shares, participation or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.
(ii) Subject to Section 7 hereof, the Company may not redeem fewer than all
of the outstanding shares of Series B Preferred Shares unless all accumulated
and unpaid distributions have been paid on all outstanding Series B Preferred
Shares for all quarterly distribution periods terminating on or prior to the
date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will
be (i) faxed, and (ii) mailed by the Company, postage prepaid, not less than 30
nor more than 60 days prior to the redemption date, addressed to the respective
holders of record of the Series B Preferred Shares to be redeemed at their
respective addresses as they appear on the transfer records of the Company. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series B Preferred Shares except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law or by the applicable rules of any exchange upon
which the Series B Preferred Shares may be listed or admitted to trading, each
such notice shall state: (i) the redemption date, (ii) the redemption price,
(iii) the number of shares of Series B Preferred Shares to be redeemed, (iv) the
place or places where such shares of Series B Preferred Shares are to be
surrendered for payment of the redemption price, (v) that distributions on the
Series B Preferred Shares to be redeemed will cease to accumulate on such
redemption date and (vi) that payment of the redemption price and any
accumulated and unpaid distributions will be made upon presentation and
surrender of such Series B Preferred Shares. If fewer than all of the shares of
Series B Preferred Shares held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of Series B
Preferred Shares held by such holder to be redeemed.
(ii) If the Company gives a notice of redemption in respect of Series B
Preferred Shares (which notice will be irrevocable) then, by 12:00 noon, New
York City time, on the redemption date, the Company will deposit irrevocably in
trust for the benefit of the Series B Preferred Shares being redeemed funds
sufficient to pay the applicable redemption price, plus any accumulated and
unpaid distributions, whether or not declared, if any, on such shares to the
date fixed for redemption, without interest, and will give irrevocable
instructions and authority to pay such redemption price and any accumulated and
unpaid distributions, if any, on such shares to the holders of the Series B
Preferred Shares upon surrender of the certificate evidencing the Series B
Preferred Shares by such holders at the place designated in the notice of
redemption. If fewer than all Series B Preferred Shares evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series B Preferred Shares, evidencing the
unredeemed Series B Preferred Shares without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series B Preferred Shares or portions thereof called for redemption, unless the
Company defaults in the payment thereof. If any date fixed for redemption of
Series B Preferred Shares is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the redemption price or any accumulated or unpaid distributions in
respect of the Series B Preferred Shares is improperly withheld or refused and
not paid by the Company, distributions on such Series B Preferred Shares will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
(d) Status of Redeemed Shares. Any Series B Preferred Shares
that shall at any time have been redeemed shall after such redemption, have the
status of authorized but unissued Preferred Shares, without designation as to
class or series until such shares are once more designated as part of a
particular class or series by the Board of Trustees.
Section 6. Voting Rights.
(a) General. Holders of the Series B Preferred Shares will not have any
voting rights, except as set forth below.
(b) Right to Elect Trustees. (i) If at any time distributions
shall be in arrears with respect to six (6) prior quarterly distribution periods
(including quarterly periods on the Series B Preferred Units prior to the
exchange into Series B Preferred Shares), whether or not consecutive, and shall
not have been paid in full (a "Preferred Distribution Default"), the authorized
number of members of the Board of Trustees shall automatically be increased by
two and the holders of record of such Series B Preferred Shares, voting together
as a single class with the holders of each class or series of Parity Preferred
Shares upon which like voting rights have been conferred and are exercisable,
will be entitled to fill the vacancies so created by electing two additional
trustees to serve on the Company's Board of Trustees (the "Preferred Shares
Trustees") at a special meeting called in accordance with Section 6(b)(ii) at
the next annual meeting of shareholders, and at each subsequent annual meeting
of shareholders or special meeting held in place thereof, until all such
distributions in arrears and distributions for the current quarterly period on
the Series B Preferred Shares and each such class or series of Parity Preferred
Shares have been paid in full.
(ii) At any time when such voting rights shall have vested, a
proper officer of the Company may, and, upon written request (addressed to the
Secretary at the principal office of the Company) of holders of record of at
least 10% of the outstanding Shares of Series B Preferred Shares, shall call or
cause to be called a special meeting of the holders of Series B Preferred Shares
and all the series of Parity Preferred Shares upon which like voting rights have
been conferred and are exercisable (collectively, the "Parity Securities") by
notice similar to that provided in the Bylaws of the Company for a special
meeting of shareholders or as required by law. The record date for determining
holders of the Parity Securities entitled to notice of and to vote at such
special meeting will be the close of business on the third Business Day
preceding the day on which such notice is mailed. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within twenty (20) days after receipt of any such request, then any holder of
Series B Preferred Shares may call such meeting, upon the notice above provided,
and for that purpose shall have access to the share records of the Company. At
any such special meeting, all of the holders of the Parity Securities, by
plurality vote, voting together as a single class without regard to series will
be entitled to elect two trustees on the basis of one vote per $50.00 of
liquidation preference to which such Parity Securities are entitled by their
terms (excluding amounts in respect of accumulated and unpaid dividends) and not
cumulatively. The holder or holders of one-third of the Parity Securities then
outstanding, present in person or by proxy, will constitute a quorum for the
election of the Preferred Shares Trustees except as otherwise provided by law.
Notice of all meetings at which holders of the Series B Preferred Shares shall
be entitled to vote will be given to such holders at their addresses as they
appear in the transfer records. At any such meeting or adjournment thereof in
the absence of a quorum, subject to the provisions of any applicable law, a
majority of the holders of the Parity Securities present in person or by proxy
shall have the power to adjourn the meeting for the election of the Preferred
Shares Trustees, without notice other than an announcement at the meeting, until
a quorum is present. If a Preferred Distribution Default shall terminate after
the notice of a special meeting has been given but before such special meeting
has been held, the Company shall, as soon as practicable after such termination,
mail or cause to be mailed notice of such termination to holders of the Series B
Preferred Shares that would have been entitled to vote at such special meeting.
(iii) If and when all accumulated distributions and the
distribution for the current distribution period on the Series B Preferred
Shares shall have been paid in full or a sum sufficient for such payment is
irrevocably deposited in trust for payment, the holders of the Series B
Preferred Shares shall be divested of the voting rights set forth in Section
6(b) herein (subject to revesting in the event of each and every Preferred
Distribution Default) and, if all distributions in arrears and the distributions
for the current distribution period have been paid in full or set aside for
payment in full on all other classes or series of Parity Preferred Shares upon
which like voting rights have been conferred and are exercisable, the term and
office of each Preferred Shares Trustee so elected shall terminate. Any
Preferred Shares Trustee may be removed at any time with or without cause by the
vote of, and shall not be removed otherwise than by the vote of, the holders of
record of a majority of the outstanding Series B Preferred Shares when they have
the voting rights set forth in Section 6(b) (voting separately as a single class
with all other classes or series of Parity Preferred Shares upon which like
voting rights have been conferred and are exercisable). So long as a Preferred
Distribution Default shall continue, any vacancy in the office of a Preferred
Shares Trustee may be filled by written consent of the Preferred Shares Trustee
remaining in office, or if none remains in office, by a vote of the holders of
record of a majority of the outstanding Series B Preferred Shares when they have
the voting rights set forth in Section 6(b) (voting separately as a single class
with all other classes or series of Parity Preferred Shares upon which like
voting rights have been conferred and are exercisable). The Preferred Shares
Trustee shall each be entitled to one vote per trustee on any matter.
(c) Certain Voting Rights. So long as any Series B Preferred
Shares remain outstanding, the Company shall not, without the affirmative vote
of the holders of at least two-thirds of the Series B Preferred Shares
outstanding at the time (i) designate or create, or increase the authorized or
issued amount of, any class or series of shares ranking prior to the Series B
Preferred Shares with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any authorized shares of
the Company into any such shares, or create, authorize or issue any obligations
or security convertible into or evidencing the right to purchase any such
shares, or (ii) amend, alter or repeal the provisions of the Company's
Declaration of Trust (including these Articles Supplementary) or By-laws,
whether by merger, consolidation or otherwise, in each case that would
materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series B Preferred Shares or the holders
thereof; provided, however, that with respect to the occurrence of a merger or
consolidation, so long as (a) the Company is the surviving entity and the Series
B Preferred Shares remain outstanding with the terms thereof unchanged, or (b)
the resulting or surviving entity is a corporation or trust organized under the
laws of any state and substitutes for the Series B Preferred Shares other
preferred shares having substantially the same terms and same rights as the
Series B Preferred Shares, including with respect to distributions, voting
rights and rights upon liquidation, dissolution or winding-up, then the
occurrence of any such event shall not be deemed to materially and adversely
affect such rights, privileges or voting powers of the holders of the Series B
Preferred Shares and provided further that any increase in the amount of
authorized Preferred Shares or the creation or issuance of any other class or
series of Preferred Shares, or any increase in an amount of authorized shares of
each class or series, in each case ranking either (a) junior to the Series B
Preferred Shares with respect to payment of distributions and the distribution
of assets upon liquidation, dissolution or winding-up, or (b) on a parity with
the Series B Preferred Shares with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up shall not be
deemed to materially and adversely affect such rights, preferences, privileges
or voting powers.
Section 7. Restrictions on Ownership and Transfer to Preserve Tax Benefit.
The beneficial ownership and transfer of the Series B
Preferred Shares shall in all respects be subject to the applicable provisions
of Section 6.7 of the Declaration of Trust; provided, however, pursuant to and
in accordance with Section 6.7(k) of the Declaration of Trust: (i) the holders
of Series B Preferred Shares shall, provided that the provisions of clauses (A),
(B) and (C) of Section 6.7(k) are satisfied, be exempt from the Preferred Shares
Ownership Limit, (ii) in imposing requirements in respect of the Series B
Preferred Shares pursuant to the last two sentences of Section 6.7(k) of the
Declaration of Trust as in effect on the date hereof, the Company shall,
notwithstanding anything to the contrary set forth in such sentences act in a
reasonable and customary manner and (iii) the legend required pursuant to
Section 6.7(l) of the Declaration of Trust shall be modified to reflect the
foregoing.
Section 8. No Conversion Rights. The holders of the Series B
Preferred Shares shall not have any rights to convert such shares into shares of
any other class or series of shares or into any other securities of, or interest
in, the Company.
Section 9. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series B Preferred Shares.
Section 10. No Preemptive Rights. No holder of the Series B
Preferred Shares of the Company shall, as such holder, have any preemptive
rights to purchase or subscribe for additional shares of the Company or any
other security of the Company which it may issue or sell.
THIRD: The Series B Preferred Shares have been classified and designated by
the Board of Trustees under the authority contained in the Declaration of Trust.
FOURTH: These Articles Supplementary have been approved by the Board of
Trustees in the manner and by the vote required by law.
FIFTH: The undersigned President of the Company acknowledges
these Articles Supplementary to be the act of the Company and, as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, the Company has caused Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and attested to by its Secretary on this 23rd day of February, 1999.
COLONIAL PROPERTIES TRUST
By: /s/ Thomas H. Lowder
Name: Thomas H. Lowder
Title: President
ATTEST:
By:/s/ Howard B. Nelson, Jr.
Name: Howard B. Nelson, Jr.
Title: Secretary
Exhibit 10.2.8
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of February 23, 1999, between COLONIAL PROPERTIES TRUST, an
Alabama real estate investment trust (the "Company"), BELCREST REALTY
CORPORATION, a Delaware corporation ("Belcrest") and BELAIR REAL ESTATE
CORPORATION, a Delaware corporation ("Belair"; Belcrest and Belair are
collectively referred to herein as the "Contributors").
This Agreement is made in connection with the private sale of
8.875% Series B Cumulative Redeemable Perpetual Preferred Units (the "Series B
Preferred Units") of partnership interest in COLONIAL REALTY LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Operating Partnership")
pursuant to (i) that certain Contribution Agreement, dated as of February 23,
1999, between Belcrest, the Company and the Operating Partnership, in which the
Company holds the sole general partnership interest, and (ii) that certain
Contribution Agreement, dated as of February 23, 1999, between Belair, the
Company and the Operating Partnership. The foregoing contribution agreements are
collectively referred to herein as the "Contribution Agreements." The Series B
Preferred Units may be exchanged for shares of 8.875% Series B Cumulative
Redeemable Perpetual Preferred Shares of Beneficial Interest (the "Preferred
Shares"), par value $.01 per share, of the Company, pursuant to the terms of the
Series B Preferred Units (any such exchange, an "Exchange"). To induce each of
the Contributors to enter into the Contribution Agreements, the Company has
agreed to register for sale by the Contributors and the Holders the Registrable
Securities and to provide the Contributors with certain registration rights set
forth herein. The execution of this Agreement is a condition to the closing
under each of the Contribution Agreements.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"Affiliate" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified.
"Belair" shall have the meaning set forth in the preamble.
"Belcrest" shall have the meaning set forth in the preamble.
"Closing Date" shall mean the date of closing of the Company's
sale of Series B Preferred Units to the Contributors.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors or other parties who succeed to the
Company's obligations hereunder.
"Contribution Agreements" shall have the meaning set forth in
the preamble.
"Contributors" shall have the meaning sets forth in the
preamble and shall include their successors and permitted assigns.
"Exchange" shall have the meaning set forth in the preamble.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and any successor statute thereto, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the relevant time.
"Holder" shall mean (i) either of the Contributors or (ii) any
Person holding Registrable Securities as a result of a transfer or assignment of
Registrable Securities to that Person other than pursuant to an effective
registration statement or Rule 144 under the Securities Act, in each case where
securities sold in such transaction may be resold in a public distribution
without subsequent registration under the Securities Act, and together the
entities described in clauses (i) and (ii) hereof shall be "Holders".
"Indemnified Party" shall have the meaning set forth in
Section 7(c) hereof.
"Indemnifying Parance, if the Company so desires; and (vii)
fees and expenses of other Persons reasonably necessary in connection with the
Registration retained by the Company, including any experts, transfer agent or
registrar.
"Registration Request" shall have the meaning set forth in
Section 2(b) hereof.
"Registration Statement" shall mean a registration statement
of the Company and any other person required to be a registrant with respect to
such registration statement pursuant to the requirements of the Securities Act,
which covers the resale of all of the Registrable Securities on an appropriate
form under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"SEC" shall mean the Securities and Exchange Commission or
any successor federal agency.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statute thereto, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the relevant time.
"Series B Preferred Units" shall have the meaning therefor set
forth in the preamble hereof.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
"Underwritten Offering" shall mean a sale of securities of the
Company to an underwriter or underwriters for reoffering to the public.
2. Registration Under the Securities Act.
(a) Demand Registration. Upon receipt of a written request (a "Registration
Request"), which shall include a description of such Holders' proposed method of
distribution (which method may also include an Underwritten Offering by a
nationally recognized Underwriter selected by the Company and reasonably
acceptable to the Registering Holders) from Holders holding Registrable
Securities having an aggregate expected offering price of at least $15,000,000
(or all remaining Registrable Securities if all such remaining Registrable
Securities shall have an aggregate expected offering price of less than
$15,000,000), the Company shall (i) promptly give notice of the Registration
Request to all non-requesting Holders and (ii) prepare and file with the SEC,
within sixty (60) days after receipt of such Registration Request, a
Registration Statement for the sale of all Registrable Securities held by the
requesting Holders and any other Holder who makes a written request of the
Company to have her or his Registrable Securities included in such Registration
Statement, which written request must be received by the Company within ten (10)
days after such Holder receives the Registration Request (all of such Holders,
collectively, the "Registering Holders"). Upon receipt of such written request,
the Company shall use its best efforts to cause such Registration Statement to
be declared effective within one hundred twenty (120) days after receipt of a
Registration Request. The Company shall keep such Registration Statement
continuously effective until the date on which all Registrable Securities have
been sold pursuant to such Registration Statement or are eligible for resale
under Rule 144 without regard to holding periods or volume limitations.
(b) Expenses. The Company shall pay all Registration Expenses in
connection with any registration undertaken pursuant to Section 2(a) hereof. If
the Company at any time agrees (an "Other Agreement") to pay for or reimburse
the legal fees and expenses of any holder(s) of any equity securities of the
Company incurred in connection with one or more registrations of such securities
pursuant to such Other Agreement (including, without limitation, in connection
with compliance with federal or state securities or blue sky laws), then (i) the
Company shall pay or reimburse to the Contributors their reasonable legal fees
and expenses in connection with an equal number of registrations under this
Agreement, up to the amount agreed to be paid or reimbursed by the Company
pursuant to such Other Agreement (it being agreed that, if the Company enters
into more than one Other Agreement, the Contributors' rights under this Section
2(b)(i) shall be determined by reference to the Other Agreement that is most
favorable to the Contributors) and (ii) Registration Expenses shall include such
expenses. The Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Registration Statement.
3. Hold-Back Agreement.
Each Holder of Registrable Securities shall agree not to
effect any public sale or distribution of securities of the Company of the same
or similar class or classes of the securities included in the Registration
Statement or any securities convertible into or exchangeable or exercisable for
such securities, including a sale pursuant to Rule 144 or Rule 144A under the
Securities Act, during such periods as reasonably requested by the Underwriter
in an underwritten public offering by the Company; provided that no Holder shall
be so obligated under this Section 3 in the event that any such period requested
by the Underwriter is longer than ninety (90) days and or occurs more than once
in any twelve (12) month period.
4. Registration Procedures.
In connection with the obligations of the Company with respect
to a Registration Statement pursuant to Section 2(a) hereof, the Company shall
use all commercially reasonable efforts to effect or cause to be effected the
registration of the Registrable Securities under the Securities Act to permit
the sale of such Registrable Securities by the Holder in accordance with its
intended method or methods of distribution, and the Company shall:
(a) prepare and file with the SEC, as specified in Section 2 hereof, a
Registration Statement, which Registration Statement shall comply as to form in
all material respects with the requirements of the applicable form and include
all financial statements required by the SEC to be filed therewith, and use its
best efforts to cause such Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;
(b) subject to Section 4(j) hereof, prepare and file with the SEC
such amendments and post-effective amendments to each such Registration
Statement as may be necessary to keep such Registration Statement effective for
the applicable period; cause each such Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 or any similar rule that may be adopted under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by each Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the
selling Holder thereof;
(c) furnish to the Holder of Registrable Securities without
charge, as many copies of each Prospectus, including each or summary prospectus
preliminary Prospectus, and any amendment or supplement thereto and such other
documents as such Holder may reasonably request, in order to facilitate the
public sale or other disposition of the Registrable Securities; the Company
consents to the use of any such Prospectus, including each preliminary
Prospectus, by the Holder of Registrable Securities, if any, in connection with
the offering and sale of the Registrable Securities covered by any such
Prospectus;
(d) use its best efforts to register or qualify, or obtain exemption from
registration or qualification for, all Registrable Securities by the time the
applicable Registration Statement is declared effective by the SEC under all
applicable state securities or "blue sky" laws of such jurisdictions as the
Holder of Registrable Securities covered by a Registration Statement shall
reasonably request in writing, keep each such registration or qualification or
exemption effective during the period such Registration Statement is required to
be kept effective and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Holder; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction or to register as a broker
or dealer in such jurisdiction where it would not otherwise be required to
qualify but for this Section 4(d), (ii) subject itself to taxation in any such
jurisdiction, or (iii) submit to the general service of process in any such
jurisdiction;
(e) notify the Holder of Registrable Securities promptly and,
if requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of the issuance by the
SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, and (iii) of the happening of any event during the period a
Registration Statement is effective as a result of which such Registration
Statement or the related Prospectus contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iv) of the
Company's receipt of any notification of the suspension of the qualification of
any Registrable Securities covered by a Registration Statement for sale in any
jurisdiction; in the event the Company shall give notice as to the occurrence of
any event described Sections 4(e)(ii), 4(e)(iii) or 4(e)(iv) hereof, the Company
shall extend the period during which such Registration Statement shall be
maintained effective by the number of days during the period from and including
the date of the giving of such notice to the date the Company delivers notice
that disposition may be made;
(f) furnish to the Holder of Registrable Securities copies of any request
by the SEC or any state securities authority of amendments of supplements to a
Registration Statement and Prospectus or for additional information;
(g) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(h) provide to the Holders, at no cost to such Holders, a copy of the
Registration Statement and any amendment thereto with respect to Registrable
Securities, each Prospectus contained in such Registration Statement or
post-effective amendment and any amendment or supplement thereto and such other
documents as such Holders may reasonably request in order to facilitate the
disposition of their Registrable Securities covered by such Registration
Statement; the Company consents to the use of each such Prospectus and any
supplement thereto by such Holders in connection with the offering and sale of
their Registrable Securities covered by such Registration Statement or any
amendment thereto;
(i) upon the occurrence of any event contemplated by Section
4(e)(iii) hereof, immediately notify all Holders of the Registrable Securities
affected by such event of such event and prepare and provide to such Holders a
supplement or post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by reference and file
any required document so that, as thereafter delivered to the purchasers of the
Registrable Securities, such Prospectus will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(j) make available for inspection by representatives of the Holder of the
Registrable Securities and any Underwriters participating in any disposition
pursuant to a Registration Statement and any special counsel or accountant
retained by such Holders or Underwriters, all financial and other records,
pertinent corporate documents and properties of the Company and cause the
respective officers, trustees and employees of the Company to supply all
information reasonably requested by any such representative, Underwriter,
special counsel or accountant in connection with a Registration Statement;
provided, however, that such records, documents or information which the Company
determines, in good faith, to be confidential and notifies such representatives,
Underwriters ' special counsel or accountants are confidential shall not be
disclosed by the representatives, underwriters special counsel or accountants
unless (i) the disclosure of such records, documents or information is necessary
to avoid or correct a misstatement or omission in a Registration Statement, (ii)
the release of such records, documents or information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, or (iii) such
records, documents or information have been generally made available to the
public;
(k) use all commercially reasonable efforts (including, without limitation,
seeking to cure any deficiencies (within the Company's control) cited by such
exchange or market in the Company's listing application) to list all Registrable
Securities on The New York Stock Exchange (unless the Company qualifies and
chooses to list all Registrable Securities on the American Stock Exchange or The
NASDAQ National Market, in which event the Company shall use its best efforts to
list all Registrable Securities on the American Stock Exchange or The NASDAQ
National Market);
(l) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the Registration Statement;
(m) comply with the Securities Act and the Exchange Act in
connection with the offer and sale of the Registrable Securities to be sold
pursuant to a Registration Statement, and shall use all commercially reasonable
efforts to make available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least twelve (12) months which
shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(n) provide and cause to be maintained a transfer agent for all
Registrable Securities covered by such Registration Statement from and after a
date not later than the effective date of such Registration Statement;
(o) cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing their Registrable Securities to be sold
pursuant to a Registration Statement and not bearing any Securities Act legend;
and enable certificates for such Registrable Securities be issued for such
numbers of shares and registered in such names as such Holders may reasonably
request at least two (2) business days prior to any sale of their Registrable
Securities;
(p) enter into customary agreements (including an underwriting
agreement or securities sales agreement, if any, in customary form) containing
such representations and warranties to the Holders of such Registrable
Securities and the Underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in similar underwritten offerings as
may be reasonably requested by them and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities; and
(q) furnish to each Registering Holder and to each Underwriter,
if any, a signed counterpart, addressed to such Registering Holder or
Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants (to the extent permitted by the standards of the American Institute
of Certified Public Accountants), each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the
case may be, as the Holders of a majority of the Registrable Securities included
in such offering or the managing Underwriter or Underwriters therefor reasonably
request.
The Company may require the Holder of Registrable Securities
to furnish to the Company in writing such information regarding the proposed
distribution by such Holder of such Registrable Securities as the Company may
from time to time reasonably request in writing.
The Holders agree that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 4(e)(iii)
hereof, such Holder will immediately discontinue disposition of Registrable
Securities pursuant to a Registration Statement until such Holders' receipt of
the copies of the supplemented or amended Prospectus, if so directed by the
Company, such Holders will deliver to the Company (at the expense of the
Company) all copies in its possession, other than permanent file copies then in
such Holders' possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
5. Black-Out Period.
(a) Following the effectiveness of a Registration Statement (and the
filings with any state securities commissions), the Company may direct the
Holder to suspend sales of the Registrable Securities for such times as the
Company reasonably may determine is necessary and advisable, including the
following events (each, a "Suspension Event"): (i) an underwritten primary
offering by the Company where the Company is advised by the underwriters for
such offering that sale of Registrable Shares under the Registration Statement
would have a material adverse effect on the primary offering, or (ii) pending
negotiations relating to, or consummation of, a transaction or the occurrence of
an event (x) that would require additional disclosure of material information by
the Company in the Registration Statement (or such filings), (y) as to which the
Company has a bona fide business purpose for preserving confidentiality or (z)
which renders the Company unable to comply with SEC requirements, in each case
under circumstances that would make it impractical or inadvisable to cause the
Registration Statement (or such filings) to become effective or to promptly
amend or supplement the Registration Statement on a post-effective basis, as
applicable.
(b) In the event of a Suspension Event, the Company may give notice (a
"Suspension Notice") to the Holder to suspend sales of the Registrable Shares so
that the Company may correct or update the Registration Statement (or such
filings); provided, however, that such suspension shall continue only for so
long as the Suspension Event or its effect is continuing. The Holder agrees that
it will not effect any sales of the Registrable Shares pursuant to such
Registration Statement (or such filings) at any time after it has received a
Suspension Notice from the Company. If so directed by the Company, Holder will
deliver to the Company all copies of the Prospectus covering the Registrable
Shares held by them at the time of receipt of the Suspension Notice. The Holder
may recommence effecting sales of the Registrable Shares pursuant to the
Registration Statement (or such filings) following further notice to such effect
(an "End of Suspension Notice") from the Company, which End of Suspension Notice
shall be given by the Company promptly following the conclusion of any
Suspension Event and the effectiveness of any required amendment or supplement
to be the Registration Statement.
(c) Notwithstanding the provisions of Sections 5(a) and 5(b) to the
contrary: (i) no Holder shall be subject to the provisions of Sections 5(a) and
5(b) hereof for a period of time in excess of sixty (60) days; and (ii) no
Suspension Notice may be given more than twice in any twelve (12) month period.
Moreover, notwithstanding Section 2(a) hereof, if the Company shall give a
Suspension Notice pursuant to this Section 5, the Company agrees it shall extend
the period during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from the date
of the giving of the Suspension Notice to and including the date when the
Holders shall have received the End of Suspension Notice and copies of the
supplemented or amended Prospectus necessary to resume sales.
6. Rule 144 and Rule 144A.
For so long as the Company is subject to the reporting
requirements of Section 13 or 15 of the Exchange Act, the Company covenants that
it will timely file the reports required to be filed by it under the Securities
Act and Section 13(a) or 15(d) of the Exchange Act and the rules and regulations
adopted by the SEC thereunder and, if at any time the Company is not required to
file such reports, it will, upon the request of any Holder of Registrable
Securities, make publicly available other information so long as necessary to
permit sales pursuant to Rule 144 under the Securities Act. The Company also
covenants that it will provide the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any Holder of
Registrable Securities and it will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time, to enable such Holder to sell its Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, (b) Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or (c) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
7. Indemnification.
(a) The Company will indemnify each Registering Holder, each such Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages, liabilities and expenses (including reasonable legal expenses), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement or prospectus relating to
such Holders' Registrable Securities, or any amendment or supplement thereto, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not indemnify and will not
be liable to any Registered Holder in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
conformity with and in reliance upon information furnished in writing to the
Company by such Holder or by an underwriter for inclusion therein or such
Holder's failure to deliver any Prospectus or amendment or supplement thereto.
(b) Each Registering Holder will indemnify the Company, each of its
trustees and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages, liabilities and expenses (including reasonable legal fees and expenses)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement or prospectus, or
any amendment or supplement thereto, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement or prospectus, in reliance upon and in conformity with information
furnished in writing to the Company by such Holder for inclusion therein.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought. However,
the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which it may have to the Indemnified Party
pursuant to the provisions of this Section 7, except to the extent of the actual
damages suffered by such delay in notification. The Indemnifying Party shall
assume the defense of such action. including the employment of counsel, which
shall be chosen by the Indemnifying Party and shall be reasonably satisfactory
to the Indemnified Party, and payment of expenses in connection with such
defense. The Indemnified Party shall have the right to employ its own counsel in
any such case, but the legal fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (i) the employment of such counsel shall
have been authorized in writing by the Indemnifying Party, (ii) the Indemnifying
Party shall not have assumed the defense of such action within a reasonable
period of time, or (iii) the Indemnified Party shall have been reasonably
advised by its counsel that there may be defenses available to it or them which
are different from or additional to those available to Indemnifying Party (in
which case the Indemnifying Party shall not have the right to direct the defense
of such action on behalf of the Indemnified Party), in any of which events such
fees and expenses shall be borne by the Indemnifying Party. No Indemnifying
Party in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to the entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to each such Indemnified Party of a release
from all liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 7 is unavailable to
a party that would have been an Indemnified Party under this Section 7, then
each party that would have been an Indemnifying Party hereunder shall, in lieu
of indemnifying such Indemnified Party, contribute to the amount paid or payable
by such Indemnified Party as a result of such claims, losses, damages,
liabilities and expenses in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and such Indemnified
Party on the other in connection with the statement or omission which resulted
in such claims, losses, damages, liabilities and expenses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
related to information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each Registering Holder agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation that fails to take account of the equitable
considerations referred to above in this Section 7(d).
(e) No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(f) In no event shall any Registering Holder be liable for any claims,
losses, damages, liabilities or expenses pursuant to this Section 7 in excess of
the proceeds to such Holder for the sale of such Holder's Registrable Securities
pursuant to a Registration.
8. Miscellaneous.
(a) No Inconsistent Agreement. The Company has not entered into nor will
the Company on or after the date of this Agreement enter into any agreement
which is inconsistent with the rights granted to the Holder of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holder do not in any way conflict with and are not
inconsistent with the rights granted to the holder of the Company's other issued
and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and the Holder(s) of a majority of
the Registrable Securities (including outstanding Series B Preferred Units).
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to the Contributors, c/o Eaton Vance Management, One Federal Plaza Street,
Boston, Massachusetts 02110, Attention: Alan Dynner, telecopier number (617)
338-8054, and thereafter at such other address or telecopier number, notice of
which is given in accordance with the provisions of this Section 8(c), with a
copy to Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022,
Attention: Peter H. Blessing, Esq., telecopier number (212) 848-7179, (ii) if to
an assignee or transferee of the Contributors, to such address or telecopier
number such assignee or transferee shall have provided to the Company, and
thereafter at such other address or telecopier number, notice of which is given
in accordance with the provisions of this Section 8(c) and (iii) if to the
Company, at 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203,
Attention: President, telecopier number (205) 250-8890, and thereafter at such
other address or telecopier number, notice of which is given in accordance with
the provisions of this Section 8(c), with a copy to Hogan & Hartson, L.L.P.,
Columbia Square, 555 13th Street, N.W., Washington, D.C. 20004, Attention: Alan
Dye, Esq., telecopier number (202) 637-5910. All such notices and communications
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five (5) business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt is
acknowledged, if telecopied; and on the next business day if timely delivered to
an air courier guaranteeing overnight delivery.
(d) Successors. The rights and obligations of any Holder hereunder may be
assigned to any other Holder. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of the Company and the Holder.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ALABAMA, WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAW PROVISIONS THEREOF. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF ALABAMA IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to complete specific performance of the obligations of any other party under
this Agreement to accordance with the terms and conditions of this Agreement in
any court of the United States or any State thereof having jurisdiction.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof. (k) Attorneys' Fees. If the Company or any Holder brings an
action to enforce its rights under this Agreement, the prevailing party in the
action shall be entitled to recover its costs and expenses, including without
limitation, reasonable attorneys' fees, incurred in connection with such action,
including any appeal of such action.
(1) Authority; Binding Effect. Each party hereto represents and warrants
that it has the fall legal right, power and authority to execute this Agreement,
that this Agreement has been duly authorized, executed and delivered on behalf
of such party and constitutes a valid and binding agreement of such party
enforceable in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
COLONIAL PROPERTIES TRUST
By:
Name:
Title:
BELCREST REALTY CORPORATION
By:
Name:
Title:
BELAIR REAL ESTATE CORPORATION
By:
Name:
Title:
Exhibit 10.2.9
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this "Agreement") is
made and entered into as of July 1, 1998, by and among Colonial Properties
Trust, an Alabama real estate investment trust (the "Company"), Colonial Realty
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and William M. Johnson Investments I, LLLP, William M. Johnson
Investments II, LLLP, and William M. Johnson (the "Holders").
WHEREAS, on the date hereof the Operating Partnership is acquiring
certain real property known as "Mansell Overlook 200" pursuant to a Contribution
and Merger Agreement dated as of July 31, 1997, by and between Colonial
Properties Holding Company, Inc. ("CPHC"), and the Operating Partnership and
Mansell Overlook 200, LLC, William M. Johnson and Phyllis Johnson and certain
real property known as "The Shoppes at Mansell" pursuant to a Contribution and
Merger Agreement dated as of July 31, 1997, by and between CPHC and the
Operating Partnership and the Shoppes at Mansell, L.P., William M. Johnson and
Phyllis Johnson (together, the "Contribution Agreements") and in connection
therewith the Holders will receive Class B Units of limited partnership interest
in the Operating Partnership (such Class B Units and the Class A Units of
limited partnership interest into which such Class B Units will be converted
being referred to hereinafter as the "Units");
WHEREAS, in order to induce the Holders to consummate the closing
contemplated under the Contribution Agreements, the Company has agreed to grant
the Holders the registration rights set forth in Section 3 hereof;
WHEREAS, in order to induce the Operating Partnership to consummate the
closing contemplated under the Contribution Agreements, the Holders have agreed
to the Lock-up (as defined in Section 2(a) hereof);
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Common Shares" shall mean common
shares of beneficial interest, par value $ .01 per share, in the
Company.
"Company"shall have the meaning set forth in the Preamble and also shall include
the Company's successors.
"Dispose of" shall have the meaning set forth in Section 2(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Holders" shall have the meaning set forth in the Preamble and also shall
include the Holders' successors and permitted assigns.
"Lock-up" shall have the meaning set forth in Section 2(a) hereof.
"Lock-up Period" shall have the meaning set forth in Section 2(a)
hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Operating Partnership" shall have the meaning set forth in the Preamble and
also shall include the Operating Partnership's successors.
"Person" shall mean an individual, partnership, corporation, trust, estate, or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" shall mean the prospectus included in a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Securities" shall mean the Shares, excluding (i) Shares for which a
Registration Statement relating to the sale thereof shall have become effective
under the Securities Act and which have been disposed of under such Registration
Statement and (ii) Shares sold pursuant to Rule 144 under the Securities Act or
Shares which, when combined with all other Shares then owned by the Holders, are
eligible for sale pursuant to Rule 144 in a single transaction in accordance
with the volume limitations contained in Rule 144(e) (or any successor rule
under the Securities Act).
"Registration Expenses" shall mean any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation: (i) all
SEC, stock exchange or NASD registration and filing fees; (ii) all fees and
expenses incurred in connection with compliance with state securities or "blue
sky" laws (including reasonable fees and disbursements of counsel in connection
with "blue sky" qualification of any of the Registrable Securities and the
preparation of a Blue Sky Memorandum) and compliance with the rules of the NASD;
(iii) all expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, certificates and other documents relating to the performance of and
compliance with this Agreement; (iv) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges pursuant to Section 4(1) hereof; and (v) the
fees and disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance. Registration Expenses shall specifically exclude underwriting
discounts and commissions, the fees and disbursements of counsel representing
the Holders, and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by the Holders, all of which shall be borne by the
Holders in all cases.
"Registration Notice" shall have the meaning set forth in Section 4(b) hereof.
"Registration Statement" or "Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company and any other Person required to be a
registrant with respect to such shelf registration statement pursuant to the
requirements of the Securities Act which covers the issuance or resale of the
Registrable Securities on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from time to
time.
"Shares"shall mean any Common Shares issued or to be issued to the Holders upon
redemption of their Units. "Shelf Registration" shall mean a
registration required to be effected pursuant to Section 3 hereof.
"Units" shall have the meaning set forth in the Preamble.
2. Lock-up Agreement.
2(a) Each Holder hereby agrees that, except as set forth in
Sections 2(b) and 2(c) below, for a period of three years from July 31, 1997
(the "Lock-up Period"), without the prior written consent of the Company, it
will not offer, pledge, sell, contract to sell, grant any options for the sale
of or otherwise dispose of, directly or indirectly (collectively, "Dispose of"),
any Units (the "Lock-up"); provided, however, that if William M. Johnson ceases
to be a Trustee of the Company at any time prior to July 31, 2000, the Lock-up
Period shall expire on the later of (i) July 31, 1998, or (ii) the date William
M. Johnson ceases to be a Trustee.
2(b) The following transfers of Units shall not be subject to the Lock-up
set forth in Section 2(a): (i) a Holder may Dispose of Units as a gift or other
transfer without consideration; (ii) a Holder who is a natural person may
Dispose of Units to his or her spouse, siblings, parents or any natural or
adopted children or other descendants or to any personal trust in which such
family members or such Holder retains the entire beneficial interest; (iii) a
Holder may Dispose of Units to one or more corporations, partnerships or other
business entities that are wholly owned and controlled, legally and
beneficially, by such Holder or by a Person or Persons that directly or
indirectly wholly own and control such Holder; (iv) a Holder that is a
corporation, partnership or other business entity (other than a Holder in which
any Person other than William M. Johnson or Phyllis Johnson owns an equity
interest) may Dispose of Units by distributing such Units in a liquidation,
winding up or otherwise without consideration to the equity owners of such
corporation, partnership or business entity or to any other corporation,
partnership or business entity that is wholly owned by such equity owners; and
(v) a Holder may Dispose of Units pursuant to a pledge, grant of security
interest or other encumbrance effected in a bona fide transaction with an
unrelated and unaffiliated pledgee. In the event that a Holder Disposes of Units
as permitted by this Section 2(b), such Units shall remain subject to this
Agreement and, as a condition of the validity of such disposition, the
transferee shall be required to execute and deliver a counterpart of this
Agreement (except that a pledgee shall not be required to execute and deliver a
counterpart of this Agreement until it forecloses upon such Units). Thereafter,
such transferee shall be deemed to be a Holder for purposes of this Agreement.
2(c) William M. Johnson may Dispose of Units for the purpose of exercising such
rights as are accorded to him under Section 8.12(b) of each of the Contribution
Agreements. 3. Shelf Registration Under the Securities Act.
3(a) Filing of Shelf Registration Statement.
At any time beginning on the sixtieth day prior to the expiration of the
Lock-up Period (or after the expiration of the Lock-up Period), any Holder, or
one or more Holders, may deliver to the Company a written notice requesting that
the Company cause to be filed with the SEC a Registration Statement registering
the resale by such Holders of a specified number of Registrable Securities
(which number shall not be less than 50,000 minus the number of any Common
Shares that William M. Johnson and/or Phyllis Johnson simultaneously request by
written notice to be registered for resale pursuant to Section 3(a) of the
Registration Rights and Lock-Up Agreement dated as of July 31, 1997, by and
among the Company, the Operating Partnership and William M. Johnson and Phyllis
Johnson) held by or issuable to such Holder(s). Within 60 days of its receipt of
such a notice the Company shall cause to be filed with the SEC a Shelf
Registration Statement providing for the resale by such Holder(s) of the
Registrable Securities specified in the notice (and, if the Company so elects,
any other securities of the Company held by the Holders or any other Person,
including any other Registrable Securities held by the requesting Holder(s) or
other Holders) in accordance with the terms hereof and will use its reasonable
efforts to cause such Shelf Registration Statement to be declared effective by
the SEC as soon as practicable thereafter. The Company also may, at any time and
without receipt of a notice or request from any Holder(s), file a Shelf
Registration Statement registering the resale of all Registrable Securities not
previously covered by a Shelf Registration Statement, which Shelf Registration
Statement also may register for sale Common Shares held by any other Person and
which shall satisfy the Company's obligation to file a Shelf Registration
Statement under this Section 3(a). The Company agrees to use its reasonable
efforts to keep any Shelf Registration Statement filed pursuant to this Section
3(a) continuously effective for a period expiring on the date on which all of
the Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or have become eligible for
sale pursuant to Rule 144 in a single transaction in accordance with the volume
limitations contained in Rule 144(e) (or any successor rule under the Securities
Act) and, subject to Section 4(b) and Section 4(i), further agrees to supplement
or amend the Shelf Registration Statement, if and as required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the Securities Act or by any
other rules and regulations thereunder for shelf registration; provided,
however, that the Company shall not be deemed to have used its reasonable
efforts to keep a Registration Statement effective during the applicable period
if it voluntarily takes any action that would result in the selling Holders
covered thereby not being able to sell such Registrable Securities during that
period, unless such action is required under applicable law or the Company has
filed a post-effective amendment to the Registration Statement and the SEC has
not declared it effective. Notwithstanding the foregoing, the Company shall not
be required to file a Registration Statement or to keep a Registration Statement
effective if the negotiation or consummation of a transaction is pending or an
event has occurred, which negotiation, consummation or event would require
additional disclosure by the Company in the Registration Statement of material
information which the Company has a bona fide business purpose for keeping
confidential and the nondisclosure of which in the Registration Statement might
cause the Registration Statement to fail to comply with applicable disclosure
requirements, and the Company so advises the affected Holder(s) in a writing
signed by the chief executive officer or chief financial officer of the Company;
provided, however, that the Company may not delay, suspend or withdraw a
Registration Statement for such reason for more than 60 days or more often than
twice during any period of 12 consecutive months. 3(b) Expenses. The Company
shall pay all Registration Expenses in connection with any registration pursuant
to Section 3(a). Each Holder shall pay all underwriting discounts, if any, sales
commissions, fees and disbursements of counsel representing such Holder, and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement or Rule 144
under the Securities Act. 3(c) Inclusion in Shelf Registration Statement. Any
Holder who does not timely provide the information reasonably requested by the
Company in connection with any Shelf Registration Statement shall not be
entitled to have such Holder's Registrable Securities included in the Shelf
Registration Statement. 3(d) Repurchase Option. If a Holder redeems Units
pursuant to the Amended and Restated Agreement of Limited Partnership of the
Operating Partnership prior to such Holder's request for or the Company's
voluntary filing of a Shelf Registration Statement pursuant to Section 3(a)
covering the Shares issuable upon such redemption, the Company may, in the event
that such Holder subsequently delivers to the Company a notice pursuant to
Section 3(a) requesting registration of the resale of any such Shares, elect to
repurchase such Shares for cash in lieu of filing a Shelf Registration
Statement. The Company shall make any such election by delivering written notice
to the Holder within 30 days after receipt of such request. If the Company so
elects, the purchase price per Share so repurchased shall be equal to the
average of the closing prices of the Common Shares on the New York Stock
Exchange (or on such other exchange or in such other market as the Common Shares
are then listed or traded) on the ten trading days preceding the Company's
receipt of such request (or, if the Common Shares have not traded on all ten of
such trading days, in an amount equal to the fair value of such Registrable
Securities as determined in good faith by the Board of Trustees of the Company).
4. Registration Procedures.
In connection with the obligations of the Company
with respect to the Registration Statement pursuant to Section 3 hereof, the
Company shall:
4(a) prepare and file with the SEC, within the time period set forth in
Section 3 hereof, a Shelf Registration Statement, which Shelf Registration
Statement (i) shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution by the Holder(s)
thereof and (ii) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith;
4(b) subject to the last three sentences of this Section 4(b) and Section
4(i) hereof, (i) prepare and file with the SEC such amendments and
post-effective amendments to each such Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period; (ii) cause each such Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities Act; (iii) respond
as promptly as practicable to any comments received from the SEC with respect to
the Shelf Registration Statement, or any amendment, post-effective amendment or
supplement relating thereto; and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the Holder(s) thereof.
Notwithstanding anything to the contrary contained herein, the Company shall not
be required to take any of the actions described in subsections (i), (ii) or
(iii) above with respect to a Holder unless and until the Company has received a
notice (a "Registration Notice") from such Holder that such Holder intends to
make offers or sales under the Registration Statement as specified in such
Registration Notice; provided, however, that the Company shall have ten business
days to prepare and file any such amendment or supplement after receipt of such
Registration Notice. Once a Holder has delivered a Registration Notice to the
Company, such Holder shall promptly provide to the Company such information as
the Company reasonably requests in order to identify such Holder and the method
of distribution in a Registration Statement or post-effective amendment to the
Registration Statement or a supplement to the Prospectus. Such Holder also shall
notify the Company in writing upon completion of such offer or sale or at such
time as such Holder no longer intends to make offers or sales under the
Registration Statement;
4(c) furnish to each Holder of Registrable Securities that has delivered a
Registration Notice to the Company, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities; the Company consents to the use of the Prospectus,
including each preliminary Prospectus, by each such Holder of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or the preliminary Prospectus;
4(d) use its reasonable efforts to register or qualify the Registrable
Securities by the time the applicable Registration Statement is declared
effective by the SEC under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective or during the period offers or sales
are being made by any such Holder, whichever is shorter, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction or to register as a broker or dealer in such jurisdiction where it
would not otherwise be required to qualify but for this Section 4(d), (ii)
subject itself to taxation in any such jurisdiction, or (iii) submit to the
general service of process in any such jurisdiction;
4(e) notify each Holder of Registrable Securities that has delivered a
Registration Notice to the Company promptly and, if requested by any such
Holder, confirm such advice in writing (i) when a Registration Statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iii) if the
Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, and (iv) of the happening of any
event during the period a Registration Statement is effective which is of a type
specified in the last sentence of Section 3(a) hereof or as a result of which
such Registration Statement or the related Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of the Prospectus), not
misleading;
4(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
4(g) furnish to each Holder of Registrable Securities that has delivered a
Registration Notice to the Company, without charge, at least one conformed copy
of each Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
4(h) cooperate with the selling Holder(s) of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for such
numbers of Shares and registered in such names as the selling Holder(s) may
reasonably request at least two business days prior to any sale of Registrable
Securities;
4(i) subject to the last sentence of Section 3(a) hereof and the last three
sentences of Section 4(b) hereof, upon the occurrence of any event contemplated
by Section 4(e)(iv) hereof, use its reasonable efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of a post-effective
amendment to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
4(j) make available for inspection by representatives of the Holder(s) of
Registrable Securities and any counsel or accountant retained by such Holder(s),
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, counsel or accountant in connection with a Registration
Statement; provided, however, that such records, documents or information which
the Company determines, in good faith, to be confidential and notifies such
representatives, counsel or accountants in writing that such records, documents
or information are confidential shall not be disclosed by the representatives,
counsel or accountants unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a material misstatement or omission
in a Registration Statement, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public;
4(k) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document (not including any
documents incorporated by reference therein unless requested) to the Holders of
Registrable Securities that have provided a Registration Notice to the Company;
4(l) use its reasonable efforts to cause all Registrable Securities covered
by a Registration Statement to be listed on any securities exchange on which
similar securities issued by the Company are then listed;
4(m) provide a CUSIP number for all Registrable Securities, not later than
the effective date of a Registration Statement;
4(n) otherwise use its
reasonable efforts to comply with all applicable rules and regulations of the
SEC and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering at least 12 months which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
4(o) use its reasonable efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the selling Holders to
consummate the disposition of such Registrable Securities. The Company may
require each Holder of Registrable Securities to furnish to the Company in
writing such information regarding the proposed distribution by such Holder of
such Registrable Securities as the Company may from time to time reasonably
request in writing. In connection with and as a condition to the Company's
obligations with respect to the Registration Statement pursuant to Section 3
hereof and this Section 4, each Holder agrees that (i) such Holder will not
offer or sell such Holder's Registrable Securities under the Registration
Statement until such Holder has provided a Registration Notice pursuant to
Section 4(b) hereof and has received copies of the supplemental or amended
Prospectus contemplated by Section 4(b) hereof and received notice that any
post-effective amendment has become effective, (ii) upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(e)(iv) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder
receives copies of the supplemented or amended Prospectus contemplated by
Section 4(i) hereof and receives notice that any post-effective amendment has
become effective, and, if so directed by the Company, such Holder will deliver
to the Company (at the expense of the Company) all copies in their possession,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice, (iii) all offers and sales under the Registration Statement
shall be completed within sixty (60) days after the first date on which offers
or sales can be made pursuant to clause (i) of this paragraph, and upon
expiration of such sixty (60) day period such Holder will not offer or sell such
Holder's Registrable Securities under the Registration Statement until such
Holder has again complied with the provisions of clause (i) of this paragraph
and (iv) such Holder will deliver or cause delivery of the Prospectus to any
purchaser of Registrable Securities from such Holder in accordance with
applicable requirements of the Securities Act and the rules and regulations
thereunder.
5. Indemnification; Contribution.
5(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder, the beneficial owners, officers and directors of each
Holder, if any, each underwriter (as defined in the Securities Act) who
participates in the offering of such Registrable Securities, and each person, if
any, who controls such Holder or participating person within the meaning of the
Securities Act, as follows: (i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Registrable Securities
were registered under the Securities Act, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; (ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and (iii) against any and all expense
whatsoever, as incurred (including reasonable fees and disbursements of
counsel), reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not paid
under subparagraph (i) or (ii) above; provided, however, that the indemnity
provided pursuant to this Section 5(a) does not apply to any Holder with respect
to any loss, liability, claim, damage or expense to the extent arising out of
(x) any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished to
the Company by such Holder expressly for use in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) or
(y) such Holder's failure to deliver an amended or supplemental Prospectus if
such loss, liability, claim, damage or expense would not have arisen had such
delivery occurred.
5(b) Indemnification by Holders. Each Holder severally, not jointly, agrees
to indemnify and hold harmless the Company and its trustees and officers
(including each trustee and officer of the Company who signed the Registration
Statement), and each Person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, to the same extent as the indemnity
contained in Section 5(a) hereof (except that any settlement described in
Section 5(a)(ii) shall be effected with the written consent of such Holder), but
only insofar as such loss, liability, claim, damage or expense arises out of or
is based upon any untrue statement or omission, or alleged untrue statements or
omissions, made in a Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Holder
expressly for use in such Registration Statement (or any amendment thereto) or
such Prospectus (or any amendment or supplement thereto).
5(c) Conduct of Indemnification Proceedings. Each indemnified party shall
give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party (i) shall not relieve
it from any liability which it may have under the indemnity agreement provided
in Section 5(a) or 5(b) above, unless and to the extent it did not otherwise
learn of such action and the lack of notice by the indemnified party results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided under Section 5(a) or 5(b) above. If the indemnifying party so elects
within a reasonable time after receipt of such notice, the indemnifying party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel chosen by the indemnifying party and approved by the
indemnified parties defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
or parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to assume
such defense and the indemnified party or parties shall be entitled to one
separate counsel at the indemnifying party's or parties' expense. If an
indemnifying party is not entitled to assume the defense of such action or
proceeding as a result of the proviso to the preceding sentence, such
indemnifying party's counsel shall be entitled to conduct such indemnifying
party's defense and counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently as possible. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of counsel for the indemnified party or
parties. In such event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
5(d)Contribution.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in this Section 5 is for any reason
held to be unenforceable although applicable in accordance with its terms, the
Company and the selling Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and such Holders, in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and such Holder on the other (in such proportions that the Holders are
severally, not jointly, responsible for the balance), in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether the action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or the indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The parties hereto agree that it would not be
just or equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no selling
Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such Holder were
offered to the public exceeds the amount of any damages which such Holder would
otherwise have been required to pay by reason of such untrue statement or
omission. The liability of any Holder selling Registrable Securities for
contribution shall not exceed an amount equal to the offering price per share of
the Registrable Securities, multiplied by the number of Registrable Securities
sold by such Holder. Notwithstanding the foregoing, no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 5(d),
each trustee of the Company, each officer of the Company who signed the
Registration Statement and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
6. Rule 144 Sales.
6(a) The Company covenants that it will file the reports required to be
filed by the Company under the Securities Act and the Exchange Act so as to
enable the Holders to sell Shares pursuant to Rule 144 under the Securities Act.
6(b) In connection with any sale, transfer or other disposition by a Holder
of any Shares pursuant to Rule 144 under the Securities Act, the Company shall
cooperate with such Holder to facilitate the timely preparation and delivery of
certificates representing Shares to be sold and not bearing any Securities Act
legend, and enable certificates for such Shares to be for such number of shares
and registered in such names as such Holder may reasonably request at least two
business days prior to any sale of Shares.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and the Holder(s) of a majority
in amount of the outstanding Registrable Securities. Notice of any amendment,
modification or supplement to this Agreement adopted in accordance with this
Section 7(a) shall be provided by the Company to the Holder(s) at least thirty
(30) days prior to the effective date of such amendment, modification or
supplement.
7(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, to the parties at their respective addresses set forth opposite their
signatures below or at such other address as a party may indicate by written
notice to the other party or parties.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three (3)
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; or
at the time delivered, if delivered by courier guaranteeing overnight delivery.
7(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any successor, assignee or transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be entitled to receive the benefits hereof and
shall be conclusively deemed to have agreed to be bound by all of the terms and
provisions hereof.
7(d) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
7(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
7(g) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
7(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
2101 6th Avenue North, COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35202
By:/s/ Thomas H. Lowder
Thomas H. Lowder
Chairman of the Board, President
and Chief Executive Officer
2101 6th Avenue North, COLONIAL REALTY LIMITED
Suite 750 PARTNERSHIP
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES
HOLDING COMPANY, INC., General Partner
By: /s/ Thomas H. Lowder
Thomas H. Lowder
President
2010 Brassfield Way WILLIAM M. JOHNSON
Roswell, GA 30075 INVESTMENTS I, LLP
By:/s/ William M. Johnson
Name:
Title:
2010 Brassfield Way WILLIAM M. JOHNSON
Roswell, GA 30075 INVESTMENTS II, LLP
By:/s/ William M. Johnson
Name:
Title:
2010 Brassfield Way
Roswell, GA 30075
/s/ William M. Johnson
William M. Johnson
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of July 1, 1998
by and among
COLONIAL PROPERTIES TRUST,
COLONIAL REALTY LIMITED PARTNERSHIP
and
WILLIAM M. JOHNSON INVESTMENTS I, LLLP,
WILLIAM M. JOHNSON INVESTMENTS II, LLLP
and
WILLIAM M. JOHNSON
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION 10-5-9 OF THE 'GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
Exhibit 10.2.10
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this "Agreement") is
made and entered into as of July 31, 1997 by and among Colonial Properties
Trust, an Alabama real estate investment trust (the "Company"), Colonial Realty
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and William M. Johnson and Phyllis Johnson (the "Holders").
WHEREAS, on the date hereof the Operating Partnership is acquiring
certain real property in and around Mansell 400 Business Center, located in
North Fulton County, Georgia, and certain personal property in connection
therewith pursuant to the Contribution and Merger Agreement dated as of July 31,
1997, by and between the Operating Partnership and Mansell 400 Associates, L.P.;
the Contribution and Merger Agreement dated as of July 31, 1997, by and between
the Operating Partnership and Mansell Overlook 100, LLC; and the limited warrant
deed conveying Mansell Court East to the Operating Partnership (collectively,
the "Agreements"), and in connection therewith the Holders will receive Class B
Units of limited partnership interest in the Operating Partnership (such Class B
Units and the Class A Units of limited partnership interest into which such
Class B Units will be converted being referred to hereinafter as the "Units");
WHEREAS, in order to induce the Holders to consummate the closing
contemplated under the Agreements, the Company has agreed to grant the Holders
the registration rights set forth in Section 3 hereof;
WHEREAS, in order to induce the Operating Partnership to consummate the
closing contemplated under the Agreements, the Holders have agreed to the
Lock-up (as defined in Section 2(a) hereof);
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Common Shares" shall mean common shares of beneficial interest, par
value $ .01 per share, in the Company.
"Company" shall have the meaning set forth in the Preamble and also
shall include the Company's successors.
"Dispose of" shall have the meaning set forth in Section 2(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Holders" shall have the meaning set forth in the Preamble and also
shall include the Holders' successorsand permitted assigns.
"Lock-up" shall have the meaning set forth in Section 2(a) hereof.
"Lock-up Period" shall have the meaning set forth in Section 2(a)
hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Operating Partnership" shall have the meaning set forth in the
Preamble and also shall include the Operating Partnership's successors.
"Person" shall mean an individual, partnership, corporation, trust,
estate, or unincorporated organization, or a government or agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Registrable Securities" shall mean the Shares, excluding (i) Shares
for which a Registration Statement relating to the sale thereof shall have
become effective under the Securities Act and which have been disposed of under
such Registration Statement and (ii) Shares sold pursuant to Rule 144 under the
Securities Act or Shares which, when combined with all other Shares then owned
by the Holders, are eligible for sale pursuant to Rule 144 in a single
transaction in accordance with the volume limitations contained in Rule 144(e)
(or any successor rule under the Securities Act).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees; (ii) all fees
and expenses incurred in connection with compliance with state securities or
"blue sky" laws (including reasonable fees and disbursements of counsel in
connection with "blue sky" qualification of any of the Registrable Securities
and the preparation of a Blue Sky Memorandum) and compliance with the rules of
the NASD; (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges pursuant to Section 4(1)
hereof; and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions, the fees and disbursements of counsel
representing the Holders, and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by the Holders, all of which shall be
borne by the Holders in all cases.
"Registration Notice" shall have the meaning set forth in Section 4(b)
hereof.
"Registration Statement" or "Shelf Registration Statement" shall mean a
"shelf" registration statement of the Company and any other Person required to
be a registrant with respect to such shelf registration statement pursuant to
the requirements of the Securities Act which covers the issuance or resale of
the Registrable Securities on an appropriate form under Rule 415 under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shares" shall mean any Common Shares issued or to be issued to the
Holders upon redemption of their Units.
"Shelf Registration" shall mean a registration required to be effected
pursuant to Section 3 hereof.
"Units" shall have the meaning set forth in the Preamble.
2. Lock-up Agreement.
2(a) Each Holder hereby agrees that, except as set forth in
Sections 2(b) and 2(c) below, for three years following the date hereof (the
"Lock-up Period"), such Holder will not, without the prior written consent of
the Company, offer, pledge, sell, contract to sell, grant any options for the
sale of or otherwise dispose of, directly or indirectly (collectively, "Dispose
of"), any Units (the "Lock-up"); provided, however, that if William M. Johnson
has not been elected to the Board of Trustees of the Company prior to the
adjournment of the next regularly scheduled meeting of the Board of Trustees
following the date hereof or ceases to be a Trustee of the Company at any time
after his election and prior to the date which is three years from the date
hereof, the Lock-up Period shall expire on the later to occur of (i) the date
that is one year from the date hereof or (ii) the date William M. Johnson ceases
to be a Trustee.
2(b) The following transfers of Units shall not be subject to the Lock-up
set forth in Section 2(a):
(i) a Holder may Dispose of Units as a gift or other transfer without
consideration;
(ii) a Holder who is a natural person may Dispose of Units to his or her
spouse,siblings, parents or any natural or adopted children or other descendants
or to any personal trust in which such family members or such Holder retains the
entire beneficial interest;
(iii) a Holder may Dispose of Units to one or more corporations,
partnerships or other business entities that are wholly owned and controlled,
legally and beneficially, by such Holder or by a Person or Persons that directly
or indirectly wholly own and control such Holder;
(iv) a Holder that is a corporation, partnership or other business entity
(other than a Holder in which any Person other than William M. Johnson or
Phyllis Johnson owns an equity interest) may Dispose of Units by distributing
such Units in a liquidation, winding up or otherwise without consideration to
the equity owners of such corporation, partnership or business entity or to any
other corporation, partnership or business entity that is wholly owned by such
equity owners; and
(v) a Holder may Dispose of Units pursuant to a pledge, grant of security
interest or other encumbrance effected in a bona fide transaction with an
unrelated and unaffiliated pledgee. In the event that a Holder Disposes of Units
as permitted by this Section 2(b), such Units shall remain subject to this
Agreement and, as a condition of the validity of such disposition, the
transferee shall be required to execute and deliver a counterpart of this
Agreement (except that a pledgee shall not be required to execute and deliver a
counterpart of this Agreement until it forecloses upon such Units). Thereafter,
such transferee shall be deemed to be a Holder for purposes of this Agreement.
2(c) William M. Johnson may Dispose of Units for the purpose
of exercising such rights as are accorded to him under Section 8.12(b) of the
Contribution and Merger Agreement between the Operating Partnership and Mansell
Overlook 200, LLC.
3. Shelf Registration Under the Securities Act.
3(a) Filing of Shelf Registration Statement. At any time
beginning on the sixtieth day prior to the expiration of the Lock-up Period (or,
if the Lock-up Period is less than three years, at any time after the expiration
of the Lock-up Period), any Holder, or one or more Holders, may deliver to the
Company a written notice requesting that the Company cause to be filed with the
SEC a Registration Statement registering the resale by such Holders of a
specified number of Registrable Securities (which number shall not be less than
50,000) held by or issuable to such Holder(s). Within 60 days of its receipt of
such a notice the Company shall cause to be filed with the SEC a Shelf
Registration Statement providing for the resale by such Holder(s) of the
Registrable Securities specified in the notice (and, if the Company so elects,
any other securities of the Company held by the Holders or any other Person,
including any other Registrable Securities held by the requesting Holder(s) or
other Holders) in accordance with the terms hereof and will use its reasonable
efforts to cause such Shelf Registration Statement to be declared effective by
the SEC as soon as practicable thereafter. The Company also may, at any time and
without receipt of a notice or request from any Holder(s), file a Shelf
Registration Statement registering the resale of all Registrable Securities not
previously covered by a Shelf Registration Statement, which Shelf Registration
Statement also may register for sale Common Shares held by any other Person and
which shall satisfy the Company's obligation to file a Shelf Registration
Statement under this Section 3(a). The Company agrees to use its reasonable
efforts to keep any Shelf Registration Statement filed pursuant to this Section
3(a) continuously effective for a period expiring on the date on which all of
the Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or have become eligible for
sale pursuant to Rule 144 in a single transaction in accordance with the volume
limitations contained in Rule 144(e) (or any successor rule under the Securities
Act) and, subject to Section 4(b) and Section 4(i), further agrees to supplement
or amend the Shelf Registration Statement, if and as required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration Statement or by the Securities Act or by any
other rules and regulations thereunder for shelf registration; provided,
however, that the Company shall not be deemed to have used its reasonable
efforts to keep a Registration Statement effective during the applicable period
if it voluntarily takes any action that would result in the selling Holders
covered thereby not being able to sell such Registrable Securities during that
period, unless such action is required under applicable law or the Company has
filed a post-effective amendment to the Registration Statement and the SEC has
not declared it effective. Notwithstanding the foregoing, the Company shall not
be required to file a Registration Statement or to keep a Registration Statement
effective if the negotiation or consummation of a transaction is pending or an
event has occurred, which negotiation, consummation or event would require
additional disclosure by the Company in the Registration Statement of material
information which the Company has a bona fide business purpose for keeping
confidential and the nondisclosure of which in the Registration Statement might
cause the Registration Statement to fail to comply with applicable disclosure
requirements, and the Company so advises the affected Holder(s) in a writing
signed by the chief executive officer or chief financial officer of the Company;
provided, however, that the Company may not delay, suspend or withdraw a
Registration Statement for such reason for more than 60 days or more often than
twice during any period of 12 consecutive months.
3(b) Expenses. The Company shall pay all Registration Expenses
in connection with any registration pursuant to Section 3(a). Each Holder shall
pay all underwriting discounts, if any, sales commissions, fees and
disbursements of counsel representing such Holder, and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement or Rule 144 under the Securities
Act.
3(c) Inclusion in Shelf Registration Statement. Any Holder who
does not timely provide the information reasonably requested by the Company in
connection with any Shelf Registration Statement shall not be entitled to have
such Holder's Registrable Securities included in the Shelf Registration
Statement.
3(d) Repurchase Option. If a Holder redeems Units pursuant to
the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership prior to such Holder's request for or the Company's voluntary filing
of a Shelf Registration Statement pursuant to Section 3(a) covering the Shares
issuable upon such redemption, the Company may, in the event that such Holder
subsequently delivers to the Company a notice pursuant to Section 3(a)
requesting registration of the resale of any such Shares, elect to repurchase
such Shares for cash in lieu of filing a Shelf Registration Statement. The
Company shall make any such election by delivering written notice to the Holder
within 30 days after receipt of such request. If the Company so elects, the
purchase price per Share so repurchased shall be equal to the average of the
closing prices of the Common Shares on the New York Stock Exchange (or on such
other exchange or in such other market as the Common Shares are then listed or
traded) on the ten trading days preceding the Company's receipt of such request
(or, if the Common Shares have not traded on all ten of such trading days, in an
amount equal to the fair value of such Registrable Securities as determined in
good faith by the Board of Trustees of the Company).
4. Registration Procedures.
In connection with the obligations of the Company with respect to the
Registration Statement pursuant to Section 3 hereof, the Company shall:
4(a) prepare and file with the SEC, within the time period set
forth in Section 3 hereof, a Shelf Registration Statement, which Shelf
Registration Statement (i) shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution by
the Holder(s) thereof and (ii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith;
4(b) subject to the last three sentences of this Section 4(b)
and Section 4(i) hereof, (i) prepare and file with the SEC such amendments and
post-effective amendments to each such Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period; (ii) cause each such Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities Act; (iii) respond
as promptly as practicable to any comments received from the SEC with respect to
the Shelf Registration Statement, or any amendment, post-effective amendment or
supplement relating thereto; and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the Holder(s) thereof.
Notwithstanding anything to the contrary contained herein, the Company shall not
be required to take any of the actions described in subsections (i), (ii) or
(iii) above with respect to a Holder unless and until the Company has received a
notice (a "Registration Notice") from such Holder that such Holder intends to
make offers or sales under the Registration Statement as specified in such
Registration Notice; provided, however, that the Company shall have ten business
days to prepare and file any such amendment or supplement after receipt of such
Registration Notice. Once a Holder has delivered a Registration Notice to the
Company, such Holder shall promptly provide to the Company such information as
the Company reasonably requests in order to identify such Holder and the method
of distribution in a Registration Statement or post-effective amendment to the
Registration Statement or a supplement to the Prospectus. Such Holder also shall
notify the Company in writing upon completion of such offer or sale or at such
time as such Holder no longer intends to make offers or sales under the
Registration Statement;
4(c) furnish to each Holder of Registrable Securities that has
delivered a Registration Notice to the Company, without charge, as many copies
of each Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities; the Company consents to the use of the Prospectus,
including each preliminary Prospectus, by each such Holder of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or the preliminary Prospectus;
4(d) use its reasonable efforts to register or qualify the
Registrable Securities by the time the applicable Registration Statement is
declared effective by the SEC under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable Securities covered
by a Registration Statement shall reasonably request in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective or during the period offers or sales
are being made by any such Holder, whichever is shorter, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
each such Holder to consummate the disposition in each such jurisdiction of such
Registrable Securities owned by such Holder; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction or to register as a broker or dealer in such jurisdiction where it
would not otherwise be required to qualify but for this Section 4(d), (ii)
subject itself to taxation in any such jurisdiction, or (iii) submit to the
general service of process in any such jurisdiction;
4(e) notify each Holder of Registrable Securities that has
delivered a Registration Notice to the Company promptly and, if requested by any
such Holder, confirm such advice in writing (i) when a Registration Statement
has become effective and when any post-effective amendments and supplements
thereto become effective, (ii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iii) if the Company receives any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction or
the initiation of any proceeding for such purpose, and (iv) of the happening of
any event during the period a Registration Statement is effective which is of a
type specified in the last sentence of Section 3(a) hereof or as a result of
which such Registration Statement or the related Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made (in the case of the Prospectus), not
misleading;
4(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
4(g) furnish to each Holder of Registrable Securities that has
delivered a Registration Notice to the Company, without charge, at least one
conformed copy of each Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or exhibits
thereto, unless requested);
4(h) cooperate with the selling Holder(s) of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any Securities
Act legend; and enable certificates for such Registrable Securities to be issued
for such numbers of Shares and registered in such names as the selling Holder(s)
may reasonably request at least two business days prior to any sale of
Registrable Securities;
4(i) subject to the last sentence of Section 3(a) hereof and
the last three sentences of Section 4(b) hereof, upon the occurrence of any
event contemplated by Section 4(e)(iv) hereof, use its reasonable efforts
promptly to prepare and file a supplement or prepare, file and obtain
effectiveness of a post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
4(j) make available for inspection by representatives of the
Holder(s) of Registrable Securities and any counsel or accountant retained by
such Holder(s), all financial and other records, pertinent corporate documents
and properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by any
such representative, counsel or accountant in connection with a Registration
Statement; provided, however, that such records, documents or information which
the Company determines, in good faith, to be confidential and notifies such
representatives, counsel or accountants in writing that such records, documents
or information are confidential shall not be disclosed by the representatives,
counsel or accountants unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a material misstatement or omission
in a Registration Statement, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public;
4(k) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus, provide copies of such document (not
including any documents incorporated by reference therein unless requested) to
the Holders of Registrable Securities that have provided a Registration Notice
to the Company;
4(l) use its reasonable efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on any securities
exchange on which similar securities issued by the Company are then listed;
4(m) provide a CUSIP number for all Registrable
Securities, not later than the effective date
of a Registration Statement;
4(n) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and
4(o) use its reasonable efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company to enable the selling Holders to
consummate the disposition of such Registrable Securities.
The Company may require each Holder of Registrable Securities to
furnish to the Company in writing such information regarding the proposed
distribution by such Holder of such Registrable Securities as the Company may
from time to time reasonably request in writing.
In connection with and as a condition to the Company's obligations with
respect to the Registration Statement pursuant to Section 3 hereof and this
Section 4, each Holder agrees that (i) such Holder will not offer or sell such
Holder's Registrable Securities under the Registration Statement until such
Holder has provided a Registration Notice pursuant to Section 4(b) hereof and
has received copies of the supplemental or amended Prospectus contemplated by
Section 4(b) hereof and received notice that any post-effective amendment has
become effective, (ii) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(e)(iv) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder receives copies of the
supplemented or amended Prospectus contemplated by Section 4(i) hereof and
receives notice that any post-effective amendment has become effective, and, if
so directed by the Company, such Holder will deliver to the Company (at the
expense of the Company) all copies in their possession, other than permanent
file copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice, (iii) all
offers and sales under the Registration Statement shall be completed within
sixty (60) days after the first date on which offers or sales can be made
pursuant to clause (i) of this paragraph, and upon expiration of such sixty (60)
day period such Holder will not offer or sell such Holder's Registrable
Securities under the Registration Statement until such Holder has again complied
with the provisions of clause (i) of this paragraph and (iv) such Holder will
deliver or cause delivery of the Prospectus to any purchaser of Registrable
Securities from such Holder in accordance with applicable requirements of the
Securities Act and the rules and regulations thereunder.
5. Indemnification; Contribution.
5(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Holder, the beneficial owners, officers and
directors of each Holder, if any, each underwriter (as defined in the Securities
Act) who participates in the offering of such Registrable Securities, and each
person, if any, who controls such Holder or participating person within the
meaning of the Securities Act, as follows: (i) against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Registrable
Securities were registered under the Securities Act, including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto), including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (ii) against any and
all loss, liability, claim, damage and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such settlement
is effected with the written consent of the Company; and (iii) against any and
all expense whatsoever, as incurred (including reasonable fees and disbursements
of counsel), reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, in each case whether or not a party, or
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above; provided, however, that the
indemnity provided pursuant to this Section 5(a) does not apply to any Holder
with respect to any loss, liability, claim, damage or expense to the extent
arising out of (x) any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by such Holder expressly for use in a Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) or (y) such Holder's failure to deliver an amended or
supplemental Prospectus if such loss, liability, claim, damage or expense would
not have arisen had such delivery occurred.
5(b) Indemnification by Holders.
Each Holder severally, not
jointly, agrees to indemnify and hold harmless the Company and its trustees and
officers (including each trustee and officer of the Company who signed the
Registration Statement), and each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, to the same extent as
the indemnity contained in Section 5(a) hereof (except that any settlement
described in Section 5(a)(ii) shall be effected with the written consent of such
Holder), but only insofar as such loss, liability, claim, damage or expense
arises out of or is based upon any untrue statement or omission, or alleged
untrue statements or omissions, made in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Holder expressly for use in such Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto).
5(c) Conduct of Indemnification Proceedings. Each indemnified
party shall give reasonably prompt notice to each indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party (i) shall not
relieve it from any liability which it may have under the indemnity agreement
provided in Section 5(a) or 5(b) above, unless and to the extent it did not
otherwise learn of such action and the lack of notice by the indemnified party
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) shall not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided under Section 5(a) or 5(b) above. If the indemnifying party
so elects within a reasonable time after receipt of such notice, the
indemnifying party may assume the defense of such action or proceeding at such
indemnifying party's own expense with counsel chosen by the indemnifying party
and approved by the indemnified parties defendant in such action or proceeding,
which approval shall not be unreasonably withheld; provided, however, that, if
such indemnified party or parties reasonably determine that a conflict of
interest exists where it is advisable for such indemnified party or parties to
be represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to them which are different from or in addition to
those available to the indemnifying party, then the indemnifying party shall not
be entitled to assume such defense and the indemnified party or parties shall be
entitled to one separate counsel at the indemnifying party's or parties'
expense. If an indemnifying party is not entitled to assume the defense of such
action or proceeding as a result of the proviso to the preceding sentence, such
indemnifying party's counsel shall be entitled to conduct such indemnifying
party's defense and counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently as possible. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of counsel for the indemnified party or
parties. In such event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
5(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
this Section 5 is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the selling Holders shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company and such
Holders, in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and such Holder on the other (in such proportions
that the Holders are severally, not jointly, responsible for the balance), in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether the action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
the indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder would otherwise have
been required to pay by reason of such untrue statement or omission. The
liability of any Holder selling Registrable Securities for contribution shall
not exceed an amount equal to the offering price per share of the Registrable
Securities, multiplied by the number of Registrable Securities sold by such
Holder.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), each trustee of
the Company, each officer of the Company who signed the Registration Statement
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as the
Company.
6. Rule 144 Sales.
6(a) The Company covenants that it will file the reports
required to be filed by the Company under the Securities Act and the Exchange
Act so as to enable the Holders to sell Shares pursuant to Rule 144 under the
Securities Act.
6(b) In connection with any sale, transfer or other
disposition by a Holder of any Shares pursuant to Rule 144 under the Securities
Act, the Company shall cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Shares to be sold and not
bearing any Securities Act legend, and enable certificates for such Shares to be
for such number of shares and registered in such names as such Holder may
reasonably request at least two business days prior to any sale of Shares.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holder(s) of
a majority in amount of the outstanding Registrable Securities. Notice of any
amendment, modification or supplement to this Agreement adopted in accordance
with this Section 7(a) shall be provided by the Company to the Holder(s) at
least thirty (30) days prior to the effective date of such amendment,
modification or supplement.
7(b) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, to the parties at their respective addresses set forth opposite their
signatures below or at such other address as a party may indicate by written
notice to the other party or parties.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three (3)
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; or
at the time delivered, if delivered by courier guaranteeing overnight delivery.
7(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any successor, assignee or transferee
of any Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such Person shall be entitled to receive the benefits
hereof and shall be conclusively deemed to have agreed to be bound by all of the
terms and provisions hereof.
7(d) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
7(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
7(g) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
7(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above.
Address:
2101 6th Avenue North, COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35202
By:/s/ Thomas H. Lowder
Thomas H. Lowder
Chairman of the Board, President and Chief Executive Officer
2101 6th Avenue North, COLONIAL REALTY LIMITED
Suite 750 PARTNERSHIP
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES HOLDING COMPANY, INC.,
General Partner
By: /s/ Thomas H. Lowder
Thomas H. Lowder
President
Address:
/s/ William M. Johnson
William M. Johnson
/s/ Phyllis Johnson
Phyllis Johnson
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of July 31, 1997
by and among
COLONIAL PROPERTIES TRUST,
COLONIAL REALTY LIMITED PARTNERSHIP
and
WILLIAM M. JOHNSON AND PHYLLIS JOHNSON
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION 10-5-9 OF THE 'GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
Exhibit 10.2.11
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement") is made and entered into as of November 18, 1998, by and among
COLONIAL PROPERTIES TRUST, an Alabama real estate investment trust (the
"Company"), Colonial Realty Limited Partnership, a Delaware limited partnership
(the "Operating Partnership"), and COLONIAL COMMERCIAL INVESTMENTS, INC.
("CCI").
WHEREAS, on September 29, 1993 the Company, Colonial Properties, Inc.
(of which CCI is the successor) and certain other parties entered into a
Registration Rights and Lock-up Agreement (the "Initial Agreement") pursuant to
which the Company granted to certain holders of Units (as defined in the Initial
Agreement) of the Operating Partnership certain registration rights, and such
holders agreed to certain lock-up arrangements;
WHEREAS, on July 1, 1996, CCI and certain other parties entered into a
Supplemental Registration Rights and Lock-Up Agreement pursuant to which certain
additional Units became subject to the terms and conditions of the Initial
Agreement;
WHEREAS, on July 1, 1997, CCI entered into a second Supplemental
Registration Rights and Lock-Up Agreement pursuant to which certain additional
Units became subject to the terms and conditions of the Initial Agreement;
WHEREAS, on October 7, 1998, CCI became the owner of 34,700 Units in
connection with the transfer to the Operating Partnership of a certain parcel of
land in Montgomery County, Alabama, commonly known as a portion of Montgomery
Promenade;
WHEREAS, on the date hereof, CCI is or will become the owner of 36,647
Units (such number of Units, together with the 34,700 Units described above,
shall be referred to hereinafter as the "Additional Units") in connection with
the transfer to the Operating Partnership of Research Office Park-Huntsville, an
office complex in Huntsville, Alabama; and
WHEREAS, the parties hereto have agreed that, except as stated herein,
the Additional Units shall be subject to, and the parties hereto shall be
governed by, the terms and conditions of the Initial Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, agree as follows:
1. General.
1(a) Except as otherwise defined herein, all capitalized terms
used herein shall have the meanings ascribed to them in the Initial Agreement.
1(b) Except as otherwise provided herein, CCI and the Company
shall have all of the rights and obligations with respect to the Additional
Units as are provided for in the Initial Agreement with respect to the Common
Shares and Units expressly referred to therein. Nothing in this Agreement shall
be deemed to amend, waive, supplement, or otherwise affect the terms of the
Initial Agreement.
2. Definitions.
Except as otherwise provided herein,
2(a) The Additional Units shall be deemed "Units" as that term
is defined in the Initial Agreement, and any Common Shares issued upon
redemption of Additional Units shall be deemed "Shares" as that term is defined
in the Initial Agreement. The Additional Units and any Common Shares issuable
upon redemption of Additional Units are referred to herein collectively as "New
Securities."
2(b) Any Common Shares issued upon the redemption of
Additional Units shall be deemed "Registrable Securities" as that term is
defined in the Initial Agreement.
2(c) CCI and its permitted successors and assigns shall be
deemed "Holders" as that term is defined in the Initial Agreement and shall be
referred to as Holders herein.
3. Lock-up Agreement.
3(a) Notwithstanding any other provision of this Agreement or
the Initial Agreement, the Holder hereby agrees that, except as set forth in
Section 3(b) below, for a period of one year from the respective dates of
issuance of the Additional Units (the "Lock-up Period"), without the prior
written consent of the Company, it will not offer, pledge, sell, contract to
sell, grant any options for the sale of or otherwise dispose of, directly or
indirectly (collectively, "Dispose of"), any New Securities (the "Lock-up").
3(b) The following transfers of New Securities shall not be
subject to the Lock-up set forth in Section 2(a):
(i) a Holder may Dispose of New Securities as a gift or other transfer
without consideration;
(ii) a Holder who is a natural person may Dispose of New Securities to his or
her spouse, siblings, parents or any natural or adopted children or other
descendants or to any personal trust in which such family members or such Holder
retain the entire beneficial interest; (iii) a Holder may Dispose of New
Securities to any entity that controls, is controlled by, or is under common
control with such Holder; and
(iv) a Holder may Dispose of New Securities pursuant to a pledge, grant of
security interest or other encumbrance effected in a bona fide transaction with
an unrelated and unaffiliated pledgee. In the event a Holder Disposes of New
Securities described in this Section 3(b) (except pursuant to clause (iv)
hereof), such New Securities shall remain subject to this Agreement and, as a
condition of the validity of such disposition, the transferee shall be required
to execute and deliver a counterpart of this Agreement (except that a pledgee
shall not be required to execute and deliver a counterpart of this Agreement
until it forecloses upon such New Securities). Thereafter, such transferee shall
be deemed to be a Holder for purposes of this Agreement.
4. Shelf Registration Under the Securities Act.
Beginning after the expiration of the Lock-up Period, the
Holder(s) shall be entitled to offer for sale pursuant to a Registration
Statement any Registrable Securities held by the Holder(s), subject to the terms
and conditions, and pursuant to the procedures, specified in Sections 3 and 4 of
the Initial Agreement.
5. Indemnification; Contribution.
The parties agree to indemnify and hold harmless, with respect
to any registration of Registrable Securities hereunder, to the same extent as
specified in Section 5 of the Initial Agreement.
6. Rule 144 Sales.
The Company covenants to undertake all such steps as are
specified in Section 6 of the Initial Agreement in order to enable any Holder to
sell Common Shares issued or issuable upon redemption of Additional Units
pursuant to Rule 144 under the Securities Act.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders of a
majority in amount of the outstanding New Securities; provided, however, that no
amendment, modification or supplement or waiver or consent to the departure with
respect to the provisions of Sections 3, 4, 5 or 6 hereof shall be effective as
against any person who is then a Holder of New Securities unless consented to in
writing by such Holder of New Securities. Notice of any amendment, modification
or supplement to this Agreement shall promptly be provided by the Company to
each Holder of New Securities.
7(b) Notices; Counterparts; Headings; Successors and Assigns;
Specific Performance; Governing Law. The parties agree to be governed with
respect to the subject matter hereof by the provisions set forth in Sections
7(b), 7(c), 7(e), 7(f), 7(g) and 7(h) of the Initial Agreement.
7(c) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement with respect to the New
Securities and is intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first written above. Address:
2101 6th Avenue North, COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35202
By:/s/ Paul F. Earle
Name: Paul F. Earle
Title: Executive Vice President
2101 6th Avenue North, COLONIAL REALTY LIMITED
Suite 750 PARTNERSHIP
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES HOLDING COMPANY, INC.,
General Partner
By: /s/ Paul F. Earle
Name: Paul F. Earle
Title: Executive Vice President
Address: COLONIAL COMMERCIAL INVESTMENTS, INC.
2000 Interstate Park Drive
Suite 400
Montgomery, AL 36109
By: /s/ James K. Lowder
James K. Lowder
President
SUPPLEMENTAL REGISTRATION RIGHTS AND LOCK-UP AGREEMENT Dated as of November 18,
1998 by and among COLONIAL PROPERTIES TRUST, COLONIAL REALTY LIMITED PARTNERSHIP
================================================================================
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
Dated as of December 29, 1994
by and among
COLONIAL PROPERTIES TRUST
and
Certain Direct and Indirect Holders of Limited Partnership Interests
of Colonial Realty Limited Partnership
================================================================================
<PAGE>
REGISTRATION RIGHTS AND LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (this
"Agreement") is made and entered into as of December, 29, 1994 by and among
Colonial Properties Trust, a Maryland real estate investment trust (the
"Company"), Colonial Realty Limited Partnership, a Delaware limited partnership
(the "Operating Partnership"), and the other parties who are signatories hereto
(each a "Holder" and collectively the "Holders").
WHEREAS, on the date hereof the Operating Partnership is
acquiring, among other things, certain assets of various general partnerships in
which the Holders own direct or indirect interests (the "Property Partnerships")
pursuant to merger agreements or acquisition agreements of even date herewith
(the "Contribution Agreements") by and among the Operating Partnership, certain
acquisition partnerships of which the Operating Partnership is the managing
general partner, the Property Partnerships and the Holders, and in connection
therewith the Holders will receive Class C Units of limited partnership interest
in the Operating Partnership (such Class C Units and the Class A Units of
limited partnership interest into which such Class C Units may be converted
being referred to hereinafter as the "Units");
WHEREAS, in order to induce the Property Partnerships and the
Holders to consummate the closings contemplated under the Contribution
Agreements, the Company has agreed to grant to Holders the registration rights
set forth in Section 3 hereof; and
WHEREAS, in order to induce the Operating Partnership to
consummate the closings contemplated under the Contribution Agreements, the
Holders have agreed to the Lock-up (as defined in Section 2(a) hereof).
NOW, THEREFORE, the parties hereto, in consideration of the
foregoing, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"Common Shares" shall mean common shares of beneficial
interest, par value $.01 per share, in the Company.
"Company" shall have the meaning set forth in the Preamble and
also shall include the Company's successors.
"Dispose of" shall have the meaning set forth in Section
2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Holder" or "Holders" shall have the meaning set forth in
the Preamble.
"Lock-up" shall have the meaning set forth in Section 2(a)
hereof.
"Lock-up Period" shall have the meaning set forth in
Section 2(a) hereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Operating Partnership" shall have the meaning set forth in
the Preamble and also shall include the Operating Partnership's successors.
"Person" shall mean an individual, partnership, corporation,
trust, estate, or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, including post-effective amendments, and in each
case including all material incorporated by reference therein.
"Registrable Securities" shall mean the Shares, excluding (i)
Shares for which a Registration Statement relating to the sale thereof shall
have become effective under the Securities Act and which have been disposed of
under such Registration Statement or (ii) Shares sold or eligible for sale
pursuant to Section 4(1) of the Securities Act or Rule 144 thereunder.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance with this Agreement, including, without
limitation: (i) all SEC, stock exchange or NASD registration and filing fees;
(ii) all fees and expenses incurred in connection with compliance with state
securities or "blue sky" laws (including reasonable fees and disbursements of
counsel in connection with "blue sky" qualification of any of the Registrable
Securities and the preparation of a Blue Sky Memorandum) and compliance with the
rules of the NASD; (iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with this Agreement; (iv) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges pursuant to Section 4(l)
hereof; and (v) the fees and disbursements of counsel for the Company and of the
independent public accountants of the Company, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance. Registration Expenses shall specifically exclude
underwriting discounts and commissions, the fees and disbursements of counsel
representing a selling Holder, and transfer taxes, if any, relating to the sale
or disposition of Registrable Securities by a selling Holder, all of which shall
be borne by such Holder in all cases.
"Registration Notice" shall have the meaning set forth in
Section 3(a) hereof.
"Registration Statement" or "Shelf Registration Statement"
shall mean a "shelf" registration statement of the Company and any other Person
required to be a registrant with respect to such shelf registration statement
pursuant to the requirements of the Securities Act which covers the issuance or
resale of the Registrable Securities on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Shares" shall mean any Common Shares issued or to be issued
to the Holders upon redemption of their Units.
"Shelf Registration" shall mean a registration required to be
effected pursuant to Section 3 hereof.
"Units" shall have the meaning set forth in the Preamble.
2. Lock-up Agreement.
2(a) Each Holder hereby agrees that, except as set forth in Section 2(b)
below, for one year following the date hereof (the "Lock-up Period"), it will
not, without the prior written consent of the Company, offer, pledge, sell,
contract to sell, grant any options for the sale of or otherwise dispose of,
directly or indirectly (collectively, "Dispose of"), any Units (the "Lock-up").
2(b) The following transfers of Units shall not
be subject to the Lock-up set forth in Section 2(a):
(i) a Holder may Dispose of Units to his or
her spouse, siblings, parents or any natural or
adopted children or other descendants or to any
personal trust in which such family members or such
Holder retain the entire beneficial interest;
(ii) a Holder may Dispose of Units on his or
her death to such Holder's estate, executor,
administrator or personal representative or to such
Holder's beneficiaries pursuant to a devise or
bequest or by the laws of descent and distribution;
(iii) a Holder may Dispose of Units as a
gift or other transfer without
consideration;
(iv) a Holder may Dispose of Units pursuant
to a pledge, grant of security interest or other
encumbrance effected in a bona fide transaction with
an unrelated and unaffiliated pledgee; and
(v) a Holder may Dispose of Units to
another Holder.
In the event that any Holder Disposes of Units as permitted by this Section
2(b), such Units shall remain subject to this Agreement and, as a condition of
the validity of such disposition, the transferee shall be required to execute
and deliver a counterpart of this Agreement (except that a pledgee shall not be
required to execute and deliver a counterpart of this Agreement until it
forecloses upon such Units). Thereafter, such transferee shall be deemed to be a
Holder for purposes of this Agreement.
3. Shelf Registration Under the Securities Act.
3(a) Filing of Shelf Registration Statement. Beginning after the expiration
of the Lock-up Period, each Holder shall be entitled to offer for sale pursuant
to a Registration Statement any Registrable Securities held by such Holder,
subject to the terms and conditions hereof. Upon receipt by the Company of a
written notice (a "Registration Notice") from one or more Holders that such
Holder(s) propose to make a registered offer of a specified number of
Registrable Securities (which number shall not be less than 50,000), the Company
shall cause to be filed a Shelf Registration Statement providing for the sale by
such Holder(s) of the Registrable Securities specified in such Registration
Notice in accordance with the terms hereof and will use its reasonable efforts
to cause such Shelf Registration Statement to be declared effective by the SEC
as soon as practicable. The Company agrees to use its reasonable efforts to keep
the Shelf Registration Statement continuously effective for a period expiring on
the date on which all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or have become eligible for sale pursuant to Section 4(1) of the
Securities Act or Rule 144 thereunder and, subject to Section 4(b) and Section
4(i), further agrees to supplement or amend the Shelf Registration Statement, if
and as required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement or
by the Securities Act or by any other rules and regulations thereunder for shelf
registration; provided, however, that the Company shall not be deemed to have
used its reasonable efforts to keep a Registration Statement effective during
the applicable period if it voluntarily takes any action that would result in
selling Holders covered thereby not being able to sell such Registrable
Securities during that period, unless such action is required under applicable
law or the Company has filed a post-effective amendment to the Registration
Statement and the SEC has not declared it effective. Notwithstanding the
foregoing, the Company shall not be required to file a Registration Statement or
to keep a Registration Statement effective if the negotiation or consummation of
a transaction is pending or an event has occurred, which negotiation,
consummation or event would require additional disclosure by the Company in the
Registration Statement of material information which the Company has a bona fide
business purpose for keeping confidential and the nondisclosure of which in the
Registration Statement might cause the Registration Statement to fail to comply
with applicable disclosure requirements; provided, however, that the Company may
not delay, suspend or withdraw a Registration Statement for such reason for more
than 60 days or more often than twice during any period of 12 consecutive
months.
3(b) Expenses. The Company shall pay all Registration Expenses in
connection with any registration pursuant to Section 3(a). Each Holder shall pay
all underwriting discounts, if any, sales commissions, the fees and
disbursements of counsel representing such Holder, and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement, Section 4(1) of the Securities Act
or Rule 144 thereunder.
3(c) Inclusion in Shelf Registration Statement. Any Holder who does not
timely provide the information reasonably requested by the Company in connection
with the Shelf Registration Statement shall not be entitled to have its
Registrable Securities included in the Shelf Registration Statement.
3(d) Repurchase Option. In lieu of registering Registrable Securities that
a Holder seeks to register pursuant to Section 3(a) hereof, the Company may, by
delivery of written notice to such Holder within 30 days after receipt of a
Registration Notice from such Holder, elect to repurchase such Registrable
Securities for cash, in an amount per Share equal to the average of the closing
prices of the Common Shares on the New York Stock Exchange (or on such other
exchange or in such other market as the Common Shares are then listed or traded)
on the ten trading days preceding the Company's receipt of such Registration
Notice (or, if the common shares have not traded on all ten of such trading
days, in an amount equal to the fair value of such Registrable Securities as
determined in good faith by the Board of Trustees of the Company).
4. Registration Procedures.
In connection with the obligations of the Company with respect
to the Registration Statement pursuant to Section 3 hereof, the Company shall,
to the extent applicable:
4(a) prepare and file with the SEC, within the time period set forth in
Section 3 hereof, a Shelf Registration Statement, which Shelf Registration
Statement (i) shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution by the selling
Holders thereof, and (ii) shall comply as to form in all material respects with
the requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith;
4(b) subject to the last three sentences of this Section 4(b) and Section
4(i) hereof, (i) prepare and file with the SEC such amendments and
post-effective amendments to each such Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period; (ii) cause each such Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
or any similar rule that may be adopted under the Securities Act; (iii) respond
as promptly as practicable to any comments received from the SEC with respect to
the Shelf Registration Statement, or any amendment, post-effective amendment or
supplement relating thereto; and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof.
Notwithstanding anything to the contrary contained herein, the Company shall not
be required to take any of the actions described in subsections (i), (ii) or
(iii) above with respect to each particular Holder of Registrable Securities
unless and until the Company has received a Registration Notice from a Holder
that such Holder intends to make offers or sales under the Registration
Statement as specified in such Registration Notice; provided, however, that the
Company shall have 10 business days to prepare and file any such amendment or
supplement after receipt of the Registration Notice. Once a Holder has delivered
a Registration Notice to the Company, such Holder shall promptly provide to the
Company such information as the Company reasonably requests in order to identify
such Holder and the method of distribution in a post-effective amendment to the
Registration Statement or a supplement to the Prospectus. Such Holder also shall
notify the Company in writing upon completion of such offer or sale or at such
time as such Holder no longer intends to make offers or sales under the
Registration Statement;
4(c) furnish to each Holder of Registrable Securities that has delivered a
Registration Notice to the Company, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities; the Company consents to the use of the Prospectus,
including each preliminary Prospectus, by each such Holder of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or the preliminary Prospectus;
4(d) use its reasonable efforts to register or qualify the Registrable
Securities by the time the applicable Registration Statement is declared
effective by the SEC under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective or during the period offers or sales
are being made by a Holder that has delivered a Registration Notice to the
Company, whichever is shorter, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Holder; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction or to register as a broker
or dealer in such jurisdiction where it would not otherwise be required to
qualify but for this Section 4(d), (ii) subject itself to taxation in any such
jurisdiction, or (iii) submit to the general service of process in any such
jurisdiction;
4(e) notify each Holder of Registrable Securities that has delivered a
Registration Notice to the Company promptly and, if requested by such Holder,
confirm such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto become
effective, (ii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iii) if the Company receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, and (iv) of the happening of any event during the
period a Registration Statement is effective which is of a type specified in the
last sentence of Section 3(a) hereof or as a result of which such Registration
Statement or the related Prospectus contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made (in the case of the Prospectus), not misleading;
4(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
4(g) furnish to each Holder of Registrable Securities that has delivered a
Registration Notice to the Company, without charge, at least one conformed copy
of each Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
4(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for such
numbers of Shares and registered in such names as the selling Holders may
reasonably request at least two business days prior to any sale of Registrable
Securities;
4(i) subject to the last sentence of Section 3(a) hereof and the last three
sentences of Section 4(b) hereof, upon the occurrence of any event contemplated
by Section 4(e)(iv) hereof, use its reasonable efforts promptly to prepare and
file a supplement or prepare, file and obtain effectiveness of a post-effective
amendment to a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
4(j) make available for inspection by representatives of the Holders of the
Registrable Securities and any counsel or accountant retained by such Holders,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, counsel or accountant in connection with a Registration
Statement; provided, however, that such records, documents or information which
the Company determines, in good faith, to be confidential and notifies such
representatives, counsel or accountants in writing that such records, documents
or information are confidential shall not be disclosed by the representatives,
counsel or accountants unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a material misstatement or omission
in a Registration Statement, (ii) the release of such records, documents or
information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (iii) such records, documents or information have
been generally made available to the public;
4(k) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document (not including any
documents incorporated by reference therein unless requested) to the Holders of
Registrable Securities that have provided a Registration Notice to the Company;
4(l) use its reasonable efforts to cause all Registrable Securities to be
listed on any securities exchange on which similar securities issued by the
Company are then listed;
4(m) provide a CUSIP number for all Registrable Securities, not later than
the effective date of a Registration Statement;
4(n) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder; and
4(o) use its reasonable efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable Holders that have delivered
Registration Notices to the Company to consummate the disposition of such
Registrable Securities.
The Company may require each Holder of Registrable Securities
to furnish to the Company in writing such information regarding the proposed
distribution by such Holder of such Registrable Securities as the Company may
from time to time reasonably request in writing.
In connection with and as a condition to the Company's
obligations with respect to the Registration Statement pursuant to Section 3
hereof and this Section 4, each Holder agrees that (i) it will not offer or sell
its Registrable Securities under the Registration Statement until it has
provided a Registration Notice pursuant to Section 4(b) hereof and has received
copies of the supplemental or amended Prospectus contemplated by Section 4(b)
hereof and receives notice that any post-effective amendment has become
effective, (ii) upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 4(e)(iv) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder receives copies of the supplemented or
amended Prospectus contemplated by Section 4(i) hereof and receives notice that
any post-effective amendment has become effective, and, if so directed by the
Company, such Holder will deliver to the Company (at the expense of the Company)
all copies in its possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice, and (iii) all offers and sales
under the Registration Statement shall be completed within sixty (60) days after
the first date on which offers or sales can be made pursuant to clause (i)
above, and upon expiration of such sixty (60) day period the Holder will not
offer or sell its Registrable Securities under the Registration Statement until
it has again complied with the provisions of clause (i) above.
5. Indemnification; Contribution.
5(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and its officers and directors or trustees and each
Person, if any, who controls any Holder within the meaning of Section 15 of the
Securities Act as follows:
(i) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue
statement of a material fact contained in any
Registration Statement (or any amendment thereto)
pursuant to which Registrable Securities were
registered under the Securities Act, including all
documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to
make the statements therein not misleading or arising
out of any untrue statement or alleged untrue
statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto),
including all documents incorporated therein by
reference, or the omission or alleged omission
therefrom of a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to
the extent of the aggregate amount paid in settlement
of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any
such untrue statement or omission, or any such
alleged untrue statement or omission, if such
settlement is effected with the written consent of
the Company; and
(iii) against any and all expense
whatsoever, as incurred (including reasonable fees
and disbursements of counsel), reasonably incurred in
investigating, preparing or defending against any
litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened,
in each case whether or not a party, or any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not
paid under subparagraph (i) or (ii) above;
provided, however, that the indemnity provided pursuant to this Section 5(a)
does not apply to any Holder with respect to any loss, liability, claim, damage
or expense to the extent arising out of (x) any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use in a Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) or (y) such Holder's failure to deliver an
amended or supplemental Prospectus if such loss, liability, claim, damage or
expense would not have arisen had such delivery occurred.
5(b) Indemnification by Holders. Each Holder severally agrees to indemnify
and hold harmless the Company and the other selling Holders, and each of their
respective directors and officers (including each director and officer of the
Company who signed the Registration Statement), and each Person, if any, who
controls the Company or any other selling Holder within the meaning of Section
15 of the Securities Act, to the same extent as the indemnity contained in
Section 5(a) hereof (except that any settlement described in Section 5(a)(ii)
shall be effected with the written consent of such Holder), but only insofar as
such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or omission, or alleged untrue statements or omissions,
made in a Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such selling Holder expressly
for use in such Registration Statement (or any amendment thereto) or such
Prospectus (or any amendment or supplement thereto).
5(c) Conduct of Indemnification Proceedings. Each indemnified party shall
give reasonably prompt notice to each indemnifying party of any action or
proceeding commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party (i) shall not relieve
it from any liability which it may have under the indemnity agreement provided
in Section 5(a) or 5(b) above, unless and to the extent it did not otherwise
learn of such action and the lack of notice by the indemnified party results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) shall not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided under Section 5(a) or 5(b) above. If the indemnifying party so elects
within a reasonable time after receipt of such notice, the indemnifying party
may assume the defense of such action or proceeding at such indemnifying party's
own expense with counsel chosen by the indemnifying party and approved by the
indemnified parties defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
or parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to assume
such defense and the indemnified party or parties shall be entitled to one
separate counsel at the indemnifying party's or parties' expense. If an
indemnifying party is not entitled to assume the defense of such action or
proceeding as a result of the proviso to the preceding sentence, such
indemnifying party's counsel shall be entitled to conduct such indemnifying
party's defense and counsel for the indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties, it being
understood that both such counsel will cooperate with each other to conduct the
defense of such action or proceeding as efficiently as possible. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party or parties will pay
the reasonable fees and expenses of counsel for the indemnified party or
parties. In such event, however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
5(d) Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in this Section 5
is for any reason held to be unenforceable although applicable in accordance
with its terms, the Company and the selling Holders shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company and the selling
Holders, in such proportion as is appropriate to reflect the relative fault of
and benefits to the Company on the one hand and the selling Holders on the other
(in such proportions that the selling Holders are severally, not jointly,
responsible for the balance), in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits to the
indemnifying party and indemnified parties shall be determined by reference to,
among other things, the total proceeds received by the indemnified party and
indemnified parties in connection with the offering to which such losses,
claims, damages, liabilities or expenses relate. The relative fault of the
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether the action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or the indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action.
The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no selling
Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such selling Holder
were offered to the public exceeds the amount of any damages which such selling
Holder would otherwise have been required to pay by reason of such untrue
statement or omission.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), each Person, if
any, who controls a Holder within the meaning of Section 15 of the Securities
Act and directors and officers of a Holder shall have the same rights to
contribution as such Holder, and each director of the Company, each officer of
the Company who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
6. Rule 144 Sales.
6(a) The Company covenants that it will file the reports required to be
filed by the Company under the Securities Act and the Exchange Act so as to
enable any Holder to sell Shares pursuant to Rule 144 under the Securities Act.
6(b) In connection with any sale, transfer or other disposition by any
Holder of any Shares pursuant to Section 4(1) of the Securities Act or Rule 144
thereunder, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Shares to be sold
and not bearing any Securities Act legend, and enable certificates for such
Shares to be for such number of shares and registered in such names as the
selling Holders may reasonably request at least two business days prior to any
sale of Shares.
7. Miscellaneous.
7(a) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and the Holders of a majority
in amount of the outstanding Registrable Securities; provided, however, that no
amendment, modification or supplement or waiver or consent to the departure with
respect to the provisions of Sections 2, 3, 5 or 6 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing by
such Holder of Registrable Securities. Notice of any amendment, modification or
supplement to this Agreement adopted in accordance with this Section 7(a) shall
be provided by the Company to each Holder of Registrable Securities at least
thirty (30) days prior to the effective date of such amendment, modification or
supplement.
7(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, to the parties at their respective addresses set forth opposite their
signatures below or at such other address as a party may indicate by written
notice to the other party or parties.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; three
(3) business days after being deposited in the mail, postage prepaid, if mailed;
when answered back., if telexed; when receipt is acknowledged, if telecopied; or
at the time delivered, if delivered by an air courier guaranteeing overnight
delivery.
7(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders. If any successor, assignee or transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such Person shall be entitled to receive the benefits hereof and
shall be conclusively deemed to have agreed to be bound by all of the terms and
provisions hereof.
7(d) [Intentionally Omitted]
7(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
7(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
7(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PROVISIONS THEREOF.
7(h) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any other party under this
Agreement in accordance with the terms and conditions of this Agreement in any
court of the United States or any State thereof having jurisdiction.
7(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement, or caused this Agreement to be duly executed on its behalf, as
of the date first written above.
Address:
2101 6th Avenue North, COLONIAL PROPERTIES TRUST
Suite 750
Birmingham, Alabama 35202 By: /s/ Thomas H. Lowder
Thomas H. Lowder
Chairman of the Board,
President and Chief Executive
Officer
2101 6th Avenue North, COLONIAL REALTY LIMITED
Suite 750 PARTNERSHIP
Birmingham, Alabama 35202
By: COLONIAL PROPERTIES
HOLDING COMPANY, INC.,
General Partner
By: /s/ Thomas H. Lowder
Thomas H. Lowder
President
HOLDERS:
Address:
2029 King Stables Road /s/ Harold W. Ripps
-----------------------------------
Birmingham, Alabama 35242 Harold W. Ripps
<PAGE>
Address:
4752 Southlake Parkway /s/ Chester L. Parker, Jr.
Birmingham, Alabama 35244 Chester L. Parker, Jr.
2556 North Delwood Drive /s/ Herbert A. Meisler
Mobile, Alabama 36606 Herbert A. Meisler
261 Montrose Drive /s/ Irving D. Meisler
-----------------------------------
McDonough, Georgia 30253 Irving D. Meisler
BERFAN COMPANY
500 Robert Jemison Road By: /s/ Herbert A. Meisler
-------------------------------
Birmingham, Alabama 35209 Herbert A. Meisler
Title: General Partner
BAMIL INVESTMENT COMPANY
500 Robert Jemison Road By: /s/ Allen M. Meisler
Birmingham, Alabama 35209 Allen M. Meisler,
Managing Partner
AMENDMENT TO CREDIT AGREEMENT
THIS AMENDMENT TO CREDIT AGREEMENT (this "Agreement") is made and
entered into as of the 10th day of July, 1998, among COLONIAL REALTY LIMITED
PARTNERSHIP, a Delaware limited partnership (the "Borrower"), COLONIAL
PROPERTIES TRUST, an Alabama trust ("CPT"), COLONIAL PROPERTIES HOLDING COMPANY,
INC., an Alabama corporation ("CPHC"; CPHC and CPT are collectively, known as
the "Guarantors"), SOUTHTRUST BANK, NATIONAL ASSOCIATION, a national banking
association, AMSOUTH BANK, a state banking corporation, WACHOVIA BANK, N.A., a
national banking association, FIRST NATIONAL BANK OF COMMERCE, N.A., a national
banking association, WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association and PNC BANK, NATIONAL ASSOCIATION, a national banking association,
successor by merger to PNC Bank, Ohio, National Association (collectively, the
"Banks").
R E C I T A L S:
A. Borrower, Guarantors and Banks have entered into that certain Credit
Agreement dated July 10, 1997 (as so amended, the "Credit Agreement").
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Credit Agreement.
B. Borrower, Guarantors and Banks desire to amend the Credit Agreement
to increase the Aggregate Commitment from $200,000,000 to $250,000,000.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the parties hereto agree as follows:
1. Article 1 of the Credit Agreement is hereby amended by deleting the
definitions of "Agent Fee", "Aggregate Commitment", "Commitment Fee", "Facility
Fee", "Maximum Borrowing Base", "Pool", "Pool GAV", "Revolver Period",
"Stabilized Properties", and "Total Liabilities" , and by inserting in lieu
thereof the following definitions:
"Agent Fee" means $50,000.
"Aggregate Commitment" means $250,000,000 subject to being
decreased as set forth in Section 2.8.
"Commitment Fee" means a commitment fee equal to fifteen (15)
basis points of the Aggregate Commitment. Such commitment fee shall be paid to
Lenders based upon their pro rata share of the Loans.
<PAGE>
7
552384.6
"Facility Fee" means a facility fee equal to eight (8) basis
points per annum of each Lender's average unfunded portion of such
Lender's Commitment, payable monthly in arrears. For purposes of
calculating the unfunded portion of a Lender's Commitment for any
month, such Lender's Commitment Percentage of any unexpired Letters of
Credit and any Competitive Bid Loans made by such Lender will be
considered outstanding loans. Such Competitive Bid Loans will not be
considered outstanding loans for purposes of computing the unfunded
portion of any other Lender's Commitment. Attached hereto as Schedule
1.2 is an example of the method of calculating the Facility Fee.
"Maximum Borrowing Base" means the difference between (i) Pool
GAV divided by 1.70, and (ii) Unsecured Liabilities (excluding the
outstanding principal balance of the Loans and the Reimbursement
Obligation), all as more particularly set forth on Line 14 of the
Compliance Certificate
"Pool" shall mean the Credit Parties' unencumbered asset pool
which shall consist of (i) cash from a 1031 exchange, (ii) cash or cash
equivalents held by the Credit Parties for the sole purpose of
liquidating or retiring unsecured Debt, and (iii) all Properties of
Credit Parties which meet all of the following criteria: (a) a
certificate of occupancy has been issued for the Property and remains
in full force and effect, (b) the Property has been at least fifty
percent (50%) leased (based on actual leasable square footage at the
Property) for the most immediately preceding three (3) consecutive
months based on leases wherein the tenants are paying at least the
average monthly lease payments required by the terms of such leases and
such leases are free from default by either the landlord or tenant
thereunder, (c) there is no Lien on the Property, and (d) the Credit
Parties have provided Agent with a Phase I environmental report for the
Property in form and content acceptable to Lenders. Notwithstanding the
foregoing, the amount of Non-Stabilized Properties included in the Pool
shall not exceed twenty-five percent (25%) of Pool GAV. (Any
Non-Stabilized Property included in the Pool will be removed from the
Pool if such Property fails to meet the definition of a "Stabilized
Property" within nine (9) months from the date such Property is first
included in the Pool.)
"Pool GAV" shall mean the sum of (without redundancy) (i) 100%
of Pool EBITDA from Stabilized Properties, capitalized at the
appropriate Capitalization Rate, (ii) for each Non-Stabilized Property
in the Pool, the lesser of (a) 75% of the Gross Book Value of
Non-Stabilized Properties in the Pool, or (b) Pool EBITDA of
Non-Stabilized Properties capitalized at the appropriate Capitalization
Rate, and (iii) cash from a 1031 exchange, and (iv) cash or cash
equivalents held by the credit parties for the sole purpose of
liquidating or retiring unsecured debt. Notwithstanding the foregoing,
any Properties acquired during the applicable reporting period that
qualify for Pool shall be valued at Gross Book Value.
<PAGE>
"Revolver Period" means the period of time from the Closing
Date until July 10, 2000, unless extended by Lenders in accordance with
Section 2.8. hereof.
"Stabilized Properties" shall mean any Property which meets
all of the following criteria: (i) a certificate of occupancy has been
issued for the Property and remains in full force and effect, (ii) the
Property has been at least eighty-five percent (85%) occupancy level if
multifamily, retail, or office (based on actual leasable square footage
at the property) for the most immediately preceding three (3)
consecutive months based on leases wherein the tenants are paying at
least the average monthly lease payments required by the terms of such
leases and such leases are free from default by either the landlord or
tenant thereunder, and (iii) there is no Lien on the Property. However,
if a historically Stabilized Property drops below the above listed
occupancy threshold level, such Property may again become classified as
a Stabilized Property after attaining a ninety percent (90%) occupancy
level for a monthly reporting period if such Property attains such
ninety percent (90%) occupancy level within three months of previously
being classified as a Stabilized Property.
"Total Liabilities" shall mean (without redundancy), all
mortgage debt, letters of credit, the deferred purchase price pursuant
to purchase agreements or contracts, to the extent such deferred
purchase price is required to be included in accordance with GAAP,
forward equity commitments (however, such commitments shall not be
considered debt if such commitments are required to be replaced dollar
for dollar with equity), pre-purchase deals (including all assets and
liabilities of such pre-purchase deals), unsecured debt, subordinated
debt, payables, accrued expenses, lease obligations (including ground
leases), guarantees of indebtedness and unfunded obligations, pro rata
share of non-recourse debt in an Unconsolidated Subsidiaries or joint
ventures (where the pro rata share of the asset has been included) and
any loan where any of the Credit Parties are liable for debt as a
general partner, and one hundred percent (100%) of recourse debt in an
Unconsolidated Subsidiaries or joint ventures, and one hundred percent
(100%) of recourse debt incurred by any of the Credit Parties.
2. Article 1 of the Credit Agreement is hereby amended by adding the
following definitions:
"Increase Commitment Fee" means a one-time commitment fee for
the $50,000,000 increase, which is due and payable upon execution of
this Agreement and will be calculated by multiplying $75,000 (15 basis
of the $50,000,000 increase) by a fraction, the numerator of which is
the number of days from execution of this Agreement until July 10,
1998, and the denominator of which is 365. Such increase commitment fee
shall be paid to Lenders based upon their pro rata share of the Loans.
<PAGE>
"Up-Front Fee" means a one-time up-front commitment equal to
15 basis points of the $50,000,000 increase. Such up-front fee shall be
paid to Lenders based upon their pro rata share of the Loans.
3. Section 2.4(a) of the Credit Agreement shall be amended to delete
the indented information in its entirety and by inserting in lieu thereof the
following:
Published Debt Rating Margin
- --------------------- ------
Less than BBB-/Baa3 or unrated by a Qualified Rating Agency 135
Equal to BBB-/Baa3 95
Equal to or greater than BBB/Baa2 80
4. Section 2.6 of the Credit Agreement shall be amended to delete the
first sentence of the section and insert in lieu thereof the following:
"The Borrower shall pay the Up-Front Fee, the Increase
Commitment Fee, and the Commitment Fee to Agent, for account of
Lenders, on the Closing Date of the Amendment to the Credit Agreement
and shall pay the Commitment Fee to Agent, for account of Lenders, on
each anniversary of the Closing Date."
5. Section 2.8(b) of the Credit Agreement shall be deleted in its
entirety, and the following inserted in its place:
(b) If Lenders elect not to extend the Revolver Period,
(i) by the day that is three (3) months
after the Conversion Date, Borrower shall have
reduced the aggregate outstanding principal balance
of all Loans (inclusive of the Reimbursement
Obligation) to $229,700,000 (and the maximum amount
of Competitive Bid Loans shall be reduced to
$114,850,000),
(ii) by the day that is six (6) months after the Conversion
Date, Borrower shall have reduced the
aggregate outstanding principal balance of all Loans
(inclusive of the Reimbursement Obligation) to
$209,400,000 (and the maximum amount of Competitive
Bid Loans shall be reduced to $104,700,000),
(iii) by the day that is nine (9) months
after the Conversion Date, Borrower shall have
reduced the aggregate outstanding principal balance
of all Loans (inclusive of the Reimbursement
Obligation) to $189,100,000 (and the maximum amount
of Competitive Bid Loans shall be reduced to
$94,550,000),
<PAGE>
(iv) by the day that is twelve (12) months after the
Conversion Date, Credit Parties shall have
reduced the aggregate outstanding principal balance
of all Loans (inclusive of the Reimbursement
Obligation) to $168,750,000,000 (and the maximum
amount of Competitive Bid Loans shall be reduced to
$84,375,000),
(v) by the day that is fifteen (15) months
after the Conversion Date, Borrower shall have
reduced the aggregate outstanding principal balance
of all Loans (inclusive of the Reimbursement
Obligation) to $137,500,000 (and the maximum amount
of Competitive Bid Loans shall be reduced to
$68,750,000),
(vi) by the day that is eighteen (18) months
after the Conversion Date, Borrower shall have
reduced the aggregate outstanding principal balance
of all Loans (inclusive of the Reimbursement
Obligation) to $106,250,000 (and the maximum amount
of Competitive Bid Loans shall be reduced to
$53,125,000),
(vii) by the day that is twenty-one (21) months after the
Conversion Date, Borrower shall have
reduced the aggregate outstanding principal balance
of all Loans (inclusive of the Reimbursement
Obligation) to $75,000,000 (and the maximum amount of
Competitive Bid Loans shall be reduced to
$37,500,000), and
(viii) on the Maturity Date, the outstanding principal balance
of all Loans, together with all
accrued and unpaid interest thereon shall be due and
payable.
6. The Letter of Credit Fee as set forth in Section 2A.3 shall be
reduced to from one percent (1%) to three-quarters of a percent (3/4%).
7. The Credit Agreement is amended to add the following Sections to
Article 6:
6.23. Newly formed subsidiaries of CPT as Guarantors.
CPT agrees that any newly formed subsidiaries of CPT shall
execute an agreement guarantying the prompt payment of the
Credit Party Obligations in full when due and shall assume and
agree to all conditions and terms set forth in Article 3
hereof.
6.24. Year 2000 Representations and Warranties
<PAGE>
(a) Borrower has (i) begun analyzing the operations
of Borrower and its subsidiaries and affiliates that could be
adversely affected by failure to become Year 2000 compliant
(that is, that computer applications, imbedded microchips and
other systems will be able to perform date-sensitive functions
prior to and after December 31, 1999) and; (ii) developed a
plan for becoming Year 2000 compliant in a timely manner,
implementation of which is on schedule in all material
respects. Borrower reasonably believes that it will become
Year 2000 compliant for its operations and those of its
subsidiaries and affiliates on a timely basis except to the
extent that a failure to do so could not reasonably be
expected to have a material adverse effect upon the financial
condition of Borrower.
(b) Borrower will promptly notify Lenders in the
event Borrower determines that any computer application which
is material to the operations of Borrower, its subsidiaries or
any of its material vendors or suppliers will not be fully
Year 2000 compliant on a timely basis, except to the extent
that such failure could not reasonably be expected to have a
material adverse effect upon the financial condition of
Borrower.
8. Section 7.8 shall be amended to delete subsection (g) and
insert in lieu thereof the following:
(g) the ratio of Secured Liabilities to GAV to
exceed thirty-five (35%).
9. Section 7.8 shall be amended to add the following:
(h) the ratio of total preferred stock of CPT to Total
Market Capitalization to exceed fifteen percent
(15%).
10. The Credit Agreement is hereby further amended by deleting in its
entirety Schedule 1.1 and inserting in lieu thereof Schedule 1.1 attached
hereto.
11. The Credit Agreement is hereby further amended by deleting in its
entirety Exhibit E and inserting in lieu thereof Exhibit E attached hereto.
12. Borrowers represent and warrant that all representations and
warranties set forth in Article 5 of the Credit Agreement, as amended hereby,
are true and correct on the date hereof, and that, to the best of their
knowledge, no Default or Event of Default has occurred or exists.
13. No right of any Bank with respect to the Loan Documents is or will
be in any manner released, destroyed, diminished, or otherwise adversely
affected by this Agreement.
14. All references in the Loan Documents to the Credit Agreement shall
be deemed to refer, from and after the date hereof, to the Credit Agreement as
amended hereby, and as the same may hereafter be modified or amended.
<PAGE>
15. Except as hereby expressly modified and amended, the Credit
Agreement shall remain in full force and effect, and the Credit Agreement, as
amended, is hereby ratified and affirmed in all respects. Borrowers confirm
that, to the best of their knowledge, they have no defenses or setoffs with
respect to their obligations pursuant to the Credit Agreement, as amended
hereby.
16. This Agreement shall inure to the benefit of and be binding upon
the parties hereto, and their respective successors and assigns.
17. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which, when taken together,
shall constitute one and the same instrument.
18. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS HEREBY WAIVE
ANY RIGHT ANY OF THEM MAY HAVE TO TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM,
SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING OUT OF OR IN ANY WAY
PERTAINING OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS, OR (II) IN ANY
WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF
THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR IN
CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED THEREBY OR THE
EXERCISE OF EITHER PARTY'S RIGHTS AND REMEDIES THEREUNDER, IN ALL OF THE
FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. BORROWERS AGREE THAT BANKS MAY FILE A COPY OF
THIS WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND
BARGAINED AGREEMENT OF BORROWERS IRREVOCABLY TO WAIVE THEIR RIGHT TO TRIAL BY
JURY, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN BORROWERS AND BANKS SHALL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly executed and delivered to be effective as of the day and year first
above written.
BORROWER:
COLONIAL REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
BY: COLONIAL PROPERTIES HOLDING COMPANY, INC., an Alabama
corporation,
Its General partner
BY: /s/Thomas H. Lowder
Thomas H. Lowder
Its President and Chief Executive Officer
GUARANTORS:
COLONIAL PROPERTIES TRUST,
an Alabama trust
BY: /s/Thomas H. Lowder
Thomas H. Lowder
Its President and Chief Executive Officer
COLONIAL PROPERTIES HOLDING COMPANY, INC., an Alabama corporation
BY: /s/Thomas H. Lowder
Thomas H. Lowder
Its President and Chief Executive Officer
(Signatures Continue)
<PAGE>
Signature Page to Colonial Realty Limited
Partnership Credit Agreement
LENDERS:
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association
By:/s/ Curtis J. Perry
Curtis J. Perry
Its Group Vice President
AMSOUTH BANK,
a state banking corporation
By:
Its
WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association
By:
Its
WACHOVIA BANK, N.A., a national banking association
By:
Robert A. Cancelliere
Its Assistant Vice President
PNC BANK, NATIONAL ASSOCIATION,
a national banking association,
successor by merger to PNC Bank, Ohio, National Association
By:
Its
(Signatures Continue)
<PAGE>
Signature Page to Colonial Realty
Limited Partnership Credit Agreement
FIRST NATIONAL BANK OF COMMERCE, N.A.,
a national banking association
By:/s/ Pete M. Yuan
Its Senior Vice President
AGENT:
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Curtis J. Perry
Curtis J. Perry
Its Group Vice President
<PAGE>
SCHEDULE 1.1
Lender Commitment Commitment Percentage
SouthTrust Bank, National Association $50,000,000 20%
AmSouth Bank 50,000,000 20%
Wells Fargo Bank, National Association 50,000,000 20%
Wachovia Bank, N.A. 50,000,000 20%
PNC Bank, National Association 25,000,000 10%
First National Bank of Commerce, N.A. 25,000,000 10%
---------- --------
TOTALS $250,000,000 100%
<PAGE>
EXHIBIT E
COMPLIANCE CERTIFICATE
SouthTrust Bank, National Association,
as Agent for the Lenders
RE: Credit Agreement dated July 10, 1997 among Colonial Realty Limited
Partnership (the "Borrower") Colonial Properties Trust and Colonial Properties
Holding Company, Inc. ("Guarantors"), the Lenders, and SouthTrust Bank, National
Association, as Agent for the Lenders (as the same may hereafter be modified or
amended the "Credit Agreement")
Ladies and Gentlemen:
This Compliance Certificate is submitted pursuant to Section 6.14. of
the above-referenced Credit Agreement. The undersigned treasurer or chief
financial officer of the Borrower hereby certifies as follows:
1. No Default or Event of Default has occurred or exists
except .
-----------------------------------------------------------------
2. As of _________________________ (the last day of each fiscal
quarter for quarterly compliance certificates, or the most
recent practicable date for all other compliance
certificates):
(a) EBITDA was
------------------------------------------
(b) Pool EBITDA was
-------------------------------------
(c) GAV was
---------------------------------------------
(d) Pool GAV was
----------------------------------------
(e) Interest Expense was
--------------------------------
(f) Fixed Charges were
----------------------------------
(g) Unsecured Interest Expense was
----------------------
(h) Unsecured Liabilities were
--------------------------
(i) Debt was
--------------------------------------------
GE>
(j) Total Market Capitalization was
---------------------
(k) Total Liabilities were
------------------------------
(l) Secured Liabilities were
----------------------------
(m) CPT's distributions to shareholders were
------------
(n) CRLP's distributions to partners were
---------------
(o) Funds From Operations were
--------------------------
3. As of the date specified in 2. above:
(a) The ratio of EBITDA to Interest Expense was:
Required: Not less than 2.0 to 1.0
Actual: to 1.0
(b) The ratio of EBITDA to Fixed Charges was:
Required: Not less than 1.75 to 1.0
Actual: to 1.0
(c) The ratio of Pool EBITDA to Unsecured Interest Expense
was:
Required: Not less than 2.0 to 1.0
Actual: to 1.0
(d) The ratio of Pool GAV to Unsecured Liabilities was:
Required: Not less than 1.70 to 1.0
Actual: to 1.0
(e) The ratio of Debt to Total Market Capitalization was:
Required: Not to exceed 55%
Actual: %
(f) The ratio of Total Liabilities to GAV was:
Required: Not to exceed 55%
Actual: %
<PAGE>
(g) The ratio of Secured Liabilities to GAV was:
Required: Not to exceed 35%.
Actual: %
(h) The ratio of total preferred stock of CPT to Total Market
Capitalization was:
Required: Not to exceed 15%
Actual: %
4. As of the date specified in 2. above:
(a) CPT's distributions to shareholders were:
Required: Not to exceed 95% of Funds From Operations
Actual: % of Funds From Operations.
(b) CRLP's distributions to partners were:
Required: Not to exceed 95% of Funds From Operations.
Actual: % of Funds From Operations.
5. The following items are attached for each Pool Property:
(a) A list of all Pool Properties.
(b) Most recent fiscal year end operating statement (to the
extent not previously submitted).
(c) Most recent fiscal quarter operating statement (to the
extent not previously submitted).
(d) Certified rent roll (certifying rents in full payment).
(e) Calculation of Property EBITDA and Property GAV.
(f) Occupancy for the most recent three (3) consecutive
months (see Notes 1 and 2 below).
Note 1: Occupancy must be based on actual leasable
square footage at the property and leases wherein the tenants
are paying at least the average monthly lease payments
required by the terms of such leases and such leases must be
free from default by either the landlord or tenant thereunder.
<PAGE>
Note 2: If occupancy is less than eighty-five percent
(85%) for any month, please state the number of consecutive
months that occupancy has been below eighty-five percent
(85%):
---------------------.
6. The following items are also attached:
(a) Calculation of Pool EBITDA and Pool GAV.
(b) Calculation of EBITDA and GAV.
(c) List of Total Liabilities (Please list all Unsecured
Liabilities together and all Secured Liabilities
together by Property).
7. For each multifamily phased Property, please complete and attach the
following information:
(a) How many units included in all phases?
(b) How many units included in the Pool?
(c) Are the operating statements submitted pursuant
hereto for the Pool Property only? . If not, what
percentage is attributable to Pool Property. .
(d) Is the rent roll submitted hereto for the Pool
Property only? . If not, please specify on the rent
roll the units included in the Pool Property.
8. The current information with respect to the rating of CRLP's senior unsecured
Debt is as follows:
Rating Agency Rating Date of Rating
a.
b.
c.
d.
9. All representations and warranties contained in the Credit
Agreement and the other Credit Documents are true and correct
as though given on the date hereof except
----------------------------.
10. Credit Parties represent and warrant that each Property
described in the list provided pursuant to Section 5(a),
satisfies the conditions for inclusion in the Pool.
11. All information provided herein or attached hereto is true and correct. 1.
<PAGE>
12. Capitalized terms not defined herein shall have the meanings given to such
terms in the Credit Agreement.
13. The following Letters of Credit have been issued and are outstanding under
the Revolving Loan:
(a) Date of Letter (b) Undrawn Amount (c) Unreimbursed Draws
(d) Expiration Date
TOTAL
14. The Maximum Borrowing Base is as follows:
(1) Pool GAV / 1.70
(2) Unsecured Liabilities (excluding the outstanding
principal balance of the Swing Loan, Revolving Loan,
and Reimbursement Obligation)
(3) Difference between Line 14(a) and 14(b)
---------
(4) Lesser of $250,000,000 or Line 14(c)
---------
(5) Amount of Reimbursement Obligation
(Total of Line 13(b) and 13(c))
(6) Amount of outstanding principal balance
of Competitive Bid Loans
(7) Amount of outstanding principal balance
of Swing Loan
(8) Maximum Borrowing Base
(Line 14(d) less Line 14(e), Line 14(f),
and Line 14 (g)
Dated this ____ day of __________________, 199__.
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
By: Colonial Properties Holding Company, Inc., an Alabama
corporation
Its General Partner
By:/s/Howard B. Nelson Jr.
Its:Chief Financial Officer
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Agreement") is made
and entered into as of the 21st day of August, 1998, among COLONIAL REALTY
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Borrower"), COLONIAL
PROPERTIES TRUST, an Alabama trust ("CPT"), COLONIAL PROPERTIES HOLDING COMPANY,
INC., an Alabama corporation ("CPHC"; CPHC and CPT are collectively, known as
the "Guarantors"), SOUTHTRUST BANK, NATIONAL ASSOCIATION, a national banking
association, AMSOUTH BANK, a state banking corporation, WACHOVIA BANK, N.A., a
national banking association, FIRST NATIONAL BANK OF COMMERCE, N.A., a national
banking association, WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association and PNC BANK, NATIONAL ASSOCIATION, a national banking association,
successor by merger to PNC Bank, Ohio, National Association (collectively, the
"Banks").
R E C I T A L S:
A. Borrower, Guarantors and Banks have entered into that certain Credit
Agreement dated July 10, 1997, as amended by that certain Amendment to Credit
Agreement dated July 10, 1998 (as so amended, the "Credit Agreement").
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Credit Agreement.
B. Borrower, Guarantors and Banks desire to amend the Credit Agreement
to add and amend certain definitions contained in the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the parties hereto agree as follows:
1. Article 1 of the Credit Agreement is hereby amended by deleting the
definitions of "GAV" and "Stabilized Properties"and by inserting in lieu thereof
the following definitions:
<PAGE>
"GAV" shall mean the sum of (without redundancy) (i) EBITDA from all
Properties which have not been acquired within the applicable reporting period,
capitalized at the appropriate Capitalization Rate, (ii) pro rata share of
EBITDA from Joint Ventures and Unconsolidated Subsidiaries which have not been
acquired within the applicable reporting period, capitalized at the appropriate
Capitalization Rate, (iii) Corporate Recurring Income less corporate general and
administrative expenses, net of the imputed management fee included in the
definition of EBITDA, all capitalized at eighteen percent (18%), (iv) Gross Book
Value of Properties acquired during the applicable reporting period, (v) pro
rata share of Gross Book Value of properties acquired by Joint Ventures and
Unconsolidated Subsidiaries during the applicable reporting period and (vi)
recorded value of land and remaining tangible assets, as determined in
accordance with GAAP.
"Stabilized Properties" shall mean any Property which meets all of the
following criteria: (i) a certificate of occupancy has been issued for the
Property and remains in full force and effect, (ii) the Property has been at
least eighty-five percent (85%) occupancy level if multifamily, retail, or
office (based on actual leasable square footage at the property) for the most
immediately preceding three (3) consecutive months based on leases wherein the
tenants are paying at least the average monthly lease payments required by the
terms of such leases and such leases are free from default by either the
landlord or tenant thereunder, and (iii) there is no Lien on the Property.
However, if a historically Stabilized Property drops below the above listed
occupancy threshold level, such Property may again become classified as a
Stabilized Property after attaining a ninety percent (90%) occupancy level for a
monthly reporting period if such Property attains such ninety percent (90%)
occupancy level within three months of previously being classified as a
Stabilized Property. Once a Property is reclassified as a Stabilized Property,
then such Property shall remain classified as a Stabilized Property if it
satisfies items (i) and (iii) above and maintains at least eighty-five percent
(85%) occupancy level for each month thereafter.
2. Article 1 of the Credit Agreement is hereby amended by adding the
following definition:
"Colonial Investments" 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 or making of
a time deposit with such Person.
"Joint Venture(s)" means any investment by any Credit Parties in a
corporation, limited liability company, limited liability partnership, tenancy
in common, and other similar entities.
3. Credit Agreement is hereby amended to add the following Article 6A:
Article 6A. Colonial Investments Covenant
Colonial Investments shall not exceed fifteen percent (15%) of GAV
("Investments Covenant"). However, if the Borrower receives a BBB/Baa3 rating
from a Qualified Rating Agency, then the Investments Covenant shall be increased
to twenty percent (20%).
4. Article 7. Negative Covenants is hereby amended to add the following
sections to the Agreement:
7.11. Loans or Advances. No Credit Party shall make loans or advances
to any Person without the prior written consent of the Lenders except
as permitted herein and except:
<PAGE>
(1) loans or advance to employees and directors not exceeding $16,000,000
in the aggregate principal amount outstanding at any time;
(2) deposits required by government agencies or public utilities;
(3) loans or advances from the Borrower to any Guarantor or from any
Guarantor to the Borrower or another Guarantor; and/or
(4) other loans and advances by any Credit Party to any Person which (x) are
evidenced by notes (and, if requested by the Agent, acting at the direction
of the Required Lenders, with such notes, together with any related
mortgage, have been assigned to and pledged with the Agent, payment for the
benefit of itself and the Lenders, as security for the payment of all
obligations of any Credit Party to the Agent and the Lenders hereunder) and
(y) are in any amount which, together with Investments permitted by clause
(vi) of Section 7.12, do not exceed fifteen percent (15%) of Gross Asset
Value as of the end of the most recent Fiscal Quarter. However, if the
Borrower receives a BBB/Baa 3 rating from a Qualified Rating Agency, then
the foregoing percentage shall be increased from fifteen percent (15%) to
twenty percent (20%).
7.12. Investments. No Credit Party shall make Colonial Investments
after the Closing Date in any Person except as permitted by Section
7.11 and except Investments in:
(1) direct obligations of the United States Government maturing within one
(1) year;
(2) certificates of deposit issued by a commercial bank whose credit is
satisfactory to the Agent;
(3) commercial paper rated A1 or the equivalent thereof
by S&P or P1 or the equivalent thereof by Moody's and
in either case maturing withing six (6) months after
the date of acquisition;
(4) 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 S&P and Aa or the equivalent
thereof by Moody's;
(5) Colonial Investments consisting of the acquisition of
all or substantially all of the assets or stock or
another Person permitted by Section 7.2; and/or
<PAGE>
(6) other Colonial Investments by Credit Parties in an
amount which together with loans and advances
permitted by clause (iv) of Section 7.11, do not
exceed fifteen percent (15%) of Gross Asset Value as
of the end of the most recent Fiscal Quarter.
However, if the Borrower receives a BBB/Baa 3 rating
from a Qualified Rating Agency, then the foregoing
percentage shall be increased from fifteen percent
(15%) to twenty percent (20%).
5. Borrowers represent and warrant that all representations and
warranties set forth in Article 5 of the Credit Agreement, as amended hereby,
are true and correct on the date hereof, and that, to the best of their
knowledge, no Default or Event of Default has occurred or exists.
6. No right of any Bank with respect to the Loan Documents is or will
be in any manner released, destroyed, diminished, or otherwise adversely
affected by this Agreement.
7. All references in the Loan Documents to the Credit Agreement shall
be deemed to refer, from and after the date hereof, to the Credit Agreement as
amended hereby, and as the same may hereafter be modified or amended.
8. Except as hereby expressly modified and amended, the Credit
Agreement shall remain in full force and effect, and the Credit Agreement, as
amended, is hereby ratified and affirmed in all respects. Borrowers confirm
that, to the best of their knowledge, they have no defenses or setoffs with
respect to their obligations pursuant to the Credit Agreement, as amended
hereby.
9. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors and assigns.
10. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which, when taken together,
shall constitute one and the same instrument.
<PAGE>
11. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND GUARANTORS
HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO TRIAL BY JURY ON ANY CLAIM,
COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING OUT OF OR IN
ANY WAY PERTAINING OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS, OR (II)
IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO OR INCIDENTAL TO ANY
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE LOAN
DOCUMENTS OR IN CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED
THEREBY OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND REMEDIES THEREUNDER, IN ALL
OF THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWER AND GUARANTORS AGREE THAT
LENDERS MAY FILE A COPY OF THIS WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED AGREEMENT OF BORROWER AND GUARANTORS
IRREVOCABLY TO WAIVE THEIR RIGHT TO TRIAL BY JURY, AND THAT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN
BORROWER, GUARANTORS, AND LENDERS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly executed and delivered to be effective as of the day and year first
above written.
BORROWER:
COLONIAL REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
BY: COLONIAL PROPERTIES HOLDING COMPANY, INC., an Alabama
corporation,
Its General partner
By: /s/ Howard B. Nelson Jr.
Its: Chief Financial Officer
GUARANTORS:
COLONIAL PROPERTIES TRUST,
an Alabama trust
By: /s/ Howard B. Nelson Jr.
Its: Chief Financial Officer
COLONIAL PROPERTIES HOLDING COMPANY, INC., an Alabama corporation
By: /s/ Howard B. Nelson Jr.
Its: Chief Financial Officer
(Signatures Continue)
<PAGE>
Signature Page to Colonial Realty
Limited Partnership Credit Agreement
LENDERS:
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Curtis J. Perry
Curtis J. Perry
Its Group Vice President
AMSOUTH BANK,
a state banking corporation
By:
Its
WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association
By:
Its
WACHOVIA BANK, N.A., a national banking association
By:
Its
(Signatures Continue)
<PAGE>
Signature Page to Colonial Realty
Limited Partnership Credit Agreement
PNC BANK, NATIONAL ASSOCIATION,
a national banking association,
successor by merger to PNC Bank, Ohio, National Association
By:
Its
FIRST NATIONAL BANK OF COMMERCE, N.A.,
a national banking association
By:
Its
AGENT:
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Curtis J. Perry
Curtis J. Perry
Its Group Vice President
Exhibit 10.13.1
FIRST SUPPLEMENTAL INDENTURE
This FIRST SUPPLEMENTAL INDENTURE dated as of December 31, 1998 (this
"First Supplemental Indenture") is between COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership (the "Company") having its principal executive
office at 2101 Sixth Avenue North, Suite 750, Birmingham, Alabama 35203, and
BANKERS TRUST COMPANY, a New York banking corporation, as trustee under the
Indenture referred to below (in such capacity, the "Trustee").
WITNESSETH:
WHEREAS, the Trustee and the Company are parties to the Indenture dated
as of July 22, 1996 (the "Indenture"), pursuant to which the Company may issue
from time to time its unsecured debt securities (the "Securities") in unlimited
principal amount;
WHEREAS, in connection with the Agreement and Articles of Merger dated
as of December 31, 1998 by and between Colonial Properties Holding Company,
Inc., an Alabama corporation and the sole general partner of the Company
("CPHC"), and Colonial Properties Trust, an Alabama real estate investment trust
("Colonial"), which provides for the merger effective December 31, 1998 of CPHC
with and into Colonial, with Colonial being the surviving entity of such merger
(the "Merger"), the Company desires to supplement the Indenture in accordance
therewith to evidence Colonial's succession, through the Merger, to CPHC's
interest as the sole general partner of the Company and to conform certain
definitions used in the Indenture;
WHEREAS, Section 9.01(9) of the Indenture permits the Company and the
Trustee to cure any ambiguity or correct or supplement any provision in the
Indenture which may be defective or inconsistent with any other provision
thereof, or to make any other provisions with respect to matters or questions
arising under the Indenture which shall not be inconsistent with the provisions
of the Indenture, provided such provisions shall not adversely affect the
interests of any of the Holders (as defined in the Indenture) of Securities of
any series or any related coupons in any material respect;
WHEREAS, in the opinion of the Board of Directors of CPHC, as evidenced
by a Board Resolution delivered to the Trustee on the date hereof, the
provisions in this First Supplemental Indenture will not modify any provision of
the Indenture so as to deprive the Holders of any Security Outstanding of any
benefit provided by the Indenture or otherwise adversely affect the interests of
any of the Holders in any respect;
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Trustee
mutually covenant and agree, for the equal and proportionate benefit of all
Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS
(a) For all purposes of this First Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
the terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;
the words "herein," "hereof," "hereto" and "hereunder" and other words of
similar import refer to the Indenture and this First Supplemental Indenture as a
whole and not to any particular Article, Section or other subdivision; and
capitalized terms are used herein as they are defined in the Indenture.
(b) The term "Board of Directors" and the definition thereof are hereby deleted
from Section 101 of the Indenture.
(c) The term "CPHC" and the definition thereof are hereby deleted from Section
101 of the Indenture.
(d) The following defined term is hereby added to Section 101 of the Indenture:
"Board of Trustees" means the board of trustees of Colonial, the executive
committee or any committee of that board authorized to act hereunder, as the
case may be.
(e) The following capitalized, boldface terms appearing in Section 101 of the
Indenture are hereby redefined as follows:
(1) "Board Resolution" means a copy of a resolution of Colonial, certified by
the Secretary or an Assistant Secretary of Colonial to have been duly adopted by
the Board of Trustees and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
(2) "Colonial" means Colonial Properties Trust, an Alabama real estate
investment trust and the sole general partner of the Company.
(3) "Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of and on behalf of the Company by the Chairman of
the Board, the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, the Secretary or an Assistant Secretary of Colonial, as
general partner of the Company, and delivered to the Trustee.
(4) "Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of Colonial, as general
partner of the Company, and delivered to the Trustee.
(5) "Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company or who may be an employee of or other counsel for Colonial or
the Company and who shall be reasonably satisfactory to the Trustee.
SECTION 102. EFFECT OF HEADINGS AND TABLE OF CONTENTS
. The Article and Section headings herein are for convenience only and shall
not affect the construction hereof.
SECTION 103. SUCCESSORS AND ASSIGNS
. All stipulations, promises and agreements in this First Supplemental Indenture
shall bind the successors and assigns of the Company and the Trustee, whether so
expressed or not.
SECTION 104. SEPARABILITY CLAUSE
. In case any provision in this First Supplemental Indenture shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 105. BENEFITS OF INDENTURE
. Nothing in this First Supplemental Indenture, express or implied, shall give
to any Person, other than the parties hereto and their successors and assigns
hereunder and the Holders of Securities, any benefit or legal or equitable
right, remedy or claim under this First Supplemental Indenture.
SECTION 106. GOVERNING LAW
. This First Supplemental Indenture shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 107. EFFECTIVENESS
. This First Supplemental Indenture shall take effect at the effective time of
the Merger.
ARTICLE TWO
The first sentence of Section 111 of the Indenture is hereby amended and
restated to read as follows:
SECTION 111. NON-RECOURSE. Notwithstanding anything contained
herein to the contrary, no recourse under or upon any obligation, covenant or
agreement contained in this Indenture, in any Security or coupon appertaining
thereto, or because of any indebtedness evidenced thereby (including, without
limitation, any obligation or indebtedness relating to the principal of, or
premium or Make-Whole Amount, if any, interest or any other amounts due, or
claimed to be due, on any Security issued hereunder), or for any claim based
thereon or otherwise in respect thereof, shall be had (i) against Colonial or
any other partner in the Company, (ii) against Colonial or any other Person
which owns an interest, directly or indirectly, in any partner in the Company or
(iii) against any promoter, as such, or against any past, present or future
shareholder, officer, director or partner, as such, of the Company or Colonial
or of any successor, either directly or through the Company or Colonial or any
successor, under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
ARTICLE THREE
THE SECURITIES
SECTION 301. The last sentence of Section 301 of the Indenture is
hereby amended and restated to read as follows:
If any of the terms of the Securities of any series are established by action
taken pursuant to one or more Board Resolutions, a copy of an appropriate record
of such action(s) shall be certified by the Secretary or an Assistant Secretary
of Colonial on behalf of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate setting forth the terms of the
Securities of such series.
SECTION 302. The first two paragraphs of Section 303 of the Indenture are hereby
amended and restated to read as follows:
The Securities and any coupons appertaining thereto shall be executed by the
Chairman of the Board, the President or one of the Vice Presidents, and the
Chief Financial Officer of Colonial, as general partner of the Company. The
signature of any of these officers on the Securities and coupons may be manual
or facsimile signatures of the present or any future such authorized officer and
may be imprinted or otherwise reproduced on the Securities.
Securities or coupons bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of Colonial or any predecessor general
partner of the Company, including, without limitation, Colonial Properties
Holding Company, Inc., shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities and did not hold such offices at
the date of such Securities or coupons.
ARTICLE FOUR
THE TRUSTEE
Section 602(2) of the Indenture is hereby amended and restated to read
as follows:
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security, together with any coupons appertaining thereto, to the
Trustee for authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the Board of
Trustees may be sufficiently evidenced by a Board Resolution.
This First Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the Company and the Trustee have caused
this First Supplemental Indenture to be duly executed as of the day and year
first above written.
COLONIAL REALTY LIMITED PARTNERSHIP
By: Colonial Properties Holding Company, Inc.,
its general partner
By: /s/ Howard B. Nelson, Jr
Name: Howard B. Nelson, Jr.
Title: Chief Financial Officer and Secretary
RIGHTS AGREEMENT
Rights Agreement, dated as of November 2, 1998 (the "Agreement"),
between Colonial Properties Trust, an Alabama real estate investment trust (the
"Company"), and BankBoston, N.A., a national banking association (the "Rights
Agent").
WHEREAS, on October 22, 1998 (the "Rights Dividend Declaration Date"),
the Board of Trustees of the Company authorized and declared a dividend of one
Right for each Common Share (as hereinafter defined) of the Company outstanding
at the Close of Business (as defined herein) on the Record Date (as defined
herein), and has authorized the issuance of one Right with respect to each
Common Share of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date (as
hereinafter defined), each Right initially representing the right to purchase
one ten-thousandth of a Series 1998 Junior Participating Preferred Share of the
Company having the rights, powers and preferences set forth in the form of
Articles Supplementary to the Company's Declaration of Trust, as amended (the
"Declaration of Trust"), relating to the Series 1998 Junior Participating
Preferred Shares attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or any Subsidiary of
the Company, (iv) any Person or entity holding Common Shares for or pursuant to
the terms of any such plan to the extent, and only to the extent, of such shares
so held, or (v) any "Excluded Holder" as such term is defined in the Declaration
of Trust. Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company which,
by reducing the number of Common Shares outstanding, increases the proportionate
number of Common Shares beneficially owned by such Person to 15% or more of the
Common Shares of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company, then such Person shall be deemed to
be an "Acquiring Person" if such Person is then the Beneficial Owner of 15% or
more of the Common Shares then outstanding. Notwithstanding the foregoing, if
the Board of Trustees of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," then such Person shall not
be deemed an "Acquiring Person" for any purposes of this Agreement unless and
until such Person shall again become an "Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(c) "Agreement" shall mean this Rights Agreement as originally executed
or as it may from time to time be supplemented or amended pursuant to the
applicable provisions hereof.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, other rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own", (A)
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (C) securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to beneficially own, any security
under this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or
any Affiliate or Associate thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (c)
shall cause a person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
Notwithstanding the foregoing, a Person shall not be deemed
the "Beneficial Owner" of any Common Shares as a result of such Person's
Beneficial Ownership of units of limited partnership interest of Colonial Realty
Limited Partnership.
(e) "Board" shall mean the Board of Trustees of the Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of Alabama or Massachusetts are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Massachusetts time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M., Massachusetts time, on the next
succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean
the common shares of beneficial interest, par value $.01 per share, of the
Company. "Common Shares" or "Common Stock" when used with reference to any
Person other than the Company shall mean the class of capital stock with the
greatest aggregate voting power, or the class of equity securities or other
equity interests having power to control or direct the management, of such
Person.
(i) "Company" shall mean Colonial Properties Trust, an Alabama real
estate investment trust.
(j) "Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day after the Share Acquisition Date (or, if the tenth day
after the Share Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the Close of Business on the tenth
Business Day (or, if such tenth Business Day occurs before the Record Date, the
Close of Business on the Record Date), or such specified or unspecified later
date on or after the Record Date as may be determined by action of the Board of
Trustees prior to such time as any Person becomes an Acquiring Person, after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company or any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person or entity holding Common Shares for or
pursuant to the terms of any such plan or any Excluded Holder) is first
published or sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon consummation thereof, such
Person would be the beneficial owner of 15% or more of the outstanding Common
Shares.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, as in effect on the date of this Agreement.
(l) "Exchange Date" shall have the meaning set forth in Section 7(a)
hereof.
(m) "Excluded Holder" shall have the same meaning as set forth in the
Declaration of Trust.
(n) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(o) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
(q) "Preferred Shares" shall mean the Series 1998 Junior Participating
Preferred Shares of Beneficial Interest, par value $.01 per share, of the
Company.
(r) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(s) "Purchase Price" shall have the meaning set forth in Section 4(a)
and 11(a)(ii) hereof.
(t) "Record Date" shall mean the close of business on November 2, 1998.
(u) "Redemption Period" shall have the meaning set forth in Section
23(a) hereof.
(v) "Rights Agent" shall mean BankBoston, N.A.
(w) "Rights Certificate" shall have the meaning set forth in Section 3
hereof.
(x) "Rights Dividend Declaration Date" shall mean the close of business
on October 22, 1998.
(y) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(z) "Section 13 Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a)hereof.
(aa) "Securities Act" shall mean the Securities Act of 1933, as
amended, as in effect on the date of this Agreement.
(bb) "Share Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(cc) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person, or is
otherwise controlled by such Person.
(dd) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(ee) "Trustee" shall mean a member of the Board of Trustees.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Shares)
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable upon ten (10) days' prior
notice to the Rights Agent. The Rights Agent shall have no duty to supervise,
and in no event be liable for, the acts or omissions of any such Co-Rights
Agent.
Section 3. Issue of Rights Certificates.
(a) As promptly as practicable following the Record Date, the Company
will send or deliver a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), to each record holder of Common Shares as of the Close of Business on
the Record Date at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Shares and the registered holders of the Common
Shares shall also be the registered holders of the associated Rights. Until the
Distribution Date (or the earlier Expiration Date or Final Expiration Date), the
transfer of any certificate representing Common Shares in respect of which
Rights have been issued shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(b) Rights shall be issued in respect of all Common Shares issued
(whether originally issued or from the Company's treasury) after the Record Date
but prior to the earlier of the Distribution Date or the Expiration Date or the
Final Expiration Date. Rights shall also be issued to the extent provided in
Section 22 in respect of all Common Shares which are issued (whether originally
issued or from the Company's treasury) after the Distribution Date and prior to
the Expiration Date. Certificates representing such Common Shares shall also be
deemed to be certificates for Rights, and shall bear the following legend (in
addition to any other legends that may be required):
This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in a Rights Agreement between Colonial Properties Trust (the
"Company") and BankBoston, N.A. (the "Rights Agent") dated as of November 2,
1998 (the "Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement as in effect on the date of
mailing without charge after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void. The Rights shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification of the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Shares
shall also be the registered holders of the associated Rights, and the transfer
of any such certificate shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Until the Distribution Date (i) the Rights will be evidenced
(subject to the provisions of paragraph (a) of this Section 3) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates for Common Shares shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates, and (ii) the Rights will
be transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company).
(d) As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Rights
Certificate, in substantially the form of Exhibit C hereto, evidencing one Right
for each Common Share so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per Common Share has been made
pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit C hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever issued, shall be dated as of the Record Date,
and on their face shall entitle the holders thereof to purchase such number of
one ten-thousandths of a Preferred Share as shall be set forth therein at the
price set forth therein (such exercise price per one ten-thousandth of a share,
the "Purchase Price"), but the amount and type of securities purchasable upon
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(d) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person; (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such; or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Trustees has determined is part
of a plan, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially owned
by a Person who was or became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e) of such
Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its President, Chief Financial Officer, Chief Investment Officer or any
Executive or Senior Vice President either manually or by facsimile signature,
and have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the earlier of the Expiration Date or
Final Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of one
ten-thousandths of a Preferred Share (or following a Triggering Event, Common
Shares, other securities, cash, or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the person
entitled thereto a Rights Certificate or Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Sections 7(e) and 7(g) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent, together with payment of the
Purchase Price for each one ten-thousandth of a Preferred Share (or other
securities, cash or other assets, as the case may be) as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on November
1, 2008 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, (iii) the time at which such Rights
are exchanged (the "Exchange Date") as provided in Section 24 hereof, or (iv)
the time at which the Rights expire pursuant to Section 13(d) hereof (the
earliest of (i), (ii), (iii) and (iv) being herein referred to as the
"Expiration Date").
(b) Each Right shall entitle the registered holder thereof to purchase
one ten-thousandth of a Preferred Share, and the Purchase Price for each one
ten-thousandth of a Preferred Share pursuant to the exercise of a Right shall
initially be $92.00, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one ten-thousandth of a Preferred Share (or Common Shares, other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax in cash, or by certified check,
cashier's check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 18(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent) certificates for the total number of
one ten-thousandths of a Preferred Share to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number of Preferred
Shares issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one ten-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of issuance of
fractional shares in accordance with Section 14, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder and (iv) after receipt
thereof, promptly deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. In the event that the Company is
obligated to issue other securities (including Common Shares) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
Trustees has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
(g) Notwithstanding anything in this Agreement to the contrary, in the
event that Rights become exercisable for Common Shares, no right shall be
exercisable by the holder thereof for a number of Common Shares in excess of the
maximum number of Common Shares that could be acquired by the holder of such
Right without violating any provision of Article VI of the Declaration of Trust
(or any successor provision or document) relating to limitations on the
ownership of Common Shares. Any Common Shares purportedly acquired upon exercise
of a Right shall, to the extent that such acquisition violates any provision of
Article VI of the Declaration of Trust (or any successor provision or document),
be deemed Excess Shares (as that term is defined in the Declaration of Trust or
any successor document), and the Person exercising such Right shall be subject
to all of the remedies and other provisions of such Article VI (or any successor
provision or document) governing Excess Shares. Nothing herein shall be deemed
to limit the application of the Declaration of Trust or the authority of the
Board of Trustees thereunder.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any provisions of this Rights Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Beneficial Interest.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares (and
following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares and/or other securities or out of its authorized and
issued shares held in its treasury), the number of Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) that, as provided in this Agreement, including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) In the event the Preferred Shares (and, following the occurrence of
a Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of Rights become listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Securities Act with respect to the Common
Shares or other securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. In addition, if the
Company shall determine that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been declared effective.
Upon any suspension of exercisability of Rights referred to in this Section
9(c), the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable and shall be void so long as held by a holder in any
jurisdiction where the requisite qualification to the issuance to such holder,
or the exercise by such holder, of the Rights in such jurisdiction shall not
have been obtained or be obtainable, or the exercise thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one ten-thousandths of a Preferred Share
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and non-assessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates or
of any certificates for a number of one ten-thousandths of a Preferred Share (or
Common Shares and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of certificates
for a number of one ten-thousandths of a Preferred Share (or Common Shares
and/or other securities, as the case may be) in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
ten-thousandths of a Preferred Share (or Common Shares and/or other securities,
as the case may be) in a name other than that of the registered holder upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Share Record Date.
Each person in whose name any certificate for a number of one
ten-thousandths of a Preferred Share (or Common Shares and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such fractional Preferred
Shares (or Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Share (or Common Share and/or other securities as the case may be)
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Share (or Common Share and/or other securities as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a distribution on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of shares or (D) issue
any other shares of beneficial interest in the Company in a reclassification of
the Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
entity), except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the time of the record date for such
distribution or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Preferred Shares or the number and
kind of shares of beneficial interest in the Company issuable on such date, as
the case may be, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment of
the aggregate adjusted Purchase Price then in effect necessary to exercise a
Right in full, the aggregate number and kind of Preferred Shares or the number
and kind of shares of beneficial interest in the Company, as the case may be,
which, if such Right had been exercised immediately prior to such date and at a
time when the Preferred Share (or Common Share and/or other securities, as the
case may be) transfer books of the Company were open, he would have owned upon
such exercise and been entitled to receive by virtue of such distribution,
subdivision, combination, or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this Agreement, in the
event that any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan or any Excluded Holder), alone or
together with its Affiliates and Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, unless the event causing
such Person to become an Acquiring Person is a transaction set forth in Section
13(a) hereof, or is an acquisition of Common Shares pursuant to a cash tender
offer made pursuant to Section 14(d) of the Exchange Act for all outstanding
Common Shares (other than Common Shares beneficially owned by the Person making
the offer or by its Affiliates or Associates) at a price and on terms determined
by at least two-thirds of the Trustees, after receiving advice from one or more
investment banking firms, to be (a) a price which is fair to shareholders
(taking into account all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and (b) otherwise in the best interests of the Company and its
shareholders, proper provision shall be made so that promptly following the
Redemption Period (as defined in Section 23(a)), each holder of a Right (except
as provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof and payment of an amount equal to the then
current Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one ten-thousandths of a Preferred Share, such number of Common
Shares of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one ten-thousandths of a
Preferred Share for which a Right was or would have been exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, whether or not such
Right was then exercisable, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement except to the extent set forth
in Section 13 hereof) by 50% of the current market price per Common Share
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) The Company may at its option substitute for a Common
Share issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) such number or fractions of Preferred Shares having an
aggregate market value equal to the current per share market price of a Common
Share. In the event that the number of Common Shares which is authorized by the
Declaration of Trust but not outstanding, or reserved for issuance for purposes
other than upon exercise of the Rights, is not sufficient to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph (ii), the
Board shall, to the extent permitted by applicable law and by material
agreements then in effect to which the Company is a party, (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right (subject to Section 7(e) hereof),
make adequate provision to substitute for some or all of the Adjustment Shares,
upon exercise of a Right and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Shares or other equity
securities of the Company (including, without limitation, Preferred Shares or
units of Preferred Shares which the Board has deemed to have the same value as
Common Shares) (such shares of beneficial interest being herein called "common
share equivalents"), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board based
upon the advice of an investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a) expires (the later of
(x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, cash, which Common Shares
and/or cash have an aggregate value equal to the Spread.
If, upon the occurrence of a Section 11(a)(ii) Event, the Board shall
determine in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the Rights,
then if the Board so elects, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period, as it may
be extended, the "Substitution Period"). To the extent that action is to be
taken pursuant to the preceding provisions of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to the first sentence of
this Section 11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Shares shall be the current
market price (as determined pursuant to Section 11(d) hereof) per Common Share
on the Section 11(a)(ii) Trigger Date and the value of any "common share
equivalent" shall be deemed to have the same value as a Common Share on such
date. The Board may, but shall not be required to, establish procedures to
allocate the right to receive Common Shares upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares") or securities convertible into Preferred Shares at a price
per Preferred Share or per "equivalent preferred share" (or having a conversion
price per Preferred Share, if a security convertible into Preferred Shares) less
than the current per share market price of the Preferred Shares (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date, plus
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent Preferred Shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of Preferred Shares outstanding on such record
date, plus the number of additional Preferred Shares and/or equivalent Preferred
Shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving entity) of evidences of indebtedness, cash (other than a regular
quarterly cash distribution out of the earnings of the Company), assets (other
than a distribution payable in Preferred Shares, but including any distribution
payable in shares of beneficial interest other than Preferred Shares), or
subscription rights or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current per share market
price of the Preferred Shares (as defined in Section 11(d)) on such record date,
less the fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a Preferred Share and the denominator of which shall be
such current per share market price of the Preferred Shares. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
market price" of the Common Shares on any date shall be deemed to be the average
of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per Common Share on any date shall
be deemed to be the average of the daily closing prices per Common Share for the
ten (10) consecutive Trading Days immediately following such date; provided,
however, that in the event that the current market price of the Common Shares is
determined during a period following the announcement by the issuer of such
Common Shares of (i) a dividend or distribution on such Common Shares payable in
such Common Shares or securities convertible into such Common Shares (other than
the Rights), or (ii) any subdivision, combination or reclassification of such
Common Shares, and prior to the expiration of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("Nasdaq") or such other
system then in use, or, if on any such date the Common Shares are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Shares
selected by the Board. If on any such date no market maker is making a market in
the Common Shares, the fair value of such shares on such date as determined in
good faith by the Board shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Common Shares
are listed or admitted to trading is open for the transaction of business, or,
if the Common Shares are not listed or admitted to trading on any national
securities exchange, the term "Trading Day" shall mean a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the State of New
York are not authorized or obligated by law or executive order to close. If the
Common Shares are not publicly held or not listed or traded, "current market
price" shall mean the fair value per share as determined in good faith by the
Board, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per Preferred Share shall be determined in the same
manner as set forth above for the Common Shares in clause (i) of this Section
11(d) (other than the last sentence thereof). If the current market price per
Preferred Share cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the "current market price" per Preferred
Share shall be conclusively deemed to be an amount equal to 10,000 (as such
number may be appropriately adjusted for such events as share splits, share
distributions and recapitalizations with respect to the Common Shares occurring
after the date of this Agreement) multiplied by the current market price per
Common Share. If neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "current market price" per Preferred Share shall
mean the fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes of this Agreement, the
"current market price" of one ten-thousandth of a Preferred Share shall be equal
to the "current market price" of one Preferred Share divided by 10,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a Common Share or other
share or one-millionth of a Preferred Share, as the case may be. Notwithstanding
the first sentence of this Section 11(e), an adjustment required by this Section
11 shall be made no later than the earlier of (i) three years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of beneficial interest in the Company
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one ten-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one ten-thousandths of
a Preferred Share (calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one ten-thousandths of a share covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one ten-thousandths of a Preferred Share issuable upon the exercise of
a Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one ten-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one ten-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one ten-thousandth of a
share and the number of one ten-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then-par value, if any, of the number of one
ten-thousandths of a Preferred Share issuable upon exercise of the Rights, the
Company shall take any trust action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable such number of one ten-thousandths of a Preferred Share at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one ten-thousandths of a Preferred Share and other shares of
beneficial interest or securities of the Company, if any, issuable upon such
exercise over and above the number of one ten-thousandths of a Preferred Share
and other shares of beneficial interest or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
share distributions or (v) issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a distribution on the
outstanding Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of shares, the number of Rights associated with each Common Share
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following the
occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Shares and the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing Common
Shares) in accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) Subject to Section 23 of this Agreement, in the event that,
following the Share Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving entity of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving entity of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
Common Shares shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof), then, and in
each such case (except as may be contemplated by Section 13(d) hereof), proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall, upon the expiration of the Redemption Period (as
defined in Section 23(a)), thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradable Common Shares of the Principal Party (as such
term is hereinafter defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of one
ten-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of one ten-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and (2) dividing that product (which product, following
the first occurrence of a Section 13 Event, shall be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by 50%
of the current market price per Common Share of such Principal Party on the date
of consummation of such Section 13 Event (or the fair market value on such date
or other securities or property of the Principal Party, as provided for herein);
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof (other than Sections 11(a)(ii) and 11(a)(iii))
shall apply only to such Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of Common Shares in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) and
Section 11(a)(iii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any such case, (1) if
the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized Common Shares which
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any such Section 13 Event, the Principal Party
will:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date;
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act;
(iii) use its best efforts to obtain any necessary regulatory
approvals in respect of the securities purchasable upon exercise of outstanding
Rights; and
(iv) use its best efforts, if such Common Shares of the
Principal Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to trading
(or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on the New York Stock Exchange or such securities
exchange, or, if the securities of the Principal Party purchasable upon exercise
of the Rights shall not be listed or admitted to trading on the New York Stock
Exchange or a national securities exchange, to cause the Rights and the
securities purchasable upon exercise of the Rights to be reported by such other
system then in use.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons (or a wholly owned subsidiary of any such Person or Persons) who
acquired Common Shares pursuant to a cash tender offer for all outstanding
Common Shares which complies with the provisions of Section 11(a)(ii) hereof,
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such cash tender offer and (iii) the form of consideration
being offered to the remaining holders of Common Shares pursuant to such
transaction is the same as the form of consideration paid pursuant to such cash
tender offer. Upon consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of the whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
high bid and low asked prices, in either case as reported by the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights the
fair value of the Rights on such date as determined in good faith by the Board
shall be used. In the event the Rights are listed or admitted to trading on a
national securities exchange, the closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the high bid and low asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to the national securities exchange on which the Rights are listed or admitted
to trading.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one ten-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one ten-thousandth of a Preferred Share). In lieu of
fractional Preferred Shares that are not integral multiples of one
ten-thousandth of a Preferred Share, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised, as herein
provided, an amount in cash equal to the same fraction of the current market
value of one ten-thousandth of a Preferred Share. For purposes of this Section
14(b), the current market value of one ten-thousandth of a Preferred Share shall
be one ten-thousandth of the closing price of a Preferred Share (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the events specified in Section
11 giving rise to the right to receive Common Shares, common share equivalents
or other securities upon the exercise of a Right, the Company shall not be
required to issue fractions of Common Shares, common share equivalents or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares, common share equivalents or other securities.
In lieu of fractional Common Shares, common share equivalents or other
securities, the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised, as herein provided, an amount in cash
equal to the same fraction of the current market value of one (1) Common Share,
common share equivalents or other securities. For purposes of this Section
14(c), the current market value of one Common Share shall be the closing price
of one Common Share (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives the right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, except the rights of
action vested in the Rights Agent pursuant to Section 18 and Section 20 hereof,
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate form of assignment and
the certificate contained therein duly completed and executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated certificate for
Common Shares) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated certificate for Common Shares made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any government authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive distributions or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of trustees or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any trust action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by any
person believed by the Rights Agent to be any one of the President, Chief
Financial Officer, Chief Investment Officer, any Executive or Senior Vice
President, or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent and shall
not be under any responsibility in respect of the validity of any provision of
this Agreement or the execution and delivery of this Agreement (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 7(e) hereof) or any adjustment required under any of
the provisions hereof or responsible for the manner, method, or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares or Preferred Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
Common Shares or Preferred Shares will, when so issued, be validly authorized
and issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be any one of the President, the Chief
Financial Officer, the Chief Investment Officer, any Executive or Senior Vice
President, or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instruction in response to such application specifying the action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect, or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect, or misconduct; provided, however, the Rights Agent was not grossly
negligent in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
(l) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
Section 19. Compensation and Indemnification of the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, its officers, employees, agents and
directors for, and to hold each of them harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for any action taken, or omitted by the Rights
Agent or such other indemnified party in connection with the acceptance and
administration of this Agreement and the exercise of its duties hereunder,
including the costs and expenses of defending against any claim of liability in
the premises. The indemnity provided for hereunder shall survive the expiration
of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement or the exercise of its duties
hereunder in reliance upon any Rights Certificate or certificate for Common
Shares or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
(c) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action unless such loss or
damage results from the gross negligence, bad faith or willful misconduct of the
Rights Agent.
Section 20. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at any such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Shares
and the Preferred Stock by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of Massachusetts or New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of Massachusetts or New York), in good standing, having
a principal office in the State of Massachusetts or New York which is authorized
under such laws to exercise corporate trust power and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
and the Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or kind of class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date (other than upon exercise of a Right) and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption.
(a) The Board may, at its option, at any time during the period
commencing on the Rights Dividend Declaration Date and ending on the earlier of
(i) the Close of Business on the tenth day following the Share Acquisition Date
(or, if the Share Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth day following the Record Date), as such
period may be extended or shortened in the discretion of the Board of Trustees
(the "Redemption Period") or (ii) the Final Expiration Date, cause the Company
to redeem all but not less than all the then outstanding Rights at a redemption
price of $.005 per Right, as such amount may be appropriately adjusted to
reflect any share split, share distribution or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"); provided, however, that, if the Board authorizes
redemption of the Rights or a change in the Redemption Period on or after the
time a Person becomes an Acquiring Person, then such authorization shall require
the concurrence of at least two-thirds of the Trustees. If, following the
occurrence of a Share Acquisition Date and following the expiration of the
Company's right of redemption hereunder (i) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of Common Shares in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of a
Triggering Event such that such Person is thereafter a Beneficial Owner of 10%
or less of the outstanding Common Shares, (ii) there are no other Persons,
immediately following the occurrence of the event described in clause (i), who
are Acquiring Persons, and (iii) the Board, by a vote of at least two-thirds of
the Trustees, shall so approve, then the Company's right of redemption shall be
reinstated and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
or a Section 13 Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price
in cash, Common Shares (based on the current market price of the Common Shares
at the time of redemption) or any other form of consideration deemed appropriate
by the Board.
(b) Immediately upon the action of the Board ordering the redemption of
the Rights, evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Promptly after the action of the Board
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) or Section 7(e) hereof) for
Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any share split, share distribution or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio").
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 11(a)(ii) or Section 7(e) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this paragraph
(d), the current market value of a whole Common Share shall be the closing price
of a Common Share (as determined pursuant to the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date (i) to pay any distribution payable in shares of beneficial
interest of any class to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular quarterly
cash distribution out of earnings) or (ii) to offer to the holders of Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of beneficial interest of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), or (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company and
its subsidiaries (taken as a whole) to, any other Person, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such share
distribution, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the Preferred Shares for purposes of such action and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of the occurrence of such event which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Shares shall be deemed thereafter to refer to Common Shares and/or, if
appropriate, other securities.
Section 26. Notices.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama 35203
Facsimile No.: (205) 250-8890
Attention: Thomas H. Lowder
with a copy (which shall not constitute notice) to:
J. Warren Gorrell, Jr.
Alan L. Dye
Hogan & Hartson L.L.P.
555 - Thirteenth Street, N.W.
Washington, DC 20004-1109
Facsimile No.: (202) 637-5910
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
BankBoston, N.A.
c/o Boston EquiServe Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to any such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 27, the Company may, and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Shares. From and
after the Distribution Date and subject to the penultimate sentence of this
Section 27, the Company may, and the Rights Agent shall at any time and from
time to time, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of any such Person); provided, however, that this Agreement may not be
supplemented or amended (A) to lengthen a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable, or
(B) to lengthen any other time period unless such lengthening is for the purpose
of protecting, enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of any such Person). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the number of one
ten-thousandths of a Preferred Share for which a Right is exercisable or the
Purchase Price, provided, however, that at any time prior to the Distribution
Date, the Company may amend this Agreement to increase the Purchase Price. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board, etc.
For all purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including without limitation a determination to redeem or not redeem
the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject any trustee to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of Common Shares).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would materially
and adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of such
determination by the Board.
Section 32. Governing Law.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Alabama and
for all purposes shall be governed by and construed in accordance with laws of
such State.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts. It shall
not be necessary that the signature of or on behalf of each party appears on
each counterpart, but it shall be sufficient that the signature of or on behalf
of each party appears on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of or on behalf of all of the
parties.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
COLONIAL PROPERTIES TRUST
Attest:
By /s/ Howard B. Nelson, Jr. By /s/ Thomas H. Lowder
Howard B. Nelson, Jr. Thomas H. Lowder
Chief Financial Officer and Chairman of the Board, President
Secretary and Chief Executive Officer
BANKBOSTON, N.A.
Attest:
By /s/ Karen Perkins By /s/ Tyler Haynes III
Karen Perkins Tyler Haynes III
Account Manager Director, Client Services
TABLE OF CONTENTS
Page
Section 1. Certain Definitions.
Section 2. Appointment of Rights Agent.
Section 3. Issue of Rights Certificates.
Section 4. Form of Rights Certificates.
Section 5. Countersignature and Registration.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
Section 8. Cancellation and Destruction of Rights Certificates.
Section 9. Reservation and Availability of Shares of Beneficial Interest.
Section 10. Preferred Share Record Date.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
Section 14. Fractional Rights and Fractional Shares.
Section 15. Rights of Action.
Section 16. Agreement of Rights Holders.
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
Section 18. Duties of Rights Agent.
Section 19. Compensation and Indemnification of the Rights Agent.
Section 20. Merger or Consolidation or Change of Name of Rights Agent.
Section 21. Change of Rights Agent.
Section 22. Issuance of New Rights Certificates.
Section 23. Redemption.
Section 24. Exchange.
Section 25. Notice of Certain Events.
Section 26. Notices.
Section 27. Supplements and Amendments.
Section 28. Successors.
Section 29. Determinations and Actions by the Board, etc.
Section 30. Benefits of this Agreement.
Section 31. Severability.
Section 32. Governing Law.
Section 33. Counterparts.
Section 34. Descriptive Headings.
COLONIAL PROPERTIES TRUST
and
BANKBOSTON, N.A.
as Rights Agent
RIGHTS AGREEMENT
Dated as of November 2, 1998
BANKERS TRUST COMPANY
By: /s/ Ednora Linares
Name:
Title:
<TABLE>
SELECTED FINANCIAL Information
<CAPTION>
Dollar amounts in thousands,
except per share data 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
OPERATING DATA
<S> <C> <C> <C> <C> <C>
Total revenue ..................... $ 257,367 $ 184,126 $ 134,881 $ 110,890 $ 64,031
Expenses:
Depreciation and amortization .. 48,647 33,278 23,534 20,490 13,061
Other operating ................ 87,972 63,581 46,819 41,772 24,026
Income from operations ............ 120,748 87,267 64,529 48,628 26,944
Interest expense .................. 52,063 40,496 24,584 24,060 10,877
Other income (expense), net ....... (1,597) 3,187 1,303 736 578
Income before extraordinary items
and minority interest .......... 67,088 49,958 41,248 25,479 16,767
Dividends to preferred shareholders 10,938 1,671 -- -- --
Net income available to
common shareholders ............ 36,030 30,277 27,506 14,936 11,317
Per share - basic and diluted:
Income before extraordinary items . $ 1.47 $ 1.66 $ 1.60 $ 1.29 $ 1.18
Extraordinary loss from early
extinguishment of debt ......... (0.01) (0.13) (0.02) -- --
Net income ........................ 1.46 1.53 1.58 1.29 1.18
Dividends declared ................ 2.20 2.08 2.00 1.90 1.73
- ---------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Land, buildings, and equipment, net $ 1,566,841 $ 1,268,432 $ 801,800 $ 624,517 $ 555,581
Total assets ...................... 1,755,449 1,397,078 948,105 681,122 620,413
Total debt ........................ 909,322 702,044 506,435 354,100 362,134
- ---------------------------------------------------------------------------------------------------------------
OTHER DATA
Funds from operations(1) .......... $ 103,746 $ 77,493 $ 62,999 $ 44,015 $ 28,123
Total market capitalization(2) .... 2,013,084 1,764,810 1,298,946 894,342 759,313
Interest coverage ratio ........... 3.20% 3.00% 3.60% 2.90% 3.70%
Cash flow provided by (used in):
Operating activities ........... $ 115,528 $ 72,065 $ 62,873 $ 47,004 $ 27,970
Investing activities ........... (365,347) (346,379) (224,076) (95,592) (119,162)
Financing activities ........... 249,870 275,504 162,957 29,443 84,689
Total properties (at end of year) . 106 93 73 62 55
<FN>
(1) The Company generally considers Funds from Operations ("FFO") a widely used
and appropriate measure of performance for an equity REIT that provides a
relevant basis for comparison among REITs. FFO, as defined by the National
Association of Real Estate Investment Trusts (NAREIT), means income (loss)
before minority interest (determined in accordance with GAAP), excluding gains
(losses) from debt restructuring and sales of property, plus real estate related
depreciation and after adjustments for unconsolidated partnerships and joint
ventures. FFO is presented to assist investors in analyzing the performance of
the Company. The Company's method of calculating FFO may be different from
methods used by other REITs and, accordingly, may not be comparable to such
other REITs. FFO (i) does not represent cash flows from operations as defined by
GAAP, (ii) is not indicative of cash available to fund all cash flow needs and
liquidity, including its ability to make distributions, and (iii) should not be
considered as an alternative to net income (as determined in accordance with
GAAP) for purposes of evaluating the Company's operating performance.
(2) Total market capitalization is the market value of all outstanding Common
Shares of the Company plus total debt. This amount was calculated assuming the
conversion of 10,613,966, 9,976,419, 8,431,198, 8,141,023, and 8,070,159 units
of minority interest in Colonial Realty Limited Partnership into the Company's
Common Shares for 1998, 1997, 1996, 1995, and 1994, respectively.
</FN>
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Colonial Properties Trust (Colonial or the Company) is engaged in the ownership,
development, management, and leasing of multifamily communities, retail malls
and shopping centers, and office buildings. Colonial is organized as a real
estate investment trust (REIT) and owns and operates properties in nine states
in the Sunbelt region of the United States. As of December 31, 1998, Colonial's
real estate portfolio consisted of 49 multifamily communities, 40 retail
properties, and 17 office properties.
Colonial is one of the largest diversified REITs in the United States.
Consistent with its diversified strategy, Colonial manages its business with
three separate and distinct operating divisions: Multifamily, Retail, and
Office. Each division has an Executive Vice President that oversees growth and
operations and has a separate management team that is responsible for acquiring,
developing, and leasing properties within each division. This structure allows
Colonial to utilize specialized management personnel for each operating
division. Constant communication among the Executive Vice Presidents and
centralized functions of accounting, information technology, due diligence and
administrative services provide the Company with unique synergy allowing the
Company to take advantage of a variety of investment opportunities. Decisions
for investments in acquisitions and developments and for dispositions are also
centralized.
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes to Consolidated Financial Statements appearing
elsewhere in this report. As used herein, the terms "Colonial" or "the Company"
includes Colonial Properties Trust, and one or more of its subsidiaries
including, among others, Colonial Realty Limited Partnership (CRLP).
Any statement contained in this report which is not a historical fact, or which
might be otherwise considered an opinion or projection concerning the Company or
its business, whether express or implied, is meant as, and should be considered,
a forward-looking statement as that term is defined in the Private Securities
Litigation Reform Act of 1996. Forward-looking statements are based upon
assumptions and opinions concerning a variety of known and unknown risks,
including but not limited to changes in market conditions, the supply and demand
for leasable real estate, interest rates, increased competition, changes in
governmental regulations, and national and local economic conditions generally,
as well as other risks more completely described in the Company's filings with
the Securities and Exchange Commission. If any of these assumptions or opinions
prove incorrect, any forward-looking statements made on the basis of such
assumptions or opinions may also prove materially incorrect in one or more
respects.
Results of Operations - 1998 vs. 1997
In 1998, the Company experienced growth in revenues, operating expenses, and net
income which primarily resulted from the acquisition and development of 40
properties and the expansion of 13 properties during 1998 and 1997. As a result
of the acquisitions, developments, and expansions the Company's net income
before dividends to preferred shareholders increased by $15.0 million, or 47.0%,
for 1998 when compared to 1997. On a per share basis, net income was $1.46 for
1998, a 4.6% decrease, compared to $1.53 for 1997. The decrease in net income
available to common shareholders, on a per share basis, is primarily
attributable to a full year of dividends paid to preferred shareholders in 1998
for the preferred stock issued in November 1997.
Revenues - Total revenues increased by $73.2 million, or 39.8%, during 1998 when
compared to 1997. Of this increase, $61.7 million relates to revenues generated
by properties that were acquired or developed during 1998 and 1997, net of
revenues of properties disposed of in 1997. The retail division accounted for
the majority of the overall revenue increase, approximately $46.4 million, while
the office and multifamily divisions accounted for $18.2 million and $9.0
million, respectively. The divisional revenue growth was primarily attributable
to the acquisition, development, and expansion of 21 retail properties, 22
multifamily properties, and 10 office properties during 1998 and 1997. The
remaining increase relates to increases in rental rates at existing properties
and lease buyouts during 1998.
Operating Expenses - Total operating expenses increased by $39.8 million, or
41.1%, during 1998 when compared to 1997. The majority of this increase relates
to additional property operating expenses of $20.3 million and additional
depreciation of $13.4 million associated with properties that were acquired,
developed, or expanded during 1998 and 1997, net of operating expenses of
properties disposed of during 1997. Depreciation expense on existing properties
increased by $1.5 million during 1998 when compared to 1997. Divisional property
operating expenses increased by $14.8 million, $2.8 million, and $5.5 million
for retail, multifamily, and office divisions, respectively, during 1998 when
compared to 1997. The increase in divisional property operating expenses was
primarily attributable to the acquisition, development, and expansion of 21
retail properties, 22 multifamily properties, and 10 office properties during
1998 and 1997. The remaining increase primarily relates to increases in
operating expenses at existing properties, and overall increases in corporate
overhead and personnel costs associated with the Company's continued growth.
Other Income and Expenses - Interest expense increased by $11.6 million, or
28.6%, during 1998 when compared to 1997. The increase in interest expense is
primarily attributable to the assumption of $5.7 million of debt, the issuance
of $175 million in Medium-Term Notes, and the net increased usage of the
Company's Line of Credit in conjunction with the financing of acquisitions and
developments.
Results of Operations - 1997 vs. 1996
In 1997, the Company experienced growth in revenues, operating expenses, and net
income which resulted from the acquisition and development of 38 properties and
the expansion of 7 properties during 1997 and 1996. As a result of the
acquisitions and developments, the Company's net income before dividends to
preferred shareholders increased by $5.0 million, or 18.0%, for 1997 when
compared to 1996. On a per share basis, net income was $1.53 for 1997, a 3.2%
decrease, compared to $1.58 for 1996. The decrease in net income available to
common shareholders, on a per share basis, is directly attributable to the
extraordinary loss from early extinguishment of debt and the dividends paid to
the preferred shareholders in 1997.
Revenues - Total revenues increased by $49.2 million, or 36.5%, during 1997 when
compared to 1996. Of this increase, $43.4 million relates to revenues generated
by properties that were acquired or developed during 1997 and 1996. The
remaining increase primarily relates to increases in rental rates at existing
properties. The retail division accounted for the majority of the overall
revenue increase, approximately $25.4 million, while the multifamily and office
divisions accounted for $14.6 million and $8.9 million, respectively. The
divisional revenue growth was primarily attributable to the acquisition,
development, and expansion of 20 retail properties, 19 multifamily properties,
and 6 office properties during 1997 and 1996.
Operating Expenses - Total operating expenses increased by $26.5 million, or
37.7%, during 1997 when compared to 1996. The majority of this increase relates
to additional property operating expenses of $13.3 million and additional
depreciation of $8.2 million associated with properties that were acquired or
developed during 1997 and 1996. Depreciation expense on existing properties
increased by $1.8 million during 1997 when compared to 1996. Divisional property
operating expenses increased by $7.4 million, $2.1 million, and $4.9 million for
retail, multifamily, and office divisions, respectively, during 1997 when
compared to 1996. The increase in divisional property operating expenses was
primarily attributable to the acquisition, development, and expansion of 20
retail properties, 19 multifamily properties, and 6 office properties during
1997 and 1996. The remaining change primarily relates to the resolution of prior
year reserves for certain tax contingencies, increases in operating expenses at
existing properties, and overall increases in corporate overhead and personnel
costs associated with the Company's continued growth.
Other Income and Expenses - Interest expense increased by $15.9 million, or
64.7%, during 1997 when compared to 1996. The increase in interest expense is
primarily attributable to the assumption of $75 million of debt, the issuance of
$175 million in Medium-Term Notes, and the increased usage of the Company's Line
of Credit in conjunction with the financing of acquisitions and developments.
LIQUIDITY AND CAPITAL RESOURCES
During 1998, the Company invested $358.1 million, net of disposition, in the
acquisition and development of properties. This acquisition and development
activity increased the Company's multifamily, retail, and office property
holdings. The Company financed the growth through proceeds from public offerings
of equity and debt totaling $315 million during 1998, advances on its bank line
of credit, the issuance of limited partnership units in CRLP, the proceeds from
joint ventures, and cash from operations. The Company also used these sources of
funds to repay $29.5 million on five mortgage loans.
Acquisition and Development Activities
Multifamily Properties - During 1998, the Company added 1,026 apartment units
through the acquisition of four multifamily communities at an aggregate cost of
$48.2 million. The Company also completed development of 596 apartment units in
seven multifamily communities during 1998 and acquired land on which it intends
to develop additional multifamily communities during 1999. The aggregate
investment in the multifamily developments during 1998 was $90.4 million. As of
December 31, 1998, the Company has 2,426 apartment units in 12 multifamily
communities under development or expansion. Management anticipates that the 12
multifamily projects will be completed during 1999 through 2001. Management
estimates that it will invest an additional $115 million to complete these
multifamily communities.
Retail Properties - During 1998, the Company added 2.9 million square feet of
retail shopping space (including 1.5 million square feet in two joint ventures)
through the acquisition of a community shopping center, an enclosed mall and
investment in two joint ventures at a net cost of $117.5 million. In addition,
the company began the development of a community shopping center in Birmingham,
Alabama. The aggregate investment in the retail development during 1998 was $8.8
million. Management anticipates that it will invest an additional $25.7 million
to complete the retail development.
Office Properties - During 1998, the Company increased its office portfolio by
827,000 square feet with the acquisition of five office properties at an
aggregate cost of $87.9 million. In addition, the Company began development on
two office properties. The aggregate investment in the office developments
during 1998 was $5.3 million. Management estimates that it will invest an
additional $24.3 million to complete these properties.
Joint Ventures
During the fourth quarter of 1998, the Company entered into two joint ventures.
On December 9, 1998, Colonial and CBL & Associates Properties, Inc. formed a
joint venture to acquire Parkway City Mall in Huntsville, Alabama for $11.4
million. In addition to the purchase of the property, the joint venture will
redevelop the mall, with all related costs being shared equally by both venture
partners. At December 31, 1998, Colonial had invested approximately $5.7 million
in the joint venture and had an ending net investment balance of $5.9 million.
On December 29, 1998, Colonial and Prudential Real Estate Investors through its
Property Investment Separate Account Fund (Prudential) entered into a joint
venture to own Orlando Fashion Square. In connection with the formation of the
joint venture, Prudential acquired a 50% interest in Orlando Fashion Square from
Colonial for $52 million which approximated both book value and fair value of
the recently acquired property. Subsequent to formation, the joint venture
leveraged the property with a $65 million nonrecourse note and the proceeds from
the issuance of the note were distributed equally to the joint venture partners.
The Company's investment in the joint venture at December 31, 1998 was $20.2
million. Colonial used the proceeds from the Prudential joint venture to fund
acquisition and development activities. Both joint ventures have been accounted
for using the equity method.
<TABLE>
Common Share Offerings
<CAPTION>
(in thousands)
Number of Price Per Gross Offering Net
Date Common Shares Share Proceeds Costs Proceeds
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
February 375,540 $ 30.00 $ 11,266 $ 627 $ 10,639
March 806,452 $ 31.00 $ 25,000 $ 1,389 $ 23,611
March 381,046 $ 31.00 $ 11,812 $ 656 $ 11,156
April 3,046,400 $ 30.13 $ 91,773 $ 4,973 $ 86,800
</TABLE>
<TABLE>
Debt Offering
<CAPTION>
Gross
Type of Proceeds
Date Note Maturity Rate (in thousands)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
July Senior July 1, 2007 7.00% $ 175,000
</TABLE>
Financing Activities
The Company funded a large portion of its acquisitions and developments through
the issuance of common shares and debt securities. During 1998, the Company
completed the following equity and debt transactions:
On July 10, 1998, the Company increased the borrowing capacity under its
unsecured line of credit from $200 million to $250 million. The credit facility,
which is used by the Company primarily to finance additional property
investments, bears interest at a rate ranging between 80 and 135 basis points
above LIBOR and is renewable in July 2000. The line of credit agreement includes
a competitive bid feature that will allow the Company to convert up to $125
million under the line of credit to a fixed rate, for a fixed term not to exceed
90 days. As of December 31, 1998, the balance outstanding on the Company's line
of credit was $174.5 million.
At December 31, 1998, the Company's total outstanding debt balance was $909.3
million. The outstanding balance includes fixed-rate debt of $681.2 million, or
74.9%, and floating-rate debt of $228.1 million, or 25.1%. The Company has
obtained interest rate protection for $50.0 million of the floating-rate debt.
The cap agreement limits the debt to an interest rate of 8.00% through May 2,
2000. The Company's total market capitalization as of December 31, 1998 was $2.0
billion and its ratio of debt to total market capitalization was 45.1%. Certain
loan agreements of the Company contain restrictive covenants which, among other
things, require maintenance of various financial ratios. At December 31, 1998,
the Company was in compliance with these covenants.
The Company has only limited involvement with derivative financial instruments
and does not use them for trading purposes. Interest rate cap agreements and
interest rate swaps are used to reduce the potential impact of increases in
interest rates on variable-rate debt. Treasury lock agreements are used by the
Company's subsidiary, CRLP, to lock in interest rates in connection with public
debt offerings. Colonial has entered into an interest rate cap agreement which
limits debt of $50 million to an interest rate of 8.00% through May 2, 2000.
Subsequent to year-end, the Company entered into two interest rate swap
agreements. On January 4, 1999, Colonial entered into an interest rate swap for
$50 million of its line of credit at 4.97% plus 80 to 135 basis points and on
January 15, 1999, Colonial entered into an interest rate swap for $52 million of
tax exempt bonds at a rate of 3.23%. Both of these interest rate swap agreements
have one-year terms and any payments made or received under the agreements are
recognized as adjustments to interest expense as incurred. Colonial is exposed
to credit losses in the event of nonperformance by the counterparties to its
interest rate cap and nonderivative financial assets but has no
off-balance-sheet credit risk of accounting loss. The Company anticipates,
however, that counterparties will be able to fully satisfy their obligations
under the contracts. Colonial does not obtain collateral or other security to
support financial instruments subject to credit risk but monitors the credit
standing of counterparties.
OUTLOOK
Management intends to maintain the Company's strength through continued
diversification, while pursuing acquisitions and developments that meet
Colonial's criteria for property quality, market strength, and investment
return. Management will continue to use its line of credit to provide short-term
financing for acquisition and development activities and plans to continue to
replace significant borrowings under the bank line of credit with funds
generated from the sale of additional equity securities and permanent financing,
as market conditions permit. Management believes that these potential sources of
funds, along with the possibility of issuing limited partnership units of CRLP
in exchange for properties, will provide the Company with the means to finance
additional acquisitions and development.
In addition to the issuance of equity and debt, management is investigating
alternate financing methods and sources to raise future capital. Private
placements, joint ventures, and non-traditional equity and debt offerings are
some of the alternatives the Company is contemplating. Colonial continues to
work diligently to improve its credit rating, in order to reduce its cost of
raising future capital.
Management anticipates that its net cash provided by operations and its existing
cash balances will provide the necessary funds on a short- and long-term basis
to cover its operating expenses, interest expense on outstanding indebtedness,
recurring capital expenditures, and dividends to shareholders in accordance with
Internal Revenue Code requirements applicable to real estate investment trusts.
YEAR 2000 ISSUE
Overview of Y2K Problem
The Year 2000 or "Y2K" problem refers to the inability of many existing computer
programs having time-sensitive software to recognize a date using "00" as the
year 2000. Instead, the computer programs interpret such data as the year 1900.
This failure to accurately recognize the year 2000 and other key dates could
result in a variety of problems ranging from data miscalculations to the failure
of entire systems. In an attempt to eliminate or minimize this potential risk,
the Company has initiated an effort to identify, understand, and address the
myriad of issues associated with the Y2K problem. The Company has identified two
main areas where potential Y2K problems exist: (a) Property Management Systems
and; (b) Information Systems.
Phase One - Assessing the Company's Y2K Readiness
As a result of potential risks posed by Y2K problems on the Company's
operations, in the early months of 1998, the Company formed a Year 2000
Committee to oversee, manage, and implement a Year 2000 Compliance Program (the
"Program"). The Committee is comprised of representatives from senior management
and various departments and advisors at the home and regional offices, including
the telecommunications, information systems, and office services departments.
Because of the wide-ranging implications of the Y2K problem, management decided
to carry out the Program in multiple phases over the remainder of 1998 and 1999.
Many of the phases of the Program are being carried out simultaneously.
The initial step in assessing the Company's Y2K readiness consisted of
identifying systems that are date sensitive and, accordingly, could pose
potential Y2K problems. The process included an examination of information
technology and non-information technology systems at the Company's home and
regional offices and at the Company's properties. The initial step of
identifying systems has been completed by the Company's information services
department and building services department through a combination of physical
inspections and informational interviews with Company employees.
Having identified systems that could have a potential Y2K problem, the Company
is attempting to determine which of the systems actually have a Y2K problem.
Much of the required information is within the exclusive control of the
Company's vendors and manufacturers, who are being contacted through standard
form letters and telephone calls requesting such information. In the case of
property management systems, a database was compiled for the types of equipment,
names of manufacturers and model numbers. The following is a summary of the
Phase One results obtained to date.
Property Management Systems
The Company has identified six categories of property management systems in
which it has the most exposure to potential Y2K problems. These categories
include: o Building automation (e.g., energy management, HVAC) o Security card
access o Fire and life safety o Elevator o Garage revenue control o Office
equipment
In April 1998, the Company began gathering data from vendors to catalog the
equipment in all of its buildings. To date, approximately 75% of the information
requested has been received. The Company does not expect to receive 100% of the
information requested due to a number of nonresponsive vendors or unavailable
information.
All of the responses have confirmed that their systems would not be affected in
an adverse way due to the Y2K date change. The Y2K steering committee is in the
process of evaluating if any of these property management systems are mission
critical in nature and would have a negative impact on the Company's ability to
conduct business if a failure occurs. At this time the Company does not believe
these systems are mission critical. Regardless, efforts continue to obtain
additional evidence from vendors concerning these systems such as processes
followed, test scripts, and actual findings. Once received, the Company will
further evaluate these systems and will determine if it will be necessary to
confirm the information received from the vendors. Due to the positive responses
received the Company does not feel that this will be necessary.
Information Systems
Information systems fall into four general categories: Accounting and property
management; network operating systems; desktop software; and secondary systems.
Accounting and Property Management - The general ledger and property management
software systems are not currently compliant. However, new versions have been
written and are stated to be Y2K compliant by the supplying vendor. The Company
is currently in the process of testing the new versions and the expected
schedule for confirming compliance is as follows:
<PAGE>
o System testing - First Quarter 1999 o Test software upgrades - First and
Second Quarter 1999 o Begin installation of upgrades - Second Quarter 1999 o
Full Y2K Compliance - Second and Third Quarter 1999
Network Operating Systems - Management believes that the network operating
servers are currently Y2K compliant subject to certain possible exceptions.
Microsoft Corporation recently announced that Windows NT 4.0, which the Company
uses, is not Y2K compliant with service pak level III. However, Microsoft has
stated that service pak level IV will need to be loaded to become completely Y2K
compliant. Upgrades of Company network operating systems are expected to be
installed in the first and second quarters of 1999, bringing the network
operating servers into full compliance. Management believes that testing of this
new software will not be necessary, as it has already been proven in the
industry to be Y2K compliant.
Desktop Software - Management has reviewed all desktop systems and software
applications, identified those that are not in compliance and compiled a list of
necessary upgrades. Those upgrades have been completed for 95% of the current
systems and are now Y2K compliant. The remaining upgrades for 5% of the systems
are anticipated to be completed by the end of the first quarter. As part of the
continuing efforts to be Y2K compliant, every new system is tested upon
installation.
The status of desktop compliance is as follows:
o Systems (hardware and software) testing - Complete
o Installation of updated software that also provides Y2K compliance - November
1998 o Complete installation/full compliance - First Quarter 1999
Secondary Information Systems - "Secondary" information systems include, but are
not limited to: payroll; fixed-asset system; and forecasting modeling software,
which provide projections on property returns and other items. Letters have been
received confirming Y2K compliance from the vendors of the Company's secondary
systems. The number of computers related to these secondary systems are nominal
and testing is expected to be completed by the end of the second quarter of
1999.
Telecommunications Systems - In general, management believes that the internal
telephone systems are not date sensitive and should not be materially affected
by Y2K problems. A letter has been received from the telephone system vendor
confirming Y2K readiness of the voice mail system, telephone system and
telephone hardware. Testing will be completed by the end of the second quarter
of 1999.
Phase Two - Determining the Cost of Achieving Y2K Readiness and Implementing
the Y2K Action Plan
During the last two years, costs for new technology to ensure Y2K readiness,
including computers, telephone systems, and software, has been approximately $1
million and an additional $400,000 is estimated to be spent on property
management software upgrades and testing from a third-party consultant on
current secondary systems. However, the costs of the project and the completion
date are based on management's best estimates, which are based on numerous
assumptions of future events.
Phase Three - Assessing the Risks to the Company of Noncompliance
Management does not believe that the impact of Y2K will have a material adverse
effect on the Company's financial condition, results of operations and cash
flows. Such belief is based on management's analysis of the risks to the Company
related to the Company's own potential Y2K problems discussed above and the
assessment of the Y2K problems of vendors, suppliers, and customers.
Property Management Systems - Management believes that the Y2K risks to the
Company's financial condition and operations associated with a failure of
building management systems is immaterial due to the fact that each of the
Company's properties have, for the most part, separate building management
systems. In addition, based upon the investigation results received to date,
management believes there is sufficient time to correct those system problems
within the Company's control before the Year 2000.
In the event a failure of essential property management systems occurs at one or
more of the Company's buildings, whether due to a failure of a Company system or
an interruption of utilities, management believes that the individual tenant
leases will protect the Company from claims of constructive eviction or other
remedies that could result in a termination of lease rights. It is also
management's belief that most of the leases eliminate, limit or qualify the
rights of a tenant to receive an abatement under such circumstances. Although
there is always a risk of claims being brought on a noncontractual basis (e.g.,
in tort), it is management's belief that the Company's efforts to identify and
solve Y2K problems will minimize such risk. The Company has also attempted to
allocate the risk of noncompliance to the vendors and manufacturers of the
property management and information systems by establishing standard riders and
addenda to be attached to new contracts for systems using time sensitive data.
Information Systems - Because the Company's major source of income is rental
payments under long-term leases, the failure of key information systems is not
expected to have a material adverse effect on the Company's financial condition,
results of operations, or cash flows for its existing properties. Even if
problems with the information systems are experienced, the payment of rent under
leases would not be excused. However, the ability of the Company to produce
complete and accurate financial information in a timely fashion could be
impaired. This situation would affect the Company's anticipated development
projects or acquisitions of new properties. Management expects to correct any
information system problems within the Company's control before the Year 2000,
thereby minimizing or avoiding the increased cost of correcting problems after
the fact.
Our Vendors - The success of the Company's business is not closely tied to the
operations of any one manufacturer, vendor or supplier. Accordingly, if any
manufacturers, vendors or suppliers cease to conduct business due to Y2K related
problems, management expects to be able to contract with alternate providers
without experiencing any material adverse effect on the Company's financial
condition, results of operations, or cash flows.
Our Customers - Because of a broad customer/tenant base, the Company's success
is not closely tied to the success of any particular tenant. Accordingly,
management believes that there should not be a material adverse effect on the
Company's financial condition, results of operations, or cash flows if any
tenant ceases to conduct business due to Y2K related problems. The Company has
requested that major tenants provide periodic updates as to their Y2K readiness.
Phase Four - Developing Contingency Plans
The Company currently does not have contingency plans in place; however,
management expects to develop and implement contingency plans by the end of the
second quarter of 1999. The Company's contingency plans will be structured to
address both restoration of systems and their components and overall business
operating risk. These plans are intended to mitigate both internal risks, as
well as potential risks in the supply chain of the Company's suppliers and
customers.
RECENTLY ISSUED ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting for
Derivative Instruments and Hedging Activities, addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and hedging activities. Under SFAS 133, the Company will be
required to account for derivative financial instruments, if any, at their fair
market value, and make certain required disclosures. The Company is required to
adopt SFAS 133 for periods beginning January 1, 2000.
INFLATION
Substantially all of the leases at the retail properties provide for the
pass-through to tenants of certain operating costs, including real estate taxes,
common area maintenance expenses, and insurance. Leases at the multifamily
properties generally provide for an initial term of six months to one year and
allow for rent adjustments at the time of renewal. Leases at the office
properties typically provide for rent adjustments and the pass-through of
certain operating expenses during the term of the lease. All of these provisions
permit the Company to increase rental rates or other charges to tenants in
response to rising prices and, therefore serve to minimize the Company's
exposure to the adverse effects of inflation.
<PAGE>
FUNDS FROM OPERATIONS
The Company considers Funds From Operations ("FFO") a widely accepted and
appropriate measure of performance for an equity REIT that provides a relevant
basis for comparison among REITs. FFO, as defined by the National Association of
Real Estate Investment Trusts (NAREIT), means income (loss) before minority
interest (determined in accordance with GAAP), excluding gains (losses) from
debt restructuring and sales of property, plus real estate depreciation and
after adjustments for unconsolidated partnerships and joint ventures. FFO is
presented to assist investors in analyzing the performance of the Company. The
Company's method of calculating FFO may be different from methods used by other
REITs and, accordingly, may not be comparable to such other REITs. FFO (i) does
not represent cash flows from operations as defined by GAAP, (ii) is not
indicative of cash available to fund all cash flow needs and liquidity,
including its ability to make distributions, and (iii) should not be considered
as an alternative to net income (as determined in accordance with GAAP) for
purposes of evaluating the Company's operating performance. The Company's FFO
for the years ended December 31, 1998, 1997 and 1996 was calculated as follows:
<TABLE>
<CAPTION>
(in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 36,030 $ 30,277 $ 27,506
Adjustments:
Minority interest in CRLP 19,719 14,360 13,231
Depreciation (1) 47,189 32,288 22,621
Sales of property (1) 21 (3,082) (870)
Debt prepayment penalties 401 3,650 511
Write-off of development costs
charged to net income 386 - -
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Funds from operations $ 103,746 $ 77,493 $ 62,999
- --------------------------------------------------------------------------------
(1) Includes pro-rata share of adjustments for partially owned entities.
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
December 31, 1998 and 1997
<CAPTION>
(Amounts in thousands) 1998 1997
- -----------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Land, buildings, and equipment, net ............ $ 1,566,841 $ 1,268,432
Undeveloped land and construction in progress .. 128,336 98,555
Cash and equivalents ........................... 4,583 4,531
Restricted cash ................................ 2,897 2,665
Accounts receivable, net ....................... 9,428 7,301
Prepaid expenses ............................... 3,224 3,164
Deferred debt and lease costs .................. 9,644 6,901
Investment in partially owned entities ......... 25,181 685
Other assets ................................... 5,315 4,844
----------- -----------
Total assets ............................ $ 1,755,449 $ 1,397,078
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable .................... $ 909,322 $ 702,044
Accounts payable ............................... 8,614 12,706
Accounts payable to affiliates ................. 5,540 2,320
Accrued interest ............................... 12,051 6,526
Accrued expenses ............................... 3,456 2,814
Tenant deposits ................................ 4,272 3,715
Unearned rent .................................. 2,800 2,253
----------- -----------
Total liabilities ....................... 946,055 732,378
----------- -----------
Minority interest .............................. 198,947 174,281
----------- -----------
Preferred shares of beneficial interest, $.01 par value, 10,000,000 shares
authorized; 5,000,000 shares issued and outstanding at December 31, 1998
and 1997,
respectively . 50 50
Common shares of beneficial interest, $.01 par value, 65,000,000 shares
authorized; 26,147,054 and 21,152,754 shares issued and outstanding at
December 31, 1998 and 1997, respectively 261 212
Additional paid-in capital ....................... 662,895 524,605
Cumulative earnings .............................. 129,684 82,716
Cumulative distributions ......................... (182,135) (116,768)
Deferred compensation on restricted shares ...... (308) (396)
----------- -----------
Total shareholders' equity ............... 610,447 490,419
----------- -----------
$ 1,755,449 $ 1,397,078
----------- -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
<CAPTION>
For the Years Ended December 31, 1998, 1997, 1996
1998 1997 1996
--------------------------------
Revenue:
<S> <C> <C> <C>
Base rent ...................................... $ 206,234 $ 154,063 $ 115,174
Base rent from affiliates ...................... 1,027 879 758
Percentage rent ................................ 4,002 2,161 1,841
Tenant recoveries .............................. 31,573 17,349 10,717
Other .......................................... 14,531 9,674 6,391
--------------------------------------------------------------------------------------
Total revenue ............................... 257,367 184,126 134,881
-----------------------------------------------------------------------------------
Property operating expenses:
General operating expenses ..................... 20,590 12,603 9,530
Salaries and benefits .......................... 12,600 10,283 8,606
Repairs and maintenance ........................ 24,795 18,669 13,073
Taxes, licenses, and insurance ................. 22,312 15,578 11,538
General and administrative ......................... 7,675 6,448 4,071
Depreciation ....................................... 46,841 31,956 22,025
Amortization ....................................... 1,806 1,322 1,509
- ------------------------------------------------------------------------------------------
Total operating expenses .................... 136,619 96,859 70,352
- ------------------------------------------------------------------------------------------
Income from operations ...................... 120,748 87,267 64,529
- ------------------------------------------------------------------------------------------
Other income (expense):
Interest expense ............................... (52,063) (40,496) (24,584)
Income (loss) from partially owned entities .... (1,578) 620 835
Gains (losses) from sales of property .......... (19) 2,567 468
- ------------------------------------------------------------------------------------------
Total other expense ......................... (53,660) (37,309) (23,281)
- ------------------------------------------------------------------------------------------
Income before extraordinary items and
minority interest ............................ 67,088 49,958 41,248
Extraordinary loss from early extinguishment of debt (401) (3,650) (511)
Income before minority interest .............. 66,687 46,308 40,737
- ------------------------------------------------------------------------------------------
Minority interest in income of CRLP ................. 19,719 14,360 13,231
- ------------------------------------------------------------------------------------------
Net income .................................. 46,968 31,948 27,506
- ------------------------------------------------------------------------------------------
Dividends to preferred shareholders ................. (10,938) (1,671) -0-
- ------------------------------------------------------------------------------------------
Net income available to common shareholders .. $ 36,030 $ 30,277 $ 27,506
- ------------------------------------------------------------------------------------------
Basic and Diluted net income per share after consideration of minority
interest:
Income before extraordinary item ............. $ 1.47 $ 1.66 $ 1.60
Extraordinary loss from early extinguishment
of debt .................... (0.01) (0.13) (0.02)
Net income per common share .................. $ 1.46 $ 1.53 $ 1.58
- -------------------------------------------------------------------------------------------
Weighted average common shares outstanding .......... 24,641 19,808 17,378
- -------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in Thousands)
For the Years Ended December 31, 1998, 1997, 1996
<CAPTION>
Preferred Shares of Common Shares Additional Deferred Total
Beneficial Interest Beneficial Interest Paid-In Cumulative Cumulative Compensation Shareholders'
Shares Par Value Shares Par Value Capital Earnings Distributions Restricted Shares Equity
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 .................. 13,045 $ 131 $ 205,885 $ 23,262 $ (38,080) $ (303) $ 190,895
Distributions ($2.00 per share) ............ (35,307) (35,307)
Net income ................................. 27,506 27,506
Issuance of Restricted Common Shares of
Beneficial Interest ...................... 7 -0- 158 (158) -0-
Amortization of deferred compensation ...... 103 103
Public offering of common shares
of beneficial interest, net of offering
costs of $6,632 .......................... 4,600 46 106,597 106,643
Issuance of common shares of beneficial
interest through the Company's dividend
reinvestment plan .......................... 8 -0- 204 204
Adjustments to minority interest in Colonial
Realty Limited Partnership due to
issuance of common shares of beneficial
interest and limited partnership units .... (10,540) (10,540)
---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 ................... 17,660 177 302,304 50,768 (73,387) (358) 279,504
Distributions on common shares
($2.08 per share) ......................... (41,710) (41,710)
Distributions on preferred shares
($0.3342 per share) ..................... (1,671) (1,671)
Net income ................................ 31,948 31,948
Issuance of Restricted Common Shares of
Beneficial Interest ..................... 8 -0- 261 (261) -0-
Amortization of deferred compensation ........ 223 223
Public offering of preferred shares
of beneficial interest, net of offering
costs of $4,451 ........5,000 $ 50 120,499 120,549
Public offerings of common shares
of beneficial interest, net of offering
costs of $4,732 ...................... 3,366 34 97,640 97,674
Issuance of common shares of beneficial
interest through the Company's dividend
reinvestment plan ......................... 95 1 2,475 2,476
Issuance of common shares of beneficial
interest through options exercised ........ 24 -0- 570 570
Adjustments to minority interest in Colonial
Realty Limited Partnership due to
issuance of common shares of beneficial
interest and limited partnership units .... 856 856
--------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 .5,000 50 21,153 212 524,605 82,716 (116,768) (396) 490,419
Distributions on common shares ($2.20 per share) .. (54,429) (54,429)
Distributions on preferred shares ($2.19 per share) (10,938) (10,938)
Net income ........................................ 46,968 46,968
Issuance of Restricted Common Shares of
Beneficial Interest .................. 0 -0- 13 (13) -0-
Amortization of deferred compensation .............. 101 101
Public offerings of common shares
of beneficial interest, net of offering
costs of $4,973 ......................... 4,609 46 132,159 132,205
Issuance of common shares of beneficial
interest through the Company's dividend
reinvestment plan ....................... 370 3 9,284 9,287
Issuance of common shares of beneficial
interest through options exercised ....... 15 -0- 359 359
Adjustments to minority interest in Colonial
Realty Limited Partnership due to
issuance of common shares of beneficial
interest and limited partnership units ........... (3,525) (3,525)
---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 .5,000 $ 50 26,147 $ 261 $ 662,895 $129,684 $(182,135) $ (308) $ 610,447
====================================================================================================================================
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
<CAPTION>
For the Years Ended December 31, 1998, 1997, 1996
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Net income .................................................. $ 46,968 $ 31,948 $ 27,506
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization .............................. 48,647 33,278 23,534
Loss (income) from subsidiaries ............................ 1,578 (620) (835)
Minority interest in CRLP .................................. 19,719 14,360 13,231
Losses (gains) from sales of property ...................... 19 (2,567) (468)
Other, net ................................................. 1,105 4,204 1,026
Decrease (increase) in:
Restricted cash ...................................... (232) (215) (371)
Accounts receivable .................................. (4,437) (2,743) (3,253)
Prepaid expenses ..................................... (57) 867 (224)
Other assets ......................................... 749 565 (1,298)
Increase (decrease) in:
Accounts payable ..................................... (872) (2,646) 81
Accrued interest ..................................... 5,525 1,061 4,508
Accrued expenses and other ........................... (3,184) (5,427) (564)
------ ------ ----
Net cash provided by operating activities ............ 115,528 72,065 62,873
------- ------ ------
Cash flows from investing activities:
Acquisition of properties .................................... (312,585) (301,931) (125,927)
Development expenditures ..................................... (62,075) (37,589) (22,168)
Development expenditures paid to an affiliate ................ (40,347) (46,481) (70,415)
Tenant improvements .......................................... (4,140) (2,792) (1,029)
Capital expenditures ......................................... (24,967) (12,325) (6,824)
Proceeds from sales of property, net of selling costs ........ 52,238 54,092 1,254
Distributions from partially owned entities .................. 32,379 788 1,047
Capital contributions to partially owned entities ............ (5,850) (141) (14)
------ ---- ---
Net cash used in investing activities ............ (365,347) (346,379) (224,076)
-------- -------- --------
Cash flows from financing activities:
Proceeds from common stock issuances, net of expenses paid ... 132,205 97,674 106,643
Proceeds from preferred stock issuance, net of expenses paid . -0- 120,549 -0-
Principal reductions of debt .................................. (31,725) (122,880) (45,798)
Proceeds from additional borrowings .......................... 173,976 175,246 179,540
Net change in revolving credit balances ...................... 57,403 68,271 (21,877)
Dividends paid to common and preferred shareholders .......... (65,367) (43,381) (35,306)
Distributions to minority partners ........................... (22,133) (17,956) (16,523)
Payment of mortgage financing cost ........................... (3,734) (1,417) (3,416)
Proceeds from dividend reinvestments ......................... 9,646 3,048 205
Other, net ................................................... (401) (3,650) (511)
---- ------ ----
Net cash provided by financing activities ............ 249,870 275,504 162,957
------- ------- -------
Increase in cash and equivalents ..................... 51 1,190 1,754
Cash and equivalents, beginning of period ...................... 4,532 3,342 1,588
----- ----- -----
Cash and equivalents, end of period ............................ $ 4,583 $ 4,532 $ 3,342
--------- --------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest ................. $ 46,538 $ 39,435 $ 20,077
--------- --------- ---------
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
Notes to consolidated financial statements
1. Organization and Basis of Presentation
Organization - Colonial Properties Trust (Colonial or the Company), a real
estate investment trust (REIT), was originally formed as a Maryland real estate
investment trust on July 9, 1993 and reorganized as an Alabama real estate
investment trust under a new Alabama REIT statute on August 21, 1995. The
Company is engaged in the ownership, development, management, and leasing of
multifamily housing communities, retail malls and centers, and office buildings.
The Company also owns certain parcels of land.
Federal Income Tax Status - The Company, which is considered a corporation for
federal income tax purposes, qualifies as a REIT for federal income tax purposes
and generally will not be subject to federal income tax to the extent it
distributes its REIT taxable income to its shareholders. REITs are subject to a
number of organizational and operational requirements. If the Company fails to
qualify as a REIT in any taxable year, the Company will be subject to federal
income tax on its taxable income at regular corporate rates. The Company may be
subject to certain state and local taxes on its income and property. No
provision for income taxes is included in the financial statements.
Distributions to shareholders are partially taxable to shareholders as ordinary
income and partially nontaxable to shareholders as return of capital. During
1996, 1997, and 1998 the Company's distributions had the following
characteristics: <TABLE> <CAPTION>
Distribution Ordinary Return of
Per Share Income Capital
----------------------------------------
<S> <C> <C> <C>
1996 $ 2.00 75.32% 24.68%
1997 $ 2.08 74.02% 25.98%
1998 $ 2.20 81.37% 18.63%
</TABLE>
Principles of Consolidation - The Company's consolidated financial statements
include the Company, Colonial Realty Limited Partnership (CRLP) (in which the
Company held 71.12%, 67.94%, and 67.68% general and limited partner interests at
December 31, 1998, 1997, and 1996, respectively), and Colonial Properties
Services Limited Partnership (in which CRLP holds 99% general and limited
partner interests). The minority limited partner interests in CRLP and Colonial
Properties Services Limited Partnership are included as minority interest in the
Company's consolidated financial statements.
Investments in Partially Owned Entities - Partnerships and corporations in which
the Company owns a 50% or less interest and does not control are reflected in
the consolidated financial statements as investments accounted for under the
equity method. Under this method the investment is carried at cost plus or minus
equity in undistributed earnings or losses since the date of acquisition.
Also included in investments in partnerships and partially owned entities is the
Company's 99% nonvoting, equity interest in Colonial Properties Services, Inc.
(CPSI). Colonial holds a 1% voting interest in CPSI. The Company accounts for
its 99% equity interest on the equity method. CPSI provides property management
services for third-party owned properties and administrative services to the
Company. Colonial generally reimburses CPSI for payroll and other costs incurred
in providing services to the Company.
2. Summary of Significant Accounting Policies
Recently Issued Accounting Standard - Statement of Financial Accounting
Standards No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging
Activities, addresses the accounting for derivative instruments, including
certain derivative instruments embedded in other contracts, and hedging
activity. Under SFAS 133, the Company will be required to account for derivative
financial instruments, if any, at their fair market value, and make certain
required disclosures. The Company is required to adopt SFAS 133 for periods
beginning January 1, 2000.
Land, Buildings, and Equipment - Land, buildings, and equipment is stated at the
lower of cost, less accumulated depreciation, or net realizable value. Where an
impairment of a property's value is determined to be other than temporary, an
allowance for the estimated potential loss is established to record the property
at its net realizable value. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets, which range from seven to
40 years. Repairs and maintenance are charged to expense as incurred.
Replacements and improvements are capitalized and depreciated over the estimated
remaining useful lives of the assets. When items of land, buildings, or
equipment are sold or retired, the related cost and accumulated depreciation are
removed from the accounts and any gain or loss is included in the results of
operations.
Undeveloped Land and Construction in Progress - Undeveloped land and
construction in progress is stated at the lower of cost or net realizable value.
The Company capitalizes all costs associated with land development including
construction period interest and property taxes.
Capitalization of Interest - The Company capitalizes interest during periods in
which property is undergoing development activities necessary to prepare the
asset for its intended use.
Cash and Equivalents - The Company includes highly liquid marketable securities
and debt instruments purchased with a maturity of three months or less in cash
equivalents.
Restricted Cash - Cash which is legally restricted as to use consists primarily
of tenant deposits.
Deferred Debt and Lease Costs - Amortization of debt costs is recorded using the
straight-line method, which approximates the effective interest method, over the
terms of the related debt. Leasing commissions and fees are amortized using the
straight-line method over the terms of the related leases.
Derivatives - The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Interest rate cap
agreements and interest rate swaps are used to reduce the potential impact of
increases in interest rates on variable-rate debt. Premiums paid for purchased
interest rate cap agreements are amortized to expense over the terms of the
caps. Unamortized premiums are included in other assets in the balance sheets.
Amounts receivable under cap agreements are accrued as a reduction of interest
expense. Payments under interest rate swap agreements are recognized as
adjustments to interest expense as incurred. Treasury lock agreements are used
by the Company's subsidiary, CRLP, to set interest rates in anticipation of
public debt offerings. Any gains or losses related to treasury locks are
included in deferred debt and lease cost on the balance sheet and amortized over
the life of the related debt to the extent that such treasury locks are
utilized. All unutilized treasury locks are expensed when their future utility
expires. All treasury locks were utilized during 1998 and 1997.
Deferred Compensation on Restricted Shares - Deferred compensation on restricted
shares relates to the issuance of restricted shares to employees of the Company.
Deferred compensation is amortized to compensation expense based on the passage
of time and certain performance criteria.
Revenue Recognition - Rental income and management fees are recognized as
earned. Anticipated losses, if any, are recognized when such amounts become
known.
Net Income Per Share - Basic net income per share is calculated by dividing the
net income available to common shareholders by the weighted average numbers of
common shares outstanding during the periods. Diluted net income per share is
calculated by dividing the net income available to common shareholders by the
weighted average numbers of common shares outstanding during the periods,
adjusted for the assumed conversion of all potentially dilutive share options.
Use of Estimates - 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
the reported amounts of revenues and expenses. Actual results could differ from
those estimates.
Segment Reporting - In 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 (SFAS 131), Disclosure about Segments of an
Enterprise and Related Information. Reportable segments are identified based
upon management's approach for making operating decisions and assessing
performance of the Company. The adoption of SFAS 131 did not affect results of
operations or financial position but did require the disclosure of segment
information (see Note 7).
Software Development - The Company capitalizes certain internally developed
software costs. Costs capitalized in connection with internal software
development are amortized using the straight-line method over the estimated
useful life of the software.
Reclassifications - Certain immaterial reclassifications have been made to the
1996 and 1997 financial statements in order to conform them to the 1998
financial statement presentation.
<PAGE>
3. Property Acquisitions and Dispositions
The Company acquired 12 properties and invested in an additional joint venture
during 1998, 25 properties during 1997, and 11 properties during 1996 at
aggregate costs of $348.6 million, $430.6 million, and $173.7 million,
respectively. The Company funded these acquisitions with cash proceeds from its
public offerings of equity (see Note 10) and debt (see Note 8), advances on bank
lines of credit, the issuance of limited partnership units in CRLP, the proceeds
received from the formation of joint ventures (see Note 6), and cash from
operations.
Effective
Acquisition
Location Date
- --------------------------------------------------------------------------------
Retail Properties:
Briarcliffe Mall .................. Myrtle Beach, SC July 1, 1996
Colonial Promenade Wekiva ......... Orlando, FL October 1, 1996
Colonial Promenade Bardmoor ....... St. Petersburg, FL October 1, 1996
Colonial Promenade
Hunter's Creek .............. Orlando, FL October 1, 1996
Colonial Shoppes Inverness ........ Birmingham, AL March 24, 1997
Beechwood Shopping Center ......... Athens, GA March 27, 1997
Brookwood Village ................. Birmingham, AL May 13, 1997
Lakewood Plaza .................... Jacksonville, FL October 1, 1997
Glynn Place Mall .................. Brunswick, GA November 1, 1997
Lakeshore Mall .................... Gainesville, GA November 1, 1997
Valdosta Mall ..................... Valdosta, GA November 1, 1997
Holly Hill Mall ................... Burlington, NC November 1, 1997
Yadkin Town Center ................ Yadkinville, NC November 1, 1997
Mayberry Mall ..................... Mount Airy, NC November 1, 1997
Quaker Village .................... Greensboro, NC November 1, 1997
Stanly Plaza ...................... Locust, NC November 1, 1997
Rivermont Plaza ................... Chattanooga, TN November 1, 1997
Staunton Mall ..................... Staunton, VA November 1, 1997
Abingdon Village .................. Abingdon, VA November 1, 1997
Village at Roswell Summit ......... Atlanta, GA December 31, 1997
Orlando Fashion Square ............ Orlando, FL May 29, 1998
Shoppes at Mansell ................ Atlanta, GA July 1, 1998
Parkway City Mall ................. Huntsville, AL December 9, 1998
Bel Air Village ................... Mobile, AL December 29, 1998
Multifamily Properties:
Colonial Village at Ashford Place . Mobile, AL April 1, 1996
Colonial Village at Hillcrest ..... Mobile, AL April 1, 1996
Colonial Grand at Spring Creek .... Macon, GA April 1, 1996
Colonial Grand at Galleria Woods .. Birmingham, AL April 15, 1996
Colonial Grand at Mountain Brook .. Birmingham, AL May 10, 1996
Colonial Village at Cahaba Heights Birmingham, AL May 10, 1996
Colonial Grand at Barrington ...... Macon, GA September 13, 1996
Colonial Village at Trussville .... Birmingham, AL April 1, 1997
Colonial Village at Timothy Woods . Athens, GA July 1, 1997
Colonial Grand at Oakleigh ........ Pensacola, FL July 1, 1997
Colonial Grand at Natchez Trace ... Jackson, MS August 1, 1997
Colonial Village at Caledon Wood .. Greenville, SC October 1, 1997
Colonial Village at Ashley Plantation Bluffton, SC May 1, 1998
Colonial Village at Haverhill ..... San Antonio, TX July 1, 1998
Colonial Village at Walton Way .... Augusta, GA July 1, 1998
Colonial Village at River Hills I . Tampa, FL July 1, 1998
Office Properties:
Riverchase Center ................. Birmingham, AL January 1, 1997
Lakeside Office Park .............. Huntsville, AL May 23, 1997
Progress Center ................... Huntsville, AL June 24, 1997
Mansell Business Park ............. Atlanta, GA July 31, 1997
Perimeter Corporate Park .......... Huntsville, AL January 1, 1998
Independence Plaza ................ Birmingham, AL January 1, 1998
Shades Brook Building ............. Birmingham, AL July 1, 1998
Mansell Overlook 200 .............. Atlanta, GA July 1, 1998
Concourse Center .................. Tampa, FL July 1, 1998
<PAGE>
Results of operations of these properties, subsequent to their respective
acquisition dates, are included in the consolidated financial statements of the
Company. The cash paid to acquire these properties is included in the statements
of cash flows. The acquisitions during 1998, 1997, and 1996 are comprised of the
following: <TABLE> <CAPTION>
(in thousands) 1998 1997 1996
- -------------- ---- ---- ----
Assets purchased:
<S> <C> <C> <C>
Land, buildings, and equipment .... $ 348,564 $ 430,614 $ 173,277
Other assets ...................... -- 4 455
- --------------------------------------------------------------------------------
348,564 430,618 173,732
Notes and mortgages assumed ........... (7,509) (74,910) (40,444)
Other liabilities assumed ............. (5,070) (8,716) (1,774)
Issuance of limited partnership units of
Colonial Realty Limited
Partnership (23,400) (45,061) (5,587)
- --------------------------------------------------------------------------------
Cash paid .............................. $ 312,585 $ 301,931 $ 125,927
- --------------------------------------------------------------------------------
</TABLE>
During 1998, Colonial contributed Orlando Fashion Square into a joint venture
equally owned by Colonial and an unrelated party. Proceeds received from this
contribution were used to fund additional acquisitions and developments. The
Company accounts for its 50% interest in the joint venture as an equity
investment (see Note 6).
The Company's unaudited pro forma results of operations, assuming these
acquisitions and disposition had been effected by the Company prior to January
1, 1997, are as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31, ....... 1998 1997
---- ----
(in thousands)
<S> <C> <C>
Revenues ............................... $265,903 $250,713
- --------------------------------------------------------------
Income before minority interest ........ $ 70,884 $ 71,768
- --------------------------------------------------------------
Net income available to
common shareholders ...... $ 39,480 $ 40,109
- --------------------------------------------------------------
Net income per share -
basic and diluted ........ $ 1.51 $ 1.53
- --------------------------------------------------------------
</TABLE>
4. Land, Buildings, and Equipment
Land, buildings, and equipment consists of the following at December 31, 1998
and 1997:
<TABLE>
(in thousands) ......... 1998 1997
- -----------------------------------------------------
<S> <C> <C>
Buildings .............. $ 1,416,937 $ 1,140,504
Furniture and fixtures . 43,074 30,147
Equipment .............. 12,027 3,087
Land improvements ...... 35,580 27,343
Tenant improvements .... 18,733 15,273
- -----------------------------------------------------
1,526,351 1,216,354
Accumulated depreciation (169,522) (124,254)
- -----------------------------------------------------
1,356,829 1,092,100
Land ................... 210,012 176,332
- -----------------------------------------------------
$ 1,566,841 $ 1,268,432
=====================================================
</TABLE>
5. Undeveloped Land and Construction in Progress
During 1998, the Company completed the construction of five multifamily
development projects at a combined total cost of $77.0 million. The multifamily
development projects produced 1,260 new apartment units that were completed
during 1998 and 1997. The completed multifamily developments are as follows:
<TABLE>
<CAPTION>
Total Total
Units Cost
Completed Developments:
<S> <C> <C>
Colonial Village at River Hills II Tampa, FL 276 $14,186
Colonial Village at Inverness Birmingham, AL 84 6,631
Colonial Grand at Hunter's Creek Orlando, FL 496 33,426
Colonial Grand at Bayshore II Bradenton, FL 164 9,289
Colonial Grand at Wesleyan Macon, GA 240 13,503
- --------------------------------------------------------------------------------
1,260 $77,035
================================================================================
</TABLE>
The Company currently has 15 active expansion and development projects in
progress and various parcels of land available for expansion, construction, or
sale. During 1998, the Company completed construction on 596 apartment units
(including the remaining units completed in the projects mentioned above), and
the Company has an additional 2,978 apartment units in progress at December 31,
1998. Undeveloped land and construction in progress is comprised of the
following at December 31, 1998: <TABLE> <CAPTION>
Costs
Estimated Total Costs Capitalized
to Date
Completion(in thousands)(in thousands)
- -----------------------------------------------------------------------------------------------------
Multifamily Projects:
<S> <C> <C> <C> <C>
Colonial Grand at Inverness Lakes II (expansion) 132 1999 $ 8,900 $ 8,838
Colonial Village at Ashley Plantation (expansion) 214 1999 13,800 2,949
Colonial Grand at Edgewater II (expansion) 192 1999 12,600 12,487
Colonial Grand at Wesleyan II (expansion) 88 1999 6,200 5,945
Colonial Grand at Liberty Park 300 2000 26,218 2,924
Colonial Grand at Heather Glen 448 2000 31,234 9,800
Colonial Grand at Citrus Park 176 1999 12,300 9,482
Colonial Grand at Lakewood Ranch 288 1999 20,300 17,839
Colonial Grand at Cypress Crossing 250 1999 20,000 19,176
Colonial Grand at Madison 336 2000 23,000 4,690
Colonial Grand at Promenade 384 2000 27,878 4,320
Colonial Grand at Ridgeland 170 2000 12,400 1,454
- ----------------------------------------------------------------------------------------------
Total Multifamily Projects 2,978 214,830 99,904
- ----------------------------------------------------------------------------------------------
Retail Projects:
Colonial Promenade Trussville 386,000 2001 31,000 5,321
- ----------------------------------------------------------------------------------------------
Total Retail Projects 386,000 31,000 5,321
- ----------------------------------------------------------------------------------------------
Office Projects:
1800 International Park 149,457 1999 16,600 3,950
Colonial Center at Research Park 133,368 1999 13,000 1,373
- ----------------------------------------------------------------------------------------------
Total Office Projects 282,825 29,600 5,323
- ----------------------------------------------------------------------------------------------
Other Projects and Undeveloped Land 17,788
- ----------------------------------------------------------------------------------------------
$275,430 $128,336
==============================================================================================
</TABLE>
Interest capitalized on construction in progress during 1998, 1997, and 1996 was
$3.7 million, $4.1 million, and $3.7 million, respectively.
<PAGE>
6. Investment in Partially Owned Entities
Investment in partially owned entities at December 31, 1998 and 1997 consists of
the following:
<TABLE>
<CAPTION>
Percent
(in thousands) Owned 1998 1997
- -----------------------------------------------------------------------------
Office:
<S> <C> <C> <C>
600 Building Partnership, Birmingham, AL 33.34% $ (30) $ (8)
Anderson Block Properties Partnership,
Montgomery, AL 33.33% (24) (38)
- -----------------------------------------------------------------------------
(54) (46)
Retail:
Orlando Fashion Square, Orlando, FL 50.00% 20,241 --
Parkway Place LP, Huntsville, AL 50.00% 5,858 --
- -----------------------------------------------------------------------------
26,099 --
Other:
Colonial/Polar-BEK Management Company,
Birmingham, AL 50.00% 33 35
Colonial Properties Services, Inc.,
Birmingham, AL 99.00% (897) 696
- -----------------------------------------------------------------------------
(864) 731
- -----------------------------------------------------------------------------
$ 25,181 $ 685
=============================================================================
</TABLE>
During December 1998, the Company entered into two joint ventures. The Parkway
Place Limited Partnership owns and operates the Parkway City Mall in Huntsville,
Alabama. At December 31, 1998, Colonial had invested approximately $5.7 million
in the joint venture and had an ending net investment balance of $5.9 million.
The Orlando Fashion Square Joint Venture owns and operates the Orlando Fashion
Square in Orlando, Florida. The Company's net investment in the joint venture at
December 31, 1998 was $20.2 million. Both joint ventures have been accounted for
using the equity method.
The summarized financial information related to the significant partially owned
entities is as follows:
December 31, 1998 (in thousands)
Balance Sheet
Assets
Land, building, and equipment, net ............. $ 113,799
Construction in progress ....................... 3,369
Other assets ................................... 1,175
------------------------------------------------------------
Total assets .......................... $ 118,343
------------------------------------------------------------
Liabilities and Partners' Equity
Notes payable .................................. $ 65,000
Other liabilities .............................. 392
Partners' Equity ............................... 52,951
------------------------------------------------------------
Total liabilities and partners' capital $ 118,343
------------------------------------------------------------
Statement of Operations
Revenues ......................................... $ 246
Operating expenses ............................... (76)
Depreciation and amortization .................... (14)
- --------------------------------------------------------------
Net income .............................. $ 156
-------------------------------------------------------------
7. Segment Information
The Company is organized into, and manages its business based on the performance
of, three separate and distinct operating divisions: Multifamily, Retail, and
Office. Each division has a separate management team that is responsible for
acquiring, developing, managing, and leasing properties within each division.
The applicable accounting policies of the segments are the same as those
described in the "Summary of Significant Accounting Policies." Management
evaluates the performance of its segments and allocates resources to them based
on net operating income (NOI). NOI consists of revenues in excess of general
operating expenses, salaries and wages, repairs and maintenance, taxes,
licenses, and insurance. Segment information for the years ended December 31,
1998, 1997, and 1996 is as follows:
<TABLE>
<CAPTION>
(in thousands)
1998 Retail Office Multifamily Total
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Divisional revenues $117,572 $ 34,409 $104,462 $ 256,443
NOI 83,059 24,307 68,789 176,155
Divisional assets 683,042 240,161 783,097 1,706,300
1997
- -----------------------------------------------------------------
Divisional revenues $ 71,179 $ 16,224 $ 95,503 $ 182,906
NOI 51,500 11,615 62,658 125,773
Divisional assets 577,954 147,974 652,923 1,378,851
1996
- -----------------------------------------------------------------
Divisional revenues $ 45,775 $ 7,337 $ 80,914 $ 134,026
NOI 33,455 4,813 53,011 91,279
Divisional assets 306,771 32,457 595,397 934,625
</TABLE>
A reconciliation of total segment revenues to total revenues, total segment NOI
to income from operations, and total divisional assets to total assets, for the
years ended December 31, 1998, 1997, and 1996, is presented below:
<TABLE>
<CAPTION>
(in thousands)
Revenues 1998 1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Total divisional revenues $ 256,443 $ 182,906 $ 134,026
Unallocated corporate revenues 924 1,220 855
- ----------------------------------------------------------------------------------
Total revenues $ 257,367 $ 184,126 $ 134,881
- ----------------------------------------------------------------------------------
NOI 1998 1997 1996
- ----------------------------------------------------------------------------------
Total divisional NOI $ 176,155 $ 125,773 $ 91,279
Unallocated corporate revenues 924 1,220 855
General and administrative expenses (7,675) (6,448) (4,071)
Depreciation (46,841) (31,956) (22,025)
Amortization (1,806) (1,322) (1,509)
Other (9) -- --
- ----------------------------------------------------------------------------------
Income from operations $ 120,748 $ 87,267 $ 64,529
- ----------------------------------------------------------------------------------
Assets 1998 1997 1996
- ----------------------------------------------------------------------------------
Total divisional assets $ 1,706,300 $ 1,378,851 $ 934,625
Unallocated corporate assets 49,149(1) 18,227 13,480
- ----------------------------------------------------------------------------------
Total assets $ 1,755,449 $ 1,397,078 $ 948,105
- ----------------------------------------------------------------------------------
</TABLE>
(1) Includes the Company's investment in partially owned entities of $25,181
(see Note 6).
<PAGE>
8. Notes and Mortgages Payable
Notes and mortgages payable at December 31, 1998 and 1997 consist of the
following:
<TABLE>
<CAPTION>
(in thousands) 1998 1997
- --------------------------------------------------
<S> <C> <C>
Revolving credit agreement $174,489 $117,086
Mortgages and other notes:
4.50% to 6.00% 66,305 66,305
6.01% to 7.50% 471,694 316,701
7.51% to 9.00% 179,187 175,207
9.01% to 10.25% 17,647 26,745
- --------------------------------------------------
$909,322 $702,044
--------------------------------------------------
</TABLE>
As of December 31, 1998, the Company has an unsecured bank line of credit
providing for total borrowings of up to $250 million. This line of credit
agreement bears interest at LIBOR plus 80 to 135 basis points, is renewable in
July 2000 and provides for a two-year amortization in the case of nonrenewal.
The line of credit agreement includes a competitive bid feature that will allow
the Company to convert up to $125 million under the line of credit to a fixed
rate, for a fixed term not to exceed 90 days. The credit facility is primarily
used by the Company to finance property acquisitions and development and has an
outstanding balance at December 31, 1998, of $174.5 million. The weighted
average interest rate of this short-term borrowing facility, including the
competitive bid balance, was 6.42% and 6.70% at December 31, 1998 and 1997,
respectively.
During 1998 and 1997, the Company completed five public offerings of unsecured
debt securities totaling $350 million through its subsidiary, CRLP. The proceeds
of the offerings were used to fund acquisitions, development expenditures, repay
balances outstanding on the Company's revolving credit facility, repay certain
notes and mortgages payable, and for general corporate purposes. Details
relating to these debt offerings are as follows: <TABLE>
Gross Proceeds
<CAPTION>
Date Type of Note Maturity Rate (in thousands)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 1997 Medium-term January 2003 7.16% $ 50,000
July 1997 Medium-term July 2004 6.96% $ 75,000
August 1997 Medium-term August 2005 6.96 $ 25,000
September 1997 Medium-term September 2005 6.98% $ 25,000
July 1998 Senior July 2007 7.00 $175,000
</TABLE>
Colonial has entered into an interest rate cap agreement which limits debt of
$50 million to an interest rate of 8.00% through May 2, 2000. The Company paid
$227,500 for the interest rate cap, which is being amortized over the life of
the agreement. Subsequent to year-end, the Company entered into two interest
rate swap agreements. On January 4, 1999, Colonial entered into an interest rate
swap for $50 million of its line of credit at 4.97% plus 80 to 135 basis points
and on January 15, 1999, Colonial entered into an interest rate swap for $52
million of tax exempt bonds at a rate of 3.23%. Both of these interest rate swap
agreements have one-year terms and any payments made or received under the
agreements are recognized as adjustments to interest expense as incurred.
Treasury lock agreements are used by the Company's subsidiary, CRLP, to set
interest rates in anticipation of public debt offerings. Colonial is exposed to
credit losses in the event of nonperformance by the counterparties to its
interest rate cap and nonderivative financial assets but has no
off-balance-sheet credit risk of accounting loss. The Company anticipates,
however, that counterparties will be able to fully satisfy their obligations
under the contracts. Colonial does not obtain collateral or other security to
support financial instruments subject to credit risk but monitors the credit
standing of counterparties.
At December 31, 1998, the Company had $704.5 million in unsecured indebtedness
including balances outstanding on its bank line of credit and certain other
notes payable. The remainder of the Company's notes and mortgages payable are
collateralized by the assignment of rents and leases of certain properties and
assets with an aggregate net book value of $320.8 million at December 31, 1998.
<PAGE>
The aggregate maturities of notes and mortgages payable at December 31, 1998,
are as follows:
(in thousands)
- ---------------------------------------------
1999 $ 12,809
2000 224,308
2001 79,128
2002 1,404
2003 108,652
Thereafter 483,021
- ---------------------------------------------
$909,322
- ---------------------------------------------
Based on borrowing rates available to the Company for notes and mortgages
payable with similar terms, the estimated fair value of the Company's notes and
mortgages payable at December 31, 1998 and 1997 was approximately $912.6 million
and $711.0 million, respectively.
Certain loan agreements of the Company contain restrictive covenants which,
among other things, require maintenance of various financial ratios. At December
31, 1998, the Company was in compliance with these covenants.
Certain shareholders and trustees of the Company have guaranteed indebtedness of
the Company totaling $1.5 million at December 31, 1998. The Company has
indemnified these individuals from their guarantees of this indebtedness.
Certain partners of the Company's subsidiary, CRLP, have guaranteed indebtedness
of the Company totaling $33.5 million at December 31, 1998. These individuals
have not been indemnified by the Company.
9. Capital Structure
Company ownership is maintained through common shares of beneficial interest
(Common Shares) and minority interest in the Operating Partnership (Units).
Common shareholders represent public equity owners and unitholders represent
minority interest owners. Each Unit may be redeemed for either one Common Share
or, at the option of the Company, cash equal to the fair market value of a
Common Share at the time of redemption. When a unitholder redeems a Unit for a
Common Share or cash, minority interest is reduced and the Company's interest in
the Operating Partnership is increased. In addition, the Company has acquired
properties since its formation by issuing distribution paying and
nondistribution paying Units. The nondistribution paying Units convert to
distribution paying Units at various dates subsequent to their original
issuance. At December 31, 1998 and 1997, 10,613,966 and 9,976,419 units were
outstanding, respectively, all of which were distribution paying Units.
In November 1997, the Company completed its first public offering of preferred
stock totaling 5,000,000 preferred shares of beneficial interest (Preferred
Shares). The Series A Preferred Shares pay a quarterly dividend at 8.75% per
annum and may be called by the Company on or after November 6, 2002. The
Preferred Shares have no stated maturity, sinking fund or mandatory redemption
and are not convertible into any other securities of the Company. The preferred
shares have a liquidation preference of $25.00 per share. In October 1998, the
Company's Board of Trustees approved a Shareholder Rights Plan (the Rights
Plan). Under this plan, the Board declared a dividend of one Right for each
Common Share outstanding on the record date. The Rights become exercisable only
if an individual or group acquires 15% or more beneficial ownership in the
Company. Ten days after a public announcement that an individual or group has
become the beneficial owner of 15% or more of the Common Shares, each holder of
a Right, other than the acquiring individual or group, would be entitled to
purchase one Common Share for each Right outstanding at one-half of the
Company's current market price. Also, if the Company is acquired in a merger, or
if 50% or more of the Company's assets are sold in one or more related
transactions, each Right would entitle the holder thereof to purchase common
stock of the acquiring company at one-half of the then-current market price of
the acquiring company's common stock.
10. Equity Offerings
During 1998, 1997 and 1996, the Company completed eight public offerings of
common stock totaling 12,575,070 common shares of beneficial interest and one
public offering of preferred stock totaling 5,000,000. The proceeds of the
offerings were used to fund acquisition and development expenditures, repay
balances outstanding on the Company's revolving credit agreement, repay certain
notes and mortgages payable, and for general corporate purposes. Details
relating to these equity offerings are as follows:
<TABLE>
<CAPTION>
(in thousands)
-------------------------------
Number of Price Per Gross Offering Net
Offering Shares Share Proceeds Costs Proceeds
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
January 1996 Common 4,600,000 $ 24.63 $ 113,275 $ 6,632 $ 106,643
January 1997 Common 1,500,000 $ 29.88 $ 44,812 $ 1,457 $ 43,355
July 1997 Common 1,700,000 $ 30.94 $ 52,594 $ 2,945 $ 49,649
November 1997 Preferred 5,000,000 $ 25.00 $ 125,000 $ 4,451 $ 120,549
December 1997 Common 165,632 $ 30.19 $ 5,000 $ 330 $ 4,670
February 1998 Common 375,540 $ 30.00 $ 11,266 $ 627 $ 10,639
March 1998 Common 806,452 $ 31.00 $ 25,000 $ 1,389 $ 23,611
March 1998 Common 381,046 $ 31.00 $ 11,812 $ 656 $ 11,156
April 1998 Common 3,046,400 $ 30.13 $ 91,773 $ 4,973 $ 86,800
</TABLE>
11. Share Option and Restricted Share Plans
In September 1993 the Company adopted an Employee Share Option and Restricted
Share Plan (the Employee Plan) designed to attract, retain, and motivate
executive officers of the Company and other key employees. The Employee Plan, as
amended in April 1998, authorizes the issuance of up to 3,200,000 common shares
of beneficial interest (as increased from time to time to equal 10% of the
number of common shares and Operating Partnership units outstanding) pursuant to
options or restricted shares granted or issued under this plan, provided that no
more than 750,000 restricted shares may be issued. In connection with the grant
of options under the Employee Plan, the Executive Compensation Committee of the
Board of Trustees determines the option exercise period and any vesting
requirements. In September 1993 the Company also adopted a Trustee Share Option
Plan (the Trustee Plan). The Trustee Plan authorizes the issuance of up to
125,000 options to purchase common shares of beneficial interest. In April 1997,
the Company increased the number of options to purchase common shares authorized
under the Trustee Plan from 125,000 common shares to 500,000 common shares. In
April 1997, the Company also adopted a Non-Employee Trustee Share Plan (Share
Plan). The Share Plan permits non-employee trustees of the Company to elect to
receive common shares in lieu of all or a portion of their annual trustee fees,
board fees and committee fees. The Share Plan authorizes the issuance of 50,000
common shares under the Plan. The Company issued 4,010 common shares pursuant to
the Share Plan during 1998. In October 1997 the Company adopted an Employee
Share Purchase Plan (Purchase Plan). The Purchase Plan permits eligible
employees of the Company, through payroll deductions, to purchase common shares
at a 5% discount to the market price. The Purchase Plan has no limit on the
number of common shares that may be issued under the plan. The Company issued
1,119 common shares pursuant to the Purchase Plan during 1998.
The Company applies Accounting Principles Board Opinion 25 and related
Interpretations in accounting for its plans. Accordingly, no compensation
expense has been recognized for its stock option plans. Had compensation expense
for the Company's stock option plans been determined based on the fair value at
the grant dates for awards under those plans consistent with the methods
prescribed in Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
(in thousands, except per share data)
For the Years Ended December 31, 1998 1997 1996
- --------------------------------------------------------------------------------
Net income available to common shareholders:
<S> <C> <C> <C>
As reported $ 36,030 $ 30,277 $ 27,506
Pro forma $ 35,951 $ 30,020 $ 27,412
- --------------------------------------------------------------------------------
Net income per share - basic and diluted:
As reported $ 1.46 $ 1.53 $ 1.58
Pro forma $ 1.46 $ 1.52 $ 1.57
- --------------------------------------------------------------------------------
</TABLE>
The Company uses the Black-Scholes pricing model to calculate the fair values of
the options awarded, which are included in the pro forma results above. The
following assumptions were used to derive the fair values: a 10-year option
term; a volatility rate of 26.13%, 15.24% and 13.16% for 1998, 1997 and 1996,
respectively; a risk-free rate of return of 4.93%, 5.86% and 5.83% for 1998,
1997 and 1996, respectively; and a dividend yield of 7.62%, 7.11% and 7.92% for
1998, 1997 and 1996, respectively.
The Company issued 900, 8,450, and 7,800 restricted shares under the Employee
Plan during 1998, 1997, and 1996, respectively. The value of outstanding
restricted shares is being charged to compensation expense based upon the
earlier of satisfying the vesting period (eight years) or satisfying certain
performance targets. Option activity under both the Employee Plan and the
Trustee Plan combined is presented in the table below: <TABLE> <CAPTION>
Options Outstanding
----------------------
Shares Weighted
Available Average
for Future Price Per
Option Grant Shares Share
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1995 643,105 156,895 $ 23.000
Options granted (103,450) 103,450 24.371
- ------------------------------------------------------------------------
Balance, December 31, 1996 539,655 260,345 23.540
Addition to shares authorized 375,000
Options granted (119,000) 119,000 31.113
Options terminated 12,255 (12,255) 24.781
Options exercised (24,130) 23.263
- ------------------------------------------------------------------------
Balance, December 31, 1997 807,910 342,960 26.136
Addition to shares authorized 2,525,000
Options granted (50,000) 50,000 30.294
Options terminated 12,362 (12,362) 28.959
Options exercised (15,384) 23.359
- ------------------------------------------------------------------------
Balance, December 31, 1998 3,295,272 365,214 $ 26.733
========================================================================
</TABLE>
All options granted to date have a term of 10 years and may be exercised in
installments of one-third of the total number of options issued to any
individual on each of the first three anniversary dates of the grant of the
option. The balance of options that were exercisable totaled 213,691, 132,345,
and 78,425 at December 31, 1998, 1997, and 1996, respectively.
12. Employee Benefits
Employees of the Company and CPSI participate in a noncontributory defined
benefit pension plan designed to cover substantially all employees. Pension
expense includes service and interest costs adjusted by actual earnings on plan
assets and amortization of prior service cost and the transition amount. The
benefits provided by this plan are based on years of service and the employee's
final average compensation. The Company's policy is to fund the minimum required
contribution under ERISA and the Internal Revenue Code.
The table below presents a summary of pension plan status as of
December 31, 1998 and 1997, as it relates to the employees of the Company and
CPSI.
<TABLE>
<CAPTION>
(amounts in thousands) 1998 1997
- ------------------------------------------------------------ ------ ------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation
including vested benefits of $1,193 and $828
at December 31, 1998 and 1997, respectively $1,368 $ 961
Actuarial present value of projected benefit obligations
at year end $2,593 $1,957
Fair value of assets at year end $ 981 $ 861
Accrued pension cost $ 868 $ 536
Net pension cost for the year $ 393 $ 310
</TABLE>
Actuarial assumptions used in determining the actuarial present value of
accumulated benefit obligations at January 1, 1998, are as follows:
<TABLE>
1998 1997
---- ----
<S> <C> <C>
Weighted-average interest rate 6.75% 7.25%
- --------------------------------------------------------------------------------
Increase in future compensation levels 4.00% 4.25%
</TABLE>
The Company and CPSI participate in a salary reduction profit sharing
plan covering substantially all employees. This plan provides, with certain
restrictions, that employees may contribute a portion of their earnings with the
Company and CPSI matching one-half of such contributions, solely at the Company
and CPSI's discretion. Contributions by the Company and CPSI were $178,000,
$159,000 and $164,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.
13. Leasing Operations
The Company is in the business of leasing and managing office, retail,
and multifamily property. For properties owned by the Company, minimum rentals
due in future periods under noncancelable operating leases extending beyond one
year at December 31, 1998, are as follows:
(in thousands)
-----------------
1999 $ 107,651
2000 90,435
2001 77,498
2002 67,999
2003 55,640
Thereafter 228,509
-----------------
$ 627,732
=================
The noncancelable leases are with tenants engaged in retail and office
operations in Alabama, Georgia, Florida, North Carolina, South Carolina,
Tennessee, and Virginia. Performance in accordance with the lease terms is in
part dependent upon the economic conditions of the respective areas. No
additional credit risk exposure relating to the leasing arrangements exists
beyond the accounts receivable amounts shown in the December 31, 1998 balance
sheet. Leases with tenants in multifamily properties are generally for one year
or less and are thus excluded from the above table. Substantially all of the
Company's land, buildings, and equipment represent property leased under the
above and other short-term leasing arrangements.
Rental income for 1998, 1997, and 1996 includes percentage rent of $4.0
million, $2.2 million, and $1.8 million, respectively. This rental income was
earned when certain retail tenants attained sales volumes specified in their
respective lease agreements.
14. Related Party Transactions
Colonial has generally used affiliated construction companies to manage
and oversee its development projects. The Company paid $40.0 million, $41.3
million, and $42.6 million ($37.3 million, $39.8 million, and $41.2 million of
which was subsequently then paid to unaffiliated subcontractors, respectively)
for property development costs to Lowder Construction Company, Inc., a
construction company owned by The Colonial Company ("TCC") (an affiliate of
certain shareholders, trustees and minority interest holders), during the years
ended December 31, 1998, 1997, and 1996, respectively. The Company had
outstanding construction invoices and retainage payable to Lowder Construction
Company, Inc. totaling $4.3 million and $2.3 million at December 31, 1998 and
1997, respectively. The Company also paid $0.4 million, $5.2 million, and $27.9
million for property development costs to two construction companies owned by
three trustees during the years ended December 31, 1998, 1997, and 1996,
respectively. The Company had outstanding construction invoices and retainage
payable to these construction companies totaling $1.2 million at December 31,
1998. There were no outstanding construction invoices and retainage payable to
these construction companies at December 31, 1997.
Colonial Commercial Investments, Inc. ("CCI"), which is owned by
trustees James K. Lowder and Thomas H. Lowder has guaranteed indebtedness
totaling $1.3 million at December 31, 1998 for Anderson Block Properties, which
is a partnership accounted for by the Company under the equity method (listed in
Note 6). The Company has indemnified CCI from its guarantees of this
indebtedness.
On July 1, 1998, the Company acquired a 79.8% interest in Colonial
Village at Haverhill (formerly Haverhill Apartments). The remaining 20.2%
interest in this property was acquired by entities that are owned by a trustee
of the Company. The minority owner's operating results will be included in
"Minority interest in income of CRLP" in the consolidated statement of income.
In connection with the Riverchase Center acquisition, the Company
initially acquired a 73% interest in a portion of the office complex. Effective
November 1, 1997, the Company purchased the remaining 27% interest in the
property by issuing 114,798 limited partnership units in Colonial Realty Limited
Partnership ("CRLP Units") to the seller. The seller is a trustee of the
Company.
In November 1997, the Company purchased Polar BEK's 50% interest in
Polar BEK/Colonial Partnership I (a partnership previously accounted for under
the equity method of accounting), a partnership which owned a 168,000 square
foot office building in Birmingham for $7.4 million. This purchase increased the
Company's ownership from 50% to 100%.
Following is a summary of property acquisitions from entities for which
trustees of the Company are involved as a partner or shareholder:
<TABLE>
<CAPTION>
Date Property and Land Acquired Purchase Price Units Issued
- ----------------------- --------------------------------------- --------------------- ----------------------------
<S> <C> <C> <C>
November 1998 Colonial Center at Research Park $1.0 million 36,647 CRLP Units
September 1998 1800 International Park $1.8 million(1)
October 1998 Colonial Grand at Promenade $1.5 million 34,700 CRLP Units
July 1998 Mansell Overlook 200 $27.7 million 396,365 CRLP Units
July 1998 Shoppes at Mansell $3.7 million 76,809 CRLP Units
March 1997 Colonial Shoppes Inverness $3.0 million 16,303 CRLP Units
April 1997 Colonial Village at Trussville $20.5 million 57,072 CRLP Units
July 1997 Colonial Village at Timothy Woods $12.8 million 27,275 CRLP Units
August 1997 Colonial Grand at Inverness Lakes II $0.5 million 10,822 CRLP Units
December 1997 Village at Roswell Summit $3.0 million 34,777 CRLP Units
</TABLE>
(1) In connection with purchase, the Company issued a $1.8 million note payable
to a related entity.
During 1997 the Company, through CPSI, exercised options to purchase
land from a related party in the amount of $366,000. As of December 31, 1998,
all options to purchase land from a related party had expired. In December 1997,
CPSI acquired a parcel of land from CCI and sold the land, along with an
adjoining parcel of land, to an unaffiliated third party for a net gain of
$60,000. Also in December 1997, CPSI sold a separate parcel of land to CCI,
which resulted in a net gain of $120,000.
The Company and its subsidiaries provided certain services to and
received certain services from related entities which resulted in the following
income (expense) included in the accompanying statements of income:
<TABLE>
(Amounts in thousands)
1998 1997 1996
----------------------------------
<S> <C> <C> <C>
Rental income $1,027 $879 $758
Management/leasing fee income 289 368 356
Insurance brokerage expense (131) (182) (187)
Rental expense 0 (156) (211)
</TABLE>
<PAGE>
15. Net Income Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
(Amounts in thousands,
except per share data)
-----------------------------------------
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Numerator:
Numerator for basic and diluted net
income per share - net income
available to common shareholders $ 36,030 $ 30,277 $ 27,506
============ =========== ===========
Denominator:
Denominator for basic net income per
share - weighted average common shares 24,641 19,808 17,378
Effect of dilutive securities:
Trustee and employee stock options 37 46 17
============ =========== ===========
Denominator for diluted net income per
shares - adjusted weighted average
common shares 24,678 19,854 17,395
============ =========== ===========
Basic and Diluted net income per share $ 1.46 $ 1.53 $ 1.58
============ =========== ===========
</TABLE>
Options to purchase 169,000 Common Shares at a weighted average exercise price
of $30.83 per share were outstanding during 1998 but were not included in the
computation of diluted net income per share because the options' exercise price
was greater than the average market price of the common shares and, therefore,
the effect would be antidilutive.
16. Subsequent Event
On January 23, 1999, the Board of Trustees declared a cash distribution
to shareholders of the Company and partners of Colonial Realty Limited
Partnership in the amount of $.58 per share and per partnership unit, totaling
$21.3 million. The distribution was made to shareholders and partners of record
as of February 3, 1999, and was paid on February 10, 1999.
17. Quarterly Financial Information (Unaudited)
The following is a summary of the unaudited quarterly financial
information for the years ended December 31, 1998 and 1997:
<TABLE>
1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands, except per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $58,310 $59,583 $68,162 $71,292
Income before minority interest 14,045 16,913 17,201 18,528
Minority interest 4,479 5,122 5,125 4,993
Net income 9,566 11,791 12,076 13,535
Preferred Dividends (2,734) (2,735) (2,735) (2,734)
Net income available to common
shareholders $6,832 $9,056 $9,341 $10,801
Net income per share:
Basic $0.32 $0.36 $0.36 $0.43
Diluted $0.32 $0.36 $0.36 $0.42
Weighted average common
shares outstanding 21,411 24,984 26,000 26,104
</TABLE>
<TABLE>
1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
(Amounts in thousands, except per share data)
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $39,170 $42,823 $47,479 $54,654
Income before minority interest 9,905 10,349 8,207 17,847
Minority interest 3,092 3,209 2,531 5,528
Net income 6,813 7,140 5,676 12,319
Preferred Dividends -0- -0- -0- 1,671
Net income available to common
shareholders $6,813 $7,140 $5,676 $10,648
Net income per share:
Basic $0.37 $0.37 $0.28 $0.51
Diluted $0.36 $0.37 $0.28 $0.51
Weighted average common
shares outstanding 18,657 19,195 20,372 20,977
</TABLE>
<PAGE>
Report of Independent Accountants
To the Board of Trustees and Shareholders
of Colonial Properties Trust
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Colonial Properties
Trust (the "Company") at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company'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.
/s/ PricewaterhouseCoopers L.L.P.
PricewaterhouseCoopers L.L.P.
Birmingham, Alabama
January 13, 1999, except for Note 16, as
to which the date is February 10, 1999
Exhibit 21.1
Colonial Properties Trust
List of Subsidiaries
Ownership
Colonial Realty Limited Partnership 71.1% GP and LP
Colonial Properties Services Limited Partnership 99.0% GP and LP
Colonial VRS, L.L.C. 100.0%
Colonial Properties Services, Inc. 100.0% Common Stock
(non-voting)
1.0% Common Stock
(voting)
99.0% of Equity
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statements of
Colonial Properties Trust on Form S-8 related to certain restricted shares and
stock options filed on September 29, 1994; Form S-8 related to the Non-Employee
Trustee Share Plan filed on May 15, 1997; Form S-8 related to the Employee Share
Purchase Plan filed on May 15, 1997; Form S-8 related to changes to First
Amended and Restated Employee Share Option and Restricted Share Plan and the
Non-Employee Trustee Share Option Plan filed on May 15, 1997; Form S-3 related
to the Shelf Registration filed on November 20, 1997; Form S-3 related to the
Dividend Reinvestment Plan filed on April 11, 1995, as amended; and Form S-8
related to the registration of common shares issuable under the Colonial
Properties Trust 401(K)/Profit-Sharing Plan filed on October 15, 1996, of our
report dated January 13, 1999, except for Note 16, as to which the date is
February 10, 1999, on our audits of the consolidated financial statements and
financial statement schedules of Colonial Properties Trust as of December 31,
1998 and 1997, and for the years ended December 31, 1998, 1997, and 1996, which
report is incorporated by reference in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
March 30, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,583
<SECURITIES> 0
<RECEIVABLES> 9,428
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,736,363
<DEPRECIATION> (169,522)
<TOTAL-ASSETS> 1,755,449
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
50
<COMMON> 261
<OTHER-SE> 610,136
<TOTAL-LIABILITY-AND-EQUITY> 1,755,449
<SALES> 257,367
<TOTAL-REVENUES> 257,367
<CGS> 136,619
<TOTAL-COSTS> 136,619
<OTHER-EXPENSES> 0
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<INCOME-TAX> 0
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<EXTRAORDINARY> (401)
<CHANGES> 0
<NET-INCOME> 36,030
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.46
</TABLE>
