SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Amendment No. 2
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-12592
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
Maryland 75-2506197
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
One Lincoln Centre, 5400 LBJ Freeway, 75240
Suite 400, LB 45, Dallas, Texas (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (972) 788-0510
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
-------------------- ------------------------------------------
Common stock, New York Stock Exchange
$.01 par value
9.16% Series B Convertible New York Stock Exchange
Redeemable Preferred Stock,
$.01 par value
9.20% Senior Preferred Stock, New York Stock Exchange
$.01 par value
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether Registrant (1) has filed all report
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
---
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K 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 Park
III of this Form 10-K or any amendment to this form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates
of the registrant was $413,158,242 at March 3, 1997.
The number of shares of common stock outstanding at March 3, 1997
was 17,385,927.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information in the Registrant's definitive proxy statement
to be filed with the Securities and Exchange Commission related to
the Company's 1997 Annual Meeting of Stockholders is incorporated
by reference in Part III hereof.
<Page 1>
EXPLANATORY NOTE
Walden Residential Properties, Inc., a Maryland corporation,
hereby amends its Annual Report on Form 10-K, as amended, for the
fiscal year ended December 31, 1996, by revising the attached in
order to respond to a revision request received from the Securities
and Exchange Commission on May 11, 1997.
<Page 2>
PART I
Item 1. Business
- --------------------
General
- -------
Walden Residential Properties, Inc. (the "Company") is a
self-administered, self-managed, fully integrated real estate investment
trust ("REIT") focused on middle income multifamily properties
located primarily in selected Southwestern and Southeastern
markets. The Company, a Maryland corporation with headquarters in
Dallas, Texas, was formed in September 1993 to continue and expand
the multifamily property ownership, management, acquisition and
marketing operations and related business objectives and strategies
of The Walden Group, Inc. and its subsidiaries and affiliates
(collectively, "Walden Predecessors"). The Company owned 68
multifamily properties (the "Properties") as of December 31, 1996,
containing 21,407 apartment units. Approximately 93% of the
Properties are located in the Dallas/Fort Worth, Jacksonville,
Phoenix, Nashville, Austin, Oklahoma City, San Antonio, Tampa,
Tulsa, Houston and Salt Lake City areas (the "Target Markets"),
with the remaining Properties primarily located in other areas in
the Southwest and Southeast regions of the United States. The
Properties had a weighted average occupancy rate of approximately
93.4% at March 2, 1997. In addition, the Company currently manages
on a fee basis four additional multifamily properties consisting of
1,578 apartment units (the management contracts for four properties
consisting of 720 units were not renewed at the owner's option in
January 1997).
Upon completion of the Company's initial public offering on
February 9, 1994 (the "IPO"), the Company purchased the multifamily
operations of the Walden Predecessors, including 18 properties
containing 5,895 apartment units (of which a 299-unit property was
sold in April 1995, a 384-unit property was sold in April 1996 and
a 144-unit property was sold in September 1996), and concurrently
purchased two additional properties containing 448 apartment units,
one of which was owned by a third party and the other of which was
principally owned by the Walden Predecessors (collectively, the
"Original Properties"). Since the consummation of the IPO, the
Company has acquired 53 properties (the "Acquisition Properties")
(of which a 242-unit property was sold in December 1995 and a
304-unit property was sold in August 1996), containing an aggregate of
16,437 apartments units, for an aggregate acquisition cost of
$545.1 million. In addition, in connection with one property
acquired in December 1996, the Company acquired approximately 81
acres of adjacent undeveloped land for $4 million. The land is
zoned for an additional 900 apartment units, which offers the
Company the opportunity to develop apartment communities in the
future. Management believes that these acquisitions are consistent
with its core acquisition strategy of acquiring well located garden
apartment properties at prices less than replacement costs, which
serve middle income residents and can benefit from the Company's
comprehensive management programs.
The Company is operated under the direction of Don R. Daseke,
Chairman of the Board and Chief Executive Officer of the Company,
and a management team substantially all of whom were formerly
employed by the Walden Predecessors. The Company's 19 officers
have an average tenure with the Company and the Walden Predecessors
of nine years and have an average of approximately 18 years
experience in the multifamily property business. The Company is
fully
<Page 3>
integrated with operations that include multifamily property
acquisitions, redevelopment, property management, finance and asset
management.
The Company's executive offices are located at One Lincoln
Centre, 5400 LBJ Freeway, Suite 400, Dallas, Texas 75240. The
telephone number is (972) 788-0510. The Company was incorporated in
Maryland on September 29, 1993, and the duration of its existence
is perpetual.
Growth Strategies
- -----------------
The Company's primary business objective is to maximize
stockholder value by maintaining long-term growth in funds from
operations for distribution to its stockholders. Management
believes it can achieve this objective by focusing on the
ownership, management and acquisition of garden apartment
properties that have strong cash flow growth potential and by
holding such properties for long-term investment and capital
appreciation. The Company has focused its property ownership in
its Target Markets, which are in metropolitan areas in the
Southwest and Southeast regions of the United States. The Company
believes its Target Markets will experience higher growth rates in
population, household formation and employment than the national
averages. Specifically, the Company intends to continue the
implementation of the following growth strategies:
Increased Property Cash Flow. The Company intends to continue
to take advantage of the positive relationship between apartment
unit supply and demand and to continue raising rents as general
rental conditions permit. Consistent with this strategy, the
Company will continue to implement aggressive and creative
marketing programs to increase occupancy and rental rates. The
Company also anticipates increasing its cash flow by controlling
operating expenses, while at the same time maintaining
comprehensive maintenance policies, including non-recurring revenue
enhancement capital improvements (i.e., construction of covered
carports, installation of access gates with perimeter fencing,
energy efficient exterior lighting and water savers and
reconstruction of balconies and exterior stairwells) to maintain
and improve the competitive position of the Properties.
Acquisitions. The Company also seeks to increase its funds
from operations by acquiring multifamily properties that have
prospects for long-term growth. Following the IPO, the Company has
engaged in an active acquisition program, acquiring 53 multifamily
properties, containing 16,437 apartment units. The Company is
currently focusing its acquisition efforts in the Target Markets
due to the attractive demographics of these markets and the
availability of properties for sale.
Property Management
- -------------------
The Company conducts its property management operations with
an experienced staff of professionals and support personnel,
including property directors and sales directors. The depth of the
organization is intended to enable the Company to deliver quality
services on an uninterrupted basis, thereby promoting resident
satisfaction and improving resident retention. Each of the
Company's owned or managed properties is operated by a staff
specifically selected based on the size, location, age, management
plan and marketing plan of the individual property.
<Page 4>
Personnel are carefully trained in their areas of expertise, such as
property management, marketing and leasing, resident relations and
maintenance.
The Company's standardized policies and procedures specify
reporting requirements and management guidelines which are to be
applied at each property. Such policies and procedures facilitate
management consistency in all markets. The Company uses customized
software programs, including an on-site computerized rent roll
system, to provide on-site, regional and executive management with
rapid access to all marketing and accounting information. Weekly
marketing reports are prepared by on-site property directors which
track each property's leasing status, occupancy rate, prospective
resident traffic, unit availability, lease renewals, residents
moving in and out of apartments, notices by residents to vacate
their apartments and delinquent rental charges or other fees.
Accounting elements such as receivables, payables, rent roll status
and budget compliance are regularly monitored through this system.
Marketing and leasing activities and procedures are designed
to comply with all established Federal, state and local laws and
regulations. The Company generally offers leases having six- to
seven-month terms, with individual property marketing plans
structured to respond to local market conditions. Qualifying
standards for prospective residents are established to comply with
the affordable housing restrictions placed on certain of the
Properties, the Fair Housing Amendments Act of 1988 (the "FHA") and
the regulations thereunder and are designed to stabilize service
levels and income streams. The Company has 14 properties which are
currently subject to restrictions that require a specified number
of apartments be offered to persons with lower or moderate incomes.
The Company utilizes standard lease contracts promulgated by local
apartment associations to ensure compliance with the most recent
legislative and judicial activities related to multifamily
properties, as well as to permit uniform lease administration
relating to rent collections, security deposit dispositions,
evictions, repairs and renewals.
Third-Party Property Management
- -------------------------------
To maintain its status as a REIT, the Company may earn no more
than 5% of its gross revenues from prohibited sources, including
third-party management contracts. At the time of the IPO, the
amount of third-party management fee income was significant as
compared to the Company's total revenues. As a result, the
Company's third-party management contracts were performed by WDN
Management Company ("WDN Management"). The Company's gross revenues
have increased and third-party management contracts have decreased
such that third-party management fee income is no longer
significant. Therefore, effective December 31, 1996, WDN
Management was merged into the Company and its corporate entity was
dissolved. Currently, the Company manages four multifamily
properties containing 1,578 garden apartment units not owned by the
Company. Two of such properties are owned by unaffiliated third
parties. The other two properties are owned by three limited
partnerships, each of which has one of the Walden Predecessors as
the general partner. The management contracts may be terminated on
30 days notice.
<Page 5>
Employees
- ---------
As of February 28, 1997, the Company employed 601 people, of
which 87 are located at the Company's headquarters in Dallas, Texas
and its regional offices located in Atlanta, Austin, Dallas, Fort
Worth, Houston, Phoenix, San Antonio and Tulsa. The remaining 514
employees are located at the properties owned by the Company and
those fee managed. None of the Company's employees is currently
represented by a union. The Company believes that relations with
its employees are good.
Competition
- -----------
All of the Properties are located in developed areas that
include other multifamily properties. The number of multifamily
properties in a particular area could have a material effect on the
Company's ability to lease units at its Properties or at any newly
acquired properties and on the rents charged. Additionally, there
are other housing alternatives that compete with the Properties in
attracting residents. The Properties compete directly with single
family homes that are available for rent in the markets in which
the Properties are located.
The Company also competes for acquisitions with other
entities, such as insurance companies, pension funds, private
individuals, investment companies and other REITs, which may have
greater resources than the Company.
Regulation
- ----------
General. Apartment community properties are subject to
various laws, ordinances and regulations, including regulations
relating to recreational facilities such as swimming pools,
activity centers and other common areas. The Company believes that
it has the necessary permits and approvals under present laws,
ordinances and regulations to operate its business in the manner
described herein.
Americans with Disabilities Act. The Properties and any newly
acquired or developed multifamily properties must comply with Title
III of the Americans with Disabilities Act of 1990 (the "ADA") to
the extent that such properties are "public accommodations" and/or
"commercial facilities" as defined by the ADA. Compliance with the
ADA requirements could require removal of structural barriers to
handicapped access in certain public areas of the Properties where
such removal is readily achievable. The ADA does not, however,
consider residential properties, such as multifamily properties, to
be public accommodations or commercial facilities, except to the
extent that portions of such facilities, such as leasing offices,
are open to the public. The Company obtained structural reports
from third-party consultants specifying certain modifications to
certain of the Properties that needed to be made in order to bring
such properties into full compliance with the ADA. The Company has
substantially completed such modifications.
Fair Housing Amendments Act of 1988. The FHA requires
multifamily properties first occupied after March 13, 1990 to be
accessible to the handicapped. Noncompliance with the FHA could
result in the imposition of fines or an award of damages to private
litigants. All of the Company's Properties were occupied prior to
March 13, 1990.
<Page 6>
Affordable Housing Restrictions. The Company has 14
properties which are subject to restrictions requiring that a
specified percentage of the apartment units in such Properties be
offered to persons with lower or moderate incomes (currently, 67%
of the total number of apartment units in the 14 affected
properties and 16% of the total number of the Company's apartment
units). Generally, these provisions originated from the use of tax
exempt financing in those instances where it was determined that
the benefits of the lower interest rate associated with such
financing offset the potential reduction of rental income resulting
from such rental restrictions. In addition, four of these
properties are subject to limits on the amount of rent that can be
charged for certain of the apartment units. The Company believes
it is in compliance with these restrictions. These restrictions
have not had a material adverse effect on the Company's resident
profile or ability to rent the units, and management does not
anticipate that such restrictions will have a material adverse
effect on future operations or possible sales of the 14 properties
in the future.
Rent Control Legislation. State and local rent control laws
in certain jurisdictions limit a property owner's ability to
increase rents and to recover from residents increases in operating
expenses and the costs of capital improvements. Enactment of such
laws has been considered from time to time in other jurisdictions,
although none of the jurisdictions in which the Company presently
operates has adopted such laws. The Company does not presently own,
nor does it intend to acquire, multifamily properties in markets
that are either subject to rent control or in which rent limiting
legislation exists.
Environmental Matters
- ---------------------
Under various Federal, state and local environmental laws,
ordinances and regulations, a current or previous owner or operator
of real estate may be required to investigate and remediate
hazardous or toxic substances or petroleum product releases at such
property and may be held liable to a government entity or third
party for property damage and investigation and remediation costs
incurred by such parties in connection with such contamination.
Such laws typically impose cleanup responsibility and liability
without regard to whether the owner or operator knew of, or caused
the presence of, the contaminants. The costs of investigation,
remediation or removal of such substances may be substantial, and
the presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability
to sell or rent such real estate or to borrow using such real
estate as collateral. In addition, some environmental laws create
a lien on the contaminated site in favor of the government for
damages and costs it incurs in connection with the contamination.
Individuals who arrange for the disposal or treatment of hazardous
or toxic substances may be held liable for the costs of
investigation, remediation or removal of such hazardous or toxic
substances at or from the disposal or treatment facility regardless
of whether such facility is owned or operated by such person.
Finally, the owner of a site may be subject to common law claims by
third parties based on damages and costs resulting from
environmental contamination emanating from a site.
Certain Federal, state and local laws, ordinances and
regulations govern the removal, encapsulation or disturbance of
asbestos-containing materials ("ACMs") when such materials are in
poor condition or in the event of building remodeling, renovation
or demolition. Such laws may impose liability for the release of
ACMs and may provide for third parties to seek recovery from
<Page 7>
owners or operators of real estate for personal injury associated
with ACMs. In connection with the ownership and operation of its
properties, the Company may be potentially liable for costs in
connection with the matters discussed above.
All of the Properties have been the subject of environmental
assessments, which are intended to reveal information regarding,
and to evaluate the environmental condition of, the surveyed
properties and surrounding properties. The environmental
assessments generally include a historical review, a public records
review, a preliminary investigation of the site and surrounding
properties, screening for the presence of asbestos and equipment
containing polychlorinated biphenyls and underground storage tanks
and the preparation and issuance of a written report, but do not
include soil sampling or subsurface investigations.
The environmental assessments on each of the Properties have
revealed elevated lead content in the drinking water at three of
the Properties and ACMs at 25 of the Properties (some of which is
friable, but in good and manageable condition). The consulting firm
that conducted the environmental studies has prepared an operations
and maintenance program recommending procedures to be followed in
dealing with ACMs if they are moved or otherwise disturbed. The
cost to the Company resulting from any future disturbance of the
ACMs will depend upon the magnitude of the disturbance and the
location of the ACMs. The consulting firm advised the Company that
it is not required by Federal law to take any action to address the
lead levels in the water; however, the Company is currently
evaluating the remedial actions and notification options. The
Company anticipates any such remedial actions and notifications
will cost between $10,000 and $30,000 in the aggregate.
Environmental assessments performed on the Properties have not
revealed any environmental liability that the Company believes
would have a material adverse effect on the Company's business,
assets, or results of operations, nor is the Company aware of any
such environmental liability. Nevertheless, it is possible that
these assessments did not reveal all environmental liabilities or
that there are material environmental liabilities of which the
Company is unaware. Moreover, no assurances can be given that (i)
future laws, ordinances or regulations will not require any
material expenditures by or impose any material liabilities on the
Company in connection with environmental conditions by or on the
Company or its properties, (ii) the current environmental condition
of a property will not be adversely affected by residents and
occupants of such property, by the condition of properties in the
vicinity of such property (such as the presence of underground
storage tanks) or by third parties unrelated to the Company, or
(iii) prior owners of the Properties did not create environmental
problems of which the Company is not aware.
The Company believes that the Properties are in compliance in
all material respects with all Federal, state and local laws,
ordinances and regulations regarding hazardous or toxic substances
or petroleum products. Except as otherwise described above, the
Company has not been notified by any governmental authority, and is
not otherwise aware, of any material noncompliance, liability or
claim relating to hazardous or toxic substances or petroleum
products with respect to any of the Properties.
<Page 8>
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and
reasonably estimatable. Accruals for estimated losses from
environmental remediation obligations generally are recognized no
later than completion of the remediation feasibility study. Such
accruals are adjusted as further information develops or
circumstances change. Recoveries of environmental remediation
costs from other parties are recorded as assets when their receipt
is deemed probable. Management is not aware of any environmental
remediation obligations which would materially affect the
operations, financial position or cash flows of the Company.
Insurance
- ---------
The Company carries comprehensive liability, fire, extended
coverage and rental loss insurance with respect to all of the
Properties, with policy specifications, insured limits and
deductibles customarily carried for similar properties. There are,
however, certain types of losses (such as losses arising from
earthquakes or wars) that are not generally insured because they
are either uninsurable or not economically insurable. Should an
uninsured loss or a loss in excess of insured limits occur, the
Company could lose its capital invested in the affected property,
as well as the anticipated future revenues from such property and
would continue to be obligated on any mortgage indebtedness or
other obligations related to the property. Any such loss could
adversely affect the Company. Management believes that the
Properties are currently adequately
insured in accordance with industry standards.
Item 2. Properties
- ----------------------
The Company's Portfolio. As of December 31, 1996, the
Company's portfolio consisted of 68 multifamily properties
containing 21,407 apartment units located in 9 states. The
Properties are generally comprised of two and three-story buildings
in landscaped settings and generally include such amenities as a
clubhouse, swimming pools, laundry facilities and cable television
access. Certain of the Properties offer additional amenities such
as saunas, whirlpools, exercise facilities, tennis courts and
covered parking. The Properties contain an average of 315 apartment
units, with the largest property containing 994 apartment units.
The apartment units have an average size of 764 square feet. The
Properties were built between 1978 and 1988 and have a weighted
average age by number of apartment units of approximately 13 years.
The Properties are concentrated in the following markets:
<TABLE>
<CAPTION>
Number Number Percent
Location of Properties of Units of Total Units
- -------- ------------- -------- --------------
<S> <C> <C> <C>
Dallas/Fort Worth 26 7,402 34.58%
Jacksonville 5 1,748 8.16%
Phoenix 4 1,638 7.65%
Nashville 3 1,626 7.60%
Austin 4 1,329 6.21%
Oklahoma City 4 1,196 5.59%
San Antonio 5 1,146 5.35%
Tampa 3 1,080 5.04%
Tulsa 3 1,008 4.71%
Houston 3 918 4.29%
Salt Lake City 2 768 3.59%
-- ------ -------
Subtotal 62 19,859 92.77%
Other Markets (a) 6 1,548 7.23%
-- ------ -------
Total 68 21,407 100.00%
</TABLE>
(a) Represents properties in five different states.
<Page 9>
No single property accounts for greater than 10% of the
Company's total revenues. The Properties had a weighted average
occupancy of 94.5% for 1996 and 93.4% at March 2, 1997. Resident
leases are generally for six- to seven-month terms and often
require security deposits. The Properties are located in mature,
developed neighborhoods. Management believes the Properties are
well built and have been well maintained.
Capital Expenditures. The Company has adopted a policy of
expensing all maintenance and non-major, recurring repair and
replacement items, with the exception of carpet replacement which,
as of July 1, 1996, is capitalized on a prospective basis. Such
maintenance expense items include, but are not limited to, interior
painting of the units, window blinds, and pool and recreation
facility maintenance. Non-major expense items include but are not
limited to roofing, exterior painting and asphalt resurfacing under
approximately $10,000. Repair and maintenance expenses for 1996
were approximately $8.2 million, or $447 per weighted average unit.
The Company capitalizes all major repairs and replacements
which are not considered part of the normal maintenance of the
Properties or turnover of an apartment unit. As of July 1, 1996,
the Company revised its method of accounting to capitalize the cost
of replacement carpets, on a prospective basis ($864,000 was
capitalized in 1996 which would have been expensed under the old
policy). The Company believes that this accounting policy change
is preferable because it is consistent with policies currently
being used by the majority of the largest publicly traded apartment
REITs and provides a better matching of expenses with the related
benefit of the expenditures. In addition, the Company capitalizes
non-recurring items such as access gates and new carports and
capitalizes all deferred maintenance items of an acquisition
property which are planned at the time of acquisition to bring the
property to satisfactory condition. Such renovation of an
acquisition property generally takes six to twelve months to
complete, depending on the magnitude of the renovations.
For the year ended December 31, 1996, the Company incurred
approximately $10.2 million of capital expenditures to its
Properties, of which $5.7 million related to renovation costs for
properties acquired in 1996 and 1995. An additional $1.0 million
was expended on non-recurring items and $3.5 million was expended
for normal recurring capital expenditures to properties not under
renovation (the "Matured Properties" or "Matured Units") (resulting
in an average cost of $299 per Matured Unit).
For 1997, the Company has budgeted total capital expenditures
of $31.0 million. An estimated $11.3 million is to complete the
planned renovations to properties acquired in 1996. Non-recurring
capital expenditures on Matured Units are estimated to be $13.6
million, which include the construction of covered carports, the
installation of access gates with perimeter fencing, energy
efficient exterior lighting and water savers and reconstruction of
balconies and exterior stairwells. The remaining budgeted capital
expenditures of $6.1 million represent recurring capital
expenditures on Matured Units (or $372 per Matured Unit).
<Page 10a>
WALDEN RESIDENTIAL PROPERTIES, INC.
APARTMENTS OWNED
<TABLE>
<CAPTION>
Total
Year Rentable Average
Number Construction Area Total Unit Type Apt. Size
Metropolitan Area/Property Location of Units Completed (1) (Sq. Ft.) Acreage 1BR 2BR 3BR (Sq. Ft.)
- -------------------------- -------- -------- ------------- --------- ------- --- --- --- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Austin
- ------
Ashbury Parke (2) Austin, TX 416 1983 278,936 13.2 304 112 0 671
Harper's Creek Austin, TX 268 1982 201,838 8.0 228 40 0 753
Pinto Creek Austin, TX 249 1985 199,146 22.6 162 87 0 800
Trestles of Austin Austin, TX 396 1984 275,904 10.7 252 144 0 697
------ ---- ---------- ----- ------ ----- --- ---
Austin Total/Weighted Average 1,329 1983 955,824 54.5 946 383 0 719
====== ==== ========== ===== ====== ===== === ===
Dallas/Fort Worth
- -----------------
Braden's Walk (2) Bedford, TX 208 1982 151,040 8.3 128 80 0 726
Cinnamon Park Arlington, TX 272 1985 213,192 13.0 144 112 16 784
Club at Springlake Haltom City, TX 200 1986 146,328 8.0 128 72 0 732
Fielder's Glen Arlington, TX 220 1985 165,752 10.0 140 80 0 753
The Gables McKinney, TX 220 1986 169,880 10.0 160 60 0 772
Greens Crossing Dallas, TX 364 1984 262,761 10.5 292 72 0 722
Hilltop (2) North Richland Hills, TX 238 1984 179,256 12.2 150 88 0 753
Newport Irving, TX 308 1982 238,768 12.4 208 100 0 775
Oak Forest (2) Bedford, TX 170 1982 136,300 8.7 60 110 0 802
Pinnacle Lewisville, TX 150 1985 119,774 6.3 86 64 0 798
Post Oak Place Euless, TX 354 1983 255,798 11.1 270 84 0 723
Preston Greens Dallas, TX 256 1980 246,340 11.2 164 92 0 962
Quayle Walk (2) Arlington, TX 218 1984 160,432 10.3 132 86 0 736
Reflections of Highpoint Dallas, TX 372 1986 281,940 11.1 276 96 0 758
Remington Hill Fort Worth, TX 440 1986 339,008 15.0 300 140 0 770
Rivercrest Arlington, TX 420 1979 337,056 19.3 320 100 0 803
Shadow Creek (2) North Richland Hills, TX 240 1986 181,896 12.2 120 120 0 758
Springfield Mesquite, TX 264 1985 193,212 9.0 192 72 0 732
Summer Meadows Plano, TX 389 1986 323,434 21.6 236 153 0 831
Summer Villas Dallas, TX 460 1984 328,020 15.8 380 80 0 713
Summers Crossing Plano, TX 293 1986 238,697 15.7 215 78 0 815
Summers Landing Fort Worth, TX 196 1985 139,300 7.8 172 24 0 711
Timber Creek at Treepoint (2) Arlington, TX 160 1985 139,680 7.4 48 96 16 873
Towne Center Dallas, TX 392 1978 269,348 11.5 256 136 0 687
Waterford (2) Plano, TX 350 1985 310,746 22.0 102 248 0 888
Woodridge Fort Worth, TX 248 1984 197,600 10.4 128 104 16 797
------ ---- ---------- ----- ------ ----- --- ---
Dallas Total/Weighted Average 7,402 1984 5,725,558 310.8 4,807 2,547 48 774
====== ==== ========== ===== ====== ===== === ===
Houston
- -------
Copper Cove Houston, TX 270 1983 204,240 7.0 192 78 0 756
Foxboro Houston, TX 220 1982 162,712 6.3 160 60 0 740
Laurel Creek Houston, TX 428 1985 323,568 15.8 304 100 24 756
------ ---- ---------- ----- ------ ----- --- ---
Houston Total/Weighted Average 918 1984 690,520 29.1 656 238 24 752
====== ==== ========== ===== ====== ===== === ===
<Page 11a>
San Antonio
- -----------
Costa del Sol (2) San Antonio, TX 244 1985 180,798 10.0 170 74 0 741
Country View San Antonio, TX 272 1981 213,120 11.0 176 96 0 784
Remington (2) San Antonio, TX 158 1986 112,018 4.9 108 50 0 709
Summer Oaks (2) San Antonio, TX 256 1983 171,464 9.5 184 72 0 670
Villas of St. Moritz (2) San Antonio, TX 216 1986 149,040 7.5 136 80 0 690
------ ---- ---------- ----- ------ ----- --- ---
San Antonio Total/Weighted Average 1,146 1984 826,440 42.9 774 372 0 721
====== ==== ========== ===== ====== ===== === ===
Other Texas
- -----------
Fountaingate/Willowcreek Wichita Falls, TX 280 1980 252,040 17.8 160 104 16 900
Settler's Cove Beaumont, TX 182 1982 133,654 6.2 138 44 0 734
------ ---- ---------- ----- ------ ----- --- ---
Other Texas Total/Weighted Average 462 1981 385,694 24.0 298 148 16 835
====== ==== ========== ===== ====== ===== === ===
Texas Total/Weighted Average 11,257 1984 8,584,036 461.3 7,481 3,688 88 763
====== ==== ========== ===== ====== ===== === ===
Jacksonville
- ------------
Bentley Green (2) Jacksonville, FL 444 1986 308,096 25.7 336 108 0 694
Brookwood Club Jacksonville, FL 360 1987 287,480 15.0 200 160 0 799
Huntington at Hidden Hills (2) Jacksonville, FL 224 1986 183,200 15.0 64 160 0 818
Remington at Ponte Vedra Ponte Vedra Beach, FL 344 1986 302,904 28.6 136 208 0 881
Sandpiper Jacksonville, FL 376 1985 289,112 17.0 200 144 32 769
------ ---- ---------- ----- ------ ----- --- ---
Jacksonville Total/Weighted Average 1,748 1986 1,370,792 101.3 936 780 32 784
====== ==== ========== ===== ====== ===== === ===
Tampa
- -----
Bel Shores Largo, FL 250 1985 189,874 22.3 138 112 0 759
Carlyle at Waters Tampa, FL 392 1986 281,893 13.0 310 82 0 719
Three Palms Tampa, FL 438 1986 369,362 34.7 254 184 0 843
------ ---- ---------- ----- ------ ----- --- ---
Tampa Total/Weighted Average 1,080 1986 841,129 70.0 702 378 0 779
====== ==== ========== ===== ====== ===== === ===
Other Florida
- -------------
Saratoga (2) Melbourne, FL 210 1986 146,732 14.0 160 50 0 699
------ ---- ---------- ----- ------ ----- --- ---
Florida Total/Weighted Average 3,038 1986 2,358,653 185.3 1,798 1,208 32 776
====== ==== ========== ===== ====== ===== === ===
<Page 12a>
Oklahoma City
- -------------
Copperfield Oklahoma City, OK 262 1983 187,080 7.7 196 66 0 714
Hunter's Ridge Oklahoma City, OK 212 1984 155,587 6.0 148 64 0 734
Summerfield Place Oklahoma City, OK 224 1981 154,528 9.0 176 48 0 690
Woodscape Oklahoma City, OK 498 1985 363,073 15.6 348 150 0 729
------ ---- ---------- ----- ------ ----- --- ---
Oklahoma City Total/Weighted Average 1,196 1984 860,268 38.3 868 328 0 719
====== ==== ========== ===== ====== ===== === ===
Tulsa
- -----
Burning Tree Tulsa, OK 256 1978 156,848 11.3 208 48 0 613
Cinnamon Stick Tulsa, OK 424 1978 256,672 14.6 360 64 0 605
The Lift Tulsa, OK 328 1979 194,168 14.2 280 48 0 592
------ ---- ---------- ----- ------ ----- --- ---
Tulsa Total/Weighted Average 1,008 1978 607,688 40.1 848 160 0 603
====== ==== ========== ===== ====== ===== === ===
Oklahoma Total/Weighted Average 2,204 1981 1,467,956 78.4 1,716 488 0 666
====== ==== ========== ===== ====== ===== === ===
Phoenix
- -------
Casa Verde Phoenix, AZ 268 1983 178,140 8.2 184 84 0 665
Meadow Glen (2) Glendale, AZ 290 1987 242,020 11.2 90 200 0 835
Terra Vida (2) Mesa, AZ 384 1988 305,600 15.4 128 224 32 796
Woodstone Phoenix, AZ 696 1986 573,564 19.7 432 240 24 824
------ ---- ---------- ----- ------ ----- --- ---
Phoenix Total/Weighted Average 1,638 1986 1,299,324 54.5 834 748 56 793
====== ==== ========== ===== ====== ===== === ===
Salt Lake City
- --------------
James Pointe Murray, UT 312 1985 236,928 11.6 144 168 0 759
Stillwater Murray, UT 456 1986 343,216 15.3 152 304 0 753
------ ---- ---------- ----- ------ ----- --- ---
Salt Lake City Total/Weighted Average 768 1986 580,144 26.9 296 472 0 755
====== ==== ========== ===== ====== ===== === ===
Nashville
- ---------
Nashboro Village Nashville, TN 994 1982 959,153 60.7 456 426 112 965
Brandywine Nashville, TN 300 1985 203,418 21.0 240 60 0 678
Raintree Nashville, TN 332 1985 216,930 24.9 252 80 0 653
------ ---- ---------- ----- ------ ----- --- ---
Nashville Total/Weighted Average 1,626 1983 1,379,501 106.6 948 566 112 848
====== ==== ========== ===== ====== ===== === ===
<Page 13a>
Other Markets
- -------------
Eagle Pointe Indianapolis, IN 256 1988 202,000 19.8 152 104 0 789
Silverado Albuquerque, NM 256 1985 183,656 8.1 180 76 0 717
Winridge Aurora, CO (Denver) 364 1986 303,438 15.8 262 102 0 834
------ ---- ---------- ----- ------ ----- --- ---
Other Markets Total/Weighted Average 876 1986 689,094 43.7 594 282 0 787
====== ==== ========== ===== ====== ===== === ===
Total/Weighted Average 21,407 1984 16,358,708 957.0 13,667 7,452 288 764
====== ==== ========== ===== ====== ===== === ===
</TABLE>
(1) Year construction completed indicates the year in which the
final certificate of occupancy for the property was issued.
(2) Represents a recently acquired property for which certain
historical information is not available.
(3) Represents a weighted average for the properties for which
historical information is available.
<Page 10b>
<TABLE>
<CAPTION>
Average Monthly
Occupancy (3) Rental Rate Per Unit (3)
As of As of December December
Metropolitan Area/Property Location 12/31/95 12/31/96 1995 1996
- -------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Austin
- ------
Ashbury Park Austin, TX N/A 97.8% N/A $533
Harper's Creek Austin, TX 95.5% 92.5% $574 $584
Pinto Creek Austin, TX 93.2% 94.8% $627 $637
Trestles of Austin Austin, TX 96.5% 95.2% $589 $614
Austin Total/Weighted Average 95.3% 95.4% $595 $587
Dallas/Fort Worth
- -----------------
Braden's Walk (2) Bedford, TX 92.3% 98.1% N/A $496
Cinnamon Park Arlington, TX 91.9% 93.4% $523 $550
Club at Springlake Haltom City, TX 97.5% 94.0% $457 $483
Fielder's Glen Arlington, TX 94.5% 96.8% $489 $500
The Gables McKinney, TX 95.9% 92.7% $582 $602
Greens Crossing Dallas, TX 95.3% 91.5% $452 $482
Hilltop (2) North Richland Hills, TX 97.9% 93.7% N/A $505
Newport Irving, TX 97.4% 99.0% $522 $549
Oak Forest (2) Bedford, TX N/A 99.4% N/A $501
Pinnacle Lewisville, TX 96.7% 97.3% $550 $586
Post Oak Place Euless, TX 99.2% 93.5% $499 $528
Preston Greens Dallas, TX 96.9% 94.5% $636 $668
Quayle Walk (2) Arlington, TX N/A 95.4% N/A $502
Reflections of Highpoint Dallas, TX 96.2% 96.5% $552 $581
Remington Hill Fort Worth, TX 97.0% 95.9% $514 $541
Rivercrest Arlington, TX 94.0% 89.9% $490 $510
Shadow Creek (2) North Richland Hills, TX 96.3% 96.7% N/A $518
Springfield Mesquite, TX 95.1% 93.6% $487 $520
Summer Meadows Plano, TX 93.6% 91.0% $608 $630
Summer Villas Dallas, TX 96.3% 95.4% $514 $548
Summers Crossing Plano, TX 95.6% 94.5% $602 $626
Summers Landing Fort Worth, TX 97.4% 95.9% $512 $539
Timber Creek at Treepoint (2) Arlington, TX N/A 08.8% N/A $558
Towne Center Dallas, TX 93.9% 94.4% $382 $410
Waterford (2) Plano, TX N/A 92.9% N/A $632
Woodridge Fort Worth, TX 94.8% 91.5% $444 $470
----- ----- ---- ----
Dallas Total/Weighted Average 95.7% 94.5% $514 $541
===== ===== ==== ====
Houston
- -------
Copper Cove Houston, TX 92.6% 96.3% $472 $479
Foxboro Houston, TX 94.1% 93.2% $445 $468
Laurel Creek Houston, TX 95.8% 95.1% $553 $563
----- ----- ---- ----
Houston Total/Weighted Average 94.5% 95.0% $503 $516
===== ===== ==== ====
<Page 11b>
San Antonio
- -----------
Costa Del Sol (2) San Antonio, TX N/A 94.3% N/A $526
Country View San Antonio, TX 92.6% 94.1% $487 $487
Remington (2) San Antonio, TX N/A 94.3% N/A $523
Summer Oaks (2) San Antonio, TX N/A 94.5% N/A $465
Villas of St. Moritz (2) San Antonio, TX N/A 94.0% N/A $475
----- ----- ---- ----
San Antonio Total/Weighted Average 92.6% 94.2% $487 $493
===== ===== ==== ====
Other Texas
- -----------
Fountaingate/Willowcreek Wichita Falls, TX 97.9% 92.5% $501 $521
Settler's Cove Beaumont, TX 94.0% 94.0% $466 $483
----- ----- ---- ----
Other Texas Total/Weighted Average 96.4% 93.1% $487 $506
===== ===== ==== ====
Texas Total/Weighted Average 95.5% 94.6% $520 $538
===== ===== ==== ====
Jacksonville
- ------------
Bentley Green (2) Jacksonville, FL N/A 95.5% N/A $555
Brookwood Club Jacksonville, FL 97.8% 90.8% $509 $540
Huntington at Hidden Hills (2) Jacksonville, FL N/A 91.5% N/A $511
Remington at Ponte Vedra Ponte Vedra Beach, FL 93.6% 94.5% $617 $648
Sandpiper Jacksonville, FL 99.7% 94.7% $472 $535
----- ----- ---- ----
Jacksonville Total/Weighted Average 97.1% 93.7% $531 $560
===== ===== ==== ====
Tampa
- -----
Bel Shores Largo, FL 95.2% 92.8% $565 $586
Carlyle at Waters Tampa, FL 93.1% 95.9% $476 $492
Three Palms Tampa, FL 88.6% 94.3% $572 $595
----- ----- ---- ----
Tampa Total/Weighted Average 91.8% 94.5% $536 $555
===== ===== ==== ====
Other Florida
- -------------
Saratoga (2) Melbourne, FL N/A 94.3% N/A $536
----- ----- ---- ----
Florida Total/Weighted Average 94.4% 94.0% $533 $557
===== ===== ==== ====
<Page 12b>
Oklahoma City
- -------------
Copperfield Oklahoma City, OK 97.3% 98.9% $441 $459
Hunter's Ridge Oklahoma City, OK 92.9% 94.8% $429 $440
Summerfield Place Oklahoma City, OK 93.8% 95.1% $419 $440
Woodscape Oklahoma City, OK 90.8% 93.6% $447 $463
----- ----- ---- ----
Oklahoma City Total/Weighted Average 93.2% 95.3% $437 $454
===== ===== ==== ====
Tulsa
- -----
Burning Tree Tulsa, OK 98.4% 92.2% $333 $346
Cinnamon Stick Tulsa, OK 89.2% 90.1% $313 $332
The Lift Tulsa, OK 90.2% 89.0% $310 $333
----- ----- ---- ----
Tulsa Total/Weighted Average 91.9% 90.3% $317 $336
===== ===== ==== ====
Oklahoma Total/Weighted Average 92.6% 93.0% $382 $400
===== ===== ==== ====
Phoenix
- -------
Casa Verde Phoenix, AZ 91.8% 97.0% $373 $381
Meadow Glen (2) Glendale, AZ N/A 97.6% N/A $604
Terra Vida (2) Mesa, AZ N/A 94.5% N/A $556
Woodstone Phoenix, AZ 95.1% 95.3% $540 $567
----- ----- ---- ----
Phoenix Total/Weighted Average 94.2% 95.8% $494 $541
===== ===== ==== ====
Salt Lake City
- --------------
James Pointe Murray, UT 98.7% 95.2% $543 $572
Stillwater Murray, UT 98.2% 97.1% $565 $594
----- ----- ---- ----
Salt Lake City Total/Weighted Average 98.4% 96.3% $556 $585
===== ===== ==== ====
Nashville
- ---------
Nashboro Village Nashville, TN N/A 92.3% N/A N/A
Brandywine Nashville, TN 94.0% 91.7% $504 $532
Raintree Nashville, TN 97.3% 87.7% $508 $536
----- ----- ---- ----
Nashville Total/Weighted Average 95.7% 91.2% $506 $534
===== ===== ==== ====
<Page 13b>
Other Markets
- -------------
Eagle Pointe Indianapolis, IN 94.9% 89.8% $561 $571
Silverado Albuquerque, NM 96.5% 90.6% $562 $569
Winridge Aurora, CO (Denver) 92.6% 95.3% $578 $605
----- ----- ---- ----
Other Markets Total/Weighted Average 94.4% 92.3% $569 $585
===== ===== ==== ====
Total/Weighted Average 95.0% 94.1% $505 $530
===== ===== ==== ====
</TABLE>
(1) Year construction completed indicates the year in which
the final certificate of occupancy for the property was issued.
(2) Represents a recently acquired property for which certain
historical information is not available.
(3) Represents a weighted average for the properties for which
historical information is available.
<Page 14a>
WALDEN RESIDENTIAL PROPERTIES, INC.
APARTMENT AMENITIES
<TABLE>
<CAPTION>
Apartment Amenities
-------------------------------------------------------------------------
Patio or Laundry Mini Cable TV Outside Ceiling
Metropolitan Area/Property Location Balcony Hookups Fireplace Blinds Ready Storage Fans Other
- -------------------------- -------- ------- ------- --------- ------ ----- ------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Austin
- ------
Ashbury Parke Austin, TX ALL 32% 17% ALL ALL ALL 96% Frost-Free
Refrigerators;
Icemakers-157 Units;
Washer/Dryer
Provided-4 Units
Harper's Creek Austin, TX 87% 26% 34% ALL ALL 64% 29% Frost-Free
Refrigerators;
Icemakers-40 Units;
Microwaves-62 Units
Pinto Creek Austin, TX ALL 69% 38% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers
Trestles of Austin Austin, TX ALL 64% 21% ALL ALL 42% Washer/Dryer-253
Units; Frost-Free
Refrigerators
Dallas/Fort Worth
- -----------------
Braden's Walk Bedford, TX ALL 77% 19% ALL ALL 77% ALL Frost-Free
Refrigerators
Cinnamon Park Arlington, TX ALL 71% ALL ALL ALL ALL ALL Alarms; Frost-Free
Refrigerators;
Icemakers
Club at Springlake Haltom City, TX 64% 64% 64% ALL ALL 26% ALL Alarms; Icemakers
Fielder's Glen Arlington, TX 66% 66% 66% ALL ALL 26% ALL Frost-Free
Refrigerators
The Gables McKinney, TX ALL 71% ALL ALL ALL ALL ALL Frost-Free
Refrigerators
Greens Crossing Dallas, TX 70% 52% 23% ALL ALL 70% ALL Alarms; Frost-Free
Refrigerators;
Icemakers-58 Units
Hilltop North Richland Hills, TX ALL ALL 45% ALL ALL ALL Frost-Free
Refrigerators
Newport Irving, TX 83% 45% 38% ALL ALL 83% 27% Frost-Free
Refrigerators;
Icemakers-52 Units
Oak Forest Bedford, TX ALL 74% ALL ALL ALL Frost-Free
Refrigerators;
Washer/Dryer
Provided-25 Units
Pinnacle Lewisville, TX ALL ALL 50% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers;
Microwaves-15 Units
Post Oak Place Euless, TX 90% 68% 33% 80% ALL 83% 65% Frost-Free
Refrigerators
Preston Greens Dallas, TX 44% 81% ALL ALL ALL 39% Covered parking;
Alarms; Microwaves
Quayle Walk Arlington, TX ALL 45% 33% ALL ALL ALL 50% Frost-Free
Refrigerators
Reflections of Highpoint Dallas, TX ALL ALL ALL ALL ALL ALL ALL Frost-Free
Refrigerators;
Alarms; Icemakers;
Microwaves;
Washer/Dryer Provided
Remington Hill Fort Worth, TX ALL ALL ALL ALL ALL ALL ALL Frost-Free
Refrigerators;
Microwaves; Icemakers;
Covered Parking;
Washer/Dryer Provided
Rivercrest Arlington, TX ALL ALL ALL ALL ALL 11% ALL Frost-Free
Refrigerators-200
Units;
Icemakers-20 Units
Shadow Creek North Richland Hills, TX ALL 90% 50% ALL ALL 10% Frost-Free
Refrigerators
Springfield Mesquite, TX 84% 50% 24% 74% ALL 84% ALL Alarms; Frost-Free
Refrigerators;
Icemakers-36 Units
Summer Meadows Plano, TX ALL ALL 54% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers; Covered
Parking
Summer Villas Dallas, TX ALL 69% ALL ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers
Summers Crossing Plano, TX 75% ALL 97% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers
Summers Landing Fort Worth, TX ALL 71% 80% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers
Timber Creek at Treepoint Arlington, TX ALL 74% 67% ALL ALL 57% 43% Frost-Free
Refrigerators;
Icemakers-110 Units
Towne Center Dallas, TX 56% ALL ALL 56% 94% Frost-Free
Refrigerators-127
Units;
Alarms-52 Units
Waterford Plano, TX ALL ALL ALL ALL ALL 9% Frost-Free
Refrigerators;
Covered Parking;
Washer/Dryer
Provided-6 Units
Woodridge Fort Worth, TX 29% ALL 81% ALL ALL ALL Frost-Free
Refrigerators
<Page 15a>
Houston
- -------
Copper Cove Houston, TX 82% 67% 33% 93% ALL 82% 41% Frost-Free
Refrigerators;
Icemakers-54 Units
Foxboro Houston, TX 81% 41% 27% 75% ALL 95% 34% Alarms; Frost-Free
Refrigerators;
Icemakers-24 Units
Laurel Creek Houston, TX ALL ALL 57% ALL ALL 2% ALL Alarms; Frost-Free
Refrigerators;
Icemakers;
Washer/Dryer-94 Units
San Antonio
- -----------
Costa del Sol San Antonio, TX 100% 100% 100% 100% 100% 100% 100% Frost-Free
Refrigerators;
Microwaves;
Washer/Dryer
Country View San Antonio, TX ALL ALL ALL ALL 50% Icemakers;
Microwaves;
Alarms
Remington San Antonio, TX ALL ALL 34% ALL ALL ALL ALL Alarms; Frost-Free
Refrigerators;
Icemakers;
Microwaves;
Washer/Dryer-4 Units
Summer Oaks San Antonio, TX ALL ALL 50% ALL ALL ALL 34% Alarms-32 Units;
Frost-Free
Refrigerators;
Washer/Dryer
Provided-16 Units
Villas of St. Moritz San Antonio, TX ALL 81% 15% ALL ALL ALL ALL Frost-Free
Refrigerators;
Microwaves
Other Texas
- -----------
Fountaingate/Willowcreek Wichita Falls, TX 25% 19% 83% 33% ALL 11% Covered Parking;
Microwaves
Settler's Cove Beaumont, TX ALL 15% 35% ALL 64% Frost-Free
Refrigerators
Jacksonville
- ------------
Bentley Green Jacksonville, FL ALL 1% ALL ALL ALL 50% Microwaves-44 Units;
Washer/Dryer
Provided-396 Units
Brookwood Club Jacksonville, FL ALL ALL ALL ALL ALL ALL Alarms; Frost-Free
Refrigerators
Huntington at Hidden Hills Jacksonville, FL ALL 71% 71% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers;
Microwaves;
Covered
Parking-112 Units
Remington at Ponte Vedra Ponte Vedra Beach, FL ALL ALL ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers;
Microwaves;
Washer/Dryer
Provided
Sandpiper Jacksonville, FL ALL 85% 85% ALL ALL ALL Frost-Free
Refrigerators
Tampa
- -----
Bel Shores Largo, FL ALL ALL ALL ALL ALL Frost-Free
Refrigerators
Carlyle at Waters Tampa, FL ALL 50% 8% ALL ALL ALL ALL Alarms; Frost-Free
Refrigerators;
Icemakers-98 Units
Three Palms Tampa, FL ALL ALL 50% ALL ALL ALL ALL Frost-Free
Refrigerators;
Icemakers;
Microwaves;
Washer/Dryer
Provided
Other Florida
- -------------
Saratoga Melbourne, FL ALL 2% ALL ALL ALL ALL Frost-Free
Refrigerators;
Washer/Dryer
Provided
Oklahoma City
- -------------
Copperfield Oklahoma City, OK 86% 40% 24% 65% ALL ALL ALL Alarms; Frost-Free
Refrigerators;
Icemakers-42 Units
Hunter's Ridge Oklahoma City, OK 74% 41% 30% ALL ALL 74% 49% Alarms; Frost-Free
Refrigerators;
Icemakers-40 Units
Summerfield Place Oklahoma City, OK ALL ALL ALL ALL 11% Frost-Free
Refrigerators;
Icemakers;
Microwaves;
Washer/Dryer
Provided-175 Units
Woodscape Oklahoma City, OK 68% 46% 34% 89% ALL 68% 77% Frost-Free
Refrigerators;
Icemakers-58 Units
Tulsa
- -----
Burning Tree Tulsa, OK ALL 79% ALL 53% Frost-Free
Refrigerators-46
Units
Cinnamon Stick Tulsa, OK ALL 64% ALL 97% Icemakers-72 Units
The Lift Tulsa, OK ALL 46% ALL 31% Frost-Free
Refrigerators-43
Units
<Page 16a>
Phoenix
- -------
Casa Verde Phoenix, AZ ALL ALL ALL ALL Covered Parking
Meadow Glen Glendale, AZ ALL ALL 18% ALL ALL ALL ALL Frost-Free
Refrigerators;
Covered Parking;
Microwaves;
Washer/Dryer
Provided
Terra Vida Mesa, AZ ALL 67% 75% ALL ALL Frost-Free
Refrigerators;
Covered Parking;
Washer/Dryer
Provided-100 Units
Woodstone Phoenix, AZ ALL ALL 33% ALL ALL 84% ALL Covered Parking;
Microwaves
Salt Lake City
- --------------
James Pointe Murray, UT ALL ALL 33% ALL ALL ALL Covered Parking
Stillwater Murray, UT ALL ALL 33% ALL ALL 17% Covered Parking
Nashville
- ---------
Nashboro Village Nashville, TN ALL 82% 63% ALL ALL 83% ALL Frost-Free
Refrigerators-620
Units;
Icemakers-621 Units;
Washer/Dryer
Provided-120 Units
Brandywine Nashville, TN ALL 42% 16% ALL ALL Frost-Free
Refrigerators
Raintree Nashville, TN ALL 42% 16% ALL ALL Frost-Free
Refrigerators
Other Markets
- -------------
Eagle Pointe Indianapolis, IN ALL ALL 36% ALL ALL ALL Microwaves
Silverado Albuquerque, NM ALL 30% 25% ALL ALL ALL ALL Alarms; Frost-Free
Refrigerators;
Microwave
Winridge Aurora, CO (Denver) 77% ALL ALL ALL ALL 77% ALL Frost-Free
Refrigerators;
Icemakers;
Microwaves;
Washer/Dryer Provided
</TABLE>
<Page 14b>
<TABLE>
<CAPTION>
Recreational Amenities
-----------------------------------------------------
Swimming Spa/ Sports
Metropolitan Area/Property Location Clubhouse Pools Jacuzzi Facilities (2) Other
- -------------------------- -------- --------- -------- ------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Austin
- ------
Ashbury Parke Austin, TX 2 1 Yes BBQ/Picnic Area
Harper's Creek Austin, TX Yes 2 Yes Yes BBQ/Picnic Area
Pinto Creek Austin, TX Yes 2 Yes
Trestles of Austin Austin, TX Yes 2 Yes BBQ/Picnic Area
Dallas/Fort Worth
- -----------------
Braden's Walk Bedford, TX Yes 1 Yes Yes BBQ/Picnic Area
Cinnamon Park Arlington, TX Yes 1 Yes Yes BBQ/Picnic Area
Club at Springlake Haltom City, TX Yes 1 Yes BBQ/Picnic Area;
Dry Sauna
Fielder's Glen Arlington, TX Yes 2 Yes Yes BBQ/Picnic Area;
Dry Sauna
The Gables McKinney, TX Yes 2 Yes Yes BBQ Area;
Playground Area
Greens Crossing Dallas, TX Yes 2 Yes Yes BBQ/Picnic Area
Hilltop North Richland Hills, TX Yes 1 Yes Yes BBQ/Picnic Area
Newport Irving, TX Yes 2 Yes BBQ Area;
Playground Area
Oak Forest Bedford, TX Yes 2 Yes BBQ/Picnic Area
Pinnacle Lewisville, TX Yes 1 Yes Yes BBQ/Picnic Area
Post Oak Place Euless, TX Yes 2 Yes BBQ/Picnic Area
Preston Greens Dallas, TX Yes 3 Yes BBQ/Picnic Area;
Dry Sauna
Quayle Walk Arlington, TX Yes 1 Yes BBQ/Picnic Area
Reflections of Highpoint Dallas, TX Yes 4 Yes Yes BBQ/Picnic Area;
Dry Sauna; Pool
Table; Car Wash
Remington Hill Fort Worth, TX Yes 3 Yes Yes BBQ/Picnic Area;
Dry Sauna
Rivercrest Arlington, TX Yes 2 Yes Yes BBQ/Picnic Area
Shadow Creek North Richland Hills, TX Yes 2 Yes Yes BBQ/Picnic Area;
Playground Area
Springfield Mesquite, TX Yes 2 Yes
Summer Meadows Plano, TX Yes 2 Yes Yes BBQ/Picnic Area;
Car Wash; Playground
Area; Pool Table
Summer Villas Dallas, TX Yes 3 Yes Yes BBQ/Picnic Area
Summers Crossing Plano, TX Yes 2 Yes Yes BBQ/Picnic Area;
Playground Area
Summers Landing Fort Worth, TX Yes 1 Yes BBQ/Picnic Area
Timber Creek at Treepoint Arlington, TX Yes 4 Yes Yes BBQ/Picnic Area;
Playground Area
Towne Center Dallas, TX Yes 2 Yes BBQ/Picnic Area
Waterford Plano, TX 3 Yes BBQ/Picnic Area
Woodridge Fort Worth, TX 1 Yes BBQ/Picnic Area;
Dry Sauna
<Page 15b>
Houston
- -------
Copper Cove Houston, TX Yes 1 Yes
Foxboro Houston, TX Yes 1 BBQ/Picnic Area
Laurel Creek Houston, TX Yes 3 Yes Yes
San Antonio
- -----------
Costa del Sol San Antonio, TX Yes 2 Yes BBQ/Picnic Area
Country View San Antonio, TX Yes 3 BBQ/Picnic Area
Remington San Antonio, TX Yes 1 1 Yes BBQ/Picnic Area
Summer Oaks San Antonio, TX Yes 2 1 Yes BBQ/Picnic Area
Villas of St. Moritz San Antonio, TX Yes 1 1 Yes BBQ/Picnic Area
Other Texas
- -----------
Fountaingate/Willowcreek Wichita Falls, TX Yes 2 Yes Playground Area
Settler's Cove Beaumont, TX Yes 1 Yes BBQ/Picnic Area
Jacksonville
- ------------
Bentley Green Jacksonville, FL Yes 2 2 Yes BBQ/Picnic Area
Brookwood Club Jacksonville, FL Yes 10 Yes
Huntington at Hidden Hills Jacksonville, FL Yes 1 1 Yes BBQ/Picnic Area;
Playground Area
Remington at Ponte Vedra Ponte Vedra Beach, FL Yes 2 Yes Yes Playground Area;
Dry Sauna; Car Wash
Sandpiper Jacksonville, FL Yes 2 Yes Yes BBQ/Picnic Area;
Car Wash;
Playground Area
Tampa
- -----
Bel Shores Largo, FL Yes 1 Yes Yes BBQ Area; Car Wash; Lake
Carlyle at Waters Tampa, FL Yes 2 Yes Yes
Three Palms Tampa, FL Yes 4 Yes Yes BBQ/Picnic Area;
Dry Sauna;
Playground Area;
Car Wash
Other Florida
- -------------
Saratoga Melbourne, FL Yes 1 Yes Pool Table
Oklahoma City
- -------------
Copperfield Oklahoma City, OK Yes 1 Yes No
Hunter's Ridge Oklahoma City, OK Yes 1 Yes Yes BBQ/Picnic Area
Summerfield Place Oklahoma City, OK Yes 1 Yes BBQ/Picnic Area
Woodscape Oklahoma City, OK Yes 2 Yes Yes
Tulsa
- -----
Burning Tree Tulsa, OK Yes 1 Yes Playground Area
Cinnamon Stick Tulsa, OK Yes 1 Yes BBQ/Picnic Area
The Lift Tulsa, OK Yes 1 Yes Playground Area
<Page 16b>
Phoenix
- -------
Casa Verde Phoenix, AZ 2 Yes BBQ/Picnic Area
Meadow Glen Glendale, AZ 2 2 Yes BBQ/Picnic Area;
Playground Area
Terra Vida Mesa, AZ Yes 3 2 Yes BBQ/Picnic Area;
Playground Area
Woodstone Phoenix, AZ Yes 4 Yes Yes BBQ/Picnic Area
Salt Lake City
- --------------
James Pointe Murray, UT Yes 1 Yes Yes Tanning Bed; Pool Table
Stillwater Murray, UT Yes 1 Yes Yes Tanning Bed; Pool Table
Nashville
- ---------
Nashboro Village Nashville, TN 3 6 2 Yes BBQ/Picnic Area;
Two Dry Saunas;
Community Wide Along
with Sports Center
Brandywine Nashville, TN Yes 1 Yes
Raintree Nashville, TN Yes 1 Yes
Other Markets
- -------------
Eagle Pointe Indianapolis, IN Yes 1 Yes Yes Two Tanning Beds
Silverado Albuquerque, NM Yes 2 Yes Yes BBQ/Picnic Area
Winridge Aurora, CO (Denver) Yes 1 Yes BBQ/Picnic Area;
Dry Sauna
</TABLE>
(1) Amenities exist in all units except where otherwise
indicated.
(2) Consists of one or more of the following: Fitness center,
tennis court(s), water volleyball, racquetball, basketball
and/or volleyball courts.
<Page 17>
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. The Company and the Properties are occasionally
subjected to routine litigation arising in the ordinary course of
business, which has been and is expected to be covered by liability
insurance and none of which has had or is expected to have a
material adverse effect on the business, financial condition,
results of operations or cash flows of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
(a) (1) A Special Meeting of holders of the Company's 9.16%
Series B Convertible Redeemable Preferred Stock was
held on December 2, 1996.
(2) The Series B Preferred Stockholders approved the
issuance of a series of senior preferred stock:
Affirmative Negative Abstentions
----------- -------- -----------
932,220 339,800 435,280
(b) (1) A Special Meeting of holders of the Company's 9.16%
Series A Convertible Redeemable Preferred Stock was
held on December 11, 1996.
(2) The Series A Preferred Stockholders approved the
issuance of a series of senior preferred stock:
Affirmative Negative Abstentions
----------- -------- -----------
66,000 -- 12,700
<Page 18>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
- -----------------------------------------------------------------------
The common stock of the Company ("Common Stock") has traded on
the New York Stock Exchange ("NYSE") under the symbol "WDN" since
February 2, 1994, the date on which the Common Stock began trading.
The following table sets forth for the periods indicated the high
and low sales prices per common share as reported on the NYSE and
the distributions declared by the Company per share for each such
period in 1996 and 1995:
<TABLE>
<CAPTION>
Distributions
Quarter Ended High Low Per Share
- ------------- ---- --- -------------
<S> <C> <C> <C>
March 31, 1996. . . . . . . . . . $22.125 $20.000 $.465
June 30, 1996 . . . . . . . . . . 21.875 20.250 .465
September 30, 1996. . . . . . . . 21.875 19.750 .465
December 31, 1996 . . . . . . . . 26.000 20.875 .465
March 31, 1995. . . . . . . . . . 20.50 17.875 .455
June 30, 1995 . . . . . . . . . . 19.875 18.00 .455
September 30, 1995. . . . . . . . 19.50 18.125 .455
December 31, 1995 . . . . . . . . 21.00 17.375 .455
</TABLE>
As of March 3, 1997, the Common Stock was held by 1,315
stockholders of record, including shares held in nominee or street
name by brokers.
For the year ended December 31, 1996, the Company declared and
paid distributions totaling $1.86 per share of Common Stock. On
March 3, 1997, the Company paid a distribution of $.4825 per share
to record holders of Common Stock on February 17, 1997,
representing a 3.8% increase in its quarterly distribution and an
annualized distribution of $1.93 per share of Common Stock.
Pursuant to a provision of the Company's credit facility,
distributions to stockholders may not exceed 90% of funds from
operations, as defined in the credit facility. The Company does
not anticipate any restrictions on distributions pursuant to this
provision.
Future distributions made by the Company will be at the
discretion of its Board of Directors and will depend upon numerous
factors, including the gross revenues received from its Properties,
the operating expenses of the Company, capital expenditures for the
Properties and the interest expense incurred in borrowing.
Distributions by the Company to the extent of its current and
accumulated earnings and profits for Federal income tax purposes
generally will be taxable to stockholders as ordinary dividend
income. Distributions in excess of such earnings and profits
generally will be treated as a non-taxable reduction of the
stockholder's basis in the shares of Common Stock to the extent
thereof (which may have the effect of deferring taxation until such
stockholder's sale of the shares of Common Stock), and thereafter
as taxable gain. Approximately $0.80 (or 43.3%) of the $1.86
<Page 19>
of distributions in 1996 represented a return of capital. In
addition, approximately $0.07 (or 3.7%) of the $1.86 distributions
in 1996 represented a capital gain from the sale of real estate
assets.
Item 6. Selected Financial Data
- ---------------------------------
The following tables set forth selected consolidated financial
data for the Company and combined financial data for 18 of the
Original Properties (three of which have been sold, one in April
1995, one in April 1996 and one in September 1996) acquired
concurrently with the closing of the IPO and assets, liabilities
and operations of the Walden Predecessors' operating companies.
The historical consolidated operating data for the Company for the
years ended December 31, 1996 and 1995 and the period from February
9, 1994 (date of commencement of operations) to December 31, 1994
and the balance sheet data as of December 31, 1996 and 1995 and the
combined operating data of the Walden Predecessors for the period
January 1, 1994 to February 8, 1994, each of the years in the two-year
period ended December 31, 1993 and the balance sheet data as
of December 31, 1993 and 1992 have been derived from the
consolidated financial statements and accounting records of the
Company and the combined financial statements and accounting
records of the Walden Predecessors, respectively, which have been
audited by independent auditors. The consolidated and combined
historical operating results of the Company and the Walden
Predecessors may not be indicative of future operating results of
the Company. The following selected financial information should be
read in conjunction with the discussion set forth under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and all of the financial statements included
elsewhere in this report. All amounts are in thousands except per
share and property data.
<Page 20>
<TABLE>
<CAPTION>
The Company
-----------------------------
Year Ended February 9 to
December 31, December 31,
--------------- -------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
OPERATING DATA
Revenues
Rental income . . . . . . . . . . . . $ 105,602 $ 78,469 $ 39,602
Other property income . . . . . . . . 3,873 3,090 1,493
Interest income . . . . . . . . . . . 1,433 856 365
Other income. . . . . . . . . . . . . 263 409 533
--------- -------- ---------
Total revenues. . . . . . . . . . . 111,171 82,824 41,993
Expenses
Property operating and maintenance. . 37,521 28,748 15,607
Real estate taxes . . . . . . . . . . 10,039 7,337 3,275
General and administrative. . . . . . 5,124 3,811 2,507
Interest expense. . . . . . . . . . . 20,573 17,111 6,288
Amortization. . . . . . . . . . . . . 916 900 371
Depreciation. . . . . . . . . . . . . 19,810 15,734 8,589
--------- -------- ---------
Total expenses. . . . . . . . . . . 93,983 73,641 36,637
--------- -------- ---------
Operating income. . . . . . . . . . . . 17,188 9,183 5,356
Gain on disposition of real property. . 1,934 1,502 --
--------- -------- ---------
Income before extraordinary item. . . . 19,122 10,685 5,356
Extraordinary loss on debt
extinguishment . . . . . . . . . . . . (1,848) (1,352) --
--------- -------- ---------
Net income. . . . . . . . . . . . . . . 17,274 9,333 5,356
Preferred distributions . . . . . . . . (4,092) (922) --
--------- -------- ---------
Net income available to common
stockholders . . . . . . . . . . . . . $ 13,182 $ 8,411 $ 5,356
========= ======== =========
Net income available to common
stockholders per share . . . . . . . . $ .90 $ .69 $ .62
========= ======== =========
Distributions per share of common
stock. . . . . . . . . . . . . . . . . $ 1.86 $ 1.82 $ 1.09
========= ======== =========
Weighted average number of common stock
and common stock equivalent shares
outstanding. . . . . . . . . . . . . . 14,720 12,155 8,689
========= ======== =========
PROPERTY DATA
Total properties (at end of period). . . 68 55 40
Total units (at end of period) . . . . . 21,407 17,205 12,319
Total units (weighted average) . . . . . 18,430 14,601 9,140
Weighted average monthly property
revenue per unit (a). . . . . . . . . . $ 495 $ 465 $ 420
OTHER DATA
Funds from operations (b). . . . . . . . $ 36,998 $ 24,917 $ 13,945
Cash flows provided by (used in):
Operating activities . . . . . . . . . $ 38,281 $ 31,317 $ 16,420
Investing activities . . . . . . . . . $(158,668) $(86,926) $(256,114)
Financing activities. . . . . . . . . $ 143,306 $ 58,121 $ 243,982
</TABLE>
<TABLE>
<CAPTION>
The Company
----------------------------------
December 31,
----------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
BALANCE SHEET DATA
Real estate assets . . . . . . . . . . . $683,515 $513,341 $329,206
Accumulated depreciation . . . . . . . . (41,707) (23,734) (8,589)
Total assets . . . . . . . . . . . . . . 689,714 510,548 334,937
Mortgage notes payable and credit
facility . . . . . . . . . . . . . . . 258,908 259,015 165,439
Stockholders' equity . . . . . . . . . . 411,421 235,127 160,267
</TABLE>
- ---------------
(a) Represents rental income and other property income, divided by
weighted average units, divided by the number of months.
(b) Management generally considers funds from operations ("FFO")
to be an appropriate measure of the performance of an equity
REIT. FFO is defined as net income (loss) (determined in
accordance with generally accepted accounting principles),
excluding gains (or losses) from debt restructuring and sales
of property, plus depreciation of real estate assets. FFO
does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and
is not necessarily indicative of cash available to fund cash
needs and cash distributions. FFO should not be considered as
an alternative to net income as an indication of the Company's
performance or as an alternative to cash flow as a measure of
liquidity. In addition, the Company's FFO is not necessarily
comparable to similar entitled items reported by other REITs.
FFO for the 1995 and 1994 periods have been restated to
reflect the new definition of FFO.
<Page 20>
<TABLE>
<CAPTION>
Walden Predecessors
--------------------------------
January 1 to Year Ended
February 8, December 31,
------------ ------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
OPERATING DATA
Revenues
Rental income . . . . . . . . . . . . $ 3,047 $27,336 $25,668
Other property income . . . . . . . . 134 1,286 1,089
Interest income . . . . . . . . . . . 37 124 182
Property management fees. . . . . . . 150 1,266 1,167
------- ------- -------
Total revenues. . . . . . . . . . . 3,368 30,012 28,106
Expenses
Property operating and maintenance. . 1,242 11,398 10,813
Real estate taxes . . . . . . . . . . 226 2,159 2,121
General and administrative. . . . . . 217 2,263 2,014
Interest expense. . . . . . . . . . . 1,075 11,456 11,751
Amortization and financing costs. . . 20 1,417 418
Depreciation. . . . . . . . . . . . . 633 6,114 6,198
------- ------- -------
Total expenses. . . . . . . . . . . 3,413 34,807 33,315
------- ------- -------
Net loss (a). . . . . . . . . . . . . . $ (45) $(4,795) $(5,209)
======= ======= =======
PROPERTY DATA
Total properties (at end of period) . . 18 18 18
Total units (at end of period). . . . . 5,895 5,895 5,895
Total units (weighted average). . . . . 5,895 5,895 5,895
Weighted average monthly property
revenue per unit (b). . . . . . . . . $ 421 $ 405 $ 378
OTHER DATA
Funds from operations (c). . . . . . . . $ 588 $ 1,370 $ 1,079
Cash flows provided by (used in):
Operating activities. . . . . . . . . $ 1,858 $ 1,698 $ 2,497
Investing activities. . . . . . . . . $ -- $ (23) $ (11)
Financing activities. . . . . . . . . $ (311) $(1,476) $(2,320)
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------
1993 1992
---- ----
<S> <C> <C>
BALANCE SHEET DATA
Real estate assets . . . . . . . . . . . $195,421 $195,421
Accumulated depreciation and impairment
allowance. . . . . . . . . . . . . . . (83,026) (76,981)
Total assets . . . . . . . . . . . . . . 121,889 126,495
Mortgage notes payable . . . . . . . . . 147,322 144,801
Partners' deficit. . . . . . . . . . . . (33,610) (29,256)
</TABLE>
- ---------------
(a) Net loss of Walden Predecessors is before income tax benefits and
extraordinary gains.
(b) Represents rental income and other property income, divided by
weighted average units, divided by the number of months.
(c) Management generally considers FFO to be an appropriate measure of
the performance of an equity REIT. FFO is defined as net income
(loss) (determined in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring
and sales of property, plus depreciation of real estate assets.
FFO does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not
necessarily indicative of cash available to fund cash needs and
cash distributions. FFO should not be considered as an alternative
to net income as an indication of the Company's performance or as
an alternative to cash flow as a measure of liquidity. In
addition, the Company's FFO is not necessarily comparable to
similar entitled items reported by other REITs. FFO for the three
periods presented above have been restated to reflect the new
definition of FFO.
<Page 22>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -------------------------------------------------------------
Overview
- --------
The following discussion should be read in conjunction with
the "Selected Financial Data" and all of the financial statements
and notes thereto included elsewhere in this report. Such financial
statements and information have been prepared to reflect the
consolidated statements of income of the Company for the years
ended December 31, 1996 and 1995 and the period from February 9,
1994 (date of commencement of operations) through December 31,
1994, the balance sheet of the Company as of December 31, 1996 and
1995 and the historical combined operations of the Walden
Predecessors prior to the consummation of the IPO. (See the Walden
Residential Properties, Inc. Consolidated Financial Statements and
related Notes and the Walden Predecessors Combined Financial
Statements and related Notes included elsewhere in this report.)
Changes in revenues and expenses related to the Properties
during 1996 and 1995 are primarily the result of property
acquisitions. Where appropriate, comparisons are made on a
dollars-per-weighted-average-unit basis in order to adjust for
changes in the number of units owned during each period. The
results of operations of the Company for the period from February
9, 1994 (date of commencement of operations) to December 31, 1994
and the Walden Predecessors for the period from January 1, 1994 to
February 8, 1994 are combined in this discussion to reflect the
results of operations for the year ended December 31, 1994.
Revenues and most expenses related to the properties owned by the
Walden Predecessors are comparable to those of the Company.
However, interest, depreciation and amortization, and general and
administrative expenses of the Company are not necessarily
comparable to those same expenses of the Walden Predecessors due,
in large part, to three factors. The Company's reduced debt level
as a result of the application of the proceeds from the IPO, offset
by increased indebtedness related to properties acquired in 1994,
1995 and 1996, resulted in a decrease in interest expense in 1994
and an increase in interest expense in 1995 and 1996. Depreciation
and amortization of the Company increased because of property
acquisitions and basis adjustments made to reflect purchase
accounting for assets acquired on February 9, 1994. General and
administrative expenses increased due to costs associated with
public ownership of the Company and property acquisitions.
Results of Operations
- ---------------------
Results of Operations for the Company for the Year Ended
December 31, 1996 Compared to the Year Ended December 31, 1995.
The weighted average number of units owned increased by 3,829
units in 1996, or 26.2%, from 14,601 units in 1995 to 18,430 units
in 1996 as a result of the acquisition of additional properties.
Total units owned at December 31, 1995 and 1996 were 17,205 and
21,407, respectively. The portfolio had a weighted average
occupancy of 94.5% for both 1995 and 1996.
<Page 23>
The Company owned 36 properties with 11,188 apartment units
throughout both calendar years 1996 and 1995. The operating
performance of these properties is summarized as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------
1996 1995 % Change
---- ---- --------
<S> <C> <C> <C>
Rental and other property revenue (in thousands). . . . . $63,623 $60,684 4.8%
Property operating expenses (in thousands) (1). . . . . . 27,675 27,239 1.6%
------- -------
Property operating income (in thousands). . . . . . . . . $35,948 $33,445 7.5%
======= =======
Weighted average physical occupancy . . . . . . . . . . . 94.4% 94.7% N/A
======= =======
Average monthly revenue per unit. . . . . . . . . . . . . $ 474 $ 452 4.8%
======= =======
Average annual operating and maintenance
expenses per unit . . . . . . . . . . . . . . . . . . . $ 2,007 $ 1,975 1.6%
======= =======
Average annual real estate taxes per unit . . . . . . . . $ 467 $ 460 1.5%
======= =======
Operating expense ratio . . . . . . . . . . . . . . . . . 43.5% 44.9% (3.1%)
======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate
tax expenses.
The operating performance of properties not owned throughout
both calendar years 1996 and 1995 is summarized as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------
1996 1995 % Change
---- ---- --------
<S> <C> <C> <C>
Rental and other property revenue (in thousands). . . . $45,852 $20,875 119.7%
Property operating expenses (in thousands) (1). . . . . 19,885 8,846 124.8%
------- -------
Property operating income (in thousands). . . . . . . . $25,967 $12,029 115.9%
======= =======
Weighted average number of units . . . . . . . . . . . 7,242 3,413 112.2%
======= =======
Weighted average physical occupancy . . . . . . . . . . 94.7% 93.8% N/A
Average monthly revenue per unit. . . . . . . . . . . . $ 528 $ 510 3.5%
======= =======
Average annual operating and maintenance
expenses per unit . . . . . . . . . . . . . . . . . . $ 2,081 $ 1,948 6.8%
======= =======
Average annual real estate taxes per unit . . . . . . . $ 665 $ 644 3.3%
======= =======
Operating expense ratio . . . . . . . . . . . . . . . . 43.4% 42.4% 2.4%
======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate
tax expenses.
<Page 24>
Interest income increased $577,000 in 1996, or 67.4%, from
$856,000 in 1995 to $1,433,000 in 1996, primarily as the result of
increased cash balances and interest earned on recourse notes
entered into by certain officers and directors of the Company in
December 1995 and January 1996 in connection with the acquisition
of shares of Common Stock by such persons.
Other income decreased $146,000 in 1996, or 35.7%, from
$409,000 in 1995 to $263,000 in 1996, primarily due to the
reduction in third-party management contracts and an increase in
operating expenses of WDN Management unrelated to third-party
management contracts. The number of third-party management
contracts decreased from ten at December 31, 1995 to eight at the
end of 1996.
General and administrative expenses increased $1.3 million in
1996, or 34.5%, from $3.8 million in 1995 to $5.1 million in 1996.
This represented a per weighted average unit increase of $17, or
6.5%. The increase in general and administrative expenses was
primarily due to increased occupancy cost due to the relocation of
the Company's corporate office, increased salaries expense and
increased costs associated with the increased number of
stockholders (quarterly mailings to stockholders, transfer
services, NYSE listing fees, etc.).
Interest expense increased $3.5 million in 1996, or 20.2%,
from $17.1 million in 1995 to $20.6 million in 1996, due to the
increased weighted average indebtedness of approximately $60.9
million associated with the acquisition of properties offset by a
decreased weighted average interest rate in 1996 of approximately
0.5%.
Depreciation expense increased $4.1 million in 1996, or 25.9%,
from $15.7 million in 1995 to $19.8 million in 1996, due to
depreciation on additional properties acquired and capital
improvements on existing properties.
The $1.9 million gain on disposition of real property in 1996
related to the sale of three properties: a 384-unit property
located in Wichita, Kansas on April 24, 1996, a 304-unit property
located in Corpus Christi, Texas on August 30, 1996 and a 144-unit
property located in Stone Mountain, Georgia on September 27, 1996.
The Company received total net sales proceeds from these
dispositions of approximately $22.9 million, which were used to
purchase additional properties.
The $1.8 million extraordinary loss on debt extinguishment in
1996 resulted from the write-off of unamortized deferred financing
costs and prepayment penalties incurred in connection with the
refinancings of the Company's credit facility in February 1996
($488,000) and December 1996 ($767,000), the refinancing of $22
million of variable rate tax-exempt debt in May 1996 ($96,000), the
repayment of debt on a property sold in September 1996 ($488,000)
and the refinancing of $14.4 million of fixed rate debt on three
properties in October 1996 ($9,000).
As of July 1, 1996, the Company revised its method of
accounting to capitalize the cost of replacement carpets, on a
prospective basis ($864,000 was capitalized in 1996 which would
have been expensed under the old policy). The Company believes
that this accounting policy change is preferable because it is
consistent with policies currently being used by the majority of
<Page 25>
the largest publicly traded apartments REITs and provides a better
matching of expenses with the related benefit of the expenditures.
Results of Operations for the Company for the Year Ended
December 31, 1995 Compared to the Combined Results of Operations
for the Company and the Walden Predecessors for the Year Ended
December 31, 1994.
The weighted average number of units owned increased by 5,807
units in 1995, or 66.0%, from 8,794 units in 1994 to 14,601 units
in 1995 as a result of the acquisition of additional properties.
Total units owned at December 31, 1994 and 1995 were 12,319 and
17,205, respectively. The portfolio had a weighted average
occupancy of 94.3% and 94.5% for 1994 and 1995, respectively.
The Company owned 17 properties with 5,596 apartment units
throughout both calendar years 1995 and 1994. The operating
performance of these properties is summarized as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------
1995 1994 % Change
---- ---- --------
<S> <C> <C> <C>
Rental and other property revenue (in thousands). . . . $30,474 $28,419 7.2%
Property operating expenses (in thousands) (1). . . . . 12,858 12,749 0.9%
------- -------
Property operating income (in thousands). . . . . . . . $17,616 $15,670 12.4%
======= =======
Weighted average physical occupancy . . . . . . . . . . 94.7% 94.6% N/A
======= =======
Average monthly revenue per unit. . . . . . . . . . . . $ 454 $ 423 7.2%
======= =======
Average annual operating and maintenance
expenses per unit . . . . . . . . . . . . . . . . . . $ 1,908 $ 1,894 0.7%
======= =======
Average annual real estate taxes per unit . . . . . . . $ 390 $ 384 1.6%
======= =======
Operating expense ratio . . . . . . . . . . . . . . . . 42.2% 44.9% (6.0%)
======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate
tax expenses.
<Page 26>
The operating performance of properties not owned throughout
both calendar years 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------
1995 1994 % Change
---- ---- --------
<S> <C> <C> <C>
Rental and other property revenue (in thousands). . . . . . . $51,085 $15,857 222.2%
Property operating expenses (in thousands) (1). . . . . . . . 23,227 7,601 205.6%
------- -------
Property operating income (in thousands). . . . . . . . . . . $27,858 $ 8,256 237.4%
======= =======
Weighted average number of units. . . . . . . . . . . . . . . 9,005 3,198 181.6%
======= =======
Weighted average physical occupancy . . . . . . . . . . . . . 94.4% 94.1% N/A
======= =======
Average monthly revenue per unit. . . . . . . . . . . . . . . $ 473 $ 413 14.5%
======= =======
Average annual operating and maintenance
expenses per unit . . . . . . . . . . . . . . . . . . . . . $ 2,007 $ 1,955 2.7%
======= =======
Average annual real estate taxes per unit . . . . . . . . . . $ 572 $ 422 35.5%
======= =======
Operating expense ratio . . . . . . . . . . . . . . . . . . . 45.5% 47.9% (5.0%)
======= =======
</TABLE>
(1) Consists of property operating and maintenance and real estate
tax expenses.
Interest income increased $454,000 in 1995, or 112.9%, from
$402,000 in 1994 to $856,000 in 1995 as the result of increased
cash balances, higher short-term interest rates and interest earned
on recourse notes entered into by certain officers of the Company
in connection with the acquisition of shares of Common Stock by
such persons.
Property management fees and other income combined decreased
$274,000 in 1995, or 40.1%, from $683,000 in 1994 to $409,000 in
1995. A portion of the decrease resulted from the termination of
four management contracts in December 1994, due to the Company
purchasing the properties, and the non-renewal of two additional
management contracts in August 1995 at the option of the owners.
The remaining portion of the decrease was attributable to
accounting for WDN Management on the equity accounting method. At
the close of the IPO, WDN Management was formed to continue the fee
management of multifamily properties for third parties. The Walden
Predecessors accounted for property management income on a combined
basis. This decrease in revenue is partially offset by a decrease
in general and administrative expenses, also as a result of the
differing accounting treatment.
General and administrative expense increased $1.1 million in
1995, or 40.7%, from $2.7 million in 1994 to $3.8 million in 1995.
This represents a per weighted average unit decrease of $49 in
1995, or 15.8%. The increase in general and administrative expenses
was primarily due to increased occupancy cost due to the relocation
of the Company's corporate office, increased salaries expense and
increased costs associated with the increased number of
stockholders (quarterly mailings to stockholders, transfer
services, NYSE listing fees, etc.).
<Page 27>
Interest expense increased $9.7 million in 1995, or 131%, from
$7.4 million in 1994 to $17.1 million in 1995 due to increased
weighted average indebtedness of approximately $113 million
associated with the acquisition of properties and an increased
weighted average interest rate in 1995 of approximately 0.71%.
Depreciation and amortization and financing costs increased
$7.0 million in 1995, or 72.9%, from $9.6 million in 1994 to $16.6
million in 1995 primarily due to additional depreciation on
properties acquired since the IPO and additional amortization of
deferred loan costs associated with debt incurred in 1995.
Of the $1.5 million gain on disposition of real property, $1.1
million resulted from the sale of Sterling Pointe Apartments, a
299-unit property located in Greensboro, North Carolina, in April
1995. The remaining gain of $.4 million resulted from the sale of
Barrington Oaks, a 242-unit property located in Roswell, Georgia,
in December 1995. The Company received total net sales proceeds
from these dispositions of approximately $23.2 million.
The $1.4 million extraordinary loss represented prepayment
penalties and deferred loan costs written off upon repayment of
certain of the Company's indebtedness in 1995.
Liquidity and Capital Resources
- -------------------------------
The Company's principal demands for liquidity are
distributions to its stockholders, ongoing maintenance and repair
of its properties, capital improvements to its properties,
acquisitions of properties, interest on indebtedness and debt
repayments.
In 1996, the Company received a total of $200.6 million in net
equity proceeds from four public offerings, its dividend
reinvestment plan and stock issued to an officer in January 1996.
In addition, the Company received approximately $22.9 million from
the sale of three properties, of which $4.2 million represented a
mortgage loan assumed by the buyer in connection with the sale of
one property. These funds were primarily used to purchase 16
properties (5,034 units) with an aggregate purchase price of
approximately $183.0 million, including $4 million for undeveloped
land. In connection with the acquisition of these 16 properties,
the Company assumed $14.7 million of existing mortgage indebtedness
and funded $3.3 million in rehabilitation costs.
Cash and cash equivalents increased $22.9 million, or 337%,
from $6.8 million as of December 31, 1995 to $29.7 million as of
December 31, 1996.
Net cash provided by operating activities increased by $7.0
million in 1996, from $31.3 million in 1995 to $38.3 million in
1996, primarily due to an increase in property operating income
from properties owned throughout both years, as well as property
operating income from properties acquired in 1996.
Net cash used in investing activities was $158.7 million for
the year ended December 31, 1996, primarily due to $168.2 million
of property acquisitions and $9.5 million of capital
<Page 28>
improvements on the properties, offset by $18.7 million of net cash proceeds
from the sale of three properties in 1996.
Net cash provided from financing activities was $143.3 million
for the year ended December 31, 1996, primarily due to a $200.6
million of net proceeds from the sale of stock, less net repayments
of mortgage financings and distributions to stockholders.
The Company intends to meet its short-term liquidity
requirements, including capital expenditures related to maintaining
and improving its Matured Properties, through cash flow provided by
operations. The Company considers its cash provided by operating
activities to be adequate to meet both its operating requirements
and distribution obligations. The Company has certain loans which
require principal payments on a monthly basis for which cash
provided by operating activities may or may not be sufficient.
Accordingly, the Company anticipates borrowing under its credit
facility (the "Credit Facility"), as described below, to fund such
payments, if necessary.
During the year ended December 31, 1996, the Company spent
approximately $9.5 million in capital expenditures and
rehabilitation expenditures on acquisition properties.
Rehabilitation costs of $5.3 million and capital expenditures on
Matured Properties of $4.2 million were funded from net cash
provided by operating activities. The Company has budgeted capital
improvements of $19.7 million for 1997 on its Matured Properties
(of which $13.6 million represents non-recurring costs for the
construction of covered carports, the installation of access gates
with perimeter fencing, energy efficient exterior lighting and
water savers and the reconstruction of balconies and exterior
stairwells) and $11.3 million to complete necessary renovations to
properties acquired in 1996, which are anticipated to be funded
from borrowings under the Credit Facility.
For the year ended December 31, 1996, the Company paid
distributions of $31.2 million to its common and preferred
stockholders and on the convertible equity securities. On March 3,
1997, the Company paid distributions of $10.9 million to common and
preferred stockholders of record on February 17, 1997. The
distribution paid to common stockholders was $.4825 per share,
which equates to an annualized distribution of $1.93 per share, a
3.8% increase over the aggregate $1.86 per share distributions paid
in 1996.
As of December 31, 1996, the Company had outstanding
indebtedness in the aggregate principal amount of $258.9 million,
consisting of fixed rate conventional and tax-exempt debt in the
amount of $207.8 million and variable rate tax-exempt debt of $51.1
million.
<Page 29>
During the year ended December 31, 1996, the Company
refinanced, repaid or assumed debt as summarized below (in
thousands):
<TABLE>
<CAPTION>
Outstanding Outstanding
Indebtedness Indebtedness
as of Debt Debt Debt Principal as of
12/31/95 Proceeds Assumed Repaid Repayment 12/31/96
------------ -------- ------- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Fixed rate indebtedness $179,460 $ 37,470 $ 10,553 (1) $ (14,418) $(5,242) $207,823
Variable rate indebtedness 73,055 -- -- (21,970) -- 51,085
Credit Facility 6,500 129,300 -- (135,800) -- --
-------- -------- -------- -------- ------- --------
Total $259,015 $166,770 $ 10,553 $(172,188) $(5,242) $258,908
======== ======== ======== ========= ======= ========
</TABLE>
(1) Represents mortgages assumed by the Company of $14,748 net of
a $4,195 mortgage loan assumed by the buyer of one property
sold in 1996.
The following table sets forth certain information regarding
the outstanding indebtedness as of December 31, 1996:
<TABLE>
<CAPTION>
Weighted Average
--------------------- Outstanding Percentage
Interest Years to Principal of
Rate Maturity Balance (1) Total
-------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Conventional fixed rate 8.70% 7.8 Years $138,003 53.3%
Tax-exempt fixed rate 6.48% 22.2 Years 69,820 27.0%
-------- ------
Total fixed rate 7.95% 12.6 Years 207,823 80.3%
-------- ------
Tax-exempt variable rate 5.78% 1.5 Years 51,085 19.7%
Credit Facility N/A 2.1 Years -- 0.0%
-------- ------
Total variable rate 5.78% 1.5 Years 51,085 19.7%
-------- ------
Total 7.53% 10.4 Years $258,908 100.0%
======== ======
</TABLE>
(1) In thousands.
The Company has no outstanding indebtedness that matures
during the next year. Of the total indebtedness, principal and
balloon payments become due as follows (in thousands):
<TABLE>
<CAPTION>
Balloon
Principal Payments Total
--------- -------- -----
<S> <C> <C> <C>
1997 . . . . . . . . . . . . . . . $ 3,334 $ -- $ 3,334
1998 . . . . . . . . . . . . . . . 3,593 51,085 54,678
1999 . . . . . . . . . . . . . . . 3,888 -- 3,888
2000 . . . . . . . . . . . . . . . 4,148 7,067 11,215
2001 . . . . . . . . . . . . . . . 4,321 6,636 10,957
Thereafter . . . . . . . . . . . . 59,074 115,762 174,836
-------- -------- --------
Total. . . . . . . . . . . . . . $ 78,358 $180,550 $258,908
======== ======== ========
</TABLE>
<Page 30>
On December 4, 1996, the Company entered into the new Credit
Facility with The First National Bank of Boston ("Bank of Boston").
This Credit Facility provides an unsecured borrowing capacity of up
to $150 million, with borrowings outstanding under the Credit
Facility initially bearing interest at 1.5% over LIBOR. The Credit
Facility expires in February 1999. As of March 3, 1997, there were
no outstanding borrowings under the Credit Facility.
The Credit Facility contains customary representations,
warranties and events of default which require the Company to
comply with certain affirmative and negative covenants. The
primary restrictive covenants are as follows: (1) distributions to
stockholders may not exceed 90% of funds from operations, as
defined in the Credit Facility; (2) secured mortgage indebtedness
may not exceed 40% of the Company's total assets before
depreciation; (3) the Company's fixed charge coverage ratio, as
defined, must exceed 1.60; and (4) the Company's debt service
coverage ratio, as defined, must exceed 2.0. As of December 31,
1996, Management believes it is in compliance with all covenants of
the Credit Facility.
As of December 31, 1996, 42 of the Company's real estate
assets are collateral for the various debt agreements.
The Company expects to meet its long-term liquidity
requirements, such as refinancing mortgages and property
acquisitions, including capital improvements on property
acquisitions, through long-term borrowings, both secured and
unsecured, and the issuance of debt or equity securities.
The Company's ability to acquire additional properties is
dependent upon its ability to obtain equity or debt financing.
During 1996, the Company was able to raise additional equity and
incur indebtedness to acquire 16 properties. As of March 3, 1997,
the Company's debt-to-total-market capitalization ratio was
approximately 29%, leaving the Company the ability to borrow funds
to acquire additional properties in the amount of approximately
$369 million and still maintain its 50% debt-to-total-market
capitalization policy. When the Company finances its acquisitions
with debt, the Company expects that such acquired properties will
generate cash flow adequate to service the associated indebtedness.
Funds from Operations
- ---------------------
Management generally considers funds from operations ("FFO") an
appropriate measure of performance of an equity REIT. FFO is
defined as net income (determined in accordance with generally
accepted accounting principles), excluding gains (or losses) from
debt restructuring and sales of property, plus depreciation of real
estate assets. The Company believes that in order to facilitate a
clear understanding of its operating results, FFO should be
examined in conjunction with net income (loss) as presented in the
audited consolidated or combined financial statements and
information included elsewhere in this report. FFO does not
represent cash generated from operating activities in accordance
with generally accepted accounting principles and is not
necessarily indicative of cash available to fund cash needs and
cash distributions. FFO should not be considered as an alternative
to net income (determined in accordance with generally accepted
accounting principles) as an indication of the Company's
performance or as an alternative to cash
<Page 31>
flow (determined in accordance with generally accepted accounting principles)
as a measure of liquidity. In addition, the Company's FFO is not
necessarily comparable to similar entitled items reported by other
REITs.
The National Association of Real Estate Investment Trusts
("NAREIT") adopted certain changes to the calculation of FFO during
1995. The Company has adopted these changes effective January 1,
1996, and the Company has restated below its 1995 calculation of
FFO for comparative purposes. Under NAREIT's new definition of
FFO, the Company (as well as other REITs using the old definition)
will no longer add back amortization of financing costs. The
following is a calculation of FFO under the new definition (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Income before extraordinary item. . . . . . . . . . $19,122 $10,685
Gain on disposition of real property. . . . . . . . (1,934) (1,502)
Depreciation of real estate assets. . . . . . . . . 19,810 15,734
------- -------
Funds from Operations . . . . . . . . . . . . . . $36,998 $24,917
======= =======
</TABLE>
As discussed in Note (3) in the accompanying financial
statements, effective July 1, 1996, the Company revised its method
of accounting to capitalize the cost of replacement carpets on a
prospective basis. Following is the effect on depreciation, net
income and FFO for such change in accounting policy for the year
ended December 31, 1996:
<TABLE>
<S> <C>
Adjustment for change in accounting policy to capitalize
carpet replacement costs (and effect on funds from
operations). . . . . . . . . . . . . . . . . . . . . . . . . $ 864
Adjustment for effect of depreciation on capitalized carpet
replacement costs. . . . . . . . . . . . . . . . . . . . . . (43)
------
Net effect on net income . . . . . . . . . . . . . . . . . . . $ 821
======
</TABLE>
FFO increased $12.1 million, or 48.5%, from $24.9 million for
the year ended December 31, 1995 to $37.0 million for the year
ended December 31, 1996. The increase in FFO was primarily
attributable to additional operating income, which resulted from an
increase in the number of units owned as a result of property
acquisitions and increased operating income from properties owned
throughout both periods.
Inflation
- ---------
The Company leases apartments under lease terms generally
ranging from six to 12 months. Management believes that such short-term
lease contracts lessen the impact of inflation due to the
ability to adjust rental rates to market levels as leases expire.
New Accounting Standards
- ------------------------
None.
Risks Associated with Forward-Looking Statements Included in this Form 10-K
- ----------------------------------------------------------------------------
This Form 10-K contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, which are
intended to be covered by the safe harbors created thereby. These
statements include the plans and objectives of management for
future operations, including plans and objectives relating to
capital expenditures and rehabilitation costs on the Properties.
The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties.
Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and
market conditions and future business decisions, all of which are
difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes
that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be
<Page 32>
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Form 10-K will prove to be accurate.
In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the
Company will be achieved.
Item 8. Financial Statements and Supplementary Data
- -----------------------------------------------------
Financial statements and supplementary financial information
are contained on pages F-1 through F-29 and S-1 through S-3 of this
report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
- ----------------------------------------------------------
None.
<Page 33>
PART III
Item 10. Directors and Executive Officers of the Registrant
- --------------------------------------------------------------
The information required by this item is incorporated by
reference from the Company's definitive Proxy Statement for its
1997 Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934.
Item 11. Executive Compensation
- ----------------------------------
The information required by this item is incorporated by
reference from the Company's definitive Proxy Statement for its
1997 Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
- ---------------------------------------------------------------
The information required by this item is incorporated by
reference from the Company's definitive Proxy Statement for its
1997 Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934.
Item 13. Certain Relationships and Related Transactions
- ----------------------------------------------------------
The information required by this item is incorporated by
reference from the Company's definitive Proxy Statement for its
1997 Annual Meeting of Stockholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
- -------------------------------------------------------------------
(a) (1) Financial Statements:
The financial statements are contained on pages F-1
through F-29 of this report.
(2) Financial Statement Schedules:
III. Real Estate and Accumulated Depreciation are
presented on pages S-1 through S-3 of this
report.
All other schedules have been omitted because the
required information of such other schedules is not
present, is not present in amounts sufficient to
require submission of the schedule or is included
in the consolidated financial statements.
<Page 34>
(3) Index to Exhibits:
See Index to Exhibits on page E-1.
(b) Reports on Form 8-K:
A Report on Form 8-K dated September 16, 1996 (including
amendments), was filed with the Securities and Exchange
Commission on October 1, 1996, reporting information
regarding the acquisition of 14 apartment properties,
consisting of 3,580 units and the disposition of three
apartment properties, consisting of 832 units.
A Report on Form 8-K dated December 16, 1996 (including
amendments), was filed with the Securities and Exchange
Commission, reporting information regarding the
acquisition of three apartment properties, consisting of
1,454 units.
A Report on Form 8-K dated December 19, 1996, was filed
with the Securities and Exchange Commission, reporting
information regarding the incorporation by reference an
exhibit labeled "Form of Underwriting Agreement" into the
Company's Registration Statement on Form S-3
(Registration No. 333-13809).
<Page 35>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Mark S. Dillinger
---------------------
Mark S. Dillinger
Executive Vice President &
Chief Financial Officer
Date: June 23, 1997
---------------------
<Page F-1>
INDEX TO FINANCIAL STATEMENTS
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report . . . . . . . . . . . . . . .F-2
Consolidated Balance Sheets as of December 31, 1996
and 1995. . . . . . . . . . . . . . . . . . . . . . . .F-3
Consolidated Statements of Income for the years ended
December 31, 1996 and 1995 and the period from
February 9, 1994 (date of commencement of operations)
through December 31, 1994 . . . . . . . . . . . . . . .F-4
Consolidated Statements of Stockholders' Equity for the
three year period ended December 31, 1996 . . . . . . .F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996 and 1995 and the period from
February 9, 1994 (date of commencement of operations)
through December 31, 1994 . . . . . . . . . . . . . . .F-6
Notes to Consolidated Financial Statements . . . . . . . .F-7
WALDEN PREDECESSORS
COMBINED FINANCIAL STATEMENTS
Independent Auditors' Report . . . . . . . . . . . . . . . F-25
Combined Statement of Operations for the period
January 1, 1994 through February 8, 1994. . . . . . . . F-26
Combined Statements of Cash Flows for the period
January 1, 1994 through February 8, 1994. . . . . . . . F-27
Notes to Combined Financial Statements . . . . . . . . . . F-28
The following financial statement supplementary schedule of the
Registrant and its subsidiaries required to be included in
Item 14(a)(2) is listed below:
Schedule III -- Real Estate and Accumulated Depreciation .S-1
<Page F-2>
INDEPENDENT AUDITORS' REPORT
To the Directors and Stockholders of
Walden Residential Properties, Inc.
We have audited the accompanying consolidated balance sheets
of Walden Residential Properties, Inc. and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements
of income and cash flows for the years ended December 31, 1996 and
1995 and the period February 9, 1994 (date of commencement of
operations) through December 31, 1994 and stockholders' equity for
each of the three years in the period ended December 31, 1996. Our
audits also included the financial statement schedule listed in the
Index at Item 14(a)(2). These financial statements and financial
statement schedule are the responsibility of the management of
Walden Residential Properties, Inc. Our responsibility is to
express an opinion on these financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Walden
Residential Properties, Inc. and subsidiaries at December 31, 1996
and 1995, and the results of their operations and their cash flows
for the years ended December 31, 1996 and 1995 and the period
February 9, 1994 (date of commencement of operations) through
December 31, 1994 and the changes in stockholders' equity for each
of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
As discussed in Note 3 to the consolidated financial
statements, the Company changed its method of accounting for the
cost of replacement carpets effective July 1, 1996.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
March 3, 1997
<Page F-3>
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share information)
<TABLE>
<CAPTION>
December 31,
----------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
Real estate assets, at cost
Land . . . . . . . . . . . . . . . . . . . . . . . $ 80,914 $ 60,637
Buildings and improvements . . . . . . . . . . . . 602,601 452,704
-------- --------
683,515 513,341
Less: Accumulated depreciation . . . . . . . . (41,707) (23,734)
-------- --------
641,808 489,607
Receivable from and investment in WDN Management . . -- 1,005
Rent and other receivables . . . . . . . . . . . . . 1,324 1,448
Prepaid and other assets . . . . . . . . . . . . . . 3,146 1,353
Deferred financing costs, net. . . . . . . . . . . . 5,827 4,359
Cash and cash equivalents. . . . . . . . . . . . . . 29,720 6,801
Restricted cash:
Escrow deposits. . . . . . . . . . . . . . . . . . 5,369 4,105
Additional collateral on loans . . . . . . . . . . 2,520 1,870
-------- --------
Total assets. . . . . . . . . . . . . . . . . . $689,714 $510,548
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable . . . . . . . . . . . . . . $258,908 $252,515
Credit facility. . . . . . . . . . . . . . . . . . -- 6,500
Accrued real estate taxes. . . . . . . . . . . . . 7,960 6,522
Accounts payable . . . . . . . . . . . . . . . . . 5,653 4,815
Accrued expenses and other liabilities . . . . . . 5,395 4,608
Preferred distribution payable on convertible
equity securities. . . . . . . . . . . . . . . . 377 461
-------- --------
Total liabilities . . . . . . . . . . . . . . . 278,293 275,421
Commitments and contingencies
Stockholders' equity:
Convertible equity securities. . . . . . . . . . . 14,886 18,608
Preferred stock, $.01 par value per share,
10,000 shares authorized, 5,786 shares issued
and outstanding as of December 31, 1996 and no
shares issued as of December 31, 1995 (aggregate
liquidation value of $144,650) . . . . . . . . . 58 --
Common stock, $.01 par value per share,
50,000 shares authorized, 16,880 shares issued
and outstanding as of December 31, 1996 and
14,190 shares issued and outstanding as of
December 31, 1995. . . . . . . . . . . . . . . . 169 142
Excess stock, $.01 par value per share,
60,000 shares authorized, no shares issued . . . -- --
Additional paid in capital . . . . . . . . . . . . 432,974 238,899
Officer and director notes for stock purchases . . (5,263) (4,971)
Distributions in excess of net income. . . . . . . (31,403) (17,551)
-------- --------
Total stockholders' equity. . . . . . . . . . . 411,421 235,127
-------- --------
Total liabilities and stockholders' equity. . $689,714 $510,548
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<Page F-4>
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share information)
<TABLE>
<CAPTION>
For the Period
For the Year Ended February 9, 1994
December 31, (Commencement of
------------------ Operations) through
1996 1995 December 31, 1994
---- ---- -------------------
<S> <C> <C> <C>
REVENUES
Rental income. . . . . . . . . . . . . $105,602 $ 78,469 $ 39,602
Other property income. . . . . . . . . 3,873 3,090 1,493
Interest income. . . . . . . . . . . . 1,433 856 365
Other income . . . . . . . . . . . . . 263 409 533
-------- -------- --------
Total revenues. . . . . . . . . . . 111,171 82,824 41,993
EXPENSES
Property operating and maintenance . . 37,521 28,748 15,607
Real estate taxes. . . . . . . . . . . 10,039 7,337 3,275
General and administrative . . . . . . 5,124 3,811 2,507
Interest . . . . . . . . . . . . . . . 20,573 17,111 6,288
Amortization . . . . . . . . . . . . . 916 900 371
Depreciation . . . . . . . . . . . . . 19,810 15,734 8,589
-------- -------- --------
Total expenses. . . . . . . . . . . 93,983 73,641 36,637
-------- -------- --------
Operating income . . . . . . . . . . . . 17,188 9,183 5,356
Gain on disposition of real property . 1,934 1,502 --
-------- -------- --------
Income before extraordinary item 19,122 10,685 5,356
Extraordinary loss on debt
extinguishment . . . . . . . . . . . (1,848) (1,352) --
-------- -------- --------
Net income . . . . . . . . . . . . . . . 17,274 9,333 5,356
Preferred distributions. . . . . . . . (4,092) (922) --
Net income available to common
stockholders . . . . . . . . . . . . . $ 13,182 $ 8,411 $ 5,356
======== ======== ========
Income per share:
Before extraordinary item, less
preferred distributions. . . . . . . $ 1.02 $ .80 $ .62
Extraordinary loss on debt
extinguishment . . . . . . . . . . . (.12) (.11) --
-------- -------- --------
Net income available to common
stockholders . . . . . . . . . . . . $ .90 $ .69 $ .62
======== ======== ========
Weighted average number of common stock
and common stock equivalent shares
outstanding. . . . . . . . . . . . . . 14,720 12,155 8,689
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<Page F-5>
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In thousands)
<TABLE>
<CAPTION>
Convertible Additional
Equity Preferred Stock Common Stock Paid In
Securities Shares Par Value Shares Par Value Capital
---------- ------ --------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 . . . . . . . . . $ -- -- $ -- 1 $ -- $ 1
Public offerings, net of offering costs
and reduction for carryover basis . . . -- -- 9,886 99 163,727
Officers' stock purchase. . . . . . . . . 183 2 3,818
Distributions . . . . . . . . . . . . . .
Net income. . . . . . . . . . . . . . . .
------- ----- ----- ------ ----- --------
Balance, December 31, 1994 . . . . . . . . -- -- -- 10,070 101 167,546
Stock and convertible equity securities
issued to purchase real estate assets . 18,608 216 2 4,205
Public offering, net of offering costs. . 3,500 35 60,138
Stock issued under the dividend
reinvestment plan . . . . . . . . . . . 404 4 7,037
Repurchases of the Company's
common stock. . . . . . . . . . . . . .
Officers'/Directors' stock purchase . . . (27)
Distributions . . . . . . . . . . . . . .
Net income. . . . . . . . . . . . . . . .
------- ----- ----- ------ ----- --------
Balance, December 31, 1995 . . . . . . . . 18,608 -- -- 14,190 142 238,899
Repurchases of the Company's
common stock. . . . . . . . . . . . . .
Officers'/Directors' stock purchase . . . 19 -- (22)
Retirement of common stock
repurchased . . . . . . . . . . . . . . (318) (3) (6,075)
Public offerings, net of offering costs . 5,800 58 2,756 28 196,094
Conversion of preferred stock to
common stock. . . . . . . . . . . . . . (14) -- 16 --
Stock issued under the dividend
reinvestment plan . . . . . . . . . . . 217 2 4,331
Repurchase of convertible equity
securities. . . . . . . . . . . . . . . (3,722) (253)
Distributions . . . . . . . . . . . . . .
Net income. . . . . . . . . . . . . . . .
------- ----- ----- ------ ----- --------
Balance, December 31, 1996 $14,886 5,786 $ 58 16,880 $ 169 $432,974
======= ===== ===== ====== ===== ========
</TABLE>
<TABLE>
<CAPTION>
Officer/Director Distributions
Notes for Stock Stock in Excess of
Purchases Repurchases Net Income
--------------- ----------- -------------
<S> <C> <C> <C>
Balance, January 1, 1994 . . . . . . . . . $ -- $ -- $ --
Public offerings, net of offering
costs and reduction for carryover
basis . . . . . . . . . . . . . . . .
Officers' stock purchase. . . . . . . . (3,438)
Distributions . . . . . . . . . . . . . (9,298)
Net income. . . . . . . . . . . . . . . 5,356
------- ------- --------
Balance, December 31, 1994 . . . . . . . . (3,438) -- (3,942)
Stock and convertible equity securities
issued to purchase real estate
assets. . . . . . . . . . . . . . . .
Public offering, net of offering costs.
Stock issued under the dividend
reinvestment plan . . . . . . . . . .
Repurchases of the Company's common
stock . . . . . . . . . . . . . . . . (2,038)
Officers'/Directors' stock purchase . . (1,533) 2,038
Distributions . . . . . . . . . . . . . (22,942)
Net income. . . . . . . . . . . . . . . 9,333
------- ------- --------
Balance, December 31, 1995 . . . . . . . . (4,971) -- (17,551)
Repurchases of the Company's common
stock . . . . . . . . . . . . . . . . (6,462)
Officers'/Directors' stock purchase . . (292) 387
Retirement of common stock repurchased. 6,075
Public offerings, net of offering
costs . . . . . . . . . . . . . . . .
Conversion of preferred stock to
common stock. . . . . . . . . . . . .
Stock issued under the dividend
reinvestment plan . . . . . . . . . .
Repurchase of convertible equity
securities. . . . . . . . . . . . . .
Distributions . . . . . . . . . . . . . (31,126)
Net income. . . . . . . . . . . . . . . 17,274
------- ------- --------
Balance, December 31, 1996 . . . . . . . . $(5,263) $ -- $(31,403)
======= ======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
<Page F-6>
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Period
For the Year Ended February 9, 1994
December 31, (Commencement of
------------------ Operations) through
1996 1995 December 31, 1994
---- ---- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . $ 17,274 $ 9,333 $ 5,356
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization . 20,726 16,634 8,960
Gain on disposition of real
property. . . . . . . . . . . (1,934) (1,502) --
Extraordinary loss on debt
extinguishment. . . . . . . . 1,848 1,352 --
Net effect of changes in
operating accounts:
Escrow deposits . . . . . . . (1,299) (850) (3,255)
Other assets. . . . . . . . . (784) 203 (3,872)
Accrued real estate taxes . . 1,438 3,521 3,001
Accounts payable. . . . . . . 492 1,352 2,936
Other liabilities . . . . . . 520 1,274 3,294
-------- -------- --------
Net cash provided by
operating activities . . 38,281 31,317 16,420
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate
assets, net of noncash
items shown below. . . . . . . . . (168,219) (103,631) (251,513)
Real estate asset additions. . . . . (9,455) (6,451) (4,601)
Proceeds from disposition of real
property, net of noncash items
shown below. . . . . . . . . . . . 18,667 23,156 --
Purchase of WDN Management net
assets, net of noncash item
shown below. . . . . . . . . . . . 339 -- --
-------- -------- --------
Net cash used in investing
activities. . . . . . . . . . . (158,668) (86,926) (256,114)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance,
net of issuance costs. . . . . . . 200,614 67,723 170,768
Purchase of the Company's
common stock . . . . . . . . . . . (6,573) (1,928) --
Purchase of convertible equity
securities . . . . . . . . . . . . (3,975) -- --
Distributions paid . . . . . . . . . (31,210) (22,481) (9,298)
Proceeds from mortgage notes payable
and credit facility. . . . . . . . 166,770 152,471 108,704
Payment of mortgage notes payable
and credit facility. . . . . . . . (172,188) (130,753) (22,550)
Principal reductions of debt . . . . (5,242) (1,197) (504)
Payment of financing costs . . . . . (4,143) (3,751) (2,317)
Prepayment penalties on debt
extinguishment . . . . . . . . . . (97) (914) --
Additional collateral on loans . . . (650) (1,049) (821)
-------- -------- --------
Net cash provided by financing
activities. . . . . . . . . . . 143,306 58,121 243,982
-------- -------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . 22,919 2,512 4,288
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD. . . . . . . . . . . . . . 6,801 4,289 1
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF
PERIOD . . . . . . . . . . . . . . . $ 29,720 $ 6,801 $ 4,289
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest . . . . . . . $ 20,706 $ 16,916 $ 5,222
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Items related to purchase of assets:
Mortgage notes assumed. . . . . . $ 14,748 $ 73,055 $ 79,789
======== ======== ========
Securities issued for purchase
of assets . . . . . . . . . . . $ -- $ 22,825 $ 137
======== ======== ========
Basis adjustment attributable to
restricted shares . . . . . . . $ -- $ -- $ 6,697
======== ======== ========
Accrued real estate asset
additions. . . . . . . . . . . . . $ 517 $ 416 $ --
======== ======== ========
Purchase of WDN Management net
assets . . . . . . . . . . . . . . $ 354 $ -- $ --
======== ======== ========
Mortgage note assumed by buyer upon
disposition of property. . . . . . $ 4,195 $ -- $ --
======== ======== ========
Notes receivable for officers' and
directors' stock purchases . . . . $ 292 $ 1,533 $ 3,438
======== ======== ========
Preferred distribution payable on
convertible equity securities. . . $ 377 $ 461 $ --
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<Page F-7>
(1) Organization
- -----------------
Walden Residential Properties, Inc. (the "Company") was formed
on September 29, 1993 as a Maryland corporation to continue the
multifamily operations of The Walden Group, Inc. (collectively with
its subsidiaries and predecessors "Walden"). The Company was
capitalized on September 29, 1993 upon the sale of 1,000 shares of
common stock for $1,000 to Don R. Daseke, the sole director and
executive officer of Walden, which amount represented the only
asset of the Company as of December 31, 1993. On February 9, 1994
(date of commencement of operations), the Company completed an
initial public offering ("IPO") of its common stock, which is
listed on the New York Stock Exchange.
The Company is a self-administered and self-managed equity
real estate investment trust ("REIT") as defined under the Internal
Revenue Code of 1986, as amended. As of December 31, 1996, the
Company owned 68 multifamily properties, containing 21,407
apartment units, primarily in the Southwest and Southeast regions
of the United States.
(2) Basis of Presentation and Summary of Significant Accounting Policies
- -------------------------------------------------------------------------
Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the
accounts of the Company, eight wholly-owned subsidiaries (three of
which were formed in 1996 and one of which was merged into the
Company on December 31, 1996), eight wholly-owned limited
partnerships (one of which was formed in 1996) and a limited
partnership which owns 13 multifamily properties in which the
Company has a controlling interest (see Note 10). The Company
had no operations for the period September 29, 1993 through
February 8, 1994. All material intercompany transactions and
account balances have been eliminated in consolidation.
Income Recognition
------------------
Rental, interest and other income are recorded on the accrual
method of accounting as earned.
Rental Operations
-----------------
As of December 31, 1996, the Company owned 68 multifamily
properties in nine states; with 53% of its apartment units located
in Texas and 43% located in Florida, Oklahoma, Arizona, Tennessee
and Utah. Of the total units owned, 7,402 units, or 35%, are
located in the Dallas/Fort Worth area in 18 different submarkets.
Apartment units are leased to residents on terms of one year or
less, with monthly payments due in advance. Certain of the
properties are subject to Federal, state and local statutes or
other restrictions requiring that a percentage of apartments be
made available to lower or moderate income families. In
management's opinion, due to the
<Page F-8>
number of residents, the type and diversity of markets in which
the properties operate and the collection terms, there is no
concentration of credit risk.
Cash and Cash Equivalents
-------------------------
All cash and investments in money market accounts, excluding
restricted cash, that have a maturity of three months or less at
the time of purchase are considered to be cash and cash
equivalents.
Restricted Cash
---------------
Restricted cash consists of two major components: (1) security
deposits and escrow deposits held by lenders for the payment of
property taxes, insurance and replacement reserves, and (2)
additional collateral on mortgage notes payable. Restricted cash
related to security and escrow deposits is invested primarily in
short-term securities. Restricted cash related to additional
collateral on mortgage notes is invested in long-term government
securities. The additional collateral is not available for general
operating purposes.
Real Estate Assets and Depreciation
-----------------------------------
Expenditures directly related to the acquisition and
improvement of real estate assets are capitalized at cost as land,
buildings and improvements. The Company capitalizes the cost of
appliances, exterior painting, roof replacement and expenditures
for other major property improvements, as well as rehabilitation
costs incurred for properties acquired. Effective July 1, 1996,
the Company revised its method of accounting to capitalize the cost
of replacement carpets on a prospective basis (see Note 3).
Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets which range from 14 to
30 years for buildings and five, ten or 15 years for personal
property.
The Company's management routinely reviews its investments for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Based
on the Company's policy for reviewing impairment of long-lived
assets (reviewing expected future cash flows of its properties),
there was no adjustment necessary for impairment of properties
during the three year period ended December 31, 1996.
Deferred Financing Costs and Amortization
-----------------------------------------
Legal fees and other costs associated with obtaining financing
have been capitalized and are amortized over the terms of the
related debt. Financing costs were reported net of amortization of
$632,000 and $732,000 as of December 31, 1996 and 1995,
respectively.
<Page F-8>
Income Taxes
------------
The Company elected to be taxed as a REIT for Federal income
tax purposes as provided under the Internal Revenue Code of 1986,
as amended, effective with its taxable year ending December 31,
1994. As a result, the Company generally will not be subject to
Federal income taxation if it distributes 95% of its REIT taxable
income to its stockholders and satisfies certain other
requirements. The Company qualified as a REIT for its taxable
years ended December 31, 1995 and 1994 and anticipates that its
method of operations will enable it to continue to satisfy the
requirements for such qualification.
Stock-based Compensation
------------------------
The Company has elected not to recognize compensation expense
as calculated under Statement of Financial Accounting Standards No.
123 ("SFAS No. 123"), but rather will continue recognizing expense
as prescribed by APB Opinion No. 25. Disclosure of amounts
required by SFAS No. 123 are included in Note 9.
Net Income Per Share of Common Stock
------------------------------------
Net income per share of common stock has been computed by
dividing net income available to common stockholders by the
weighted average number of common stock and common stock equivalent
shares outstanding. Net income available to common stockholders is
net income less the preferred distributions on the Company's
preferred stock and convertible equity securities (see Note 10).
Common stock equivalents include the weighted average number of
assumed equivalent shares outstanding from stock options if
dilutive. Fully diluted net income per share of common stock is not
materially dilutive and is not presented.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of
certain assets, liabilities, revenues and expenses as of and for
the reporting periods. Actual results may differ from such
estimates.
Environmental Remediation Costs
-------------------------------
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and
reasonably estimatable. Accruals for estimated losses from
environmental remediation obligations generally are recognized no
later than completion of the remediation feasibility study. Such
accruals are adjusted as further information develops or
circumstances change. Recoveries of environmental remediation
costs from other parties are recorded as assets when their receipt
is deemed probable. The Company's management is not
<Page F-10>
aware of any environmental remediation obligations which would
materially affect the operations, financial position or cash flows
of the Company.
Reclassifications
-----------------
Certain previously reported amounts have been reclassified to
conform to current financial statement presentation.
(3) Change in Accounting Policy
- --------------------------------
Effective July 1, 1996, the Company revised its method of
accounting to capitalize the cost of replacement carpets on a
prospective basis ($864,000 capitalized in 1996 which would have
been expensed under the old policy, which represents $.06 per share
of common stock). The Company believes that this accounting policy
change is preferable because it is consistent with policies
currently being used by the majority of the largest publicly traded
apartment REITs and provides a better matching of expenses with the
related benefit of the expenditures.
Following is pro forma information as if the revised
capitalization policy was in effect as of February 9, 1994 (the
date the Company's operations commenced):
<TABLE>
<CAPTION>
Year Ended
December 31, For the Period
----------------- February 9, 1994 to
1996 1995 December 31, 1994
---- ---- -------------------
<S> <C> <C> <C>
Income before extraordinary item as reported. . . $19,122 $10,685 $ 5,356
Add: Adjustment for change in accounting policy
to capitalize carpet replacement costs. . . . . 264 875 518
------- ------- -------
Income before extraordinary item as adjusted. . . $19,386 $11,560 $ 5,874
======= ======= =======
Net income as adjusted. . . . . . . . . . . . . . $17,538 $10,208 $ 5,874
======= ======= =======
Net income available to common stockholders
as adjusted . . . . . . . . . . . . . . . . . . $13,446 $ 9,286 $ 5,874
======= ======= =======
Income per share:
Before extraordinary item, less preferred
distributions as reported . . . . . . . . . . $ 1.02 $ .80 $ .62
Adjustment for effect of change in accounting
policy. . . . . . . . . . . . . . . . . . . . .02 .08 .06
------- ------- -------
Income before extraordinary item, less
preferred distributions as adjusted . . . . . $ 1.04 $ .88 $ .68
======= ======= =======
Net income available to common stockholders
as reported . . . . . . . . . . . . . . . . . $ .90 $ .69 $ .62
Adjustment for effect of change in accounting
policy. . . . . . . . . . . . . . . . . . . . .02 .08 .06
------- ------- -------
Net income available to common stockholders
as adjusted . . . . . . . . . . . . . . . . . $ .92 $ .77 $ .68
======= ======= =======
</TABLE>
<Page F-11>
(4) Acquisitions and Dispositions
- ------------------------------------
Acquisitions
------------
During 1996 the Company acquired 16 apartment properties
containing 5,034 units (or 1,631 weighted average units) for a cost
of $179.0 million. In addition, in connection with one property
acquired in December 1996, the Company acquired approximately 81
acres of adjacent undeveloped land for $4 million. During 1995,
the Company acquired 17 multifamily properties containing 5,427
units (or 2,505 weighted average units) for a cost of $199.5
million. The properties acquired in 1996 and 1995 are located in
the states of Texas, Oklahoma, Florida, New Mexico, Colorado,
Georgia, Arizona and Tennessee.
The acquisitions are accounted for by the purchase method of
accounting, and the accompanying consolidated financial statements
reflect the results of operations of the acquired properties since
the date of purchase.
On January 8, 1997, the Company acquired a 208-unit apartment
property located in Arlington, Texas, for approximately $5.7
million. The acquisition was funded from proceeds of a December
public equity offering. This property is being operated in
combination with an adjacent property acquired by the Company in
September 1996 so that the Company still owns a total of 68
properties.
Dispositions
------------
During 1996 the Company disposed of three multifamily
properties: a 384-unit property located in Wichita Kansas, on April
24, 1996; a 304-unit property located in Corpus Christi, Texas, on
August 30, 1996; and a 144-unit property located in Stone Mountain,
Georgia, on September 27, 1996. During 1995 the Company disposed
of two multifamily properties: a 299-unit property, located in
Greensboro, North Carolina, on April 7, 1995 and a 242-unit
property, located in Roswell, Georgia, on December 28, 1995. In
connection with these dispositions, the Company reported gains in
the amount of $1,934,000 and $1,502,000 for the year ended December
31, 1996 and 1995, respectively.
Pro Forma Information (Unaudited)
---------------------------------
The following unaudited condensed pro forma information for
the two years ended December 31, 1996 was prepared from the
financial statements of the Company by adjusting for the effect of
all public offerings and all property dispositions and acquisitions
in 1996 and 1995, including debt used to finance acquisitions or
repaid from proceeds of dispositions, as if all of these
transactions had occurred on January 1, 1995. The pro forma
results do not include gains on property dispositions or
extraordinary losses on early extinguishment of debt. The
following information is not necessarily indicative of what the
performance would have been had the
<Page F-12>
Company owned these properties for the entire period, nor does it
purport to represent future results of operations of the Company.
(In thousands, except per share information.)
<TABLE>
<CAPTION>
Pro Forma
-----------------
Year Ended
December 31,
-----------------
1996 1995
---- ----
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $129,448 $123,711
Expenses . . . . . . . . . . . . . . . . . . . 105,774 104,181
-------- --------
Net income . . . . . . . . . . . . . . . . . . 23,674 19,530
Preferred distributions. . . . . . . . . . . . (15,001) (15,206)
-------- --------
Net income available to common stockholders. . $ 8,673 $ 4,324
======== ========
Net income available to common stockholders
per share. . . . . . . . . . . . . . . . . . $ .51 $ .26
======== ========
Weighted average shares of common stock
outstanding. . . . . . . . . . . . . . . . . 16,880 16,681
======== ========
</TABLE>
(5) Real Estate Assets
- -------------------------
Changes in real estate assets and related accumulated
depreciation for the years ended December 31, 1996 and 1995 are as
follows (in thousands):
<TABLE>
<S> <C>
Real estate assets:
Balance at January 1, 1995 . . . . . . . . . . . . . . . . . $329,206
Purchase of real estate assets . . . . . . . . . . . . . . . 199,511
Sale of real estate assets . . . . . . . . . . . . . . . . . (22,243)
Fixed asset additions. . . . . . . . . . . . . . . . . . . . 6,867
--------
Balance at December 31, 1995. . . . . . . . . . . . . . . 513,341
Purchase of real estate assets . . . . . . . . . . . . . . . 182,967
Sale of real estate assets . . . . . . . . . . . . . . . . . (22,765)
Fixed asset additions. . . . . . . . . . . . . . . . . . . . 9,972
--------
Balance at December 31, 1996. . . . . . . . . . . . . . . $683,515
========
Accumulated depreciation:
Balance at January 1, 1995 . . . . . . . . . . . . . . . . . $ 8,589
Depreciation expense . . . . . . . . . . . . . . . . . . . . 15,734
Write off related to real estate assets sold . . . . . . . . (589)
--------
Balance at December 31, 1995. . . . . . . . . . . . . . . 23,734
Depreciation expense . . . . . . . . . . . . . . . . . . . . 19,810
Write off related to real estate assets sold . . . . . . . . (1,837)
--------
Balance at December 31, 1996. . . . . . . . . . . . . . . $ 41,707
========
</TABLE>
(6) WDN Management Company
- -----------------------------
For the period February 9, 1994 through December 31, 1996, the
Company owned 5% of the voting common stock and 100% of the non-voting
common stock (which represented 95%
<Page F-13>
of the economic interest) of WDN Management Company ("WDN
Management"). The remaining 95% of the voting common stock (which
represented a 5% economic interest) was owned by the Company's four
executive officers. For this period, the results of operations of
WDN Management were accounted for on the equity method. On
December 31, 1996, the Company purchased the additional 5% economic
interest in WDN Management from the four executive officers for
$15,000 which represents the four executive officers' original cost
of the shares. At such time, WDN Management and its wholly-owned
subsidiary were merged into the Company and WDN Management was
dissolved. Following is a summary of the net assets of WDN
Management purchased by the Company (in thousands):
<TABLE>
<S> <C>
Prepaid and other assets . . . . . . . . . . . . . . . . . . . $1,022
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . 48
Amortizable assets . . . . . . . . . . . . . . . . . . . . . . 8
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 58
Accrued expenses and other liabilities . . . . . . . . . . . . (267)
Note payable to the Company. . . . . . . . . . . . . . . . . . (923)*
Stockholder's equity . . . . . . . . . . . . . . . . . . . . . (300)*
------
Net noncash assets purchased . . . . . . . . . . . . . . . . (354)
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354
------
$ 0
======
</TABLE>
* Amounts were eliminated with the Company's Receivable from and
Investment in WDN Management balance as of December 31, 1996.
Employee Benefit Plan
---------------------
Effective October 1, 1995, WDN Management adopted a 401(k)
Plan (the "Plan") for its employees and the employees of the
Company. The Plan is a voluntary defined contribution plan.
Employees are eligible to participate in the Plan on the earlier of
April 1 or October 1 following the date the employee has completed
one year of service, as defined, with the Company. Each
participant may make contributions to the Plan by means of a
pre-tax salary deferral in an amount up to 15% of the participant's
annual compensation (not to exceed $9,500 and $9,240 per annum for
1996 and 1995, respectively). In 1996, WDN Management made an
annual matching contribution on the participant's behalf for
$217,000. This represented up to 6% and 3% of the participant's
annual compensation for the periods from October 1, 1995 through
March 31, 1996 and from April 1, 1996 through September 30, 1996,
respectively. The Company will match up to 3% of the participant's
annual compensation through March 31, 1997. The amount relating to
the Company's employees was reimbursed to WDN Management by the
Company. A participant's salary deferral contribution is 100%
vested and nonforfeitable. A participant will become vested in the
Company's matching contributions as follows: 20% after three years
of service, 40% after four years, 60% after five years, 80% after
six years and 100% after seven years.
<Page F-14>
(7) Mortgage Notes Payable and Credit Facility
- -------------------------------------------------
Mortgage notes payable and the Company's credit facility (the
"Credit Facility") consist of the following (in thousands):
<TABLE>
<CAPTION>
As of December 31, 1996 Principal Balance
------------------------------------------ as of December 31,
Weighted Average Weighted Average --------------------
Interest Rate Years to Maturity 1996 1995
---------------- ----------------- ---- ----
<S> <C> <C> <C> <C>
Conventional Mortgage Notes:
Mortgage notes payable
to the Federal National
Mortgage Association. . . . . . . 8.73% 7.1 Years $ 48,343 $ 47,740
Mortgage notes payable
to insurance companies. . . . . . 8.69% 8.4 Years 86,452 90,352
Mortgage notes - other . . . . . . . 8.50% 3.6 Years 3,208 3,239
----- ---------- -------- --------
8.70% 7.8 Years 138,003 141,331
Tax-exempt Mortgage Notes:
Fixed rate . . . . . . . . . . . . . 6.48% 22.2 Years 69,820 38,129
Variable rate. . . . . . . . . . . . 5.78% 1.5 Years 51,085 73,055
----- ---------- -------- --------
5.76% 12.5 Years 120,905 111,184
Credit Facility. . . . . . . . . . . . -- 2.1 Years -- 6,500
----- ---------- -------- --------
Total/Weighted Average . . . . . . . 7.53% 10.4 Years $258,908 $259,015
===== ========== ========
</TABLE>
As of December 31, 1996, 42 of the Company's 68 properties are
collateral for the various mortgage loans. Substantially all of
the Company's real estate assets were collateral for the various
mortgage loans as of December 31, 1995.
Conventional Mortgage Notes Payable
-----------------------------------
Conventional mortgage notes payable include 15 loans
encumbering 30 properties at December 31, 1996 and 31 properties at
December 31, 1995. These mortgage notes are payable in monthly
installments aggregating approximately $1.2 million, including
principal and interest at various fixed rates ranging from 7.0% to
9.22% per annum. Scheduled maturities are at various dates
ranging from August 1, 2000 through December 1, 2005.
<Page F-15>
Tax-Exempt Mortgage Notes Payable
---------------------------------
At December 31, 1996, 12 of the Company's properties are
encumbered by 11 mortgage notes (as of December 31, 1995, 11
properties were encumbered by ten mortgage notes) which were
financed from the proceeds of tax-exempt bonds and which have
credit enhancements. Mortgage notes of approximately $69.8 million
are payable in monthly installments of approximately $0.5 million,
including principal and interest at fixed rates ranging from 6.13%
to 6.7% per annum. These mortgage notes have scheduled maturities
ranging from October 1, 2005 through September 1, 2028. The
remaining mortgage notes have variable interest rates, are payable
in monthly installments of interest only and have a weighted
average interest rate of 5.78% as of December 31, 1996. The bonds
underlying these mortgage notes are scheduled to mature on May 1,
2024, while the credit enhancements mature on June 30, 1998. The
Company has guaranteed $6.4 million and $2.7 million of the
tax-exempt mortgage notes as of December 31, 1996 and 1995,
respectively.
Credit Facility
---------------
The Company obtained a $50 million Credit Facility from The
First National Bank of Boston ("Bank of Boston") on February 9,
1994 in conjunction with the IPO. In September 1995, the Company,
at its option, reduced the Credit Facility, which was principally
used for working capital, property acquisitions and renovations of
property acquisitions, to $25 million. The Credit Facility was
scheduled to expire on February 8, 1996. The interest rate was
based on LIBOR (which was 5.94% as of December 31, 1995) plus
2.25%. As of December 31, 1995, the Credit Facility was secured by
six properties and had a balance of $6.5 million.
On February 8, 1996, the Company entered into a new Credit
Facility with Bank of Boston. This Credit Facility provided
financing up to $75 million. At the Company's election, the
interest rate on borrowings was at a floating rate equal to either
(i) 1% over the lender's base rate, or (ii) 1.60% to 1.75% over
LIBOR.
On December 4, 1996, the Company entered into a second new
Credit Facility with Bank of Boston. This Credit Facility provides
an unsecured borrowing capacity of up to $150 million, with
borrowings outstanding under the Credit Facility initially bearing
interest at 1.5% over LIBOR. The new Credit Facility expires in
February 1999.
On December 31, 1996, the outstanding balance of the Credit
Facility was repaid, of which $24.7 million was used from the net
proceeds of 1,076,000 shares of common stock sold on December 24,
1996. Had the stock offering and debt repayment occurred on
January 1, 1996, the net income available to common stockholders
would have been $14,201,000 (or $0.90 per share of common stock).
The Credit Facility contains customary representations,
warranties and events of default which require the Company to
comply with certain affirmative and negative covenants. The
<Page F-16>
primary restrictive covenants are as follows: (1) distributions to
stockholders may not exceed 90% of funds from operations, as
defined in the Credit Facility; (2) secured mortgage indebtedness
may not exceed 40% of the Company's total assets before
depreciation; (3) the Company's fixed charge coverage ratio, as
defined, must exceed 1.60; and (4) the Company's debt service
coverage ratio, as defined, must exceed 2.0. As of December 31,
1996, the Company's management believes it is in compliance with
all covenants of the Credit Facility.
Principal Debt Maturities
-------------------------
Principal debt maturities, including balloon payments, for the
next five years are as follows (in thousands):
<TABLE>
<S> <C>
1997. . . . . . . . . . . . . . . . . . . . . . . . $ 3,334
1998. . . . . . . . . . . . . . . . . . . . . . . . 54,678
1999. . . . . . . . . . . . . . . . . . . . . . . . 3,888
2000. . . . . . . . . . . . . . . . . . . . . . . . 11,215
2001. . . . . . . . . . . . . . . . . . . . . . . . 10,957
Thereafter. . . . . . . . . . . . . . . . . . . . . 174,836
--------
Total . . . . . . . . . . . . . . . . . . . . . . $258,908
========
</TABLE>
Extraordinary Items
-------------------
During 1996, the Company refinanced approximately $36.4
million of mortgage loans and the Credit Facility prior to
maturity, which resulted in an aggregate extraordinary loss of $1.8
million. During 1995, the Company refinanced $73.3 million of
mortgage loans prior to maturity, which resulted in an aggregate
extraordinary loss of $1.4 million. These losses represented
prepayment fees and unamortized financing costs related to the debt
retired.
(8) Officer and Director Notes for Stock Purchases
- -----------------------------------------------------
On July 19, 1994, the Company issued 183,000 shares of its
common stock, at $20.875 per share (the closing sales price of the
common stock on the New York Stock Exchange for that date), to its
four executive officers and to seven other officers of the Company.
Each officer acquiring stock paid 10% of the purchase price in
cash, with the remaining 90% loaned by the Company. Each such loan
is evidenced by a note with a five year term, bearing interest at
a fixed rate of 7.25% per annum, payable quarterly, and is secured
by a pledge of the shares of common stock purchased by each officer
pursuant to such loans. One officer, Don R. Daseke, is personally
liable for the indebtedness evidenced by his note, while the loans
to each of the other officers are non-recourse.
On December 14, 1995, the Company agreed to issue shares of
common stock at $19.375 per share, the closing sales price of the
common stock on the New York Stock Exchange for that date, to the
four executive officers, three other officers and four directors.
On December 20, 1995, the Company agreed to issue 122,600 shares of
its common stock to such officers and
<Page F-17>
directors. On such date, the closing sales price of the
Company's common stock on the New York Stock Exchange was
$19.50 per share. Of such shares of common stock, the Company
issued 103,800 on December 28, 1995 and 18,800 on January 18, 1996.
Such shares were issued from common stock repurchased pursuant
to the Company's stock repurchase program (see Note 10). Each
officer and director acquiring stock paid 20% and 50%, respectively,
of the purchase price in cash with the remaining amount loaned by
the Company. Each loan is evidenced by a note with a five year
term, bearing interest at a fixed rate of 8% per annum, payable
quarterly, and is secured by a pledge of the shares of common
stock purchased. In addition, each officer and director
is personally liable for the indebtedness evidenced by the
respective note.
(9) Stock Option Plan
- ------------------------
The Company adopted a stock option plan (the "Plan") in 1994
to provide incentives to officers, key employees and directors.
Stock options granted under the Plan include non-qualified options
and incentive stock options (the "ISOs"). Options granted to
directors vest over a one-year period. Options previously granted
to officers and employees vest ratably over a four-year period.
All options expire ten years from the date of grant. Shares of
common stock reserved for issuance under the Plan are in an amount
equal to 10% of the Company's outstanding shares. As of December
31, 1996, 1,687,956 shares of common stock were reserved for
issuance under the Plan. The Plan limits the number of shares of
common stock issuable pursuant to ISOs to 1,000,000. Following is
a summary of stock option activity for the periods ended December
31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Options outstanding, beginning of year . . 792,500 521,350 --
Granted . . . . . . . . . . . . . . . 603,250 286,150 521,350
Exercised (at $19.25 per share) . . . (125) (1,875) --
Canceled. . . . . . . . . . . . . . . (2,875) (13,125) --
--------- ------- -------
Options outstanding, end of year . . . . . 1,392,750 792,500 521,350
($18.47 - $21.25 per share) ========= ======= =======
</TABLE>
As of December 31, 1996, options for 356,900 shares of common
stock are exercisable at prices ranging from $18.47 to $19.25 per
share.
On February 5, 1997, the Company granted ISOs for 96,750
shares of common stock to certain officers and other employees and
granted non-qualified options for 150,000 shares of common stock to
its four executive officers, all at an exercise price of $26.00 per
share, which was the closing sales price of the Company's common
stock on that date.
SFAS No. 123, "Accounting for Stock-Based Compensation,"
requires companies to use recognized option pricing models to
estimate the fair value of stock based compensation, including
stock options. The Company has elected not to recognize
compensation expense as
<Page F-18>
calculated under SFAS No. 123, but rather will continue recognizing
expense as prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees," as allowed under SFAS No. 123.
Had compensation expense been determined based on the fair
value at the grant dates for the stock option grants consistent
with the method of SFAS No. 123, the Company's net income and net
income per common share would have been reduced to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net income available to common stockholders:
As reported (in thousands). . . . . . . . . . $13,182 $ 8,411
Pro forma (in thousands). . . . . . . . . . . $12,492 $ 8,068
Net income available to common stockholders per share:
As reported . . . . . . . . . . . . . . . . . $ 0.90 $ 0.69
Pro forma . . . . . . . . . . . . . . . . . . $ 0.85 $ 0.66
Stock options issued (in thousands). . . . . . . . 603 286
Weighted average exercise price. . . . . . . . . . $ 21.16 $ 19.21
Average compensation value of options granted
per option (1) . . . . . . . . . . . . . . . . . $ 1.14 $ 1.20
Compensation cost (in thousands) . . . . . . . . . $ 690 $ 343
</TABLE>
(1) Calculated in accordance with the binomial model, using the
following assumptions; (i) expected volatility computed using
the monthly average of the Company's common stock market price
as listed on the New York Stock Exchange for the period
February 1994 through July 1996, which market price volatility
averaged 11.92%; (ii) expected dividend yield ranging from
8.75% to 9.90%; (iii) expected option term of six years and
(iv) risk-free rate of return as of the date of grant, which
ranged from 5.39% to 7.61%, based on extrapolated yield of six
year U.S. Treasury securities.
(10) Stockholders' Equity
- -------------------------
Convertible Equity Securities
-----------------------------
In June 1995, the Company acquired a controlling interest in
a limited partnership (the "Partnership") which currently owns 13
multifamily properties. This Partnership is being accounted for as
wholly-owned since the limited partnership interests in the
Partnership which were not purchased by the Company are only
exchangeable for shares of the Company's common stock at the
option of the interest holders, but no later than June 30, 2018,
and are accounted for as convertible equity securities. The
limited partnership interests were initially exchangeable for an
aggregate of 1,012,660 shares of the Company's common stock. In
September 1996, the Company purchased a limited partner's interest
in the Partnership (which was exchangeable for 202,532 shares of
common stock) for $4.0 million. As a result, as of
<Page F-19>
December 31, 1996, the remaining limited partnership interests
not owned by the Company are exchangeable for an aggregate of
810,128 shares of the Company's common stock.
The convertible equity securities were valued at $18.375 per
share, which was the market price of the Company's common stock on
June 30, 1995. Prior to exchange, the holders of the limited
partnership interests are entitled to receive quarterly
distributions from the Partnership equal to the greater of the
Company's actual distributions per share or $.455 per share on the
number of exchangeable shares of common stock (810,128 shares as of
December 31, 1996). Distributions of $1,705,000 and $922,000 were
paid to the interest holders for the years ended December 31, 1996
and 1995, respectively.
Shelf Registrations
-------------------
On March 31, 1995, the Company filed a shelf registration
statement for 500,000 shares of common stock issuable pursuant to
a Dividend Reinvestment and Stock Purchase Plan ("DRP"). Such
shares issued under this DRP were at 95% of the average of the high
and low sales price of the Company's common stock on the respective
issue date. On March 19, 1996, the Company filed another shelf
registration statement for 1,000,000 shares of common stock issued
pursuant to the DRP. The DRP was revised such that the issue price
of dividend reinvestment purchases is 95% of the closing sales
price on the day preceding the respective issue date. Effective
December 5, 1996, the DRP was further amended to allow optional
cash purchases of common stock to be acquired at 97% of the closing
market price on the day preceding such purchase. In addition, the
DRP was revised to allow distributions to preferred stockholders to
be reinvested into common stock on the same terms as distributions
to common stockholders.
On June 2, 1995, the Company filed a shelf registration
statement for $150,000,000 in shares of common or preferred stock.
On October 18, 1996, the Company filed another registration
statement for $150,000,000 in shares of common or preferred stock
or stock warrants. The amount of securities available for issuance
under these registration statements at December 31, 1996 are
$6,032,000 and $23,907,000, respectively.
<Page F-20>
Public Offerings
----------------
The Company was capitalized on September 29, 1993, upon the
issuance of 1,000 shares of common stock. Following is a summary
of the Company's public offerings through December 31, 1996:
<TABLE>
<CAPTION>
Date Issue
Description Issued Price Shares Net Proceeds
- ----------- ------ ----- ------ ------------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Common Stock:
IPO. . . . . . . . . . . . . February 9, 1994 $19.250 8,386 (1) $143,680 (2)
Follow-on offerings:
November 7, 1994 $19.250 1,500 26,706
June 23, 1995 $18.375 3,500 60,173
August 27, 1996 $20.625 1,680 32,626 (2)
December 24, 1996 $24.250 1,076 (3) 24,710
------ --------
16,142 287,895
------ --------
Preferred Stock/Warrants:
9.16% Series A Convertible
Redeemable Preferred
Stock . . . . . . . . . . April 26, 1996 $25.000 1,800 43,500
9.20% Senior Preferred
Stock and Warrants. . . . December 27, 1996 $25.000 4,000 95,344
------ --------
5,800 138,844
------ --------
Total public offerings . . . . 21,942 $426,739
====== ========
</TABLE>
(1) Includes 645 shares issued to Walden and certain officers of
Walden (the "Restricted Shares").
(2) Includes overallotment option exercised.
(3) Effective January 21, 1997, 161,400 shares of common stock
were issued pursuant to an overallotment option, resulting in
net equity proceeds of $3.7 million.
Preferred Stock and Warrants
----------------------------
On April 26, 1996, the Company sold 1,800,000 shares of a
9.16% Series A Convertible Redeemable Preferred Stock ("Series A")
at $25.00 per share. On August 14, 1996, 1,707,300 shares of
Series A were exchanged for the same number of shares of a 9.16%
Series B Convertible Redeemable Preferred Stock ("Series B"). Both
Series A and B are convertible into 1.1406 shares of common stock
and are redeemable by the Company on or after April 30, 2006 at
$25.00 per share. Distributions on both Series A and B are
cumulative and are equal to the greater of (i) $2.29 per annum or
(ii) the distributions on the number of shares of common stock into
which a share of Series A and B is convertible. On July 1, 1996,
14,000 shares of Series A were converted into 15,968 shares of
common stock. On January 7, 1997, 17,800 shares of Series B were
converted into 20,302 shares of common stock.
<Page F-21>
On December 27, 1996, the Company sold 4,000,000 units at
$25.00 per unit. Each unit represented one share of 9.20% Senior
Preferred Stock and one detachable warrant. The preferred stock is
not convertible into common stock and is redeemable by the Company
on or after December 31, 2006 at $25.00 per share. Distributions
on the preferred stock are cumulative.
A warrant may be exchanged for one-third share of common stock
at an exercise price of $26.875 per share. The warrants expire on
January 1, 2002.
The aggregate liquidation preference of the Company's
preferred stock as of December 31, 1996 is $144,650,000.
Restricted Stock
----------------
On February 6, 1997, the Company adopted a Long-Term Incentive
Plan to attract and retain individuals to serve as directors,
officers and employees of the Company. On February 12, 1997, the
Company issued 107,500 restricted shares of common stock under this
plan to its four executive officers, directors and certain other
employees of the Company. The shares issued to the non-employee
directors vest ratably over a three-year period; while the shares
issued to the executive officers and other employees vest over a
ten-year period, with an initial vesting of 40% after the fourth
anniversary and a 10% annual vesting thereafter.
Other Stock Issuances
---------------------
On April 19, 1995, the Company acquired a multifamily property
for $14 million. The acquisition was funded by $9.8 million in
financing and the issuance of 215,700 shares of the Company's
common stock at a price of $19.55 per share.
Pursuant to the DRP, the Company issued 403,973 and 216,867
shares of common stock during 1995 and 1996, respectively.
As discussed in Note 8, 183,000 shares of common stock were
sold to 11 officers of the Company on July 19, 1994; 103,800 shares
of common stock were sold to seven officers and four directors on
December 28, 1995 and 18,800 shares were sold to one officer on
January 18, 1996. All of the stock sold was pursuant to an
officer/director stock purchase plan.
Stock Repurchases
-----------------
In December 1995, the Company announced its intention to
repurchase shares of its common stock. During 1995, the Company
repurchased 103,800 shares of its common stock at a cost of
$2,038,000, of which $110,000 was not paid until January 1996. All
103,800 shares were reissued to officers and directors on December
28, 1995. During 1996, the Company repurchased 318,300 shares of
its common stock at a cost of $6,462,000; of which 18,800 shares
<Page F-22>
were reissued on January 18, 1996 pursuant to an officer and
director stock purchase agreement (see Note 8). The remaining
299,500 shares were retired in 1996.
Distributions to Common and Preferred Stockholders
--------------------------------------------------
For the year ended December 31, 1996, the Company paid
distributions of $27.0 million to its common stockholders (or $1.86
per share of common stock), of which 43.3% represented a return of
capital, 3.7% represented a long-term capital gain and 53.0%
represented ordinary taxable dividend income. In addition, the
Company paid distributions of $2.4 million on its 9.16% Convertible
Redeemable Preferred Stock (Series A and B) (or $1.335 per share),
of which 6.53% represented a long-term capital gain and 93.47%
represented ordinary taxable dividend income.
For the year ended December 31, 1995, the Company paid
distributions of $22,020,000 (or $1.82 per share of common stock),
of which 45.75% represented a return of capital, 3.84% represented
a long-term capital gain and 50.41% represented ordinary taxable
dividend income. For the period February 9, 1994 through December
31, 1994, the Company paid distributions of $9,298,000 (or $1.09
per share of common stock), of which 5% represented a return of
capital and 95% represented ordinary taxable dividend income.
On March 3, 1997, the Company paid common and preferred
distributions of $10.9 million to stockholders of record on
February 17, 1997. The common stockholders were paid $.4825 per
share; the 9.16% Convertible Redeemable Preferred Stockholders
(Series A and B) were paid $.5725 per share and the 9.20% Senior
Preferred Stockholders were paid a partial distribution of $.4096
per share.
(11) Fair Value Disclosure of Financial Instruments
- -----------------------------------------------------
The following disclosure of estimated fair value of financial
instruments was determined by the Company using available market
information and appropriate valuation methodologies. However,
considerable judgement is necessary to interpret market data and
develop the related estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the
amounts that could be realized upon disposition of the financial
instruments. The use of different market assumptions and/or
estimation methodologies may have a material effect on the
estimated fair value amounts.
Cash and cash equivalents, receivables (including notes
receivable from officers and directors), accounts payable and
accrued expenses and other liabilities are carried at amounts which
reasonably approximate their fair value.
The fixed rate mortgage notes payable of $207.8 million as of
December 31, 1996, have a fair value of $211.7 million (excluding
prepayment penalties) as estimated based upon interest rates
available for the issuance of debt with similar terms and
remaining maturities as of December 31, 1996. Of these mortgage
notes, $178.0 million are not prepayable at December
<Page F-23>
31, 1996. The remaining notes are subject to prepayment penalties
of $1.9 million at December 31, 1996, which would be required to
retire these notes prior to maturity. The floating rate mortgage
notes payable balance of $51.1 million at December 31, 1996 reasonably
approximates fair value.
The fixed rate mortgage notes payable of $179.5 million as of
December 31, 1995, have a fair value of $194.7 million (excluding
prepayment penalties) as estimated based upon interest rates
available for the issuance of debt with similar terms and
remaining maturities as of December 31, 1995. Of these mortgage
notes, $150.4 million are not prepayable at December 31, 1995. The
remaining notes are subject to prepayment penalties of $1.6 million
at December 31, 1995, which would be required to retire these notes
prior to maturity. The floating rate mortgage notes payable
balance of $79.5 million at December 31, 1995 reasonably
approximates fair value.
The fair value estimates presented herein are based on
information available to management as of December 31, 1996 and
1995. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts
have not been comprehensively revalued for purposes of these
financial statements since that date, and current estimates of fair
value may differ significantly from the amounts presented herein.
(12) Commitments and Contingencies
- ------------------------------------
The Company is subject to various legal proceedings and claims
that arise in the ordinary course of business. These matters are
generally covered by insurance. While the resolution of these
matters cannot be predicted with certainty, management believes
that the final outcome of such matters will not have a material
adverse effect on the financial position, results of operations or
cash flows of the Company.
Effective October 1, 1995, the Company entered into a lease
agreement for its corporate office space. The lease requires
monthly lease payments of $25,000 for a period of sixty months.
On February 6, 1997, the Company entered into five-year
employment agreements with its four executive officers for which
the aggregate compensation of the four executive officers is
approximately $4.5 million. Under such agreements, the Company is
liable for the compensation benefits for two years of the
agreements if an executive officer were to be terminated without
cause, as defined.
On January 10, 1997, the Company executed a contract to
acquire seven apartment properties located in Austin, Texas and
Phoenix, Arizona, containing 1,937 units for a total acquisition
cost of approximately $69.5 million. In connection therewith, the
Company deposited $100,000 of earnest money. The property
acquisitions are subject to the completion of normal due diligence
procedures and there is no assurance the Company will purchase such
properties.
<Page F-24>
(13) Quarterly Financial Data (Unaudited)
- -------------------------------------------
Summarized quarterly financial information for the three year
period ended December 31, 1996 is as follows (in thousands, except
per share amounts):
<TABLE>
<CAPTION>
1996 Quarters Ended
--------------------------------------------------------
March 31 June 30 September 30 December 31 Total
-------- ------- ------------ ----------- -----
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . $25,275 $25,962 $28,899 $31,035 $111,171
Expenses . . . . . . . . . . . 21,755 22,117 24,136 25,975 93,983
------- ------- ------- ------- --------
Operating income . . . . . . . 3,520 3,845 4,763 5,060 17,188
Gain on disposition of real
property . . . . . . . . . . -- 1,272 724 (62) 1,934
Extraordinary loss on debt
extinguishment . . . . . . . (488) (96) (488) (776) (1,848)
Preferred distributions. . . . (471) (813) (1,409) (1,399) (4,092)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ 2,561 $ 4,208 $ 3,590 $ 2,823 $ 13,182
======= ======= ======= ======= ========
Net income per share:
Before extraordinary item, less
preferred distributions. . . $ .21 $ .31 $ .28 $ .23 $ 1.02
Extraordinary loss on debt
extinguishment . . . . . . . (.03) (.01) (.03) (.05) (.12)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ .18 $ .30 $ .25 $ .18 $ .90
======= ======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
1995 Quarters Ended
--------------------------------------------------------
March 31 June 30 September 30 December 31 Total
-------- ------- ------------ ----------- -----
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . $16,729 $17,571 $23,826 $24,698 $82,824
Expenses . . . . . . . . . . . 15,181 15,979 21,035 21,446 73,641
------- ------- ------- ------- -------
Operating income . . . . . . . 1,548 1,592 2,791 3,252 9,183
Gain on disposition of real
property . . . . . . . . . . -- 1,110 -- 392 1,502
Extraordinary loss on debt
extinguishment . . . . . . . -- (465) -- (887) (1,352)
Preferred distributions. . . . -- -- (461) (461) (922)
------- ------- ------- ------- -------
Net income available to
common stockholders. . . . . $ 1,548 $ 2,237 $ 2,330 $ 2,296 $ 8,411
======= ======= ======= ======= =======
Net income per share:
Before extraordinary item, less
preferred distributions. . . $ .15 $ .26 $ .17 $ .22 $ .80
Extraordinary loss on debt
extinguishment . . . . . . . -- (.04) -- (.07) (.11)
------- ------- ------- ------- -------
Net income available to
common stockholders. . . . . $ .15 $ .22 $ .17 $ .15 $ .69
======= ======= ======= ======= =======
</TABLE>
<Page F-25>
INDEPENDENT AUDITORS' REPORT
To the Partners and Stockholders of
Walden Predecessors
We have audited the accompanying combined statements of
operations and cash flows of Walden Predecessors for the period
January 1, 1994 through February 8, 1994 (date of sale of assets to
Walden Residential Properties, Inc.). Walden Predecessors consist
of the combination of seventeen individual properties, one limited
partnership and four affiliated operating companies or their
predecessors as described in Note 1, all of which are affiliated
with The Walden Group, Inc., its subsidiaries and predecessors or
with Mr. Don R. Daseke. These financial statements are the
responsibility of the management of Walden Predecessors. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, such combined financial statements present
fairly, in all material respects, the results of operations and
cash flows of Walden Predecessors for the period January 1, 1994
through February 8, 1994 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
March 3, 1995
<Page F-26>
WALDEN PREDECESSORS
COMBINED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1994
THROUGH FEBRUARY 8, 1994
(In thousands)
<TABLE>
<S> <C>
REVENUES
Rental income. . . . . . . . . . . . . . . . . . . . . . . $3,047
Other property income. . . . . . . . . . . . . . . . . . . 171
Property management fees (including $68 from affiliates) . 150
------
Total revenues. . . . . . . . . . . . . . . . . . . . . 3,368
------
EXPENSES
Property operating and maintenance . . . . . . . . . . . . 1,242
Real estate taxes. . . . . . . . . . . . . . . . . . . . . 226
General and administrative . . . . . . . . . . . . . . . . 217
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 1,075
Financing costs and amortization . . . . . . . . . . . . . 20
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 633
------
Total expenses. . . . . . . . . . . . . . . . . . . . . 3,413
------
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . $ (45)
======
</TABLE>
See Notes to Combined Financial Statements.
<Page F-27>
WALDEN PREDECESSORS
COMBINED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1994
THROUGH FEBRUARY 8, 1994
(In thousands)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . $ (45)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . 653
Net effect of changes in operating accounts:
Escrow deposits . . . . . . . . . . . . . . . . . . . 663
Other assets. . . . . . . . . . . . . . . . . . . . . (54)
Real estate taxes payable . . . . . . . . . . . . . . (777)
Accounts payable. . . . . . . . . . . . . . . . . . . 1,840
Accrued and deferred interest . . . . . . . . . . . . (432)
Other liabilities . . . . . . . . . . . . . . . . . . 10
------
Net cash provided by operating activities 1,858
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional collateral on loans . . . . . . . . . . . . . . (56)
Capital distributions. . . . . . . . . . . . . . . . . . . (27)
Principal reductions on mortgage notes . . . . . . . . . . (228)
------
Net cash used in financing activities . . . . . . . . . (311)
------
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . 1,547
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . 1,171
------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . $2,718
======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest . . . . . . . . . . . . . . . . . . $1,507
======
</TABLE>
See Notes to Combined Financial Statements.
<Page F-28>
WALDEN PREDECESSORS
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JANUARY 1, 1994
THROUGH FEBRUARY 8, 1994
(Dollars in thousands)
(1) Organization and Summary of Significant Accounting Policies
- ------------------------------------------------------------------
Organization
------------
Walden Predecessors (not a legal entity) consists of the
combination of all of the operations of 17 individual properties,
one limited partnership (which owns one property) and four
operating companies and their predecessors, all of which were sold
to Walden Residential Properties, Inc. on February 9, 1994. All of
these entities are either affiliated with The Walden Group, Inc. or
Don R. Daseke, its sole director and chief executive officer.
Principles of Combination
-------------------------
The accounts of each of the entities comprising Walden
Predecessors are combined in the financial statements. All
significant inter-entity transactions have been eliminated in
combination.
Income Recognition
------------------
Rental, interest and other income are recorded on the accrual
method of accounting as earned.
Rental Operations
-----------------
Walden Predecessors include 18 apartment properties (the
"Properties") located in nine states. Apartment units are leased
to residents on terms of one year or less, with monthly payments
due in advance. Certain of the Properties are subject to Federal,
state and local statutes or other restrictions requiring a
percentage of apartments be made available to lower or moderate
income families. In management's opinion, due to the number of
residents, the type and diversity of markets and submarkets in
which the Properties operate, and the collection terms, there is no
concentration of credit risk.
Real Estate Assets and Depreciation
-----------------------------------
All buildings and improvements are depreciated over their
estimated useful lives of 10 to 30 years using the straight line
method. Expenditures of the Properties for normal maintenance,
furnishings and equipment are expenses as incurred.
Equipment, Net
--------------
Equipment is reported at cost net of depreciation computed on
the straight line method over 10 years.
<Page F-29>
Deferred Financing Costs and Amortization
-----------------------------------------
Certain of the Properties have incurred legal fees and other
costs associated with obtaining financing. Such amounts are
capitalized and amortized over the terms of the related debt on the
straight line method which approximates the interest method of
amortization.
Income Taxes
------------
No provision for income taxes has been made in the
accompanying combined financial statements for the combined
operations of the Properties since Walden Predecessors is not
responsible for any income taxes.
(2) Mortgage Notes Payable
- -----------------------------
The majority of the Walden Predecessors' debt is fixed rate
debt with effective interest rates ranging from 0% to 12.5%. The
weighted average interest rate on the variable rate debt is 2.4%.
Additional fees on this debt aggregate 0.73%.
(3) Transactions With Partners and Affiliates
- ------------------------------------------------
Walden Predecessors provide management services under 30-day
cancelable contracts for other properties affiliated with The
Walden Group, Inc. These contracts require fees to be paid to
Walden Predecessors equal to 3.5% to 5% of gross receipts, plus
reimbursement of applicable expenses. Such management fee income
from affiliates included in property management fees totaled $54
for the period January 1, 1994 through February 8, 1994.
Walden Predecessors also provide asset management and data
processing services under contract for other properties affiliated
with The Walden Group, Inc. These contracts require a fixed cost
per unit and fees equal to 1% of gross receipts to be paid to
Walden Predecessors. Such fee income from affiliates included in
property management fees totaled $14 for the period January 1, 1994
through February 8, 1994.
(4) Subsequent Events
- ------------------------
In February 1994, the Properties were sold to Walden
Residential Properties, Inc. (REIT) for $123.9 million of cash plus
the assumption of approximately $34.2 million of existing
mortgages. In addition, certain assets and liabilities were
transferred to the REIT in exchange for restricted shares of Common
Stock therein. Debt not assumed was paid off by the respective
entities and any remaining assets or liabilities (which were
immaterial) of the Walden Predecessors remained with the respective
entities.
<Page S-0>
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1996
<Page S-1a>
WALDEN RESIDENTIAL PROPERTIES, INC.
Schedule III - Real Estate and Accumulated Depreciation
As of December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
Costs Capitalized
Subsequent to
Description Initial Cost to Company Acquisition
- ----------------------------------------------------------------------------------------------------------------------
Capital
Buildings Improvements Buildings
Property Name Location Encumbrances Land & Improvements 1996 Land & Improvements
- ------------- -------- ------------ ---- -------------- ------------ ---- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Original Properties
- -------------------
Burning Tree Tulsa, OK $ 2,411 $ 635 $ 3,475 $ 173 $ -- $ 346
Casa Verde Phoenix, AZ 2,023 1,027 3,586 40 -- 197
Cinnamon Stick Tulsa, OK 3,219 962 5,565 63 -- 478
Club at Springlake Haltom City, TX -- 613 2,648 78 -- 105
Country View San Antonio, TX (A) 719 5,302 107 -- 322
Eagle Pointe Indianapolis, IN (A) 494 7,993 90 (4) 188
Fountaingate/Willowcreek Wichita Falls, TX -- 751 6,498 68 -- 404
James Pointe Murray, UT 8,355 1,040 10,937 69 (28) 107
The Lift Tulsa, OK 2,779 804 4,164 192 -- 346
Post Oak Place Euless, TX -- 1,570 6,582 136 -- 443
Preston Greens Dallas, TX -- 1,468 6,687 181 -- 333
Raintree Nashville, TN 5,315 715 6,457 361 -- 696
Settler's Cove Beaumont, TX 3,208 159 5,056 141 -- 325
Stillwater Murray, UT 12,191 2,019 16,839 397 3 496
Trestles of Austin Austin, TX (A) 1,100 9,977 87 -- 271
Woodridge Fort Worth, TX -- 340 2,586 29 -- 213
Woodstone Phoenix, AZ 12,859 4,325 14,342 191 -- 321
-------- ------- -------- ------- ------ -------
Subtotal 52,360 18,741 118,694 2,403 (29) 5,591
-------- ------- -------- ------- ------ -------
1994 Acquisitions
- -----------------
Bel Shores Largo, FL 4,714 1,847 6,072 289 -- 529
Brookwood Club Jacksonville, FL 6,938 952 8,647 92 -- 813
Carlyle at Waters Tampa, FL (B) 1,678 11,154 578 -- 837
Cinnamon Park Arlington, TX (A) 855 7,723 23 -- 94
Copper Cove Houston, TX -- 935 6,194 153 -- 313
Copperfield Oklahoma City, OK 4,206 357 6,473 11 -- 135
Fielder's Glen Arlington, TX (A) 556 5,031 89 -- 246
Foxboro Houston, TX (A) 800 3,882 54 -- 352
The Gables McKinney, TX (A) 544 6,885 43 -- 205
Greens Crossing Dallas, TX (B) 1,368 6,795 96 -- 337
Harper's Creek Austin, TX (A) 868 8,871 112 -- 230
Hunter's Ridge Oklahoma City, OK 3,596 300 4,927 20 -- 167
Newport Irving, TX 7,192 1,200 8,878 104 -- 217
Rivercrest Arlington, TX 5,461 1,650 7,877 113 -- 587
Silverado Albuquerque, NM (B) 1,194 8,082 19 -- 162
Springfield Mesquite, TX (A) 1,042 6,507 (33) -- 149
Summerfield Place Oklahoma City, OK (A) 619 5,586 20 -- 139
Towne Center Dallas, TX 4,695 1,024 5,651 173 -- 352
Woodscape Oklahoma City, OK (A) 1,077 13,280 31 -- 306
-------- ------- -------- ------- ------ -------
Subtotal 36,802 18,866 138,515 1,987 -- 6,170
-------- ------- -------- ------- ------ -------
<Page S-2a>
1995 Acquisitions
- -----------------
Braden's Walk Bedford, TX -- 542 5,075 317 -- 317
Hilltop N. Richland Hills, TX -- 801 5,314 256 -- 162
Laurel Creek Houston, TX (A) 2,067 12,011 135 -- 499
Pinnacle Lewisville, TX -- 672 4,190 20 -- 132
Pinto Creek Austin, TX (A) 487 8,403 44 -- 274
Reflections of Highpoint Dallas, TX 12,490 1,984 12,358 54 -- 216
Remington at Ponte Vedra Ponte Vedra, FL 12,000 1,425 13,468 243 -- 502
Remington Hill Fort Worth, TX 13,880 1,846 11,847 88 -- 287
Sandpiper Jacksonville, FL (B) 1,102 10,377 615 -- 707
Shadow Creek N. Richland Hills, TX -- 666 5,899 276 -- 278
Summer Meadows Plano, TX 12,460 2,393 14,908 78 -- 344
Summer Villas Dallas, TX -- 2,270 14,140 119 -- 251
Summers Crossing Plano, TX 9,300 1,730 10,774 21 -- 345
Summers Landing Fort Worth, TX -- 819 5,259 11 -- 301
Three Palms Tampa, FL (C) 1,735 14,017 138 -- 457
Winridge Aurora, CO 12,715 790 15,939 53 -- 338
-------- ------- -------- ------- ------ -------
Subtotal 72,845 21,329 163,979 2,468 -- 5,410
-------- ------- -------- ------- ------ -------
1996 Acquisitions
- -----------------
Ashbury Parke Austin, TX -- 2,007 11,591 243 -- 243
Bentley Green Jacksonville, FL -- 1,430 14,095 355 -- 355
Brandywine Nashville, TN -- 646 8,479 463 -- 463
Costa del Sol San Antonio, TX -- 871 6,432 124 -- 124
Huntington at Hidden Hills Jacksonville, FL -- 722 6,165 651 -- 651
Meadow Glen Phoenix, AZ 7,125 1,802 10,754 18 -- 18
Nashboro Village Nashville, TN -- 6,151 42,837 13 -- 13
Oak Forest Bedford, TX -- 443 4,366 85 -- 85
Quayle Walk Arlington, TX -- 731 5,687 105 -- 105
Remington San Antonio, TX -- 427 4,411 142 -- 142
Saratoga Melbourne, FL -- 676 5,788 96 -- 96
Summer Oaks San Antonio, TX -- 826 5,624 159 -- 159
Terra Vida Mesa, AZ 7,530 1,929 13,383 368 -- 368
Timber Creek at Treepoint Arlington, TX -- 537 4,381 114 -- 114
Villas of St. Moritz San Antonio, TX -- 653 5,544 255 -- 255
Waterford on the Meadow Plano, TX -- 2,156 11,423 91 -- 91
Subtotal 14,655 22,007 160,960 3,282 -- 3,282
-------- ------- -------- ------- ------ -------
Grand Total $176,662 $80,943 $582,148 $10,140 $ (29) $20,453
======== ======= ======== ======= ====== =======
</TABLE>
<Page S-3a>
(A) Property is pledged as collateral under a $58.43 million
mortgage note payable to an insurance company.
(B) Property is pledged as collateral under a $23.816 million
mortgage note payable to an insurance company.
(C) Property is pledged as additional collateral under the
mortgage notes secured by Reflections of Highpoint, Remington
at Ponte Vedra, Remington Hill and Winridge.
(D) Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets which range
from 14 to 30 years for buildings and 5, 10 or 15 years for
personal property.
(E) The aggregate cost for Federal income tax purposes at
December 31, 1996 is approximately $685.1 million.
<Page S-1b>
<TABLE>
<CAPTION>
Gross Amount at Which
Description Carried at December 31, 1996
- --------------------------------------------------------------------------------------------------------------------------------
Buildings Accumulated Date Depreciable
Property Name Location Land & Improvements Total Depreciation Acquired Life (Years) (D)
- ------------- -------- ---- -------------- ----- ------------ -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Original Properties
- -------------------
Burning Tree Tulsa, OK $ 635 $ 3,821 $ 4,456 $ (772) 02/94
Casa Verde Phoenix, AZ 1,027 3,783 4,810 (586) 02/94
Cinnamon Stick Tulsa, OK 962 6,043 7,005 (1,231) 02/94
Club at Springlake Haltom City, TX 613 2,753 3,366 (403) 02/94
Country View San Antonio, TX 719 5,624 6,343 (930) 02/94
Eagle Pointe Indianapolis, IN 490 8,181 8,671 (1,036) 02/94
Fountaingate/Willowcreek Wichita Falls, TX 751 6,902 7,653 (1,041) 02/94
James Pointe Murray, UT 1,012 11,044 12,056 (1,516) 02/94
The Lift Tulsa, OK 804 4,510 5,314 (785) 02/94
Post Oak Place Euless, TX 1,570 7,025 8,595 (1,053) 02/94
Preston Greens Dallas, TX 1,468 7,020 8,488 (1,178) 02/94
Raintree Nashville, TN 715 7,153 7,868 (993) 02/94
Settler's Cove Beaumont, TX 159 5,381 5,540 (864) 02/94
Stillwater Murray, UT 2,022 17,335 19,357 (2,297) 02/94
Trestles of Austin Austin, TX 1,100 10,248 11,348 (1,524) 02/94
Woodridge Fort Worth, TX 340 2,799 3,139 (431) 02/94
Woodstone Phoenix, AZ 4,325 14,663 18,988 (1,921) 02/94
------- -------- -------- ---------
Subtotal 18,712 124,285 142,997 (18,561)
------- -------- -------- ---------
1994 Acquisitions
- -----------------
Bel Shores Largo, FL 1,847 6,601 8,448 (697) 03/94
Brookwood Club Jacksonville, FL 952 9,460 10,412 (790) 11/94
Carlyle at Waters Tampa, FL 1,678 11,991 13,669 (862) 12/94
Cinnamon Park Arlington, TX 855 7,817 8,672 (642) 09/94
Copper Cove Houston, TX 935 6,507 7,442 (589) 06/94
Copperfield Oklahoma City, OK 357 6,608 6,965 (601) 06/94
Fielder's Glen Arlington, TX 556 5,277 5,833 (515) 05/94
Foxboro Houston, TX 800 4,234 5,034 (423) 06/94
The Gables McKinney, TX 544 7,090 7,634 (680) 05/94
Greens Crossing Dallas, TX 1,368 7,132 8,500 (539) 12/94
Harper's Creek Austin, TX 868 9,101 9,969 (797) 06/94
Hunter's Ridge Oklahoma City, OK 300 5,094 5,394 (472) 06/94
Newport Irving, TX 1,200 9,095 10,295 (800) 06/94
Rivercrest Arlington, TX 1,650 8,464 10,114 (868) 04/94
Silverado Albuquerque, NM 1,194 8,244 9,438 (599) 12/94
Springfield Mesquite, TX 1,042 6,656 7,698 (598) 06/94
Summerfield Place Oklahoma City, OK 619 5,725 6,344 (439) 11/94
Towne Center Dallas, TX 1,024 6,003 7,027 (557) 06/94
Woodscape Oklahoma City, OK 1,077 13,586 14,663 (1,216) 06/94
------- -------- -------- --------
Subtotal 18,866 144,685 163,551 (12,684)
------- -------- -------- --------
<Page S-2b>
1995 Acquisitions
- -----------------
Braden's Walk Bedford, TX 542 5,392 5,934 (202) 12/95
Hilltop N. Richland Hills, TX 801 5,476 6,277 (202) 12/95
Laurel Creek Houston, TX 2,067 12,510 14,577 (776) 04/95
Pinnacle Lewisville, TX 672 4,322 4,994 (230) 06/95
Pinto Creek Austin, TX 487 8,677 9,164 (605) 01/95
Reflections of Highpoint Dallas, TX 1,984 12,574 14,558 (662) 06/95
Remington at Ponte Vedra Ponte Vedra, FL 1,425 13,970 15,395 (736) 06/95
Remington Hill Fort Worth, TX 1,846 12,134 13,980 (645) 06/95
Sandpiper Jacksonville, FL 1,102 11,084 12,186 (499) 10/95
Shadow Creek N. Richland Hills, TX 666 6,177 6,843 (226) 12/95
Summer Meadows Plano, TX 2,393 15,252 17,645 (806) 06/95
Summer Villas Dallas, TX 2,270 14,391 16,661 (750) 06/95
Summers Crossing Plano, TX 1,730 11,119 12,849 (585) 06/95
Summers Landing Fort Worth, TX 819 5,560 6,379 (308) 06/95
Three Palms Tampa, FL 1,735 14,474 16,209 (774) 06/95
Winridge Aurora, CO 790 16,277 17,067 (854) 06/95
------- -------- -------- --------
Subtotal 21,329 169,389 190,718 (8,860)
------- -------- -------- --------
1996 Acquisitions
- -----------------
Ashbury Parke Austin, TX 2,007 11,834 13,841 (204) 06/96
Bentley Green Jacksonville, FL 1,430 14,450 15,880 (178) 08/96 & 09/96
Brandywine Nashville, TN 646 8,942 9,588 (104) 08/96
Costa del Sol San Antonio, TX 871 6,556 7,427 (115) 06/96
Huntington at Hidden Hills Jacksonville, FL 722 6,816 7,538 (95) 08/96
Meadow Glen Phoenix, AZ 1,802 10,772 12,574 (31) 11/96
Nashboro Village Nashville, TN 6,151 42,850 49,001 (4) 12/96
Oak Forest Bedford, TX 443 4,451 4,894 (42) 10/96
Quayle Walk Arlington, TX 731 5,792 6,523 (58) 09/96
Remington San Antonio, TX 427 4,553 4,980 (79) 06/96
Saratoga Melbourne, FL 676 5,884 6,560 (67) 09/96
Summer Oaks San Antonio, TX 826 5,783 6,609 (101) 06/96
Terra Vida Mesa, AZ 1,929 13,751 15,680 (269) 06/96
Timber Creek at Treepoint Arlington, TX 537 4,495 5,032 (46) 09/96
Villas of St. Moritz San Antonio, TX 653 5,799 6,452 (101) 06/96
Waterford on the Meadow Plano, TX 2,156 11,514 13,670 (108) 09/96
------- -------- -------- --------
Subtotal 22,007 164,242 186,249 (1,602)
------- -------- -------- --------
Grand Total $80,914 $602,601 $683,515 $(41,707)
======= ======== ======== ========
</TABLE>
<Page S-3b>
(A) Property is pledged as collateral under a $58.43 million
mortgage note payable to an insurance company.
(B) Property is pledged as collateral under a $23.816 million
mortgage note payable to an insurance company.
(C) Property is pledged as additional collateral under the
mortgage notes secured by Reflections of Highpoint, Remington
at Ponte Vedra, Remington Hill and Winridge.
(D) Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets which range
from 14 to 30 years for buildings and 5, 10 or 15 years for
personal property.
(E) The aggregate cost for Federal income tax purposes at
December 31, 1996 is approximately $685.1 million.
<Page E-1>
EXHIBIT INDEX
Exhibit No. Description
---------- -----------
3.1 Articles of Amendment and Restatement of the
Company. (1)
3.2 Restated Bylaws of the Company. (1)
4.1 Specimen of certificate representing shares of
Common Stock. (2)
4.2 Form of certificate representing shares of 9.16%
Series A Convertible Redeemable Preferred Stock.
(6)
4.3 Form of certificate representing shares of 9.16%
Series B Convertible Redeemable Preferred Stock.
(6)
4.4 Form of certificate representing shares of 9.20%
Senior Preferred Stock. (6)
4.5 Form of Articles Supplementary relating to 9.20%
Senior Preferred Stock. (6)
4.6 Specimen of certificate representing shares of
9.20% Senior Preferred Stock. (8)
4.7 Form of Articles Supplementary designating the
rights of the holders of 9.20% Senior Preferred
Stock. (8)
10.1 Dividend Reinvestment and Stock Purchase Plan.
(3)
10.2 Promissory Note by and between Crossing &
Meadows Partnership, Ltd. and Collin County
Housing Finance Corporation ($12,580,000), dated
as of February 1, 1996. (5)
10.3 Promissory Note by and between Crossing &
Meadows Partnership, Ltd. and Collin County
Housing Finance Corporation ($9,390,000), dated
as of February 1, 1996. (5)
10.4 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and America
First Arizona REIT, Inc., dated as of April 12,
1996 (Laguna Point Apartments). (5)
10.5 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and IBEX
Costa del Sol Corp., dated as of April 29, 1996
(Costa del Sol Apartments). (5)
<Page E-2>
10.6 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and IBEX
Remington Corp., dated as of April 29, 1996
(Remington Apartments). (5)
10.7 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and IBEX
Summer Oaks Corporation, dated as of April 29,
1996 (Summer Oaks Apartments). (5)
10.8 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and IBEX St.
Moritz Corp., dated as of April 29, 1996 (Villas
of St. Moritz Apartments). (5)
10.9 Purchase and Sale Agreement by and between
Woodwinds, Ltd. and Walden Residential
Properties, Inc., dated as of May 1, 1996
(Brandywine Apartments). (7)
10.10 Real Estate Acquisition Contract and Escrow
Instructions by and between Stonegate Lewisville
Associates, Ltd. and Walden Residential
Properties, Inc., dated as of May 21, 1996
(Ashbury Parke Apartments). (5)
10.11 Assignment and Assumption Agreement by and among
America First Arizona REIT, Inc., Walden AZ
Corporation, The Industrial Development
Authority of the County of Maricopa and First
Bank National Association, dated as of June 4,
1996. (5)
10.12 Agreement of Sale and Purchase by and between
Walden Residential Properties, Inc. and Meadow
Glen Limited Partnership, dated as of June 17,
1996 (Meadow Glen Apartments). *
10.13 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and Florida
Raintree I Associates, Ltd., dated as of June
26, 1996 (Princeton Meadows II Apartments).
(7)
10.14 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and Cozumel
Associates, Ltd., dated as of June 26, 1996
(Cozumel Apartments). (7)
10.15 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and TE-TWO
Real Estate Limited Partnership, dated as of
July 26, 1996 (Princeton Meadows I Apartments).
(7)
<Page E-3>
10.16 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and Quayle
Walk Apartments Partners, dated as of July 29,
1996 (Quayle Walk Apartments). (7)
10.17 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and Timber
Creek Apartments Partners, dated as of July 29,
1996 (Timber Creek Apartments). (7)
10.18 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc. and
Waterford Partners, dated as of July 29, 1996
(Waterford on the Meadow Apartments). (7)
10.19 Real Estate Sales Contract by and between 1991
Treepoint Village Limited Partnership and Walden
Residential Properties, Inc., dated as of July
29, 1996 (Treepoint Village Apartments). *
10.20 First Amendment to the Real Estate Sales
Contract by and between 1991 Treepoint Village
Limited Partnership and Walden Residential
Properties, Inc., dated as of August 8, 1996
(Treepoint Village Apartments). *
10.21 Purchase and Sale Agreement by and between
Walden Residential Properties, Inc., Mark Paskin
and Marcia Paskin, dated as of August 14, 1996
(Oak Forest Apartments). (7)
10.22 First Amendment to the Agreement of Sale and
Purchase by and between Walden Residential
Properties, Inc. and Meadow Glen Limited
Partnership, dated as of September 15, 1996
(Meadow Glen Apartments). *
10.23 Agreement of Sale and Purchase by and between
Nashboro Village Apartments, L.P. and Walden
Residential Properties, Inc., dated as of
November 15, 1996 (Nashboro Village). *
10.24 First Amendment to the Agreement of Sale and
Purchase by and between Nashboro Village
Apartments, L.P. and Walden Residential
Properties, Inc., dated as of November 25, 1996
(Nashboro Village). *
<Page E-4>
10.25 Revolving Credit Agreement among WDN Properties,
Ltd., The First National Bank of Boston, the
Other Banks which are a Party to this Agreement,
the Other Banks which may become Parties to this
Agreement, and The First National Bank of Boston
(as Agent), dated as of December 4, 1996. *
10.26 Unconditional Guaranty of Payment and
Performance among Walden Residential Properties,
Inc., Walden Residential Operating Partnership,
L.P., WDN Properties, Inc., The First National
Bank of Boston, Bank of Montreal (Chicago
Branch), Dresdner Bank AG (New York and Grand
Cayman Branches), and Signet Bank, dated as of
December 4, 1996. *
10.27 Second Amendment to the Agreement of Sale and
Purchase by and between Nashboro Village
Apartments, L.P. and Walden Residential
Properties, Inc., dated as of December 13, 1996
(Nashboro Village). *
11.1 Computation of Net Income per Share. *
12.1 Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.
*
18.1 Letter regarding a change in accounting
principles. *
21.1 Schedule of Subsidiaries of the Company. *
23.1 Independent Auditors' Consent. *
27.1 Financial Data Schedule. *
* Filed herewith.
(1) Previously filed with the Amendment No. 3 to the Company's
Registration Statement on Form S-11 (Registration No. 33-70132)
filed with the Securities and Exchange Commission on
December 23, 1993 and incorporated herein by reference.
(2) Previously filed with the Company's Registration Statement on
Form S-3 (Registration No. 33-90438) filed with the Securities
and Exchange Commission on March 8, 1995 and incorporated
herein by reference.
<Page E-5>
(3) Previously filed with the Company's Registration Statement on
Form S-3 (Registration No. 333-02520) filed with the
Securities and Exchange Commission on March 19, 1996 and
incorporated herein by reference.
(4) Previously filed with the Company's Form 8-K filed with the
Securities and Exchange Commission on April 23, 1996 and
incorporated herein by reference. (Previously numbered
Exhibit 4.1)
(5) Previously filed with the Company's Form 10-Q filed with the
Securities and Exchange Commission on August 7, 1996 and
herein incorporated by reference. (Previously numbered
Exhibits 10.1 through 10.9)
(6) Previously filed with the Company's Registration Statement on
Form S-3 (Registration No. 33-13809) filed with the Securities
and Exchange Commission on October 9, 1996 and herein
incorporated by reference.
(7) Previously filed with the Company's Form 10-Q filed with the
Securities and Exchange Commission on November 12, 1996 and
herein incorporated by reference. (Previously numbered
Exhibits 10.10 through 10.18)
(8) Previously filed with the Company's Form 8-A filed with the
Securities and Exchange Commission on December 20, 1996 and
herein incorporated by reference. (Previously numbered
Exhibit 1.1 and 2.3)
AGREEMENT OF SALE AND PURCHASE
by and between
WALDEN RESIDENTIAL PROPERTIES, INC.,
A MARYLAND CORPORATION, AS PURCHASER
and
MEADOW GLEN LIMITED PARTNERSHIP,
A WASHINGTON LIMITED PARTNERSHIP AS SELLER
MEADOW GLEN APARTMENTS
4201 WEST UNION HILLS DRIVE
GLENDALE, MARICOPA COUNTY, ARIZONA
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.SALE AND PURCHASE. . . . .1
ARTICLE 2.CONSIDERATION FOR CONVEYANCE2
2.1 Consideration. . . . . . . . . . . . . . . . . . . . .2
ARTICLE 3.EARNEST MONEY. . . . . . .2
3.1 Initial Deposit. . . . . . . . . . . . . . . . . . . .2
3.2 Additional Deposit . . . . . . . . . . . . . . . . . .3
ARTICLE 4.TITLE POLICY . . . . . . .3
4.1 Permitted Exceptions . . . . . . . . . . . . . . . . .3
4.2 Title Policy . . . . . . . . . . . . . . . . . . . . .4
ARTICLE 5.SUBMISSION ITEMS . . . . .5
5.1 Confidentiality. . . . . . . . . . . . . . . . . . . .5
5.2 Information. . . . . . . . . . . . . . . . . . . . . .5
ARTICLE 6.INSPECTION AND AUDIT . . .5
6.1 Inspection Period. . . . . . . . . . . . . . . . . . .5
6.2 Condition of Subject Properties. . . . . . . . . . . .6
6.3 Financing Assumption . . . . . . . . . . . . . . . . .7
ARTICLE 7.RISK OF LOSS . . . . . . .7
ARTICLE 8.CONDITION OF PROPERTY. . .8
8.1 Condition of Property. . . . . . . . . . . . . . . . .8
8.2 Purchaser's Additional Waivers . . . . . . . . . . . .9
8.3 Management of Properties . . . . . . . . . . . . . . .9
ARTICLE 9.CLOSING. . . . . . . . . 10
9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . 10
9.2 Delivery of Items At Closing By Seller . . . . . . . 10
9.3 Delivery of Items at Closing by Purchaser. . . . . . 11
9.4 Prorations . . . . . . . . . . . . . . . . . . . . . 11
9.5 Errors and Omissions . . . . . . . . . . . . . . . . 13
9.6 Costs. . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 10.REAL ESTATE COMMISSION . 13
10.1 Commissions. . . . . . . . . . . . . . . . . . . . . 13
10.2 Broker Indemnifications14
ARTICLE 11.REMEDIES OF DEFAULT. . . 14
11.1 Termination Of Contract By Purchaser . . . . . . . . 14
11.2 Purchaser's Default. . . . . . . . . . . . . . . . . 14
11.3 Seller's Default . . . . . . . . . . . . . . . . . . 14
ARTICLE 12.MISCELLANEOUS. . . . . . 15
12.1 Notices. . . . . . . . . . . . . . . . . . . . . . . 15
12.2 Effective Date . . . . . . . . . . . . . . . . . . . 16
12.3 Assignment . . . . . . . . . . . . . . . . . . . . . 16
12.4 Laws . . . . . . . . . . . . . . . . . . . . . . . . 17
12.5 Modification . . . . . . . . . . . . . . . . . . . . 17
12.6 Authority. . . . . . . . . . . . . . . . . . . . . . 17
12.7 Times And Dates. . . . . . . . . . . . . . . . . . . 17
12.8 Descriptive Headings . . . . . . . . . . . . . . . . 17
12.9 Entire Contract. . . . . . . . . . . . . . . . . . . 17
12.10 Construction. . . . . . . . . . . . . . . . . . 17
12.11 Non-recordable. . . . . . . . . . . . . . . . . 17
12.12 Third-Party Beneficiary . . . . . . . . . . . . 18
12.13 Relationship. . . . . . . . . . . . . . . . . . 18
12.14 Contemplation of Closing. . . . . . . . . . . . 18
12.15 Return of Documents . . . . . . . . . . . . . . 18
12.16 Effect of Holiday . . . . . . . . . . . . . . . 18
<PAGE>
AGREEMENT OF SALE AND PURCHASE
This Agreement of sale and Purchase (this "Contract") is
entered into by and between MEADOW GLEN LIMITED PARTNERSHIP, a
Washington limited partnership, ("Seller"), and WALDEN RESIDENTIAL
PROPERTIES, INC., a corporation ("Purchaser").
ARTICLE 1.
SALE AND PURCHASE
1.1 Sale and Purchase. Subject to the terms and provisions
hereof, Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase from Seller:
1.1.1 All right, title and interest of Seller in
and to the real property described on Exhibit "A" attached
hereto and made a part hereof, together with all right, title
and interest of Seller in and to any and all strips or gores,
roads, easements, streets and ways bounding such real
property, and rights of ingress and egress thereto
(collectively, the "Real Property");
1.1.2 All right, title and interest of Seller in
and to all improvements situated upon the Real Property,
including, but not by way of limitation, those certain
buildings, structures, fixtures and other improvements of
every kind and nature presently situated on, in, under or
hereafter erected, installed or used in, or about the Real
Property and commonly known as the Meadow Glen Apartments,
4201 West Union Hills Drive, Glendale, Arizona (collectively,
the "Improvements");
1.1.3 All right, title and interest of Seller in
and to all personal property of every kind and nature now or
hereafter installed, located, situated or used in the
operation, use and enjoyment of the Real Property or the
Improvements (collectively, the "Personal Property") with the
exception of all replacement reserve accounts which will
remain the property of the Seller and must be replaced at
closing by the Purchaser.
The Real Property, Improvements and Personal Property are
hereinafter collectively referred to as the "Subject Properties".
ARTICLE 2.
CONSIDERATION FOR CONVEYANCE
2.1 Consideration. The purchase price for the Subject
Properties is and shall be the sum of TWELVE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($12,500,000.00) (the "Purchase Price"), which
shall be due and payable in cash by wire transfer of immediately
available federal funds at the closing of title and delivery of the
deed (the "Closing"), and by Purchaser assuming the existing
Bond/HUD financing in the approximate amount of SEVEN MILLION ONE
HUNDRED EIGHTY-FIVE THOUSAND DOLLARS ($7,185,000.00) (to be
adjusted at closing). Purchaser will pay all costs evidenced by an
agreement to be signed at the date of closing. Also, Purchaser
shall pay Seller at the date of closing an amount equal to all
funds held in a replacement/repair reserve escrow account in
connection with such Bond/HUD financing. The amount of such
account is approximately $160,000.00. Seller shall assign to
Purchaser at the date of closing all of Seller's right, title and
interest in connection with such account. Purchaser acknowledges
that as a requirement of the Bond/HUD financing, Seller made an
additional deposit of approximately $40,000.00, which deposit will
be refundable to Seller in the future after closing of this escrow.
Such additional deposit shall remain the property of Seller and
shall be forwarded to Seller when such deposit is refunded.
ARTICLE 3.
EARNEST MONEY
3.1 Initial Deposit. Upon Purchaser's execution of this
Contract, Purchaser shall deliver to the Title Company (as defined
in Section 4.2) FOUR (4) fully executed counterparts of this
Contract, and shall simultaneously deliver to the Title Company by
wire transfer of immediately available federal funds, or cashier's
check or bank check drawn by a bank satisfactory to Seller the
amount of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (the "Earnest
Money"). The Title Company shall, promptly upon receipt thereof,
place the Earnest Money in an interest bearing account in an
institution approved by Seller and Purchase. The interest thus
derived shall become part of the Earnest Money and shall be paid to
the party entitled to the Earnest Money in accordance with the
terms hereof. If the sale contemplated by the Contract is
consummated in accordance with the terms hereof, the Earnest Money,
and all interest thereon, shall be applied to the Purchase Price to
be paid to Seller at the Closing. Except as otherwise provided
herein, the Earnest Money shall be nonrefundable to Purchaser upon
the expiration of the Inspection Period (hereinafter defined).
This Contract shall be of no force and effect until such time
as (i) Purchaser has complied with each of the terms of this
Section 3.1; (ii) Seller has executed this Contract; and (iii)
Seller has sent to Purchaser ONE (1) fully executed counterpart of
this Contract.
3.2 Additional Deposit. On or before the expiration date of
the Inspection Period, Purchaser shall deliver to the Title Company
an additional ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (sometimes
hereinafter referred to as the "Additional Earnest Money"). After
Purchaser has so delivered the Additional Earnest Money to the
Title Company, the term "Earnest Money", as used in this Contract,
shall mean the initial deposit and the Additional Earnest Money in
the aggregate amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.00).
The failure of Purchaser to deliver the Additional Earnest Money,
in the amount and within the time period required hereby, shall
entitle Seller, at its sole and unfettered election, to terminate
this Contract, in which event the Earnest Money deposited by
Purchaser shall be returned to Purchaser and no party hereto shall
have any further rights or liabilities hereunder, except for
Purchaser's liability pursuant to Section 6.1 hereof.
IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT UPON REMOVAL OF THE
INSPECTION CONTINGENCY (Section 6.1), THE EARNEST MONEY IS AND
SHALL BE AT RISK IMMEDIATELY AND SHALL THEREAFTER BE NONREFUNDABLE
TO PURCHASER UNLESS THE SELLER DEFAULTS IN ITS OBLIGATIONS
HEREUNDER.
ARTICLE 4.
TITLE POLICY
4.1 Permitted Exceptions. The Subject Properties are sold
and are to be conveyed subject to the following (hereinafter the
Permitted Exceptions), and also subject to Section 4.2 below:
4.1.1 Zoning and building laws, restrictions,
regulations and ordinance of the municipality in which the
Real Property is located, if any.
4.1.2 Covenant, conditions, easements and
restrictions of record.
4.1.3 State of facts an accurate survey or
personal inspection would show.
4.1.4 All notes or notices of violations of law
or municipal ordinances, orders or requirements noted in or
issued by the Departments of Housing and Buildings, Fire
Labor, Health, or other Federal, State or Municipal
Departments having jurisdiction, against or affecting the
Subject Properties at the date of the Closing.
4.1.5 Any and all assessments becoming liens
subsequent to the Effective Date hereof and, in addition, if
at the Effective Date hereof the Subject Properties or any
part thereof shall be or shall have been affected by any
assessment or assessments which are payable in installments or
may be paid in installments without penalty (other than
interest), Purchaser shall pay all such installments which
shall become due and payable or which may be paid without
penalty (other than interest) after the Effective Date hereof,
except that any installment relating to the current fiscal
year (with any interest thereon) shall be apportioned between
the parties at Closing.
4.1.6 All liens for real estate taxes on the
Subject Properties for the year 1996 which are not yet due and
payable on the date of Closing.
4.1.7 Those matters determined to be "Permitted
Exceptions pursuant to Section 4.2 hereof.
4.2 Title Policy. Purchaser shall receive from Seller a
commitment for the issuance of an Owner's Policy of Title Insurance
(the "Title Commitment") issued by First American Title Company
(the "Title Company"), together with copies of all documents
constituting exceptions to Seller's title as reflected in the Title
Commitment. Purchaser shall have until on or before the expiration
of the Inspection Period (hereinafter defined) to review the Title
Commitment and the documents referred to therein and to deliver to
Seller in writing such objections as Purchaser may have to anything
contained or set forth in the Title Commitment. Any item to which
Purchaser does not object prior to the expiration of the Inspection
Period shall be deemed to be a "Permitted Exception" (herein so
called). As to items to which Purchaser make objections, Seller
may elect, in its sole discretion, to cure such objections. In the
event Seller elects not to cure such matters prior to the Closing,
Seller will notify Purchaser of such election and Purchaser shall
have the right, within FIVE (5) days after Seller's notice, to
either (i) terminate the Contract, in which event it shall receive
a full refund of the Earnest Money, and no party hereto shall have
any further rights hereunder except for Purchaser's liability
pursuant to Article 6 hereof, or (ii) waive such title matters,
without any reduction in the Purchase Price, and proceed to the
Closing, whereupon such waived title matters shall also be deemed
"Permitted Exceptions".
In the event Seller elects to cure such objections and
Seller is unable to cure same by the Closing, then Seller may
unilaterally extend the Closing for a period of time thereafter in
order to cure same, but in no event shall the Closing be extended
for more than THIRTY (30) days after the originally scheduled date
(as same shall be amended pursuant to the terms of this Contract).
If cure is unable to be effected within such extended sixty-day
period, then this contract shall terminate and the Earnest Money
shall be returned to Purchaser and neither party shall have any
further liability to the other except under Article 5 below.
ARTICLE 5.
SUBMISSION ITEMS
5.1 Confidentiality. All of the submission items and any
other reports, documents or information given by Seller to
Purchaser in connection herewith shall be returned to Seller or
kept in confidence by Purchaser.
5.2 Information. As an essential inducement to Seller to
sell the Subject Properties to Purchaser on the favorable terms and
conditions set forth in this Contract, Purchaser acknowledges and
agrees that: (i) all documents, materials, reports, studies and
other information delivered or disclosed to Purchaser by Seller
(the "Information") are being provided to Purchaser for
informational purposes only and only as an accommodation to
Purchaser; (ii) Seller had not made, is not making, and will not
make any representation, warranty or promise of any kind, express
or implied, concerning the accuracy or completeness of all or any
part of the Information; and (iii) any inaccuracy, incompleteness,
or deficiency in any part of the Information shall be solely the
risk and responsibility of Purchaser, shall not be chargeable in
any respect to Seller, and shall not form the basis of any claims
by Purchaser against Seller, its employees, agents, or assigns such
claims being expressly waived and relinquished by Purchaser.
ARTICLE 6.
INSPECTION AND AUDIT
6.1 Inspection Period. Purchaser shall have THIRTY (30) days
after the Effective Date (the "Inspection Period") within which to
make all audits, inspections or investigations desired by
Purchaser, subject to Seller's requirements as hereinafter set
forth. Purchaser and Purchaser's accountants, attorneys or other
representatives(s) (which shall not exceed FOUR (4) persons at any
one time, including Purchaser and its representatives, each of
which persons must be accompanied by an authorized employee or
representative of Manager or Seller) shall have the right, during
regular business hours and with reasonable notice, to:
6.1.1 Interview the Manager regarding the
management or operation of the Subject Properties and to
inspect the Leases and books an records of the Subject
Properties that are in the Manager's possession;
6.1.2 Inspect the books, records, maintenance
and service contracts, and files relating to the condition or
operation of the Subject Properties that are in the possession
or control of Seller;
6.1.3 And subject to the rights of tenants
occupying space in the Improvements, at its sole risk and
expense, Seller recommends that the Purchaser inspect the Real
Property and Improvements and make tests, surveys and
inspections, including, without limitation, soil tests,
topographical surveys, systems and materials, plumbing and
electrical inspections, structural and foundation surveys,
concrete tests, roof, stairwell and deck inspections,
equipment inspections pestilence and environmental
inspections. Purchaser shall exercise (and cause its agents
and employees to exercise) due care and ordinary prudence in
performing such surveys, inspections and tests and shall not
exercise such right in a manner that interferes with the
operation of the Subject Properties. If the transactions
contemplated hereby are not consummated, Purchaser, at its own
cost and expense, promptly shall repair any damage to the
Subject Properties resulting from such surveys, test or
inspections. Purchaser shall indemnify, defend, save and hold
harmless Seller from and against any and all claims, liens
(including, without limitation, mechanic's and materialman's
liens), actions, suits, proceedings, costs, expenses, damages
or other liabilities, including, without limitation,
attorney's fees and court costs, all as incurred, arising out
of the rights granted to Purchaser pursuant to the terms of
this Inspection Period. Purchaser, its contractors and
representatives shall keep confidential any and all
information, documents and reports obtained or prepared by
them relating to the Subject Properties in accordance with the
terms and conditions of the Confidentiality Agreement. At
Seller's request, Purchaser shall furnish to Seller copies of
all studies, test and surveys undertaken and completed in
connection with such inspections.
The terms of this Section 6.1 shall survive the Closing
or the termination of this Contract.
6.2 Condition of Subject Properties. In the event that
Purchaser, during the Inspection Period, approves of the condition
of the Subject Properties or the Submission Items, in its sole and
absolute discretion, Purchaser shall unequivocally notify Seller in
writing of such approval prior to the expiration of the Inspection
Period ("Notice of Inspections Approval"). If no such Notice of
Inspections Approval has been delivered to Seller prior to the
expiration of the Inspection Period, then this Agreement shall
terminate, Purchaser shall be entitled to a return of the Earnest
Money, and no party hereto shall have, any further obligations
hereunder except Purchaser's liabilities under Section 6.1 hereof.
If Purchaser delivers to Seller the Notice of Inspections Approval
prior to the expiration of the Inspection Period, then Purchaser
shall be deemed to have waived Purchaser's right to terminate under
this Section 6.2 and may not thereafter terminate this Contract by
reason of the condition of the Subject properties and Submission
Items; provided, however, that Purchaser may nonetheless terminate
under the terms of this Section 6.2 if Seller fails to cure the
matters for which it is required to cure under the terms of Section
4.2 hereof.
6.3 Financing Assumption. Purchaser shall assume the
existing Bond/HUD financing in the approximate amount of SEVEN
MILLION ONE HUNDRED EIGHTY-FIVE THOUSAND DOLLARS ($7,185,000.00).
Purchaser shall pay all assumption fees as required by Lender.
The Purchaser may terminate this transaction and receive
a refund of its Earnest Money deposit if the Lender requires
material changes (over FIVE THOUSAND DOLLARS ($5,000.00) PER YEAR
in additional costs to Purchaser, exclusive of reserve
requirements, assumption fees and closing costs) in the primary
financial terms of the loan being assumed.
Further, this Purchase and Sale Contract is expressly
conditioned upon preliminary approval by HUD of the transactions
set forth in Form HUD 92266, application for Transfer of Physical
Assets, and supporting documents submitted to HUD. No transfer of
any interest in the project under this sale agreement shall be
effective prior to such HUD approval. Purchaser will not take
possession of the project nor assume benefits of project ownership
prior to such approval by HUD. The Purchaser, its heirs,
executors, administrators or assigns, shall have no right upon any
breach by Seller hereunder to seek damages, directly or indirectly,
from the project which is the subject of this transaction,
including from any assets, rents, issues or profits thereof, and
Purchaser shall have no right to effect a lien upon this project or
the assets, rents, issues, or profits thereof.
ARTICLE 7.
RISK OF LOSS
In the event of any material loss, damage or taking of the
Subject Properties, prior to the Close of Escrow, Seller shall give
Purchaser written notice thereof within TWO (2) business days.
Purchaser may then, within TEN (10) business days after Purchaser
receives such notice of such loss, damage or taking, cancel this
Contract. In the case of either: (a) loss, damage or taking of the
Subject Properties, prior to the Close of Escrow, which is not
material; or (b) material loss, damage or taking of the Subject
Properties, prior to the Close of Escrow, where Purchaser does not
timely cancel this Contract in accordance with the first sentence
of this Section, then the parties shall proceed to consummate the
transaction contemplated hereby in accordance with this Contract
and Seller shall, at the Close of Escrow and as a condition
precedent thereto, either (i) pay to or apply against the Purchase
Price the amount of any insurance or condemnation proceeds
attributable thereto which have been received by Seller prior to
the Close of Escrow, or (ii) assign to Purchase as of the Close of
Escrow all rights or claims to such proceeds payable thereafter (in
which case there shall be no reduction in Purchase Price). For
purposes of this Section, a loss, damage or taking shall be deemed
material if it results in the permanent loss equal to or greater
than ONE HUNDRED THOUSAND DOLLARS ($100,000.00).
ARTICLE 8.
CONDITION OF PROPERTY
8.1 Condition of Property. It is expressly understood and
agreed that Purchaser shall accept the conveyance of the Subject
Properties in their present condition, "AS-IS, WHERE-IS", subject
to all patent and latent defects and all faults, if any, with no
representation or warranty by Seller as to their fitness,
suitability, marketability, merchantability, habitability, or
usability, including, but not limited to, (i) the quality or
condition of the Improvements and the Real Property, including,
without limitation, the water, soil and geology, (ii) the manner of
operating the Subject Properties and the expense related thereto,
and (iii) the compliance of the Subject Properties with any laws,
rules, ordinances or regulations of any governmental body; and (iv)
the nature and extent of any servitudes, rights-of-way, lease,
possession, liens, encumbrances, licenses, reservations, conditions
or otherwise. Purchaser acknowledges that it is not relying upon
any representation, warranty, statement, or other assertion with
respect to the Subject Properties condition made by Seller, its
employees or agents and accepts the Subject Properties under the
express understanding that there are no express or implied
warranties made by Seller with respect to the condition or value of
the Subject Properties (except for limited warranties of title set
forth in any of the closing documents). Purchaser declares that it
is experienced in the ownership and operation of properties similar
to the Subject Properties and therefore acknowledges that it will
rely solely on its own investigation and examination of the Subject
Properties, which it was qualified to make, and not on any
information provided or to be provided by Seller. Seller makes no
representation as to any environmental matters relating to the
Subject Properties including, without limitation, soil and water
conditions or the presence or lack thereof of hazardous materials.
The term "Hazard Materials" shall mean and include asbestos,
polychlorinated biphenyls, petroleum products and any other
hazardous or toxic materials, wastes and substances that are
defined as such in any Environmental Law. However, Seller does
represent that, to the best of its knowledge, it has neither
generated nor stored Hazardous Materials on the Subject Properties,
other than Hazardous Materials used in the normal operation of the
Subject Properties, such as gasoline for small machinery, cleaning
solvents, paint and paint thinner and similar types of maintenance
materials. Seller makes no representation as to the condition or
value of the Subject Properties. Purchaser hereby waives and
releases Seller of and from any claims, actions, causes of action,
demands, rights, liabilities, obligations, damages, costs, expenses
or compensation whatsoever, direct or indirect, known or unknown,
foreseen or unforeseen, that Purchaser now has or that may arise in
the future on account of or in any way growing out of or in
connection with the economic, physical or environmental condition
of the Subject Properties, or any Environmental Law or applicable
regulation. Purchaser acknowledges that Purchaser is assuming the
risk of such unknown and unanticipated claims and agrees that this
release applies thereon. Purchaser expressly waives the benefits
of any statutory article or other law which provides that:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the release, which if known by
him must have materially affected his settlement with the
debtor."
The provisions of this Section 8.1 shall survive Closing
and the future transfer of any or all of the Subject Properties by
Purchaser, and are additional inducement to the Seller as part and
parcel of Seller's consideration.
8.2 Purchaser's Additional Waivers. Purchaser agrees that
Seller shall not be responsible or liable to Purchaser for any
construction defects, errors, omissions or on account of any other
conditions affecting the Subject Properties, as Purchaser is
purchasing the Subject Properties AS IS, WHERE IS and WITH ALL
FAULTS. Purchaser or anyone claiming, by, through or under
Purchaser, hereby fully releases Seller, its employees, officers,
directors, partners, representatives and agents from any and all
claims that it may now have or hereafter acquire against Seller,
its employees, officers, directors, partners, representatives and
agents for any cost, loss, liability, damage, expense, demand,
action or cause of action arising from or related to any
construction defects, errors, omissions, or other conditions
affecting the Subject Properties. Purchaser further acknowledges
and agrees that this release shall be given full force and effect,
according to each of its expressed terms and provisions, including,
but not limited to, those relating to unknown and unsuspected
claims, damages and causes of action.
8.3 Management of Properties. Seller agrees that it will
continue to cause the Subject Properties to be managed and operated
by Multicorp, Inc. through the Closing in a manner consistent with
the manner currently being practiced, including the maintenance of
the insurance coverage currently maintained by Seller on the
Subject Properties. Seller makes no representations and assumes no
responsibility with respect to continued occupancy of the Real
Property and Improvements or any part thereof by any tenant or
tenants now in possession. Prior to the Closing, Seller shall be
entitled, but not obligated, to enforce the rights under any Lease
or any tenancy by litigation in any court having jurisdiction over
landlord and tenant matters. The removal by Seller of tenants that
are in default under their leases shall not give rise to any claim
on the part of Purchaser or affect this Contract in any manner
whatsoever.
ARTICLE 9.
CLOSING
9.1 Closing. Closing hereunder shall take place in the
offices of the Title Company on the date which is FIFTEEN (15)
calendar days after the written waiver of the inspection
contingency and the Lender's approval of the Purchaser's assumption
of the existing Bond/HUD debt, but in any event no later than
September 15, 1996, unless mutually agreed in writing.
9.1.1 Purchaser agrees to cooperate with Seller
to sign any documentation required to affect a 1031 tax
deferred exchange. Seller shall pay all costs of such 1031
documentation. Completion of a 1031 exchange in favor of the
Seller is NOT a contingency of this transaction.
9.2 Delivery of Items At Closing By Seller. At the Closing,
Seller shall deliver or cause to be delivered to Purchaser and
Purchaser shall accept and execute where indicated, each of the
following items (if Purchaser's execution is required by the terms
of such items):
9.2.1 Special Warranty Deed, duly executed and
acknowledged by Seller, and in form for recording, conveying
title in the Real Property and Improvements to Purchaser,
subject to the Permitted exceptions;
9.2.2 Bill of Sale duly executed and
acknowledged by Seller, conveying to Purchaser the Personal
Property, without warranty, subject to the Permitted
Exceptions;
9.2.3 An Assignment, without recourse, duly
executed and acknowledged by Seller, assigning to Purchaser
all of Seller's interest in (i) the Leases and security
deposits (that are in Seller's or Manager's possession), (ii)
those Miscellaneous Contracts Purchaser is assuming, and (iii)
the warranties, guaranties, and bonds applicable to the
Subject Properties;
9.2.4 A form letter to be addressed to each
tenant under the Leases advising such tenant that the Subject
Properties have been sold to Purchaser and that Purchaser has
assumed the obligation to refund such tenant's security
deposit in accordance with such Lease, with the exact amount
of the deposit specified for such tenant;
9.2.5 Copies of Miscellaneous Contracts, in
Seller's possession, assigned to Purchaser;
9.2.6 All keys to all locks on the Subject
Properties in possession of Seller; and
9.2.7 A certification executed by Seller
containing the following:
i) the Seller's U.S. Taxpayer Identification
Number;
ii) the business address of Seller; and
iii) a statement that Seller is not a foreign person
within the meaning of Sections 1445 and 7701 of the
Internal Revenue Code ("IRC") (i.e., Seller is not a
nonresident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those
terms are defined in the IRC and applicable Income Tax
Regulations).
9.3 Delivery of Items at Closing by Purchaser. At the
Closing, Purchaser shall:
9.3.1 Deliver to Seller the Purchase Price, less
any allowable prorations, assumptions and similar items;
9.3.2 Deliver to Seller such evidence or
documents as may be required by the Seller or the Title
Company evidencing the status and capacity of Purchaser and
the authority of the person or persons who are executing the
various documents on behalf of Purchaser in connection with
the acquisition of the Subject Properties; and
9.3.3 Join Seller in the execution of the
documents described in 9.2.3 above, which document shall
include an assumption agreement wherein Purchaser acknowledges
and assumes any and all of the terms, liabilities or
obligations of Seller under Section 8.1 hereof, the Leases,
tenants, security deposits, Miscellaneous Contracts and any
other agreements, contracts, licenses or permits assigned to
Purchaser by Seller and agrees to indemnify and hold Seller
harmless from any claims and expenses (including, without
limitation, reasonable attorney's fees), as incurred by
Seller, in relation to such matters, items or documents
accruing from and after the date of Closing. Notwithstanding
the foregoing, at Purchaser's request, Seller shall cancel any
such service contracts (upon the notice period required under
such contracts); and
9.3.4 Join Seller in the execution of the
documents described in items 9.2.2 and 9.2.4 above.
9.4 Prorations. At the Closing, the following items shall be
adjusted and prorated between Seller and Purchaser on a per diem
basis as of 12:01 A.M. on the day of Closing:
9.4.1 Rents and other charges payable under the
Leases. For purposes hereof, all rents and other charges
payable under the Leases for the calendar month in which the
Closing occurs shall be prorated on the basis of sums actually
collected by Seller prior to the Closing. All rent
collections prior to the Closing shall be first applied to
arrears (for existing residents only) for prior months, with
any balance to be applied to current monthly charges. From
and after Closing, all rent collections shall be first applied
to current monthly charges, with the balance, if any, to be
applied to arrears for prior months. After the Closing,
Purchaser shall have a duty and obligation to Seller to remit
such unpaid rents and other charges to Seller when collected
by Purchaser. Purchaser shall use reasonable efforts to
collect any such unpaid rents or other charges in arrears.
The provisions of the Section 9.4.1 shall survive the Closing.
9.4.2 Payments under the Miscellaneous Contracts
assumed by Purchaser on the basis of the actual payments owed
thereunder. If the actual payments owed under the
Miscellaneous Contracts are not known at the Closing, the
proration of such payments shall be made on the basis of the
best evidence then available and thereafter adjusted when the
actual amount of such payments are ascertainable.
9.4.3 Real estate, ad valorem and personal
property taxes, sewer rents and charges, and other state,
county and municipal taxes, charges and assessments (special
or otherwise) which may be paid in installments shall be
prorated on the basis of the calendar year for which the same
are levied, imposed or assessed. Seller shall pay regular
installments of special assessments that have become due prior
to the Closing. All installments of special assessments or
portions due on or after the Closing shall be assumed and paid
by Purchaser.
9.4.4 Charges for water, electricity, gas and
other utilities. The consumption of all water, electricity,
gas and other utilities is measured by meter, and Seller shall
furnish a current reading of each meter at the Closing, which
readings shall have been made either as of 12:01 a.m. on the
day of Closing or as close to the Closing as reasonably
possible, and in any event Seller shall be responsible for
paying charges therefor to 12:01 a.m. on the day of Closing or
submitting proof that such charges were previously paid. In
the event meter readings current as of 12:01 a.m. on the day
of Closing are not available at Closing, then Seller shall pay
at Closing the charges to the date of the most recent reading
or submit proof that such charges were previously paid, and
the parties further agree to notify the utility companies to
read the meters as soon as possible after Closing and adjust
and prorate such utility charges when the actual readings are
available.
9.5 Errors and Omissions. Any errors and omissions in
computing apportionments at Closing shall be promptly corrected,
which obligation survives the Closing.
9.6 Costs.
9.6.1 Seller shall pay for the basic premium for
a standard owner's title policy to be delivered to Purchaser
and any other closing costs customarily paid by sellers of
commercial real property in urban areas in the State of
Arizona.
9.6.2 Purchaser shall pay for the following:
9.6.2.1 Any surcharges or endorsements issued in connection with
an owner's title policy, if any, to be issued to
Purchaser;
9.6.2.2 The attorney's fees of Purchaser's counsel in connection
with or relating to the transactions contemplated by this
Contract; and
9.6.2.3 Any closing costs customarily paid by purchasers of
commercial real property in urban areas in the State of
Arizona.
9.6.2.4 Any fees charged by the Lenders with regard to the
Purchaser's assumption of the Bond/HUD financing.
ARTICLE 10.
REAL ESTATE COMMISSION
10.1 Commissions. Seller and Purchaser hereby covenant and
agree one with the other that no real estate commissions, finder's
fees or broker's fees have been or will be incurred in connection
with this Contract or the transactions contemplated hereby, except
as specified in this Section 10.1. A Commission ("Commission")
shall be payable by Seller to Hendricks & Partners, 3001 East
Camelback Road, Suite 150, Phoenix, Arizona 85016 (Tel. 602-9551122)
at Closing if and when Closing occurs. Purchaser and
Seller agree that the Broker herein was the sole agent to cause
inducement of this transaction. Purchaser and Broker hereby
indemnify and hold Seller harmless, from and against any claims,
causes of action or liabilities, including, without limitation,
reasonable attorney's fees and court costs, that may be incurred
with respect to any claim for other real estate commissions,
broker's fees or finder's fees relative to this Contract. The
provisions of Section 10.1 shall survive the Closing or termination
of this Contract.
HENDRICKS & PARTNERS REPRESENTS SELLER IN THE TRANSACTION
CONTEMPLATED BY THIS CONTRACT AND DOES NOT REPRESENT PURCHASER.
10.2 Broker Indemnifications. By executing this Contract,
Broker agrees that if for any reason whatsoever (including, without
limitation, the act of default of the Purchaser or Seller hereunder
or the unavailability or uninsurability of the title to the Subject
Properties) the Closing should not occur or this Contract should be
canceled or terminated by Seller or Purchaser, then Seller shall be
released and the Broker hereby releases Seller, from any and all
liability, claim or cause of action whatsoever, and the Commission
shall not be due or payable to Broker. The Commission, if any,
shall be the sole compensation paid to Broker. Broker shall not be
entitled to reimbursement for any expenses or any other obligations
Broker incurs in relation to or in connections with the performance
of its services in relation to this Contract. Upon payment of the
Commission, if any, to Broker, Seller shall have no further duty or
obligation to Broker and payment of such Commission, if any, by
Seller shall release Seller as of such date from any and all claims
Broker may have against Seller relating to the Subject Properties
whether known or unknown and whether past, present or future.
ARTICLE 11.
REMEDIES OF DEFAULT
11.1 Termination Of Contract By Purchaser. If this Contract
is terminated by Purchaser in accordance with any one or more
Sections hereof that entitle Purchaser to terminate this Contract,
then the Earnest Money shall be returned to Purchaser by the Title
Company, and no party hereto shall have any further obligations to
any other hereunder, except for Purchaser's obligations and
liabilities under Section 6.1 hereof.
11.2 Purchaser's Default. If Purchaser fails or refuses to
consummate the purchase of the Subject Properties for any reason
other than Seller's failure to tender performance of Seller's
obligations hereunder, or termination of the Contract pursuant to
a right granted to Purchaser hereunder to do so, then the Earnest
Money shall be paid to the Seller by the Title Company as
liquidated damages within FORTY-EIGHT (48) hours of said default.
Such amount is agreed upon by and between Seller and Purchaser as
liquidated damages due to the difficulty and inconvenience of
ascertaining and measuring actual damages and the uncertainty
thereof; and no other damages, rights or remedies (except as
provided in Section 6.1 hereof) shall in any case by collectible,
enforceable or available to Seller, but Seller shall accept said
cash payments as Seller's total damages and relief.
11.3 Seller's Default: If Seller wrongfully fails or refuses
to consummate the sale of the subject properties for any reason
other than Purchaser's failure to tender performance of its
obligations, then the Earnest Money shall be refunded to Purchaser
and the Seller shall pay the sum of ONE HUNDRED THOUSAND DOLLARS
($100,000) as liquidated damages due to the difficult and
inconvenience of ascertaining and measuring actual damages and the
uncertainty thereof; and no damages, rights or remedies, including
specific performance, shall in any case be collectable, enforceable
or available to Purchaser, but Purchaser shall accept said cash
payment as Purchaser's total damages and relief.
ARTICLE 12.
MISCELLANEOUS
12.1 Notices. All notices, demands, consents, or other
communications of any type (collectively "Notices") given by Seller
to Purchaser or by Purchaser to Seller whether required by this
Contract or in any way related to any of the transactions
contracted for herein shall be void and of no effect unless given
in accordance with the provisions of this Section 12.1. All
notices shall be in writing and shall be delivered to the person to
whom the notice is directed, either in person or by United States
Mail, as a registered or certified item, return receipt requested.
Notices may also be sent by facsimile transmission ("fax") or
overnight mail; provided, however, if sent by fax, such notice
shall be deemed received only on the date of written confirmed
receipt by the other party of all legible copies of all names of
the fax sent. Notices delivered by mail or overnight mail shall be
effective when deposited in a post office or other proper
depository, as the case may be, under the care or custody of the
United States Postal Service or other carrier, as the case may be,
enclosed in a wrapper with the proper postage affixed and
addressed, if to the Seller, as follows:
Meadow Glen Limited Partnership
c/o Bruce Thayer
Thayer Donovan Residential
777 - 108th Avenue Northeast, Suite 2330
Bellevue, WA 98004
Tel: (206) 454-7788
Fax: (206) 462-9449
with a copy to:
Matthew Straight, Esq.
10900 N.E. Fourth Street, Suite #850
Bellevue, WA 98004
Tel: (206) 635-1197
Fax: (206) 462-7114
and addressed, if to Purchaser, as follows:
Attn: Marshall B. Edwards, President
WALDEN RESIDENTIAL PROPERTIES, INC.
Suite 400, Lock Box 45
One Lincoln Centre
5400 LBJ Freeway
Dallas, Texas 75240
Tel: (214) 788-0510
Fax: (214) 788-1550
with a copy to:
Robin K. Minick, Esq.
Kitty Henry, Esq.
Munsch, Hardt, Kopf, Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, TX 75202-2711
Tel: (214) 855-7542
Fax: (214) 855-7584
Any party hereto may change the address or contact for
notice specified above by giving the other party TEN (10) days
advance written notice of such change of address or contact.
12.2 Effective Date. This Contract may be executed in
multiple counterparts on the respective dates set forth below, each
of which shall constitute an original, but which together shall
constitute but ONE (1) Contract. Execution by Purchaser hereof
shall constitute an offer by Purchaser to Seller to purchase the
Subject Properties for the price and on and subject to the terms
and conditions herein set forth, which offer shall automatically
terminate and be of no force or effect unless Seller shall execute
and return to Purchaser ONE (1) fully executed counterpart of this
Contract within TEN (10) business days after Seller's receipt of
the Contract. Notwithstanding the above and Article 3 hereof, the
date of mutual execution hereof by Purchaser and Seller shall be
the effective date of this Contract (the "Effective Date").
12.3 Assignment. This Contract may be assigned by Purchaser;
subject to Seller's written approval of the Assignee within FIVE
(5) days of Purchaser notification. Purchaser's right to assign or
transfer shall be contingent upon Seller's written approval upon
Purchaser providing to Seller, at least TEN (10) days prior to the
Closing, the name of the proposed assignee and any other
information that Seller may require in relation to such proposed
assignment. Purchaser may assign this Contract to a single asset
entity controlled by Purchaser, as is required in order to assume
the existing Bond financing.
12.4 Laws. This Contract shall be construed and interpreted
in accordance with the laws of the State of Arizona and the
obligations of the parties hereto are and shall be performable in
the county wherein the Subject Properties are located. Where
required for proper interpretation, words in the singular shall
include the plural; the masculine gender shall include the neuter
and feminine, and vice versa.
12.5 Modification. This Contract may not be modified or
amended, except by an agreement in writing signed by Seller and
Purchaser. Seller and Purchaser may waive any of the conditions
contained herein or any of the obligations of the other hereunder,
but any such waiver shall be effective only if in writing and
signed by the party waiving such conditions or obligations.
12.6 Authority. Each person executing this Contract warrants
and represents that he is fully authorized to do so.
12.7 Times And Dates. Time is of the essence of this Contract
and all times and dates shall be in accordance with Pacific
Standard Time.
12.8 Descriptive Headings. The descriptive headings of the
several Articles, Sections and Paragraphs contained in the Contract
are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
12.9 Entire Contract. This Contract, including the Exhibits
hereto and the Submission Items, constitutes the entire agreement
among the parties, whether written or oral, pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings of the parties in connection
therewith. No representation, warranty, covenant, agreement of
condition not expressed in this Contract shall be binding upon the
parties hereto or shall affect or be effective to interpret, change
or restrict the provisions of this Contract unless the parties have
complied with the terms of Sections 12.5 hereof.
12.10 Construction. This contract shall not be construed
more strongly against any party regardless of who was more
responsible for its preparation.
12.11 Non-recordable. This Contract, a memorandum of this
Contract, an interest in ownership of the Subject Properties or any
other document that would constitute an exception to Seller's title
shall not be recorded and the provisions hereof shall not
constitute a lien on the Subject Properties. Purchaser hereby
appoints Seller as Purchaser's true and lawful attorney-in-fact,
coupled with an interest, for the purpose of the execution of any
documents and doing any acts as shall be necessary to effect the
discharge of the recording of this Contract or any other exception
to the Title Commitment or any update thereof.
12.12 Third-Party Beneficiary. It is specifically
understood and agreed that no person or other entity shall be a
third-party beneficiary hereunder, and that none of the provisions
of this Contract shall be for the benefit of or be enforceable by
anyone other than the parties hereto, and that only the parties
hereto shall have any rights hereunder.
12.13 Relationship. Nothing herein shall be construed as
to constitute or establish any type of joint venture, partnership,
or any other type of legal relationship between the parties other
than the vendor-vendee relationship established hereby between
Seller and Purchaser.
12.14 Contemplation of Closing. If Purchaser closes the
sale contemplated herein, Purchaser shall be conclusively deemed to
have waived any breach or default by Seller of any covenant,
representation or warranty under this Contract (but not under any
of the documents executed at Closing that shall thereafter continue
to be effective in accordance with their terms).
12.15 Return of Documents. Upon termination of this
Contract for any reason by Purchaser or Seller, Purchaser shall
have the obligation to return all documents and copies thereof and
any other information or documentation resulting from Purchaser's
inspections, to Seller.
12.16 Effect of Holiday. In the event any date specified
or computed under this Contract for the performance of an
obligation by either Seller or Purchaser, of for the occurrence of
any event provided for herein, shall be a Saturday, Sunday or
"recognized holiday" (defined for purposes hereof as any holiday
observed by national banks in Seattle, Washington), then the date
for such performance or occurrence shall automatically be extended
to the next calendar day which is not a Saturday, Sunday or
recognized holiday.
<PAGE>
EXECUTED on this 17th day of June 1996, by Purchaser.
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By: ______________________________
MARSHALL B. EDWARDS
Its: President
EXECUTED on this 20th day of June 1996, by Seller.
MEADOW GLEN LIMITED PARTNERSHIP,
a Washington limited partnership
By: ______________________________
RICHARD F. DONOVAN
Its: General Partner
Broker executes this Contract solely for the purpose of
confirming and agreeing to the terms of Article 9 hereof.
HENDRICKS & PARTNERS
By: ______________________________
[Print Name] ______________________
Its: ______________________________
REAL ESTATE SALES CONTRACT
THIS REAL ESTATE SALES CONTRACT (hereinafter referred to as
the "Contract") is entered into by and between 1991 TREEPOINT
VILLAGE LIMITED PARTNERSHIP, a Texas limited partnership
(hereinafter referred to as "Seller") and WALDEN RESIDENTIAL
PROPERTIES, INC., (hereinafter referred to as "Purchaser").
FOR AND IN CONSIDERATION OF the premises and the respective
covenants, agreements and obligations hereinafter set forth, Seller
and Purchaser do hereby agree as follows:
1.
SALE AND PURCHASE
1.1 Upon and subject to the terms and conditions hereinafter
set forth, Purchaser agrees to purchase from Seller, and Seller
agrees to sell to Purchaser, the following (hereinafter
collectively referred to as the "Property"):
(a) The real property being approximately 11.784 acres
and being Lot 2, Block 3, Treepoint Addition, an Addition to
the Cities of Arlington and Kennedale, Tarrant County, Texas
which real property is more particularly described on Exhibit
"A" attached hereto, and incorporated herein, together with
all rights, ways, privileges and appurtenances pertaining
thereto, including any right, title and interest of Seller in
and to any streets, alleys or rights-of-way adjoining said
real property (hereinafter collectively referred to as the
"Real Property");
(b) All improvements and fixtures located on the Real
Property, including, without limitation, the buildings located
thereon, which are more commonly referred to as Treepoint
Village Apartments located at 6666 Treepoint Drive, Arlington,
Tarrant County, Texas (hereinafter referred to as the
"Improvements");
(c) All personal property of every kind and character
owned by Seller and situated on or used in connection with the
Real Property and Improvements (hereinafter collectively
referred to as the "Personal Property");
(d) All leases and rental agreements with tenants of the
Improvements (hereinafter collectively referred to as the
"Tenant Leases"), and all security deposits paid by the
Tenants in connection with the Tenant Leases (hereinafter
collectively referred to as the "Tenant Deposits");
(e) All management, employment, maintenance, service,
equipment, garbage disposal, guard, security, pest control,
and all other agreements, contracts, and leases (except Tenant
Leases) concerning the operation, use, management, maintenance
or lease of the Real Property, Improvements, and/or Personal
Property, or any portion thereof (hereinafter collectively
referred to as the "Collateral Agreements").
2.
PURCHASE PRICE
2.1 The Purchase Price for the Property (hereinafter referred
to as the "Purchase Price") shall be Five Million Six Hundred Fifty
Thousand and 00/100 Dollars ($5,650,000.00), payable all in cash at
Closing.
3.
EARNEST MONEY
3.1 Upon execution of this Contract, Purchaser shall deposit
with American Title Company located at 4950 Westgrove, Suite 100,
Dallas, Texas 75248, to the attention of Ann Sutton (hereinafter
referred to as the "Title Company"), cash in the amount of
$25,000.00 (the "Initial Deposit") to assure prompt observance of
this Contract by Purchaser.
3.2 On the date of the expiration of the Inspection Period
(as that term is defined in Paragraph 6.1 herein) and if Purchaser
has not terminated this Contract pursuant to Paragraph 6.1 herein,
then Purchaser shall deposit an additional Twenty-Five Thousand
Dollars ($25,000.00) as earnest money with the Title Company (the
"Additional Deposit"). The Additional Deposit together with the
Initial Deposit shall be collectively referred to herein as the
"Earnest Money Deposit".
3.3 The Earnest Money Deposit shall be deposited by the Title
Company and placed in an interest bearing account. All interest
accruing thereon shall be for the benefit of Purchaser.
3.4 The Earnest Money Deposit shall apply to the Purchase
Price at Closing.
4.
TITLE STATUS
4.1 Within ten (10) days after the Effective Date (as
hereinafter defined in Paragraph 14.11), Seller shall deliver to
Purchaser a Commitment for Title Insurance, Texas standard form
(hereinafter referred to as the "Commitment"), together with copies
of all instruments and documents referred to therein as exceptions
to title covering the Property, in the amount of the Purchase
Price, in favor of Purchaser, pursuant to which the Title Company
agrees, subject to the provisions thereof, to issue at Closing an
Owner Policy of Title Insurance (hereinafter referred to as the
"Owner Policy") to Purchaser.
4.2 Purchaser shall have fifteen (15) days after the latest
to be received of the Commitment, legible copies of all exception
matters referenced in the Commitment and the survey (as hereinafter
defined in Paragraph 5.1), to provide to Seller written objections
to the status of title to the Property. If such written objections
have not been received by Seller prior to the end of the said
fifteen (15) day period, Purchaser shall be deemed to have
conclusively accepted and approved the status of title to the
Property, as shown by the Commitment. If Purchaser does timely
deliver to Seller such written objections, Seller shall have ten
(10) days from the receipt of the objections to attempt to cure
such objections. If Seller is unable or unwilling to cure such
objections within such ten (10) day period, Purchaser may either
(i) waive such objections in writing and purchase the Property
notwithstanding such objections, (ii) extend Seller additional
time, not later than the date of Closing, to cure such objections
or (iii) terminate this Contract by written notice to Seller, in
which event the Earnest Money Deposit shall be returned to
Purchaser on demand, and neither Seller nor Purchaser shall have
any further obligations hereunder.
4.3 Seller shall deliver to Purchaser, at Closing, a Special
Warranty Deed (hereinafter referred to as the "Deed") conveying fee
simple title to the Property to Purchaser, subject to the
exceptions to title contained in the Commitment approved, or
waived, by Purchaser pursuant to Paragraph 4.2 hereof.
5.
SURVEY
5.1 Seller shall provide to Purchaser, within five (5) days
after the Effective Date, Seller's most recent survey (hereinafter
referred to as the "Survey") of the Property prepared by a licensed
surveyor or professional engineer. Upon the expiration of the
Inspection Period, if Purchaser has not terminated this Contract,
Seller will provide Purchaser with an updated and recertified
survey; which survey shall be in form and content sufficient to
delete the standard survey exception from the Owner Policy.
Notwithstanding the foregoing, if Purchaser desires to have a
current survey prior to the expiration of the Inspection Period,
Purchaser shall notify Seller of said desire and Seller will order
the updated Survey for Purchaser, however, Purchaser will pay for
the cost of the updated Survey if Purchaser does not close this
transaction.
5.2 Purchaser shall provide to Seller, in writing, within
fifteen (15) days after receipt of the latest to be received of the
Commitment, legible copies of all exception matters referenced in
the Commitment and the Survey, any objections to the Survey
referred to in Paragraph 5.1 hereof. If such written notice has
not been received by Seller prior to the end of said fifteen (15)
day period, Purchaser shall be deemed to have conclusively accepted
and approved the Survey. If Purchaser does timely deliver to
Seller such written objections, Seller shall have ten (10) days
from receipt of the objections to attempt to cure such objections.
If Seller is unable or unwilling to cure such objections within
such ten (10) day period, Purchaser may either: (i) waive such
objections in writing and purchase the Property notwithstanding
such objections, or (ii) terminate this Contract by written notice
to Seller, in which event the Earnest Money Deposit shall be
returned to Purchaser and neither Seller nor Purchaser shall have
any further obligations hereunder. Upon receipt of the updated and
recertified Survey, Purchaser shall have five (5) days to object in
writing to any material items which appear on the Survey for the
first time. If Purchaser so objects, Seller shall have until
Closing to cure the objections or notify Purchaser of Seller's
unwillingness to cure. If Seller is unable or unwilling to cure
such material objections, Purchaser shall either: (i) waive such
objections in writing and purchase the Property notwithstanding
such objections, or (ii) terminate this Contract by written notice
to Seller, in which event the Earnest Money Deposit shall be
returned to Purchaser and neither Seller nor Purchaser shall have
any further obligations hereunder.
6.
INSPECTION AND EXAMINATION
6.1 Purchaser shall have until September 15, 1996
(hereinafter referred to as the "Inspection Period"), during which
time, Purchaser, or Purchaser's authorized agent or representative,
shall be entitled to enter upon the Property for the purpose of
inspecting, examining and making tests upon the Property. If
Purchaser, in Purchaser's sole discretion, is dissatisfied with the
results of Purchaser's inspection of the Property, Purchaser may,
by written notice delivered to Seller prior to the expiration of
the Inspection Period, terminate this Contract in which event the
Earnest Money Deposit shall be returned to Purchaser on demand, and
neither Seller nor Purchaser shall have any further obligations
hereunder. If Purchaser does not terminate this Contract by
delivery of such written notice prior to the expiration of the
Inspection Period, Purchaser shall be conclusively deemed to have
accepted the Property in its present condition.
6.2 Purchaser shall have the right to obtain an updated
Environmental Report. In the event such Environmental Report is not
acceptable to Purchaser, in Purchaser's reasonable discretion,
Purchaser shall have the right to terminate the Contract prior to
the expiration of the Inspection Period and receive a full refund
of the Earnest Money Deposit. Purchaser agrees to commission this
study within fifteen (15) days from the Effective Date.
6.3 To facilitate Purchaser's inspection of the Property,
Seller shall provide to Purchaser, at Seller's sole expense, within
five (5) days from the Effective Date, the following:
(a) Access to obtain copies of all tenant leases, at
Purchaser's expense, and a Rent Roll, herein so called, for
the Property, prepared as of the first day of the month in
which this Contract is executed. Additionally, Seller will
provide Purchaser access to Seller's records regarding expense
and income in order to enable Purchaser to complete an audit
of such records;
(b) True copies of the most recent tax statements (both
real estate and personal property taxes) on the Property;
(c) An accurate schedule (the "Operating Schedule" )
reflecting, with respect to the Property for the twelve (12)
month period preceding the month of execution of this Contract
(i) all operating expenses and capital expenditures of the
Property (ii) the aggregate rent collected from tenants of the
Property during such period;
(d) A true and complete inventory of all furnishings,
fixtures, equipment and other personal property located upon
and/or comprising the tangible items used in connection with
the Property;
(e) A true and complete list of all service and other
agreements (the "Third Party Agreements") pertaining to the
Property on which Seller is obligated showing: (i) the names
of the parties to each agreement, (ii) the service rendered or
to be rendered under each agreement, (iii) the compensation
payable by Seller under each agreement, and (iv) the term and
expiration date of each agreement;
(f) Copies of all certificates of occupancy, licenses
and permits required by law and issued by all governmental
authorities having jurisdiction, if any, which may be in
Seller's possession;
(g) All environmental, engineering, pest control and
other professional reports in the possession of Seller;
(h) A copy of a tenant rent roll for the Property,
showing actual occupancies, rentals, security deposits,
assigned parking spaces (if any), free rent, rent concessions,
tenant incentives, lease terms, unit numbers, and unit types.
A current schedule of rental rates for each type of unit
within the Property, and such other pertinent information
regarding the tenant leases and rental units as is reasonably
available to Seller;
(i) A copy of the standard form of tenant lease;
(j) A copy of all utility bills for the Property for the
previous twelve (12) months, excluding individually metered
tenant utility bills; and a letter from each of the utility
providers stating that the utilities are available to the
Property; and
(k) Copies of any pertinent litigation of safety related
issues with respect to the Property.
6.4 Purchaser agrees that if for any reason the Closing is
not consummated, Purchaser will promptly return to Seller all
materials furnished to Purchaser pursuant to Paragraph 6.2.
6.5 Purchaser shall have the right to approve or disapprove
during the Inspection Period any of the Third Party Agreements
described in Paragraph 6.2(e) above existing on the Effective Date.
Seller will not enter into any Third Party Agreements after the
Effective Date that do not contain a clause that grants to Seller
the right to terminate such agreement upon thirty (30) days notice.
Any Third Party Agreement not acceptable to Purchaser must have a
thirty (30) day cancellation clause and Seller will notify such
third party of Purchaser's desire to terminate such agreement. If
such Third Party Agreement cannot be terminated within thirty (30)
days, Purchaser must purchase the Property subject to the terms of
such Third Party Agreement or terminate the Contract.
7.
CLOSING
7.1 The date of closing (hereinafter referred to as the
"Closing Date") shall be, and the event of closing (hereinafter
referred to as the "Closing"), shall occur on January 15, 1997, in
the offices of the Title Company, at such hour as Seller and
Purchaser may mutually agree, but otherwise at 10:00 a.m., local
time. Provided, however, Purchaser shall have the right to a
single extension of the Closing and the Closing Date of thirty (30)
days if Purchaser shall provide Seller with written notice of
Purchaser's election to so extend the Closing Date (and the
Closing) before the fifth (5th) day preceding the originally
scheduled Closing Date.
7.2 All recordation fees and closing cost shall be borne by
Seller and Purchaser in accordance with custom in the area in which
the Property is situated. Provided, however, Seller shall pay for
the Owner Policy and Purchaser shall pay the extra premium for the
survey deletion in connection with the Title Policy.
7.3 Real and personal property taxes for the then current tax
year shall be prorated to the Closing Date. The proration shall be
based on the taxes paid for the tax year 1996. No future
adjustments for real and personal property taxes shall be made
between the parties.
7.4 In addition to the taxes, all rents paid under the tenant
leases, expenses pursuant to the Third Party Agreements and
municipal utilities shall be prorated as of the Closing Date.
Provided, however, Seller shall be entitled to the full amount of
any deposits then held by any utility companies and the amount
thereof shall be an addition to the Purchase Price unless Seller
elects, at its sole option, to obtain a refund of any deposit
directly from any utility company holding same, in which event
Purchaser shall be required to replace any such deposit if
requested or required by the respective utility company. Any
delinquent rents for the current month collected after Closing
shall be delivered to Seller, in Seller's pro rata share. All
tenant deposits paid to Seller under the Tenant Leases as reflected
on the Rent Roll shall be paid to Purchaser at Closing.
7.5 At Closing, Seller shall deliver to Purchaser the
following documents which shall be duly executed and, where
appropriate, acknowledged, together with any and all items or
instruments necessary or appropriate thereto:
(a) The Deed;
(b) The Owner Policy, containing no exception to title
other than (i) the standard printed exceptions in Schedule B
to the Commitment, the tax exception shall refer to taxes for
the year 1997 and subsequent years, and subsequent assessments
for prior years due to change in land usage or ownership and
shall be endorsed "not yet due and payable" and (ii) those
exceptions to title contained in Schedule B to the Commitment
which are approved by Purchaser or waived by Purchaser
pursuant to Paragraph 4.2 hereof;
(c) An Affidavit required pursuant to Section 1445 of
the Internal Revenue Code stating, under penalties of perjury,
that Seller nor any other party so swearing, is a foreign
person within the meaning of Section 1445 of the Internal
Revenue Code;
(d) A Bill of Sale transferring to Purchaser all of the
Personal Property including but not limited to, tangible
personal property and Third Party Agreements;
(e) An Assignment of Tenant Leases and Deposits
assigning all of Seller's right, title and interest in and to
all Tenant Leases and security deposits, and other leases
covering the Property. Seller shall also deliver to Purchaser
the original leases, security deposit agreements, insurance
policies and Third Party Agreements to Purchaser; and
(f) A Tenant Notification Agreement, dated the date of
Closing, executed by Seller, notifying the tenants of the
Property that the Property has been sold to Purchaser.
7.6 At Closing, Purchaser shall deliver to Seller the cash
funds referred to in Paragraph 2.1 hereof and the statutory notice
to tenants as required by Section 92.105 (b) of the Texas Property
Code.
7.7 Possession of the Property shall be delivered to
Purchaser at Closing.
8.
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser the following:
(a) Seller has or will have at Closing good,
indefeasible, and fee simple title to the Property, free and
clear of all mortgages, liens, encumbrances, leases,
tenancies, security interest, covenants, conditions
restrictions, rights-of-way, easements, judgments or other
matters affecting title other than those shown on Schedule B
of the Commitment and otherwise permitted herein.
(b) This Contract has been duly authorized and executed
by Seller and is a valid and binding obligation of, and is
enforceable, in accordance with its terms, against Seller.
The documents delivered to Purchaser at Closing will be duly
authorized and executed by Seller and will be a valid and
binding obligation of, and will be enforceable in accordance
with their terms, against Seller.
(c) There is no pending or threatened condemnation or
similar proceeding affecting the Property or any portion
thereof, or pending public improvements, liens, or special
assessments, in, about or outside the Property which will in
any manner affect the Property or access to the Property, nor
any legal action of any kind or character whatsoever affecting
the Property which will in any manner affect Purchaser upon
the consummation hereof, nor is any such action presently
contemplated.
(d) To the best of Seller's knowledge, Seller has
complied with all applicable laws, ordinances, regulations,
statutes, rules and restrictions pertaining to and affecting
the Property. Performance of this Contract will not result in
any breach of, or constitute any default under, or result in
imposition of, any lien or encumbrance upon the Property under
any agreement or other instrument to which Seller is a party
or by which Seller or the Property might be bound.
(e) Seller will operate and manage the Property in
substantially the same manner it has been operated and managed
and will maintain the physical condition of the Property in
the same or better condition as it presently exists to the
date of Closing, reasonable wear and tear excepted.
(f) The rent roll delivered pursuant to Paragraph 6.2(h)
is the Current Rent Roll. Not earlier than five (5) days
prior to Closing, Seller shall deliver a Revised Rent Roll to
Purchaser, certified by Seller in writing as true and correct
which Revised Rent Roll shall set forth the following:
(i) the name of each tenant;
(ii) the lease commencement and expiration dates;
(iii) the amount of any security deposits;
(iv) a list of vacant space;
(v) the size and type of each vacant area; and
(vi) the amount and description of any
concessions.
(g) Except as expressly set forth in the Rent Roll:
(i) To the best of Seller's knowledge, all of
the information contained on the Rent Roll is, and
will be, true, correct and complete as of its date.
(ii) No rent under any Tenant Lease has been, or
prior to Closing will be, prepaid for a period in
excess of thirty (30) days.
(iii) No tenant has any right of first refusal or
option with respect to the leasing of any portion
of the Property.
(iv) No one, including any tenant, has any option
or right of first refusal to purchase the Property
or any part thereof.
(v) To the best of Seller's knowledge, there are
no oral agreements with anyone, including tenants,
with respect to the Property or any portion
thereof.
(vi) All of the present Tenant Leases for rental
space in the Property are in writing, on a standard
form (which form has been provided to Purchaser)
and duly executed by all parties thereto, and, to
the best of Seller's knowledge, are (A) in full
force and effect and (B) valid and binding
agreements of, and fully enforceable in accordance
with their terms against, the tenants.
(vii) The Tenant Leases will not be amended in any
way after the Effective Date, other than in the
ordinary course of business, without the prior,
written consent of Purchaser, which consent shall
not be unreasonably withheld. Purchaser, unless it
otherwise shall advise Seller in writing within
five (5) days following Seller's request for such
consent, shall be deemed to have consented to any
such amendment.
(viii) Except as stated in the Rent Roll, there are
no uncured defaults on the part of any party to any
of the Tenant Leases, and Seller is in full*
compliance with all of lessor's obligations
thereunder.
(ix) None of the rentals due or to become due
under such leases will be assigned, encumbered, or
subject to any liens at the Closing other than the
Permitted Exceptions.
(x) Except as disclosed to Purchaser by Seller
in writing, at the time of Closing, all tenants
will be paying charges for electricity consumed in
their space, including heating and air
conditioning, on an individually metered basis.
(h) The Operating Statement delivered pursuant to
Paragraph 6.2(c) is the most recent monthly statement of
income and expense in connection with the operation and
maintenance of the Property. The balance of such statements
for the preceding months shall be made available to Purchaser
promptly upon request.
(i) No action has been taken with respect to work
performed or delivery of material which would give rise to a
lien on the Property. At Closing, there will be no claim in
favor of any person or entity which is or could become a lien
on the Real Property, the Improvements, or the Personal
Property, arising out of the furnishing of labor or materials,
other than claims or liens arising from acts of Purchaser;
there will be no unpaid assessments against the Property,
except for Property taxes assessed but not due and payable at
the time of Closing; and there will be no claim in favor of
any person or entity (including the present management
company) for any unpaid commissions or fees for leasing of the
Property. In the event of any such claims at Closing, Seller,
at its option and in lieu of the foregoing, either may: (i)
establish with the Title Company an escrow of funds in an
amount and upon conditions reasonably acceptable to Seller and
Purchaser, or (ii) provide a bond in favor of purchaser or
Title Company (or Title Company's underwriter) in such amount,
upon such conditions and for such purposes as may be
satisfactory to Purchaser, Seller and Title Company, in either
case for the purpose of providing for such claims and/or
inducing the Title Company to insure Purchaser's title to the
Property free and clear of such claims.
(j) Seller agrees that benefits or compensations accrued
prior to Closing, and due or claimed to be due either before
or after Closing, to employees or former employees of Seller
shall constitute obligations of Seller only, and Seller agrees
to indemnify and hold Purchaser harmless from all such
obligations and claims.
(k) Seller will not borrow any money or do, or fail to
do, any other act or thing which would cause the Real
Property, the Improvements or any Personal Property to become
pledged or otherwise utilized as collateral or in any way
stand as security for any indebtedness or obligation.
(l) All ad valorem taxes and personal property taxes,
together with all assessments or other charges for utilities,
roads or the widening of such roads, or any other fees imposed
by any governmental authority with respect to the Property,
have been paid in full. The ad valorem taxes, personal
property taxes and special assessments pertaining to the
Property for calendar year 1995 were in the aggregate amount
of $86,768.00. The ad valorem and personal property taxes
pertaining to the Property for the calendar year 1996 have
been assessed at $4,593,700.00. However, invoices for any ad
valorem or personal property taxes and special assessments
have not yet been received by Seller for calendar year 1996 or
1997 as of the date of Seller's execution hereof. In the
event Seller receives any further invoices, notices or
assessments that should be included in the figure listed in
this Subparagraph (1), Seller will provide copies of same to
Purchaser on or prior to the Closing Date.
(m) The representations, warranties and covenants of the
Seller contained in this Agreement or in any document
delivered to Purchaser pursuant to the terms of this Agreement
(whether in this Section 8 or elsewhere): (i) shall be true
and correct in all material respects and not in default at the
time of Closing, just as though they were made at such time,
and Seller shall deliver to Purchaser, at Closing, an
affidavit to that effect. However, it is expressly agreed and
understood that the representations, warranties, and covenants
will merge with the Deed and will not survive the Closing of
this transaction.
(n) All rental units shall be in "market ready",
rentable condition as of the date of Closing. Provided,
however, Seller and Purchaser acknowledge that rental units
that are vacated within five (5) business days prior to the
date of Closing, will be in varying conditions of "make-ready"
for leasing, as is ordinary in Seller's course of business.
As to any units that are not in "market ready", rentable
condition as of the date of Closing, Purchaser and Seller
understand and agree that Purchaser shall be entitled to a
credit against the Purchase Price at Closing an amount equal
to the amount agreed upon at Closing by Purchaser and Seller
as being required to put in "market ready", rentable condition
any units that are not in such condition as of the date of the
Closing. Notwithstanding the foregoing, Seller will not be
required to pay an amount in excess of $500.00 per unit not in
"market ready", rentable condition. Purchaser shall have the
right to re-inspect the Property during the period commencing
not earlier than five (5) days prior to the Closing and ending
on the Closing solely for purposes of verifying the
maintenance of the Property in accordance with this Contract.
(o) To the best of Seller's knowledge, no Hazardous
Materials are located on or about the Property. For purposes
of this Paragraph the phrase, "To the best of Seller's
knowledge", is strictly limited to the information contained
in an environmental report prepared in connection with
Seller's acquisition of the Property. Seller agrees to
provide Purchaser with a copy of such environmental report.
(p) To the best of Seller's knowledge, the Improvements
and Personal Property are in good working order and are
structurally sound. For purposes of this Paragraph, the
phrase, "To the best of Seller's knowledge", is strictly
limited to the information contained in an engineer's report
prepared in connection with Seller's acquisition of the
Property. Seller agrees to provide Purchaser with a copy of
such engineer's report.
(q) Except as otherwise specifically stated in this
Contract, Seller shall disclose to Purchaser any and all
information Seller may have in its possession regarding the
following, but Seller hereby specifically disclaims any
warranty, guaranty or representation, oral or written, past,
present or future, of, as to, or concerning: (i) the nature
and condition of the Property, including, "without limitation,
the water, soil and geology, and the suitability thereof and
of the Property for any and all activities and uses which
Purchaser may elect to conduct thereon, and the existence of
any environmental hazards or conditions thereon (including the
presence of asbestos) or compliance with all applicable laws,
rules or regulations; (ii) except for any warranties contained
in the Deed to be delivered by Seller at the Closing, the
nature and extent of any right-of-way, lease, possession,
lien, encumbrance, license, reservation, condition or
otherwise; and (iii) the compliance of the Property or its
operation with any laws, ordinances or regulations of any
government or other body. Purchaser acknowledges that it will
inspect the Property and, except for the specific
representations, warranties and covenants contained herein,
Purchaser will rely solely on its own investigation of the
Property and not on any information provided or to be provided
by Seller. Purchaser further acknowledges that the
information provided and to be provided with respect to the
Property was obtained from a variety of sources and Seller:
(i) has not made any independent investigation or verification
of such information; and (ii) does not make any
representations as to the accuracy or completeness of such
information, except for the specific representations,
warranties and covenants contained herein. THE SALE OF THE
PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS" BASIS,
AND PURCHASER EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF
THE AGREEMENTS OF SELLER HEREIN, EXCEPT AS OTHERWISE SPECIFIED
HEREIN, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IN
RESPECT OF THE PROPERTY. NOTHING IN THIS PARAGRAPH SHALL BE
CONSTRUED OR DEEMED TO CONSTITUTE OR CREATE AN AFFIRMATIVE
OBLIGATION OF SELLER TO UNDERTAKE ANY ACTION OR TO INCUR ANY
EXPENSE IN PROCURING ANY INFORMATION OR REPORT RELATING TO
SELLER'S OBLIGATIONS HEREUNDER.
8.2 Notwithstanding the provisions of Paragraph 8.1, if,
within ten (10) days from the date this Contract is fully executed,
Seller gives written notice that any representation or warranty
contained in this Paragraph 8.1 is incorrect, Seller will not be
bound by such representation or warranty. However, within ten (10)
days after Seller's delivery of such notice to Purchaser, Purchaser
may terminate this Contract (in which event the Earnest Money
Deposit shall be immediately returned to Purchaser).
9.
DEFAULT
9.1 In the event that Purchaser shall fail to purchase the
Property in accordance with the terms and conditions of this
Contract, or otherwise default in the performance of Purchaser's
obligations pursuant to this Contract, for any reason whatsoever
other than Seller's default or as otherwise permitted hereunder,
Seller shall be paid and shall retain the Earnest Money Deposit as
liquidated damages as Seller's sole remedy hereunder.
9.2 In the event that Seller shall default in the performance
of Seller' s obligations hereunder, for any reason whatsoever other
than Purchaser's default or as otherwise permitted hereunder, as
Purchaser's only remedies hereunder, Purchaser may, at Purchaser's
option: (i) purchase the Property notwithstanding such default
pursuant to the remaining terms and provisions of this Contract, in
which event such default shall be deemed waived, (ii) terminate
this Contract, in which event Purchaser shall be entitled to return
of Purchaser's Earnest Money Deposit, and neither Seller nor
Purchaser shall have any further obligation hereunder, or (iii)
seek specific performance of this Contract.
10.
CASUALTY LOSS
10.1 If, prior to the date of the Closing, all or any material
portion of the Property is either destroyed, damaged by fire or
other casualty, Purchaser shall have the right to cancel this
Contract by written notice to Seller and the Title Company within
ten (10) days after delivery to Purchaser of notice of the
occurrence of any such event (and the Closing shall be extended
such additional time as is necessary to make such election).
Provided, however, failure to so elect shall be deemed an election
by Purchaser to complete Purchaser's purchase obligations
hereunder. If, upon any such occurrence, Purchaser elects or is
deemed to have elected to complete Purchaser's purchase obligations
hereunder, Purchaser shall be entitled to receive all insurance
proceeds, as compensation for such loss and Seller shall, in this
regard, execute all documents and perform such acts as shall be
necessary or proper for Purchaser to receive such proceeds. In the
event Purchaser elects to complete the purchase of the Property and
accept an assignment of the insurance proceeds, Seller agrees to
pay to Purchaser an amount equal to the insurance policy
deductible.
11.
BROKER FEES AND COMMISSIONS
11.1 Seller and Purchaser each hereby warrant and represent to
the other that all claims for brokerage fees, commissions or
finders' or other similar fees in connection with the transactions
contemplated in this Contract, insofar as such claims shall be
based on agreements made by either of the parties, shall be paid by
the party making such agreements, and the party hereto making such
agreement does hereby indemnify and hold the party hereto which
does not make such agreement harmless from and against all
liability, loss, cost, damage or expense (including but not limited
to reasonable attorney's fees and costs of litigation) which the
party hereto which does not make such agreement shall suffer or
incur because of any claim by any broker, agent or finder claiming
any compensation pursuant to such agreement with respect to the
sale and purchase of the Property or the execution of this
Contract. The provision of this Paragraph 11.1 shall survive
Closing.
11.2 Seller shall pay to Windsor Advisors, L.C. d/b/a Windsor
Realty Advisors (R. J. Hall) (hereinafter referred to as
"Realtor"), a commission in cash equal to three percent (3%) of the
Purchase Price. Provided, however, such commission shall be
payable only in the event that the sale of the Property as
contemplated in this Contract is consummated.
12.
NOTICE
12.1 All notices, objections and approvals referred to in this
Contract must be given in writing and will be effective on the day
the notice is: (i) actually received by the addressee thereof
after being sent by overnight delivery (such as Federal Express) or
having been personally hand delivered by the sender or (ii)
deposited in the United States Mail, postage prepaid, registered or
certified mail, return receipt requested, and properly addressed to
the party to receive said notice, or (iii) sent to the addressee by
telecopier, facsimile or similar transmitting machine. The notice
addresses of the parties shall be those specified below unless
modified in writing by the appropriate party:
SELLER:
1991 Treepoint Village Limited Partnership
4950 Westgrove, Suite 120
Dallas, Texas 75248
(214) 931-2131
(214) 248-1637 (Facsimile)
With a copy to:
Mr. R. Steven Jones
Hesse & Jones, P.C.
4950 Westgrove, Suite 100
Dallas, Texas 75248
(214) 733-3117
(214)733-3119 (Facsimile)
PURCHASER:
Walden Residential Properties, Inc.
5400 LBJ Freeway
Suite 400, L.B. 45
Dallas, Texas 75240
(214) 788-0510
(214) 788-1550 (Facsimile)
With a copy to:
Ms. Robin Minick
Munsch, Hardt, Kopf, Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
(214) 855-7500
(214) 855-7584 (Facsimile)
13.
CONTINGENCY
13.1 This Contract is expressly subject to the provisions of
Addendum Eight of the First Deed of Trust and Security Agreement
recorded under Tarrant County Clerk's Instrument Number D191177253,
Tarrant County, Texas, executed by Seller which grants General
Electric Capital Corporation a "First Option to Purchase" the
Property. Seller will use Seller's best efforts to secure within
ten (10) days from the Effective Date, the waiver of General
Electric Capital Corporation of its First Option to Purchase. In
the event General Electric Capital Corporation exercises the First
Option to Purchase in accordance with the terms of the above
described deed of trust, this Contract shall terminate and the
Earnest Money Deposit shall be returned to Purchaser and neither
Purchaser nor Seller shall have any further obligations to the
other.
13.2 This Contract is expressly contingent upon Seller using
Seller's best efforts to obtain the approval and consent of any
lienholder to the herein proposed sale and the agreement of such
lienholder to release any and all liens or security interests it
holds with regard to the Property on or before ten (10) days from
the Effective Date. In the event Seller is unable to obtain the
approval within the above described time period, this Contract
shall terminate and the Earnest Money Deposit shall be returned to
Purchaser and neither Purchaser nor Seller shall have any further
obligations to the other.
14.
MISCELLANEOUS
14.1 The execution of this Contract by the first party
constitutes an offer to buy or sell the Property. Unless this
Contract is accepted by the other party within five (5) working
days from the execution of this Contract by the first party, and a
fully executed copy is delivered to the Title Company, the offer of
this Contract shall be automatically revoked and terminated.
14.2 This Contract and all of the terms, provisions and
covenants contained herein shall apply to, be binding upon and
inure to the benefit of the parties hereto, their respective
successors and assigns.
14.3 The captions employed in this Contract are for
convenience only and are not intended in any way to limit or
amplify the terms and provisions of this Contract.
14.4 Time is of the essence of this Contract.
14.5 This Contract shall be construed in accordance with the
laws of the State of
Texas, and venue for any cause of action arising hereunder shall
lie in Dallas County, Texas.
14.6 This Contract contains the entire agreement of the
parties with respect to the subject matter hereof, and shall not be
varied, amended, or superseded except by written agreement between
the parties hereto.
14.7 This Contract may be executed in counterparts, each of
which shall constitute an original and all which taken together
shall constitute an original and all which taken together shall
constitute a single agreement.
14.8 The Purchaser hereby acknowledges that, at the time of
the execution of this Contract, the undersigned Realtor advised the
Purchaser by this writing that the Purchaser should have the
abstract covering the real estate which is the subject of this
Contract examined by an attorney of the Purchaser's own selection
or that the Purchaser should be furnished with or obtain a policy
of title insurance.
14.9 The Realtor, its agents and/or employee's may act in the
dual capacity of broker and undisclosed principal in the
transaction described hereunder.
14.10 If any date of significance hereunder falls upon a
Saturday, Sunday or recognized Federal holiday, such date will be
deemed moved forward to the next day which is not a Saturday,
Sunday or recognized Federal holiday. The terms "working day"
shall mean days elapsed exclusive of Saturday, Sunday or recognized
Federal holidays.
14.11 This Contract (or a counterpart hereof) must be
executed by Purchaser and Seller and a fully executed copy hereof
(or executed counterparts) deposited with the Title Company not
later than five (5) days after execution hereof by the latter of
Purchaser or Seller (the actual date of deposit being herein
referred to as the "Effective Date"), or this Contract shall become
null, void and of no effect whatsoever.
SELLER:
1991 TREEPOINT VILLAGE LIMITED
PARTNERSHIP,
a Texas limited partnership
July 29, 1996
Date Executed by Seller By: T.P. Apartments, Inc.,
a Texas corporation
Its: Managing Partner
By: _________________________
R. Mark Pitzer
President
PURCHASER:
WALDEN RESIDENTIAL PROPERTIES, INC.
July 26, 1996
Date Executed by Purchaser
By: ______________________________
Printed Name: _____________________
Title: ____________________________
REALTOR:
WINDSOR REALTY ADVISORS, INC.
By: __________________
R.J. Hall
<PAGE>
ACCEPTANCE BY TITLE COMPANY
The undersigned title company, AMERICAN TIME COMPANY, referred
to in the foregoing Contract as the "Title Company", hereby
acknowledges receipt of a fully executed copy (or executed
counterparts) of the foregoing Contract and $25,000. 00 of the
Earnest Money Deposit referred to therein, and accepts the
obligations of the Title Company as set forth therein.
By: ______________________________
Date: _____________________________
"Effective Date"
AMENDMENT TO REAL ESTATE SALES CONTRACT
This AMENDMENT TO REAL ESTATE SALE CONTRACT (the "Amendment")
is entered into by and between 1991 TREEPOINT VILLAGE LIMITED
PARTNERSHIP, a Texas limited partnership ("Seller") and WALDEN
RESIDENTIAL PROPERTIES, INC., ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser executed that certain Real
Estate Sales Contract (the "Contract"), with an effective date of
July 29, 1996; and
WHEREAS, Purchaser and Seller desire to amend certain matters
set forth in the Contract.
NOW, THEREFORE, for and in consideration of TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller
and Purchaser do hereby amend the Contract as follows:
1. The Inspection Period, referenced in Section 6.1 of the
Contract, shall be extended to October 15, 1996.
2. All other terms and conditions of the Contract shall
remain in effect and unchanged.
EXECUTED on this the 9th day of August, 1996, by Seller.
SELLER:
1991 TREEPOINT VILLAGE LIMITED PARTNERSHIP,
a Texas limited partnership
By: T.P. Apartments, Inc.,
a Texas corporation
Its: Managing Partner
By: ___________________________________
R. Mark Pitzer, President
EXECUTED on this the 8th day of August, 1996, by Purchaser.
PURCHASER:
WALDEN RESIDENTIAL PROPERTIES, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE
This First Amendment to Agreement of Sale and Purchase
("Amendment") is entered into effective as of September 15, 1996,
by and between Walden Residential Properties, Inc., a Maryland
corporation ("Purchaser") and Meadow Glen Limited Partnership, a
Washington limited partnership ("Seller").
BACKGROUND
A. Seller and Purchaser entered into that certain Agreement
of Sale and Purchase ("Agreement") covering a certain parcel of
real property located in the City of Glendale, Arizona, more
commonly known as the Meadow Glen Apartments and more particularly
described in the Agreement.
B. Seller and Purchaser now desire to amend the Agreement as
provided below.
AGREEMENT
1. Defined Terms. All capitalized terms used but not
defined herein shall have the same meanings given such terms in the
Agreement.
2. Closing. The Agreement hereby is amended as follows:
(a) The Closing hereby is extended from September 15, 1996
until October 15, 1996. In consideration of this
extension, Title Company shall immediately disburse to
Seller an amount equal to $100,000 ("Initial
Disbursement") of the $200,000 Earnest Money held by the
Title Company.
(b) Purchaser further shall be entitled to an additional
extension of the Closing from October 15, 1996 to
November 15, 1996. Such extension shall be automatically
effective immediately upon receipt by Seller of written
notice of Purchaser's election to so extend the Closing
("Notice of First Extension") prior to 5:00 p.m., Pacific
Standard Time, on October 15, 1996. In consideration of
this extension, Title Company shall disburse to Seller an
amount equal to $100,000 ("Second Disbursement") of the
remaining $100,000 Earnest Money held by the Title
Company immediately upon receipt of the Notice of First
Extension signed by Walden.
(c) Purchaser further shall be entitled to an additional
extension of the Closing from November 15, 1996 to
December 31, 1996. Such extension shall be automatically
effective immediately upon receipt by Seller of written
notice of Purchaser's election to so extend the Closing
("Notice of Second Extension") prior to 5:00 p.m.,
Pacific Standard Time, on November 15, 1996. In
consideration of this extension, Purchaser shall deliver
to Seller, together with the Notice of Second Extension,
the sum of $100,000 ("Supplemental Deposit"), either by
wire transfer or by cashier's check made payable to
Seller. Immediately upon delivery to Seller, the
Supplemental Deposit shall become a part of the Earnest
Money and subject to the terms of the Agreement as
modified hereby. The Earnest Money and Supplemental
Deposit shall hereafter be collectively referred to as
the "Earnest Money".
(d) Title Company may rely with acquittal upon Seller's
instruction to so disburse such monies to Seller in
accordance with this Amendment. The provisions of this
Paragraph 2 shall constitute irrevocable escrow
instructions from Seller and Purchaser to Title Company
regarding the disbursement of the monies described and as
provided in this Paragraph 2. Once disbursed or paid to
Seller, the monies so disbursed or paid shall be the sole
property of Seller, and shall not be refundable to
Purchaser if Purchaser ultimately fails to close its
purchase of the Property for any reason whatsoever, other
than a default by Seller; provided, however, all such
monies shall be applied to the Purchase Price if
Purchaser ultimately does purchase the Property.
3. Interest on the Earnest Money. All interest accrued
on the Earnest Money deposited with and disbursed by the Title
Company through and including the date of disbursement shall
continue to be held by the Title Company and applied to the
Purchase Price at Closing. In no event shall such interest
otherwise be paid to Seller. In the event that the Closing does
not occur, such interest shall be returned to Purchaser.
4. Seller's Default. Section 11.3 of the Agreement hereby
is amended to provide that, in the event that Seller fails or
refuses to consummate the sale of the Property for any reason other
than Purchaser's failure or refusal to close the purchase of the
Property, then the entire amount of the Earnest Money shall be
refunded to Purchaser immediately. Seller further acknowledges and
agrees that, absent Purchaser's failure or inability to close due
to the non-receipt of the approvals of the Bond/HUD financing as
provided in the Agreement (including, but not limited to, Section
6.3 of the Agreement), there exist no conditions precedent to
Seller's obligations to close the sale of the Property to Purchaser
as provided in the Agreement. All requirements with respect to the
Bond/HUD financing as provided in the Agreement, including but not
limited to, Section 6.3 of the Agreement, shall remain unchanged
and in full force and effect; however, Purchaser understands that
Purchaser's failure to obtain approval of any Bond/HUD financing
shall not be considered a failure or refusal by Seller to close
that would justify a refund of the Earnest Money.
5. Ratification. The Agreement remains in full force and
effect as expressly modified by this Amendment and is ratified and
confirmed. If there is a conflict between the terms of the
Agreement and this Amendment, the terms of this Amendment control.
6. Counterparts. This Amendment may be executed in several
counterparts (including by telecopy with originals to follow as
soon as possible), all of which are identical and all of which
together shall constitute one and the same instrument.
7. Time of the Essence. Time is of the essence with
respect to all of the time deadlines set forth herein.
EXECUTED effective as of the date first written above.
Seller:
MEADOW GLEN LIMITED PARTNERSHIP,
a Washington limited partnership
By: ______________________________
Name: ____________________________
Title: _______________________
Purchaser:
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By: ______________________________
Name: _______________________
Title: _______________________
AGREEMENT OF SALE AND PURCHASE
between
NASHBORO VILLAGE APARTMENTS, L.P.
AS SELLER
and
WALDEN RESIDENTIAL PROPERTIES, INC.
AS PURCHASER
pertaining to
NASHBORO VILLAGE APARTMENTS, NASHVILLE, TENNESSEE
executed effective as of
November 15, 1996
<PAGE>
TABLE OF CONTENTS
I. SALE AND PURCHASE; PROPERTY . . . . . . . . . . . . . . . .1
1.1 Sale and Purchase. . . . . . . . . . . . . .1
II. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . .2
2.1 Purchase Price . . . . . . . . . . . . . . .2
2.2 Earnest Money. . . . . . . . . . . . . . . .2
III. INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . .3
3.1 Inspection Period. . . . . . . . . . . . . .3
3.2 Document Review. . . . . . . . . . . . . . .4
3.3 Inspection Obligations . . . . . . . . . . .6
3.4 Right of Termination . . . . . . . . . . . .6
3.5 Property Conveyed AS IS" . . . . . . . . . .7
3.6 Investigative Studies. . . . . . . . . . . .9
3.7 Purchaser Represented by Counsel . . . . . .9
3.8 Purchaser's Release of Seller. . . . . . . .9
3.9 Representations, Warranties and Covenants. 10
IV. SURVEY. . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Survey. . . . . . . . . . . . . . . . . . 13
V. TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Title Commitment . . . . . . . . . . . . . 14
VI. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Seller's Remedies. . . . . . . . . . . . . 15
6.2 Purchaser's Remedies . . . . . . . . . . . 15
6.3 Attorneys' Fees. . . . . . . . . . . . . . 15
6.4 Disposition of Earnest Money . . . . . . . 15
VII. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1 Closing Date . . . . . . . . . . . . . . . 16
7.2 Closing Matters. . . . . . . . . . . . . . 16
7.3 Closing Costs. . . . . . . . . . . . . . . 19
7.4 Real Estate Commissions. . . . . . . . . . 20
VIII. CONDEMNATION . . . . . . . . . . . . . . . . . . . . 20
8.1 Condemnation . . . . . . . . . . . . . . . 20
IX. RISK OF LOSS. . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Risk of Loss . . . . . . . . . . . . . . . 21
X. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Entire Agreement . . . . . . . . . . . . . 22
10.2 Agreement Binding on Parties . . . . . . . 22
10.3 Effective Date . . . . . . . . . . . . . . 22
10.4 Notice . . . . . . . . . . . . . . . . . . 22
10.5 Time of the Essence. . . . . . . . . . . . 23
10.6 Place of Performance . . . . . . . . . . . 24
10.7 Currency . . . . . . . . . . . . . . . . . 24
10.8 Section Headings . . . . . . . . . . . . . 24
10.9 Obligations. . . . . . . . . . . . . . . . 24
10.10 Business Days. . . . . . . . . . . . . . . 24
10.11 Confidentiality. . . . . . . . . . . . . . 24
10.12 No Recordation . . . . . . . . . . . . . . 24
10.13 Multiple Counterparts. . . . . . . . . . . 25
10.14 Severability . . . . . . . . . . . . . . . 25
10.15 Limited Liability of Officers. . . . . . . 25
EXHIBITS
Exhibit A - Legal Description
Exhibit B - Form of Special Warranty Deed
Exhibit C - Form of Bill of Sale
Exhibit D - Form of Non-Foreign Entity Certificate
Exhibit E - Form of Tenant Notice Letter
Exhibit F - Operating Statements
Exhibit G - Surveyor's Certificate
Exhibit H - Service Contracts
<PAGE>
AGREEMENT OF SALE AND PURCHASE
FOR
NASHBORO VILLAGE APARTMENTS
THIS AGREEMENT OF SALE AND PURCHASE ("Agreement") is made by
and between Nashboro Village Apartments, L.P., a Delaware limited
partnership ("Seller"), and Walden Residential Properties, Inc., a
Maryland corporation ("Purchaser"), and is as follows:
WI T N E S S E T H:
WHEREAS, Seller desires to sell and Purchaser desires to
purchase the property described in Section 1.1 below, on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
I.
SALE AND PURCHASE; PROPERTY
1.1 Sale and Purchase. Seller agrees to sell and convey unto
Purchaser, and Purchaser agrees to purchase and accept from Seller,
for the price and subject to the terms, covenants, conditions and
provisions herein set forth, the following:
(a) All of that certain land (the "Land") in Nashville, Tennessee,
being more particularly described in Exhibit A attached hereto
and incorporated herein by this reference for all purposes;
(b) All right, title and interest of Seller in and to all
structures, improvements and fixtures (collectively,
"Improvements") located on the Land. The Land and the
Improvements are sometimes referred to herein collectively as
the "Real Property" and consist primarily of a 994-unit
multi-family apartment complex commonly known as "Nashboro Village
Apartments";
(c) All right, title and interest of Seller, if any, in and to any
land lying in the bed of any street, road or access way,
opened or proposed, in front of, at a side of or adjoining the
Land to the centerline thereof "Property Rights");
(d) All right, title and interest of Seller, reversionary or
otherwise, in and to all easements in or upon the Land and all
other rights and appurtenances belonging or in anywise
pertaining thereto, if any ("Appurtenances");
(e) All furniture, carpeting, draperies, appliances, building
supplies, equipment, machinery, inventory and other items of
personal property owned by Seller and presently affixed or
attached to, placed or situated upon the Real Property and
used solely in connection with the ownership, operation and
occupancy of the Real Property ("Personalty"), but
specifically excluding any items of personal property owned by
lawful tenants ("Tenants") of the Improvements and further
excluding any items of personal property owned by third
parties and leased to Seller;
(f) Seller's interest as landlord in all leases ("Leases") now or
hereafter affecting the Real Property, together with all
refundable security deposits ("Security Deposits") of Tenants
held by Seller;
(g) Seller's interest in all assignable leasing, service, supply
and maintenance contracts relating solely to the Real Property
or Personalty as more particularly described on Exhibit "H"
attached hereto and incorporated herein by this reference for
all purposes ("Contracts"); and
(h) All right, title and interest of Seller, if any, in and to all
intangible property relating solely to the ownership or
operation of the Real Property or Personalty, in each case
only to the extent assignable, including licenses, permits,
guaranties, warranties and tradenames, if any, but in each
case without warranty, including the right to use the name
"Nashboro Village" on a non-exclusive basis ("Intangible
Property").
The items described in (a) through (h) of this Section 1.1 are
hereinafter collectively called the "Property.
II.
CONSIDERATION
2.1 Purchase Price. The purchase price ("Purchase Price") to
be paid by Purchaser to Seller for the sale and conveyance of the
Property shall be Forty-Six Million and No/ 100 Dollars
($46,000,000.00), which shall be payable to Seller on or before
1:00 p.m. (Dallas, Texas time) on the day that the closing of the
transaction contemplated hereby occurs ("Closing") payable by
Federal Reserve wire transfer of immediately available funds to an
account or accounts which shall be designated by Seller on or
before the Closing Date (hereinafter defined in Section 7.1), plus
or minus prorations and adjustments as hereinafter provided; and
2.2 Earnest Money. (a) It shall be a condition precedent to
the effectiveness of this Agreement that within one (1) business
day following the Effective Date (as defined in Section 10.3), (i)
Purchaser deposit with Lawyers Title Insurance Company ("Title
Company") the amount of Two Hundred Fifty Thousand and No/ 100
Dollars ($250,000.00) by wire transfer of immediately available
federal funds (together with all interest, if any, accrued thereon,
the "Earnest Money"), and (ii) Purchaser pay to Seller One Hundred
and No/100 Dollars ($100.00) ("Independent Consideration") as
consideration for this Agreement. The Independent Consideration
will be retained by Seller in all instances and shall not be
applied against the Purchase Price at Closing. The Independent
Consideration shall not be returned to Purchaser in the event that
the Earnest Money is returned to Purchaser pursuant to the terms of
this Agreement.
(b) Title Company shall deposit the Earnest Money into an
interest-bearing money market account maintained at a federally
insured bank or savings and loan association located in Nashville,
Tennessee or Dallas, Texas. Such account shall have no penalty for
early withdrawal, and Purchaser accepts all risks with regard to
the account, specifically including the risk of closure of such
bank or savings and loan association by state and/or federal
regulators, and all losses occasioned thereby. If any portion of
the Earnest Money is not deposited with Title Company or any
portion of the Independent Consideration is not paid to Seller
within the required periods, Seller may terminate this Agreement by
delivering written notice to Purchaser and upon said termination,
the Title Company shall immediately return to Seller all executed
originals of this Agreement in its possession. Thereafter, neither
party shall have any further rights or obligations hereunder except
with respect to Section 3.2, 3.3, 3.6, 3.8, 5.1(b), Article VI, and
7.4 (such obligations being referred to herein as the "Termination
Surviving Obligations"). If the transaction contemplated hereby is
consummated in accordance with the terms and provisions hereof, the
Earnest Money shall be credited against the Purchase Price at
Closing and paid to Seller in accordance with the terms of this
Agreement. If the transaction is not so consummated, the Earnest
Money shall be held and delivered by the Title Company as
hereinafter provided. All interest earned shall be reported to the
Internal Revenue Service as income of Purchaser. Purchaser shall
promptly execute all forms reasonably requested by the Title
Company, including, without limitation, Form W-9 and any necessary
investment direction letters.
III.
INSPECTION
3.1 Inspection Period. Subject to t he provisions of this
Section 3.1, Seller shall permit Purchaser and its authorized
agents and representatives the right to enter upon the Real
Property at all reasonable times during normal business hours to
inspect the Property and conduct reasonably necessary tests. Such
entry and inspections may be conducted only during the period
("Inspection Period") commencing on the Effective Date (as defined
in Section 10.3) and ending at 5:00 p.m. (Dallas, Texas time) on
November 29, 1996. Purchaser shall notify Seller, in writing, of
its intention, or the intention of its agents or representatives,
to enter the Real Property at least 48 hours prior to such intended
entry. If Purchaser intends to conduct any physical testing or
sampling of the Property (including, without limitation, any Phase
H environmental testing), Purchaser shall describe such testing and
sampling in its notice and shall obtain Seller's prior written
consent thereto which shall not be unreasonably withheld or
delayed. Purchaser shall bear the cost of all inspections and
tests. At Seller's option, Seller may be present for any
inspection or test.
3.2 Document Review. (a) Seller agrees to permit Purchaser,
its authorized agents or representatives, upon at least 48 hours
prior written notice, at either the office of Seller, Seller's
property manager or at the Real Property (at Seller's option), the
right to inspect the following, to the extent same are in Seller's
possession: (i) environmental reports and studies prepared at the
request of Seller, (ii) the current year's assessments (special or
otherwise), ad valorem and personal property tax bills as well as
ad valorem and other property tax statements relating to the
Property for the immediately preceding two (2) tax years, (iii) its
most recent resident rent roll, (iv) copies of the form lease,
leasing applications, and security deposit documents used by Seller
for leasing apartments at the Improvements and a copies of the
Contracts, (v) a summary of all capital expenditures commencing
with Seller's acquisition of the Property including invoices,
contracts and/or work orders pertaining to carpet replacement
window replacement and appliance replacement; (vi) any plans and
specifications (including the as-built plans), (vii) Seller's most
current owner's title insurance policy and title documents relating
to the Property, (viii) all documents pertaining to any leased
Personalty, (ix) all warranties, guaranties and bonds relating to
the Property, or any part thereof, (x) a copy of all income and
expense statements for the Property, for the year-to-date
commencing with Seller's acquisition of the Property (prepared on
a monthly basis), (xi) a current schedule of rental rates for each
type of unit within the Improvements, and such other pertinent
information regarding the resident leases and rental units as is
reasonably available to Seller, including, without limitation a
schedule of the appliances and amenities included in each type of
rental unit, (xii) a copy of all certificates of occupancy for the
Improvements, swimming pool permits, boiler permits and other
licenses and permits for the Property, (xiii) a list of all
employees currently employed in the operation of the Property,
setting forth his/her name and position, (xiv) invoices, contracts
and/or work orders pertaining to, any regular maintenance and
repair at the Real Property since Seller's acquisition of the
Property (xv) a copy of all utility bills for the Real Property
since Seller's acquisition of the Property, excluding individually
metered resident utility bills, (xvi) copies of any pending
litigation of safety related issues with respect to the Property,
(xvii) a current Personalty inventory, and (xviii) such other
books, records, leasing files, contracts, agreements and
information relating to the Property that are in Seller's
possession or are readily available to Seller and as may be
required by Purchaser's accountants to perform a complete audit of
the Property for the twelve (12) month period ended December 31,
1995 (collectively, "Documents"). Purchaser at its expense shall
have the right to make photocopies of the Documents.
Notwithstanding anything in this Section 3.2 to the contrary,
Purchaser shall not have the right to inspect or make copies of any
appraisals of the Property or any documents in Seller's possession
involving Seller's acquisition of the Property, any internal
budgets or projections, or any other prospective purchasers.
(b) Purchaser acknowledges that any and all of the Documents
may be proprietary and confidential in nature and will be delivered
to Purchaser solely to assist Purchaser in determining the
feasibility of purchasing the Property. Except as required by
applicable security laws or as required by any national securities
exchange on which Purchaser's common stock is listed, Purchaser
agrees not to disclose the contents of the Documents, or any of the
provisions, terms or conditions thereto, to any party outside of
Purchaser's organization other than its attorneys, accountants,
lenders or investors (collectively, the "Permitted Outside
Parties"). Purchaser further agrees that within its organization,
or as to the Permitted Outside Parties, the Documents shall be
disclosed and exhibited only to those persons within Purchaser's
organization or to those Permitted Outside Parties who are
responsible for determining the feasibility of Purchaser's
acquisition of the Property and who have agreed in writing to
preserve the confidentiality of such information as required
herein. Purchaser further acknowledges that the Documents and
other information relating to the leasing arrangements between
Seller and the Tenants or prospective tenants are proprietary and
confidential in nature. Purchaser agrees not to divulge the
contents of such Documents and other information except in strict
accordance with the confidentiality standards set forth in this
Section 3.2. In permitting the Permitted Outside Parties to review
the Documents or information to assist Purchaser, Seller has not
waived any privilege or claim of confidentiality with respect
thereto, and no third party benefits or relationships of any kind,
either express or implied, have been offered, intended or created
by Seller and any such claims are expressly rejected by Seller and
waived by Purchaser and the Permitted Outside Parties, for whom, by
its execution of this Agreement, Purchaser is acting as an agent
with regard to such waiver. Notwithstanding the foregoing, to the
extent required by any national securities exchange on which
Purchaser's common stock is registered or if required by the
Securities and Exchange Commission, Purchaser may include a copy of
this Agreement in its required filings with the Securities and
Exchange Commission.
(c) Purchaser shall return all of the Purchaser's Information
(as hereinafter defined), on the first to occur of (i) such time as
Purchaser determines that it shall not acquire the Property, or
(ii) such time as this Agreement is terminated for any reason.
(d) Purchaser acknowledges that some of the Documents may
have been prepared by third parties and may have been prepared
prior to Seller's ownership of the Property. Purchaser hereby
acknowledges that Seller has made and does not make any
representation or warranty regarding the truth, accuracy or
completeness of the Documents or the sources thereof Seller has not
undertaken any independent investigation as to the truth, accuracy
or completeness of the Documents and is providing the Documents
solely as an accommodation to Purchaser. Notwithstanding any
provision of this Agreement to the contrary, no termination hereof
shall terminate Purchaser's obligations pursuant to Section 3.2.
3.3 Inspection Obligations. (a) In conducting any
inspections, investigations or tests of the Property and/or
Documents, Purchaser and its agents and representatives shall: (i)
not disturb the Tenants or interfere with their use of the Property
pursuant to their respective Leases; (ii) not interfere with the
operation and maintenance of the Property; (iii) not damage any
part of the Property or any personal property owned or held by any
Tenant or any other person or entity; (iv) not injure or otherwise
cause bodily harm to Seller, or its agents, guests, invitees,
contractors and employees or any Tenant or any other person or
entity; (v) maintain comprehensive general liability (occurrence)
insurance in terms and amounts satisfactory to Seller covering any
accident arising in connection with the presence of Purchaser, its
agents and representatives on the Real Property and shall deliver
a certificate of insurance verifying such coverage to Seller prior
to entry upon the Real Property; (A) promptly pay when due the
costs of all tests, investigations, and examinations done with
regard to the Property; (vii) not permit any liens to attach to the
Real Property by reason of the exercise of its rights hereunder;
(viii) fully restore the Property to the condition in which the
same was found before any such inspection or tests were undertake;
and (ix) not reveal or disclose any information obtained during the
Inspection Period concerning the Property and the Documents to
anyone outside Purchaser's organization except in accordance with
the confidentiality standards set forth in Section 3.2(b) and
Section 10.11.
(b) Purchaser hereby agrees to indemnify, defend and hold
Seller and its partners, members, officers, directors, agents,
employees, successors and assigns harmless from and against any and
all liens, claims, causes of action, damages, liabilities, demands,
suits, obligations, losses, penalties, costs and expenses
(including reasonable attorneys' fees) arising out of Purchaser's
inspections or tests permitted hereunder or any violation of the
provisions of this Section 3.3. Notwithstanding any provision of
this Agreement to the contrary, no termination hereof shall
terminate Purchaser's obligations pursuant to this Section 3.3.
3.4 Right of Termination. If, during the Inspection Period,
Purchaser shall, for any reason, in Purchaser's sole discretion,
judgment and opinion, be dissatisfied with any aspect of the
Property or any item examined by Purchaser pursuant to Sections 3.1
and 3.2 or for any reason whatsoever, Purchaser shall be entitled,
as its sole and exclusive remedy, to terminate this Agreement by
giving written notice to Seller on or before the expiration of the
Inspection Period, whereupon this Agreement shall terminate, and
upon such termination, neither Seller nor Purchaser shall have any
further obligation or liability to the other hereunder, except for
the Termination Surviving Obligations. Upon Purchaser s delivery
to Seller of the Documents and any and all copies Purchaser has
made of the Documents and all copies of any studies, reports or
test results regarding any part of the Property obtained by
Purchaser in connection with its inspection of the Property,
including, without limitation, those described in Section 3.6
(collectively "Purchaser's Information"), the Earnest Money shall
be returned to Purchaser in accordance with Section 6.4. If
Purchaser shall fail to timely notify Seller in writing of its
option to terminate this Agreement on or before the expiration of
, the Inspection Period, the termination right described in this
Section 3.4 shall be null and void.
3.5 Property Conveyed "AS IS."
(a) Disclaimer of Representations and Warranties by Seller. Except
for the limited representations of Seller in Section 3.9
herein, it is understood and agreed that Seller has not made
and is not now making, and it specifically disclaims, any
warranties,' representations or guaranties of any kind or
character, express or implied, oral or written, past, present
or future, with respect to the Property, including, but not
limited to, warranties, representations or guaranties as to
(i) matters of title (other than Seller's warranty of title
set forth in the Deed (hereinafter defined) to be delivered at
Closing), (ii) environmental matters relating to the Property
or any portion thereof, (iii) geological conditions,
including, without limitation, subsidence, subsurface
conditions, water table, underground water reservoirs,
limitations regarding the withdrawal of water and earthquake
faults and the resulting damage of past and/or future
earthquakes, (iv) whether, and to the extent to which the
Property or any portion thereof is affected by any stream
(surface or underground), body of water, flood prone area,
flood plain, floodway or special flood hazard, (v) drainage,
(vi) soil conditions, including the existence of instability,
past soil repairs, soil additions or conditions of soil fill,
or susceptibility to landslides, or the sufficiency of any
undershoring, (vii) zoning to which the Property or any
portion thereof may be subject, (viii) the availability of any
utilities to the Property or any portion thereof including,
without limitation, water, sewage, gas and electric, (ix)
usages of adjoining Property, (x) access to the Property or
any portion thereof, (xi) the value compliance with the plans
and specifications, size, location, age, use, design, quality,
description, suitability, structural integrity, operation,
title to, or physical or financial condition of the Property
or any portion thereof, (xii) any income, expenses, charges,
liens, encumbrances, rights or claims on or affecting or
pertaining to the Property or any part thereof, (xiii) the
presence of Hazardous Substances (hereinafter defined) in or
on, under or in the vicinity of the Property, (xiv) the
condition or use of the Property or compliance of the Property
with any or all past, present or future federal, state or
local ordinances, rules, regulations or laws, building, rim or
zoning ordinances, codes or other similar laws, (xv) the
existence or nonexistence of underground storage tanks, (xvi)
any other matter affecting the stability or integrity of the
Property, (xvii) the potential for further development of the
Property, (xviii) the existence of vested land use, zoning or
building entitlements affecting the Property, (xix) the
merchantability of the Property or fitness of the Property for
any particular purpose (Purchaser affirming that Purchaser has
not relied on Seller's skill or judgment to select or furnish
the Property for any particular purpose, and that Seller makes
no warranty that the Property is fit for any particular
purpose), or (xx) tax consequences.
(b) Sale "As Is". Except for the limited representations of
Seller in Section 3.9 herein, Purchaser has not relied upon
and will not rely upon, either directly or indirectly, any
representation or warranty of Seller or any of its agents and
acknowledges that no such representations have been made.
Purchaser represents that it is a knowledgeable, experienced
and sophisticated purchaser of real estate and that it is
relying solely on its own expertise and that of Purchaser's
consultants in purchasing the Property. Purchaser will
conduct such inspections and investigations of the Property as
Purchaser deems necessary, including, but not limited to, the
physical and environmental conditions thereof, and shall rely
upon same. Upon closing, Purchaser shall assume the risk that
adverse matters, including, but not limited to, adverse
physical and environmental conditions, may not have been
revealed by Purchaser's inspections and investigations.
Purchaser acknowledges and agrees that upon Closing, Seller
shall sell and convey to Purchaser and Purchaser shall accept
the Property "as is, where is," with all faults. Purchaser
further acknowledges and agrees that there are no oral
agreements, warranties or representations, collateral to or
affecting the Property by Seller, any agent of Seller or any
third party. The terms and conditions of this Section 3.5
shall expressly survive the Closing, not merge with the
provisions of any closing documents and shall be incorporated
into the Deed. Seller is not liable or bound in any manner by
any oral or written statements, representations, or
information pertaining to the Property furnished by any real
estate broker, agent, employee, servant or other person,
unless the same are specifically set forth or referred to
herein. Purchaser acknowledges that the Purchase Price
reflects the "as is" nature of this sale and any faults,
liabilities, defects or other adverse matters that may be
associated with the Property. Purchaser has fully reviewed
the disclaimers and waivers set forth in this Agreement with
its counsel and understands the significance and effect
thereof. Purchaser acknowledges and agrees that the
disclaimers and other agreements set forth herein are an
integral part of this Agreement and that Seller would not have
agreed to sell the Property to Purchaser for the Purchase
Price without the disclaimer and other agreements set forth in
this Agreement.
Purchaser
Initials
(c) "Hazardous Substances" Defined. For purposes hereof,
"Hazardous Substances" means any hazardous, toxic or dangerous
waste, substance or material, pollutant or contaminant, as
defined for purposes of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.), as amended ("CERCLA"), or the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et
seq.), as amended ("RCRA"), or any other federal, state or
local law, ordinance, rule or regulation applicable to the
Property, or any substance which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous, or any substance which
contains gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenyls (pcbs), radon gas,
urea formaldehyde, asbestos, lead or electromagnetic waves.
3.6 Investigative Studies. As additional consideration for
the transaction contemplated herein, Purchaser agrees that it will
provide to Seller, immediately following the receipt of same by
Purchaser, copies of any and all reports, tests or studies
involving structural or geologic conditions, environmental,
hazardous waste or Hazardous Substances contamination of the
Property which reports, tests or studies shall be addressed to both
Seller and Purchaser at no cost to Seller; provided, however,
Purchaser shall have no obligation to cause any such tests or
studies to be performed on the Property. Notwithstanding any
provision of this Agreement to the contrary, no termination hereof
shall terminate Purchaser's obligations pursuant to this Section
3.6.
3.7 Purchaser Represented by Counsel. Purchaser hereby
represents and warrants to Seller that: (i) Purchaser is not in a
significantly disparate bargaining position in relation to Seller;
(ii) Purchaser is represented by legal counsel in connection with
the transaction contemplated by this Agreement; and (iii) Purchaser
is purchasing the Property for business, commercial, investment or
other similar purpose and not for use as Purchaser's residence.
3.8 Purchaser's Release of Seller. Seller is hereby released
from all responsibility and liability to Purchaser regarding the
condition (including the presence in the soil, air, structures and
surface and subsurface waters, of materials or substances that have
been or may in the future be determined to be toxic, hazardous,
undesirable or subject to regulation and that may need to be
specially treated, handled and/or removed from the Property under
current or future federal, state and local laws, regulations or
guidelines), valuation, salability or utility of the Property, or
its suitability for any purpose whatsoever. Purchaser expressly
acknowledges that Purchaser has not relied on any warranties,
promises, understandings or representations, express or implied,
oral or written, of Seller or any of its agents, relating to the
Property which are not contained in this Agreement, and that
Purchaser is acquiring the Property in its present condition and
state of repair, "as is, where is", with all defects, latent or
apparent. Purchaser acknowledges that any information of any type
which Purchaser has received or may receive from Seller or its
agents, including, without limitation, any environmental reports
and surveys, is furnished on the express condition that Purchaser
shall make an independent verification of the accuracy of such
information, all such information being furnished without any
warranty whatsoever.
3.9 Representations, Warranties and Covenants.
(a) Representations of Seller. The representations set forth in
this Section 3.9 constitute the only representations of Seller
to Purchaser in connection with the sale of the Property. As
of the Effective Date, Seller represents as follows:
(i) Authority of Seller, Due Authorization. Seller is a
limited partnership duly organized and validly existing under
the laws of the State of its organization, and Seller has all
necessary partnership power and authority to execute and
deliver this Agreement and to consummate the sale.
contemplated hereby. This Agreement has been duly authorized
and executed by Seller and is a valid and binding obligation
of, and is enforceable, in accordance with its terms, against
Seller. The documents delivered to Buyer at Closing will be
duly authorized and executed by Seller and will be valid and
binding obligations of Purchaser, and will be enforceable in
accordance with their terms against Seller.
(ii) Non-Foreign Entity. Seller is not a "foreign person"
or "foreign corporation" as those terms are defined in the
Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
(iii) Violations. To Seller's actual knowledge,
except to the extent provided to Purchaser during the
Inspection Period, Seller has not received any written notice
from a Governmental Authority (as defined in Section 3.9(b))
alleging a violation of any law, rule or regulation relating
to the Property.
(iv) Non-Contravention. To Seller's actual knowledge, the
execution and delivery of this Agreement by Seller and the
performance of its obligations hereunder, do not conflict with
or result in a default under any agreement or obligation as to
which Seller or the Property is bound.
(v) Litigation. To Seller's actual knowledge, except as
previously disclosed to Purchaser, there are no legal actions,
suits or similar proceedings pending or served against seller
or the Property, which if adversely determined, would
materially affect the value of the Property or Seller's
ability to consummate the sale contemplated hereby.
(vi) Operating Statements. Attached as Exhibit "F" is the
most recent quarterly statement of income and expense in
connection with the operation and maintenance of the Property.
The balance of such statements for the preceding quarters,
covering Seller's period of ownership of the Property, shall
be made available to the Purchaser in accordance with Section
3.2 and in connection therewith, Seller agrees to make
available to Purchaser or its representatives, at Seller's
office, or Seller's property manager's office or the Real
Property all supporting documentation for such statements.
(vii) Service Contracts. To Seller's actual
knowledge, as of the Effective Date, the list of Service
Contracts attached hereto as Exhibit "H" constitutes all of
the Service Contracts affecting the Property.
(viii) Closing Not Constituting Breach. To Seller's
actual knowledge, the consummation of the transaction
contemplated herein will not result in the breach of any lease
or other agreement affecting the Property.
(ix) Access to Property. To Seller's actual knowledge,
Seller has received no written notices of termination of the
current access from the Property to any presently existing
highways and roadways adjoining the Property as shown by the
Survey.
(x) Taxes. AR ad valorem taxes for the Property for
1995 have been paid and no ad valorem taxes for 1996 are
delinquent.
(xi) Seller's Actual Knowledge' Defined. For purposes of
this Agreement "Seller's actual knowledge" shall be limited to
the current actual, as opposed to imputed or constructive,
knowledge of Larry Corson, Scott Fitzgerald and Seth Taube,
without investigation or inquiry whatsoever.
(b) Covenants. Seller hereby agrees that:
(i) Rent Roll. Not earlier than five (5) days prior to
Closing, Seller shall deliver a copy of rent roll for the
Property ("Rent Roll") certified to Seller's actual Knowledge
to be true and correct as of the date thereof.
(ii) Insurance. Seller shall maintain all insurance
policies covering the Property in effect as of the Effective
Date or their equivalent, in force until Closing. Buyer, at
Closing, shall obtain its own insurance coverage.
(iii) Inspection of Documents, Reports, Books and
Records. During the Inspection Period, the Documents, all
reports (including but not limited to soil tests and
construction inspection reports), the books and records, all
Tenant Leases and other documents, that to Seller's Knowledge
relate to the construction, ownership, operation or management
of the Property, shall be made available to Purchaser for
review at the offices of Seller, the office of Sellers
property manager, or at the Real Property as applicable, and
Seller shall cooperate with Purchaser in its review thereof.
Notwithstanding the foregoing, Purchaser will not be entitled
to inspect or review appraisals, or documents involving
Seller's acquisition of the Property, any internal budgets or
projections or any other prospective purchasers of the
Property.
(iv) Maintenance of Property Until Closing. Subject to
Article VIII & IX, Seller, at its expense, will maintain the
Property in its current condition until Closing excepting only
ordinary wear and tear.
(v) Service Contracts. After the Effective Date, Seller
will not enter into any service operating or management
contracts related to the Property that cannot be terminated on
thirty (30) days' notice.
(c) Purchaser's Representations and Warranties. Purchaser
represents and warrants as follows:
(i) Authority of Purchaser. Purchaser has the requisite
corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by the board of directors of the Purchaser and
no other corporate proceedings on the part of the Purchaser
are necessary to enter into this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been
duly executed and delivered by, and constitutes a valid and
binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms.
(ii) No Bankruptcy or Receivership. That at no time on or
before the Closing Date, shall any of the following have
occurred with respect to Purchaser: (A) the commencement of a
case under Title 11 of the United States Code, as now
constituted or hereafter amended, or under any other
applicable federal or state bankruptcy law or other similar
law; (B) the appointment of a trustee or receiver of any
property interest; (C) an assignment for the benefit of
creditors; (D) an attachment, execution or other judicial
seizure of a substantial property interest; (E) the taking of,
failure to take, or submission to any action indicating an
inability to meet its financial obligations as they accrue; or
(F) a dissolution or liquidation, death or incapacity.
(iii) Corporate Organization. The Purchaser is a
corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and is
in good standing as a foreign corporation in each jurisdiction
where failure to so qualify or be in good standing is
reasonably likely to have a material adverse effect on the
financial condition, properties, business or results of
operation of the Purchaser and its subsidiaries, taken as a
whole. The Purchaser has the requisite corporate power to
own, lease and operate its properties and assets and to carry
on its businesses as they are now being conducted. The
Purchaser's certificate of incorporation and by-laws (or other
governing instruments) are in full force and effect.
(iv) Consents and Approvals: No Violation. Neither the
execution and delivery of this Agreement by the Purchaser nor
the consummation by the Purchaser of the transactions
contemplated hereby will (A) conflict with or result in any
breach or violation of any provision of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance upon
any of the properties or assets of the Purchaser or any of its
subsidiaries under, any of the terms, conditions or provisions
of 1) their respective certificates of incorporation or by-laws
or 2) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which the Purchaser or any such subsidiary is a party or to
which they or any of their respective properties or assets are
subject, or (B) require any consent approval, authorization or
permit of, or filing with or notification to, any court,
governmental authority or other regulatory or administrative
agency or commission, domestic or foreign ("Governmental
Entity") or any other person.
(d) Conditions for Bringing a Claim for Breach of Representation.
Purchaser shall not be entitled to bring a claim for breach of
a representation to the extent it had actual knowledge
thereof, as opposed to imputed or constructive knowledge,
prior to Closing. In no event will Purchaser be entitled to
recover damages for any breach of the above representations
unless Purchaser delivers notice to Seller of its claim on or
prior to six (6) months following the Closing Date. In
addition, Purchaser shall not have any right to bring any
action against Seller as a result of any representation or
warranty of Seller contained in this Agreement unless and
until the aggregate amount of such losses, expenses and
liability arising out of or which result from the inaccuracy
of any such representations exceeds $150,000 and then only to
the extent of such excess up to an amount not to exceed
$500,000.
IV.
SURVEY
4.1 Survey. Seller shall at Seller's cost and expense,
within ten (10) days after the Effective Date, deliver to Purchaser
an update of the most recent survey of the Real Property ("Survey")
containing a certificate substantially in accordance with the form
attached hereto as Exhibit "G".
V.
TITLE
5.1 Title Commitment. (a) Seller shall, within ten (10) days
after the Effective Date, furnish to Purchaser: (I) a title
commitment ("Commitment"), by the terms of which Title Company
agrees to issue to Purchaser at Closing an 1992 ALTA Owner Policy
of Title Insurance (as amended to date) ("Title Policy") in the
amount of the Purchase Price, insuring Purchaser's fee simple
title to the Real Property to be good and indefeasible, subject to
the terms of such policy and the exceptions described therein; and
(H) a photocopy of all documents ("Title Documents") describing all
title exceptions shown on the Commitment. As used herein, the term
"Title Objection Period" shall mean a period commencing on the
first day following Seller's delivery to Purchaser of the Survey,
Commitment and Title Documents and ending ten (10) days thereafter.
All matters shown on the Survey and exceptions listed in the
Commitment which are not objected to by Purchaser by delivery of
written notice to Seller within the Title Objection Period shall be
conclusively deemed to be acceptable to Purchaser. In the event
Purchaser timely objects to any title exception or Survey matter
("Title Objection"), Seller may but shall not be obligated to, cure
such Title Objection. In the event Seller notifies Purchaser that
Seller is unable or unwilling to cure any Title Objection,
Purchaser shall be deemed to have waived the Title Objections
unless within five (5) days following such notice, Purchaser
delivers to Seller written notice terminating this Agreement.
Notwithstanding anything herein to the contrary, in the event that
Purchaser's right to terminate this Agreement pursuant to any
provision of this Section 5.1 has not expired prior thereto, it
shall expire upon expiration of the Inspection Period. As used in
this Agreement, the term "Permitted Exceptions" shall mean all
matters either shown on the Survey or listed in the Commitment to
which Purchaser does not raise a Title Objection within the Title
Objection Period or, having objected, Purchaser waives or is deemed
to have waived in accordance with the provisions of this Section
5.1.
(b) In the event of termination of this Agreement
pursuant to this Section 5.1, upon Purchaser's delivery of the
Purchaser's Information, the Earnest Money shall be delivered to
Purchaser in accordance with Section 6.4 and thereafter neither
party shall have any further rights or obligations hereunder,
except for the Termination Surviving Obligations. Notwithstanding
anything herein to the contrary, if this Agreement is terminated by
purchaser in accordance with the terms hereof, the Title Company
shall, prior to delivering the Earnest Money to the party entitled
thereto, deduct from the Earnest Money any amounts owing to the
Title Company relating to the preparation of the Commitment and
this provision shall expressly survive any termination of this
Agreement.
VI.
REMEDIES
6.1 Seller's Remedies. In the event Purchaser fails to
perform its obligations pursuant to this Agreement for any reason
except the failure by Seller to perform hereunder, Seller shall be
entitled as its sole and exclusive remedy, to terminate this
Agreement and recover the Earnest Money as liquidated damages and
not as penalty, in full satisfaction of claims against Purchaser
hereunder (excluding any claim for breach of a Termination
Surviving Obligation and if Closing occurs, excluding any claim for
breach of any obligation that expressly survives Closing pursuant
to the terms of this Agreement, for which there shall be no
limitation or restriction on liability). Seller and Purchaser
agree that Seller's damages resulting from Purchaser's default are
difficult if not impossible, to determine and the Earnest Money is
a fair estimate of those damages which has been agreed to in an
effort to cause the amount of said damages to be certain. In the
event of Purchaser's default or a termination of this Agreement and
notwithstanding anything in this Section 6.1 to the contrary, and
in the event Purchaser or any party related to or affiliated with
Purchaser is asserting any claims or right to the Property that
would otherwise delay or prevent Seller from having clear,
indefeasible and marketable title to the Property, Seller shall
have all remedies available at law or in equity.
6.2 Purchaser's Remedies. In the event Seller fails to
perform its obligations pursuant to this Agreement for any reason
except the failure by Purchaser to perform hereunder, Purchaser
shall elect, as its sole and exclusive remedy, either to (a)
terminate this Agreement by giving Seller timely written notice of
such election prior to or at ' Closing; and upon delivery of the
Purchaser's Information recover the Earnest Money in accordance
with Section 6.4, or (b) enforce specific performance of this
Agreement. Notwithstanding anything herein to the contrary,
Purchaser shall be deemed to have elected to terminate this
Agreement if Purchaser fails to deliver to Seller written notice of
its intent to file a claim or assert a cause of action for specific
performance against Seller on or before thirty (30) days following
the Closing Date or having given such notice fails to file a
lawsuit asserting said claim or cause of action in a court of
competent jurisdiction in Davidson County, Tennessee, within ninety
(90) days following the Closing Date.
6.3 Attorneys' Fees. In the event either party hereto is
required to employ an attorney because any litigation arises out of
this Agreement between the parties hereto, the nonprevailing party
shall pay the prevailing party all reasonable fees and expenses,
including attorneys' fees and expenses, incurred in connection with
such litigation.
6.4 Disposition of Earnest Money. In the event of a
termination of this Agreement by either Seller or Purchaser, Title
Company is authorized to deliver the Earnest Money to the party
hereto entitled to same pursuant to the terms hereof on or before
the fifth (5th) business day following receipt of written notice of
such termination by the Title Company and non-terminating party
from the terminating party, unless the non-terminating party
notifies the Title Company that it disputes the right of the
terminating party to receive the Earnest Money. In such event, the
Title Company shall have the right to interplead the Earnest Money
into a court of competent jurisdiction in Davidson County,
Tennessee. All attorneys' fees and costs and Title Company's costs
and expenses incurred in connection with such interpleader shall be
assessed against the party that is not awarded the Earnest Money or
if the Earnest Money is distributed in part to both parties, then
in the inverse proportion of such distribution. Notwithstanding
the foregoing, in the event this Agreement is terminated and
Purchaser is entitled to receive the Earnest Money, Title Company
is not authorized to deliver the Earnest Money to Purchaser unless
and until Purchaser deposits with Title Company, Purchaser's
written certification, addressed to Seller and Title Company, that
Purchaser has delivered to Seller the Purchaser's Information
together with a waiver of any and all of Purchaser's claims against
Seller in connection with this Agreement.
VII.
CLOSING
7.1 Closing Date. The Closing shall be held in the offices of
the Title Company (or such other location as may be mutually agreed
upon by Seller and Purchaser) at 10:00 a.m. on December 10, 1996 or
such earlier or later date as Seller and Purchaser shall mutually
agree in writing ("Closing Date").
7.2 Closing Matters.
(a) At Closing, Seller shall:
(i) cause the Title Company to modify (by interlineation
or otherwise) the Commitment to reflect the Permitted
Exceptions, thereby indicating the commitment of the Title
Company to issue to Purchaser the Title Policy;
(ii) To the extent available and in Seller's possession
or control, deliver originals of the Leases and all Contracts
affecting the Real Property either at Closing or by making
same available at the Property;
(iii) Deliver possession of the Property, subject to
the Permitted Exceptions and the rights of parties in
possession;
(iv) To the extent available and in Seller's possession,
deliver copies of all necessary permits issued by appropriate
governmental authorities and utility companies relating to the
Property;
(v) Execute, acknowledge and deliver a special warranty
deed ("Deed") in the form attached hereto as Exhibit "B",
conveying the Real Property;
(vi) Execute, acknowledge and deliver a bill of sale,
assignment and assumption ("Bill of Sale") in the form
attached hereto as Exhibit "C", conveying without warranty the
Personalty and assigning Seller's interest in the Leases,
Intangible Property, Security Deposits and the Contracts;
(vii) Deliver evidence of its authority to execute
the Deed and the Bill of Sale;
(viii) Deliver a non-foreign entity certification in
the form attached hereto as Exhibit "D", certifying, in
compliance with Section 1445 of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder
that Seller is not a "foreign person";
(ix) Deliver an affidavit or certificate reasonably
requested by the Title Company in connection with its issuance
of the Title Policy;
(x) Deliver a form notice letter in the form attached
hereto as "Exhibit E", to be delivered to each Tenant
acknowledging that Seller has conveyed its interest in the
Leases and the Security Deposits to Purchaser ("Tenant Notice
Letters"); and
(xi) Deliver such other documents as may be reasonably
requested by Purchaser or Title Company, including transfer
tax affidavits and evidence of authority to sell the Property
in accordance with this Agreement.
(b) At Closing, Purchaser shall:
(i) Deliver the Purchase Price to the Title Company (all
monies Purchaser is required to deliver shall be wired to the
account designated by Title Company and available for
disbursement by wire transfer to Seller no later than 1:00
p.m., Dallas, Texas time, on the Closing Date) or to Seller as
provided in Section 2.1;
(ii) Execute and deliver such documents as may be
reasonably required by Seller or Title Company, including but
not limited to, a certified copy of a resolution of the Board
of Directors of Purchaser (if a corporation) authorizing
Purchaser to consummate the purchase of the Property and to
issue the Shares in accordance with this Agreement and
designating those persons authorized to execute and deliver
all necessary documents at Closing;
(iii) Deliver (A) Certificates of Good Standing and
Corporate Existence, and (B) copies of any and all of the
documents evidencing the corporate structure of Purchaser
which Seller reasonably may request;
(iv) Execute and deliver the Bill of Sale, assuming the
obligations under the Leases and the Contracts from and after
Closing and the obligation, whether arising before or after
Closing, relating to the physical or environmental condition
of the Property;
(v) Execute and deliver the Tenant Notice Letters to
each Tenant acknowledging that Purchaser has received and is
responsible for the Security Deposits; and
(c) At Closing, Purchaser and Seller shall execute and deliver a
Closing Statement setting forth the Purchase Price and all
prorations, adjustments and credits thereto and, if necessary,
a post-closing agreement with respect to any adjustments based
on estimates that are to be re-adjusted after Closing.
(d) At Closing, the following items shall be prorated as of the
Closing Date with all items of income and expense for the
Property being borne by Purchaser for the Closing Date: rents;
fees and assessments; prepaid expenses and obligations under
Contracts; accrued expenses; and real and personal and other
ad valorem taxes ("Ad Valorem Taxes") for the year of Closing.
(i) If the Ad Valorem Taxes for the year of Closing are
not known or. cannot be reasonably estimated, taxes shall be
adjusted based on taxes for the year prior to Closing. After
the Ad Valorem Taxes for the year of Closing are known,
adjustments, if needed, will be made between the parties. Any
additional Ad Valorem Taxes relating to the year of Closing or
prior years arising out of a change in the use of the Real
Property or a change in ownership shall be paid by Purchaser'
when assessed. The provisions of this Section 7.2(d)(i) shall
survive Closing.
(ii) Purchaser shall take all steps necessary to
effectuate the transfer of all utilities to its name as of the
Closing Date, and where necessary, post deposits with the
utility companies. Purchaser shall further ensure that all
utility meters are read as of the Closing Date. Seller shall
pay all utilities up to and including the Closing Date and all
utilities thereafter shall be paid for by Purchaser. Seller
shall be entitled to recover any and all deposits held by any
utility company as of the date of Closing. To the extent
Purchaser fails to provide, where required, deposits to any
such utility company(s) so as to prevent the timely release of
Seller's deposit(s) by the utility company(s) on the Closing
Date, the amount of such deposit(s) shall be credited to
Seller and the Purchase Price shall be adjusted accordingly.
In such event, the deposit(s) will be assigned to Purchaser
who shall have rights to have the deposit(s) released to it
upon satisfaction of the conditions imposed by the utility
company.
(iii) Seller shall at Closing pay to the Purchaser,
in cash, the amount of any rents paid to the Seller by the
Tenants, for the Closing Date and periods subsequent to the
Closing Date. No proration shall be made for rents delinquent
as of the Closing Date (hereinafter called the "Delinquent
Rents"). All rentals collected on or after the Closing Date
shall be allocated first to the most recent month for which
rental is due by the Tenant and then to Delinquent Rents. Any
Delinquent Rents collected by Purchaser after Closing in
accordance with the foregoing allocation shall be forthwith
paid by Purchaser to Seller. Once any Delinquent Rents are in
excess of ninety (90) days past due, all rights to pursue
collection of such amounts shall vest solely in Seller,
provided, however, that Seller shall not be entitled to pursue
eviction proceedings in connection with any such legal action.
Seller shall retain the Security Deposits and the amount
thereof as reflected on the Rent Roll shall be credited to the
Purchase Price.
(e) Purchaser agrees to: (i) assume and perform all of the
covenants of Seller and Seller's predecessor in title pursuant
to the Leases and Contracts, which are performable subsequent
to the Closing Date and all obligations, whether arising
before or after the Closing Date relating to the physical or
environmental condition of the Property; (ii) deliver the
Tenant Notice Letters to the Tenants; (iii) on or before ten
(10) days following the Closing Date, deliver to Seller a
certification to the effect that the Tenant Notice Utters have
been delivered to all of the Tenants; and (iv) correct on
behalf of Seller all rents and other charges which become due
prior to the Closing Date pursuant to the Leases but which
Seller has not collected as of the Closing Date and deliver
such sums collected to Seller promptly thereafter. Purchaser
indemnifies and holds Seller harmless from and against any and
all claims, costs and expenses (including reasonable
attorneys' fees) asserted against or incurred by Seller and
arising out of the failure of Purchaser to perform its
obligations pursuant to this Section 7.2(e). Notwithstanding
any provision of this Agreement to the contrary but subject to
Section 7.2(d)(iii), Seller shall be entitled to attempt to
collect all rents and other charges which became due prior to
the Closing Date from any of the Tenants. The provisions of
this Section 7.2(e) shall survive the Closing.
(f) The agreements set forth in subparagraphs (d) and (e) of this
Section 7.2 shall survive the Closing and be enforceable until
fully performed.
7.3 Closing Costs. Any escrow fee charged by the Title
Company shall be paid 50% by Seller and 50% by Purchaser. Seller
shall pay all costs for the Commitment, Survey and the Title policy
(except for any endorsements or deletions or amendments thereto or
any Title Company inspection fees or mortgagee title policy costs,
which shall be at the cost and expense of Purchaser). Purchaser
shall pay the fee for the recording of the Deed, any documentary
stamp taxes, deed taxes, transfer taxes, intangible taxes, mortgage
taxes or other similar taxes, fees or assessments, and all other
closing costs of any nature and costs of any inspections or tests
it authorizes or conducts. Except as otherwise provided in
Sections 6.3 and 6.4, each party shall be responsible for the
payment of its own attorneys' fees incurred in connection with the
transaction that is the subject of this Agreement. Purchaser shall
pay for the costs of recertifying or modifying the Survey (beyond
the survey to be provided by Seller pursuant to Section 4.1), its
inspections and all other costs and expenses incurred by it in
connection with the acquisition of the Property and all other costs
not allocated to Seller pursuant to this Agreement.
7.4 Real Estate Commissions. Seller agrees to pay to
Stonemoss Capital Corp. C.B. Commercial and Edwin B. Raskin
Companies ("Brokers") a real estate commission at Closing (but only
in the event of Closing in strict accordance with this Agreement)
pursuant to separate agreements, but in no event will the
cumulative amount of such real estate commissions exceed 1% of the
Purchase Price. Other than as stated in the first sentence of this
Section 7.4, Seller and Purchaser each represents and warrants to
the other that no real estate brokerage commission is payable to
any person or entity in connection with the transaction
contemplated hereby, and each agrees to and does hereby indemnify
and hold the other harmless against the payment of any commission
to any person or entity claiming by, through or under Seller or
Purchaser, as applicable. This indemnification shall extend to any
and all claims, liabilities, costs and expenses (including
reasonable attorneys' fees and litigation costs) arising as a
result of such claims and shall survive the Closing. Brokers shall
not be entitled to any monies or other recovery realized by Seller
arising out of Purchaser's default or by reason of Seller's
default. Brokers shall not be entitled to any commission if
Purchaser or Seller elect to terminate this Agreement. This
Section 7.4 shall expressly survive any Closing or any termination
of this Agreement.
VIII.
CONDEMNATION
8.1 Condemnation. If, prior to Closing, any governmental
authority or other entity having condemnation authority shall
institute an eminent domain proceeding or take any steps
preliminary thereto (including the giving of any direct or indirect
notice of intent to institute such proceedings) with regard to the
Real Property, Seller shall give prompt notice of same to
Purchaser. If such proceedings are not dismissed on or before ten
(10) days prior to Closing, Purchaser shall be entitled, as its
sole and exclusive remedy, to terminate this Agreement upon written
notice to Seller (a) within ten (10) days following notice by
Seller to Purchaser of such condemnation or (b) on the Closing
Date, whichever occurs first. In the event Purchaser does not
terminate this Agreement pursuant to the preceding sentence,
Purchaser shall be conclusively deemed to have elected to accept
such condemnation and waives any right to terminate this Agreement
as a result thereof Notwithstanding anything to the contrary
herein, if any eminent domain proceeding is instituted (or notice
of which shall be given) solely for the taking of any subsurface
rights for utility easements or for any right-of-way easement, and
the surface may, after such taking, be used in substantially the
same manner as though such rights had not been taken, Purchaser
shall not be entitled to terminate this Agreement as to any part of
the Real Property, but any award resulting therefrom shall be
assigned to Purchaser at Closing and shall be the exclusive
property of Purchaser upon Closing. In the event Purchaser elects
to terminate this Agreement under this Section 8.1, the Earnest
Money shall be returned to Purchaser in accordance with Section 6.4
upon Seller's receipt of the Purchaser's Information and neither
party to this Agreement shall thereafter have any further rights or
obligations hereunder except the Termination Surviving Obligations.
If Purchaser waives (or is deemed to have waived) the right to
terminate this Agreement as a result of such a condemnation,
despite such condemnation, Seller and Purchaser shall close this
Agreement in accordance with the terms hereof with no reduction in
the Purchase Price, and Seller shall assign to Purchaser at Closing
all of Seller's right, title and interest in and to all proceeds
resulting or to result from said condemnation.
IX.
RISK OF LOSS
9.1 Risk of Loss. For purposes of this Section, "Casualty"
shall mean damage to the Improvements by fire or other casualty.
For purposes of this Section, "Material Damage" shall mean damage
to the Improvements of such nature that the cost of restoring the
same to their condition prior to the Casualty will exceed
$5,000,000.
(a) Procedure. If, prior to Closing, the Property shall be
destroyed or sustain Material Damage as a result of Casualty,
then, at Purchaser's option exercised in the manner provided
hereunder, the following shall occur with respect to such
Property:
(i) Purchaser may terminate this Agreement and neither
party hereto shall have any further rights or obligations
except for the Termination Surviving Obligations and the
Earnest Money Deposit shall be returned to Purchaser in
accordance with Section 6.4, by giving Seller written notice
of such election at or prior to Closing, but in any event
within ten (10) days following receipt by Purchaser of notice
of the occurrence of any such event; or
(ii) In the event Purchaser fails to deliver written
notice of its election to terminate the Agreement as provided
in Section 9.1(a)(i) then, Purchaser shall be deemed to have
waived such termination right and to have elected to proceed
with the Closing of the transaction as contemplated hereby
with a reduction in the Purchase Price equal to the amount of
the applicable insurance deductible, and concurrently with
such Closing, Seller shall assign to Purchaser, in form
satisfactory to Purchaser, all claims arising under any policy
of insurance covering such Casualty, and Seller shall have no
further liability to Purchaser with respect to such damage.
If the parties shall fail to agree on the amount of the
cost of such restoration, either party may terminate this
Agreement by giving written notice to the other prior to
Closing and, in such event, the Purchaser shall have the right
to the return of the Earnest Money in accordance with Section
6.4, and neither party shall have any further obligations to
the other except for the Termination Surviving Obligations.
(b) Damage Other Than Material Damage. In the event of any damage
to the Property other than Material Damage, the Closing shall
proceed in accordance with and subject to the conditions of
subparagraph 9(a)(ii) and Seller shall have no further
liability with respect to such Casualty.
X.
MISCELLANEOUS
10.1 Entire Agreement. This Agreement contains the entire
agreement of the parties hereto. There are no other agreements,
oral or written, and this Agreement can be amended only by written
agreement signed by the parties hereto, and by reference, made a
part hereof.
10.2 Agreement Binding on Parties. This Agreement, and the
terms, covenants, and conditions herein contained, shall inure to
the benefit of and be binding upon the heirs, personal
representatives, successors, and assigns of each of the parties
hereto. Purchaser may not assign its rights hereunder without the
prior written consent of Seller.
10.3 Effective Date. The "Effective Date" of this Agreement
shall be the date on which this Agreement has been executed by both
Seller and Purchaser.
10.4 Notice. Any notice, communication, request, reply or
advice (collectively, "Notice") provided for or permitted by this
Agreement to be made or accepted by either party must be in
writing. Notice may, unless otherwise provided herein, be given or
served by (i) depositing the same in the United States mail,
postage paid, certified, and addressed to the party to be notified,
with return receipt requested, (ii) by delivering the same to such
party, or an agent of such party, in person or by commercial
courier, or (iii) by facsimile, or (iv) by depositing the same
into custody of a nationally recognized overnight delivery service
such as Federal Express Corporation, Airborne Express, Emery or
Purolator. Notice deposited in the mail in the manner described in
(i) above shall be effective on the third business day after such
deposit. Notice given in any other manner shall be effective only
if and when received by the party to be notified between the hours
of 8:00 a.m. and 5:00 p.m. of any business day with delivery made
after such hours to be deemed received the following business day.
For the purposes of notice, the addresses of the parties shall,
until changed as hereinafter provided, be as follows:
SELLER:
Nashboro Village Apartments,
L.P.
13155 Noel Road, Suite 2300
Lock Box 54
Dallas, Texas 75240
Attn: Scott R. Fitzgerald
Telephone: (972) 934-0100
Fax: (972) 934-8333
WITH ADDITIONAL COPY TO:
David J. Lowery, Esq.
Jones, Day, Reavis & Pogue
2001 Ross Avenue
2300 Trammell Crow Center
Dallas, Texas 75201
Telephone: (214) 220-3939
Fax: (214) 969-5100
PURCHASER:
Walden Residential Properties,
Inc.
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Lock box 45
Dallas, Texas 75240
Attn: Marshall B. Edwards
Telephone: (972) 788-0581
Fax: (972) 788-1550
WITH COPY TO:
Robin K. Minick, Esq.
Munsch Hardt Kopf Harr &
Dinan, P.C.
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
The parties hereto shall have the right from time to time to change
their respective addresses, and each shall have the right to
specify as its address any other address within the United States
of America by at least five (5) days written notice to the other
party.
10.5 Time of the Essence. Time is of the essence in all
things pertaining to the performance of this Agreement.
10.6 Place of Performance. This Agreement is made and shall
be performable in Davidson County, Nashville, Tennessee, and shall
be construed in accordance with the laws of the State of Tennessee.
10.7 Currency. All dollar amounts are expressed in United
States currency.
10.8 Section Headings. The section headings contained in this
Agreement are for convenience only and shall in no way enlarge or
limit the scope or meaning of the various and several sections
hereof.
10.9 Obligations. To the extent necessary to carry out the
terms and provisions hereof, the terms, conditions, obligations and
rights set forth herein shall not be deemed terminated at the time
of Closing nor will they merge into the various documents executed
and delivered at the time of Closing.
10.10 Business Days. In the event that any date or any
period provided for in this Agreement shall end on a Saturday,
Sunday or legal holiday, the applicable date or period shall be
extended to the first business day following such Saturday, Sunday
or legal holiday.
10.11 Confidentiality. In addition to the confidentiality
standards set forth in Section 3.2(b) of this Agreement, Seller and
Purchaser each expressly acknowledges and agrees that the
transactions contemplated by this Agreement and the terms,
conditions, and negotiations concerning the same shall be held in
the strictest confidence by each of them and shall not be disclosed
by either of them except to their respective legal counsel,
accountants, consultants, officers, partners, directors, and
shareholders, and except and only to the extent that such
disclosure may be necessary for their respective performances
hereunder. Purchaser further acknowledges and agrees that, unless
and until the Closing occurs, all information obtained by Purchaser
in connection with the Property will not be disclosed by Purchaser
to any third persons without the prior written consent of Seller.
Nothing contained in this Section 10.11 shall preclude or limit
either party from disclosing or accessing any information otherwise
deemed confidential under this Section 10.11 in connection with
that party's enforcement of its rights following a disagreement
hereunder or in response to lawful process or subpoena or other
valid or enforceable order of a court of competent jurisdiction or
as may be required by applicable securities laws or by any
applicable securities exchange, including, to the extent required
by any applicable security exchange the inclusion of a copy of this
Agreement in required filings with the Securities and Exchange
Commission.
10.12 No Recordation. Without the prior written consent
of Seller, there shall be no recordation of either this Agreement
or any memorandum hereof, or any affidavit pertaining hereto and
any such recordation of this Agreement or memorandum hereof, by
Purchaser without the prior written consent of Seller shall
constitute a default hereunder by Purchaser, whereupon this
Agreement shall, at the option of Seller, terminate and be of no
further force and effect. Upon termination all Earnest Money shall
be immediately delivered to Seller, whereupon the parties shall
have no further duties or obligations one to the other except for
the Termination Surviving Obligations.
10.13 Multiple Counterparts. This Agreement may be
executed in multiple counterparts (each of which is to be deemed
original for all purposes).
10.14 Severability. If any provision of this Agreement or
application to any party or circumstance shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to
any extent, the remainder of this Agreement or the application of
such provision to such person or circumstances, other than those as
to which it is so determined invalid or unenforceable, shall not be
affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
10.15 Limited Liability of Officers. This Agreement and
all documents, agreements, understandings, and arrangements
relating to this transaction have been executed by the undersigned
in his/her capacity as an officer or director of Purchaser which
has been formed as a Maryland corporation pursuant to the Articles
of Incorporation of Purchaser and not individually, and neither the
directors, officers or stockholders of Buyer shall be bound or have
any personal liability hereunder or thereunder. Seller shall look
solely to the assets of Purchaser for satisfaction of any liability
of the Purchaser in respect of this Agreement and all documents,
agreements, understandings and arrangements relating to the
transaction contemplated by this Agreement and will not seek
recourse or commence any action against any of the directors,
officers or stockholders of Purchaser or any of their personal
assets for the performance or payment of any obligation hereunder
or thereunder. The foregoing shall also apply to any future
documents, agreements, understandings, arrangements and
transactions between the parties hereto.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]
<PAGE>
Dated: ___________________
"SELLER"
NASHBORO VILLAGE APARTMENTS,
L.P.,
a Delaware limited partnership
By: NVA, INC., a Delaware
corporation,
General Partner
By: ____________________________
Name: _____________________
Title: _____________________
Dated: ___________________
"PURCHASER"
WALDEN RESIDENTIAL PROPERTIES,
INC., a Maryland corporation
By: ____________________________
Name: Eric A. Calub
Title: Vice President
<PAGE>
JOINDER BY TITLE COMPANY
Lawyer's Title Insurance Company, referred to in this Agreement as
the "Title Company," hereby acknowledges that it received this
Agreement executed by Seller and Purchaser on the ___ day of
November, 1996, and accepts the obligations of the Title Company as
set forth herein. It further acknowledges that it received the
Earnest Money on the _____ day of November, 1996. The Title
Company hereby agrees to hold and distribute the Earnest Money in
accordance with the terms and provisions of this Agreement. It
further acknowledges that it hereby assumes all responsibilities
for information reporting required under Section 6045(e) of the
Internal Revenue Code.
LAWYER'S TITLE INSURANCE COMPANY
By: ______________________________
NAME: _______________________
Address: ____________________
____________________
<PAGE>
JOINDER BY BROKERS
The undersigned Brokers join herein to evidence such Brokers'
agreement to the provisions of Section 7.4 and to represent to
Seller and Purchaser that such Brokers (i) know of no other
brokers, salespersons or other parties entitled to any compensation
for brokerage services arising out of this transaction other than
those whose names appear in this Agreement, (ii) have not made any
of the representations or warranties specifically disclaimed by
Seller in Section 3.5 and (iii) is duly licensed and authorized to
do business in the State of Tennessee. Brokers advise Purchaser
that Purchaser should be furnished with or obtain a policy of title
insurance or if an abstract covering the Property is provided. in
lieu thereof, Purchaser should have said abstract examined by an
attorney of Purchaser's own selection.
Date: _______________________
STONEMOSS CAPITAL CORP.
By: _________________________
Name: __________________
Title: __________________
Address: ________________
_________________________
_________________________
License No.: ____________
Tax I.D. No.: ___________
Date: _______________________
EDWIN R. RASKIN COMPANY
By: _________________________
Name: __________________
Title: __________________
Address: ________________
_________________________
_________________________
License No.: ____________
Tax I.D. No.: ___________
Date: _______________________
C.B. COMMERCIAL
By: _________________________
Name: __________________
Title: __________________
Address: ________________
_________________________
_________________________
License No.: ____________
Tax I.D. No.: ___________
FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE
This First Amendment to Agreement of Sale and Purchase
("Amendment") is entered into effective as of November 25, 1996, by
and between Walden Residential Properties, Inc., a Maryland
corporation ("Purchaser") and Nashboro Village Apartments, L.P., a
Delaware limited partnership ("Seller").
BACKGROUND
A. Seller and Purchaser entered into that certain Agreement
of Sale and Purchase ("Agreement") covering a certain parcel of
real property located in the City of Nashville, Tennessee, more
commonly known as the Nashboro Village Apartments and more
particularly described in the Agreement.
B. Seller and Purchaser now desire to amend the Agreement as
provided below.
AGREEMENT
1. Defined Terms. All capitalized terms used but not
defined herein shall have the same meanings given such terms in the
Agreement.
2. Inspection Period. The Agreement hereby is amended to
provide that the Inspection Period hereby is extended to 5:00 p.m.,
Dallas, Texas time, on December 6, 1996 ("Extended Inspection
Date").
3. Earnest Money. Upon expiration of the Inspection Period
without termination of the Agreement by Purchaser, Purchaser shall,
on the Extended Inspection Date, deposit with the Title Company the
amount of $250,000 ("Additional Deposit") as additional Earnest
Money, which Additional Deposit shall become a part of the Earnest
Money, subject to the terms and conditions of the Agreement as
modified hereby.
4. Ratification. The Agreement remains in full force and
effect as expressly modified by this Amendment and hereby is
ratified and confirmed by the parties thereto. If there is a
conflict between the terms of the Agreement and this Amendment, the
terms of this Amendment control.
5. Counterparts. This Amendment may be executed in several
counterparts (including by telecopy with originals to follow as
soon as possible), all of which are identical and all of which
together shall constitute one and the same instrument.
<PAGE>
EXECUTED effective as of the date first written above.
Seller:
NASHBORO VILLAGE APARTMENTS, L.P.,
a Delaware limited partnership
By: NVA, INC.,
a Delaware corporation,
General Partner
By: _________________________
Name: __________________
Title: __________________
Purchaser:
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By: ______________________________
Name: _______________________
Title: ________________________
REVOLVING CREDIT AGREEMENT
DATED DECEMBER 4, 1996
among
WDN PROPERTIES, LTD.
and
THE FIRST NATIONAL BANK OF BOSTON,
THE OTHER BANKS WHICH
ARE A PARTY TO THIS AGREEMENT,
and
THE OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made the 4th day of December,
1996 by and among WDN PROPERTIES, LTD. (the "Borrower"), a Texas
limited partnership having its principal place of business at One
Lincoln Center, 5400 LBJ Freeway, Suite 400, LB45, Dallas, Texas
75240, THE FIRST NATIONAL BANK OF BOSTON, BANK OF MONTREAL, CHICAGO
BRANCH, DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES, SIGNET
BANK, and the other lending institutions which may become parties
hereto pursuant to Section 18 (the "Banks"), and THE FIRST NATIONAL
BANK OF BOSTON, as Agent for the Banks (the "Agent").
RECITALS.
WHEREAS, Borrower has requested that the Banks provide a
revolving credit facility to Borrower; and
WHEREAS, Agent and the Banks are willing to provide such facility
to Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the recitals herein and the
mutual covenants contained herein, the parties hereto hereby
covenant and agree as follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions. The following terms shall have the
meanings set forth in this Section l or elsewhere in the provisions
of this Agreement referred to below:
Additional Guarantor. See Section 7.19.
Agent. The First National Bank of Boston acting as agent for the
Banks, its successors and assigns.
Agent's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other
location as the Agent may designate from time to time by notice to
the Borrower and the Banks.
Agent's Special Counsel. Long, Aldridge & Norman or such other
counsel as may be approved by the Agent.
Agreement. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
Agreement Regarding Fees. The Agreement Regarding Fees dated of
even date herewith between the Borrower and FNBB.
Applicable Margin. On any date that the Implied Rating issued
from time to time by the Rating Agency for Walden is an Investment
Grade Rating, the applicable margin set forth below based on the
Implied Rating issued by the Rating Agency and the type of the Loan:
Rating Base Rate Loans LIBOR Rate Loans
BBB+ or better 0% 1.25%
BBB 0.25% 1.30%
BBB- 0.50% 1.40%
In the event that the Rating Agency issues an Implied Rating for
Walden that is an Investment Grade Rating, or in the event of any
change in an Implied Rating of Walden by the Rating Agency, or if
Walden's Implied Rating, after having obtained an Investment Grade
Rating, shall cease at any time to be an Investment Grade Rating by
the Rating Agency (but subject to the provisions within the
definition of the term "Investment Grade Rating"), such change
shall effect a change in the Applicable Margin on the first
Business Day after the Rating Notice Date.
On any date that the Implied Rating for Walden is not an
Investment Grade Rating or Walden has not obtained an Investment
Grade Rating from the Rating Agency, the Applicable Margin shall be
as set forth below based on the ratio of the Consolidated Total
Liabilities of Walden to the Consolidated Total Assets of Walden:
Ratio Base Rate Loans LIBOR Rate Loans
Less than 50% 0.75% 1.50%
50% or greater 0.75% 1.60%
In the event that the Applicable Margin is at any time to be
determined based upon the ratio of Walden's Consolidated Total
Liabilities to Consolidated Total Assets, the Applicable Margin
shall be determined as if such ratio was 50% or greater until five
(5) Business Days following the delivery by Walden to Agent of such
evidence as the Agent may require (including without limitation,
the delivery of the Compliance Certificate to the Agent) that such
ratio is less than fifty percent (50%). In the event of any change
in such ratio that would cause the Applicable Margin to increase,
the Borrower shall notify the Agent within five (5) Business Days
of such event, and regardless of whether Agent has received notice
of such event, such event shall effect a change in the Applicable
Margin on the first to occur of (a) the first Business Day after
the delivery of such notice to Agent of such event or (b) six (6)
Business Days following the increase of such ratio to fifty (50%)
percent or greater.
Asset Value. The purchase price of Real Estate (including
improvements and related fixtures, personal property and
intangibles) and ordinary related purchase transaction costs
without deduction for depreciation, or if the Real Estate has been
developed by such Person, the completed construction costs
determined in accordance with generally accepted accounting
principles without deduction for depreciation. If the Real Estate
is purchased as a part of a group of properties, the Asset Value
shall be calculated based upon a reasonable allocation by such
Person of the aggregate purchase price among all Real Estate
purchased in such transaction.
Balance Sheet Date. September 30, 1996.
Banks. FNBB, the other lending institutions party to this
Agreement, and any other Person who becomes an assignee of any
rights of a Bank pursuant to Section 18 (but not including any
Participant, as defined in Section 18).
Base Rate. The annual rate of interest announced from time to
time by Agent at Agent's Head Office as its "base rate". Any
change in the rate of interest payable hereunder resulting from a
change in the Base Rate shall become effective as of the opening of
business on the day on which such change in the Base Rate becomes
effective.
Base Rate Loans. Those Loans bearing interest calculated by
reference to the Base Rate.
Borrower. As defined in the preamble hereto.
Borrowing Base. The Borrowing Base shall be the amount which is
the lesser of (a) the maximum amount which, when added to the total
outstanding balance of all unsecured Indebtedness of Walden and its
Subsidiaries (including the Loans), would not exceed fifty percent
(50%) of the aggregate Asset Value of the Unencumbered Operating
Properties, and (b) the maximum amount which, when added to the
total outstanding balance of all unsecured Indebtedness of Walden
and its Subsidiaries (including the Loans) would not exceed the
Debt Service Coverage Amount for the Unencumbered Operating
Properties.
Business Day. Any day on which banking institutions located in
the same city and State as Agent's Head Office are located and are
open for the transaction of banking business and, in the case of
LIBOR Rate Loans, which also is a LIBOR Business Day.
Capital Improvement Reserve. For any period, an amount equal to
$200 per annum multiplied by the average total number of apartment
units owned by Walden and its Subsidiaries during such period;
provided, however, that at any time that Walden capitalizes the
cost of carpeting in its financial reporting, such reserve shall be
increased to $290 per unit per annum.
Capitalized Lease. A lease under which a Person is the lessee
or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the
lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See Section 6.17(a).
Closing Date. The first date on which all of the conditions set
forth in Section 10 and Section 11 have been satisfied.
Code. The Internal Revenue Code of 1986, as amended.
Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's Commitment to make
or maintain Loans (other than Swing Loans) to the Borrower, as the
same may be changed from time to time in accordance with the terms
of this Agreement.
Commitment Percentage. With respect to each Bank, the percentage
set forth on Schedule 1 hereto as such Bank's percentage of the
aggregate Commitments of all of the Banks.
Compliance Certificate. See Section 7.4(e).
Consolidated or combined. With reference to any term defined
herein, that term as applied to the accounts of a Person and its
Subsidiaries, consolidated or combined in accordance with generally
accepted accounting principles.
Consolidated Operating Cash Flow. With respect to any period of
a Person, an amount equal to the Operating Cash Flow of such Person
and its Subsidiaries for such period consolidated in accordance
with generally accepted accounting principles.
Consolidated Total Assets. All assets of a Person and its
Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles; provided that all real
estate assets shall be valued on an undepreciated cost basis. The
assets of a Person and its Subsidiaries on the consolidated
financial statements of such Person and its Subsidiaries shall be
adjusted to reflect such Person's allocable share of such asset,
for the relevant period or as of the date of determination, taking
into account (a) the relative proportion of each such item derived
from assets directly owned by such Person and from assets owned by
its Subsidiaries, and (b) such Person's respective ownership
interest in its Subsidiaries.
Consolidated Total Liabilities. All liabilities of a Person and
its Subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles and all Indebtedness
of such Person and its Subsidiaries, whether or not so classified.
In the event that a Person has an ownership or other equity
interest in any other Person, which investment is not consolidated
in accordance with generally accepted accounting principles (that
is, such interest is a "minority interest"), then the liabilities
of a Person and its Subsidiaries shall include such Person's or its
Subsidiaries' allocable share of all indebtedness of such Person in
which a minority interest is owned based on such Person's
respective ownership interest in such other Person.
Conversion Request. A notice given by the Borrower to the Agent
of its election to convert or continue a Loan in accordance with
Section 4.1.
Debt Offering. The issuance and sale by the Borrower or any
Guarantor of any debt securities of the Borrower or such Guarantor.
Debt Service. For any period, the sum of all interest (including
capitalized interest) and mandatory or scheduled principal payments
due and payable during such period excluding any balloon payments
due upon maturity of any indebtedness.
Debt Service Coverage Amount. At any time determined by Agent,
an amount equal to the maximum principal loan amount which, when
bearing interest at a rate per annum equal to the then-current
annual yield on ten (10) year obligations issued by the United
States Treasury most recently prior to the date of determination
plus two percent (2.0%) and payable based on a twenty-five year
mortgage style amortization schedule (expressed as a mortgage
constant percentage), could be paid by the monthly principal and
interest payment amount resulting from dividing (x) the quotient
obtained by dividing an amount equal to (i) the sum of the
aggregate Operating Cash Flow from the Unencumbered Operating
Properties for the preceding four fiscal quarters, minus the
Capital Improvement Reserve, by (ii) 2.00, by (y) 12. An example
of the calculation of the Debt Service Coverage Amount is set forth
in Schedule 2 attached hereto. In the event that the Borrower
shall have owned a property within the Unencumbered Operating
Properties for less than four consecutive fiscal quarters, then for
the purposes of performing such calculation, the Operating Cash
Flow with respect to such property shall be annualized in such
manner as the Majority Banks shall reasonably determine.
Default. See Section 12.1.
Distribution. With respect to any Person, the declaration or
payment of any cash, cash flow, dividend or distribution on or in
respect of any shares of any class of stock or other beneficial
interest of a Person, other than dividends or distributions payable
solely in equity securities of such Person; the purchase,
redemption, exchange or other retirement of any shares of any class
of stock or other beneficial interest of a Person, directly or
indirectly through a Subsidiary of such Person or otherwise; the
return of capital by a Person to its shareholders or partners as
such; or any other distribution on or in respect of any shares of
any class of stock or other beneficial interest of a Person.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other
office of such Bank, if any, located within the United States that
will be making or maintaining Base Rate Loans.
Drawdown Date. The date on which any Loan is made or is to be
made, and the date on which any Loan which is made prior to the
Maturity Date is converted or combined in accordance with Section
4.1.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by
Walden or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 6.17(a).
Equity Offering. The issuance and sale by the Borrower or any
Guarantor of any equity securities of the Borrower or such
Guarantor.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time and any rules and
regulations promulgated pursuant thereto.
ERISA Affiliate. Any Person which is treated as a single employer
with Walden under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA
and the regulations promulgated thereunder as to which the
requirement of notice has not been waived.
Event of Default. See Section 12.1.
FNBB. The First National Bank of Boston.
Funds from Operations. With respect to any Person for any fiscal
period, the Net Income (or Deficit) of such Person computed in
accordance with generally accepted accounting principles, excluding
financing costs and gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization and other
non-cash items.
General Partners. Collectively, Walden, as the general partner
of the Borrower, Walden Operating, Inc., as the general partner of
WROP, and any general partner of an Additional Guarantor.
generally accepted accounting principles. Principles that are
(a) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, as in
effect from time to time and (b) consistently applied with past
financial statements of the Person adopting the same principles;
provided that a certified public accountant would, insofar as the
use of such accounting principles is pertinent, be in a position to
deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly
applied.
Guaranteed Pension Plan. Any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or
contributed to by Walden or any ERISA Affiliate the benefits of
which are guaranteed on termination in full or in part by the PBGC
pursuant to Title IV of ERISA, other than a Multiemployer Plan.
Guarantors. Collectively, Walden, WROP, WDN Properties, Inc. and
each Additional Guarantor.
Guaranty. Collectively, the Unconditional Guaranty of Payment
and Performance dated of even date herewith made by the Guarantors
in favor of Agent and the Banks, and each Unconditional Guaranty of
Payment and Performance made by each Additional Guarantor in favor
of Agent and the Banks, as the same may be modified or amended,
such Guaranty to be in form and substance satisfactory to the
Agent.
Hazardous Substances. See Section 6.17(b).
Implied Rating. With respect to a Person, the most recent rating
issued from time to time by the Rating Agency as is applicable to
such Person's senior unsecured long-term debt, or if no such senior
unsecured long-term debt is outstanding, then the most recent
rating issued from time to time by the Rating Agency as would
hypothetically be applicable to such Person's senior unsecured
long-term debt (i.e., an implied rating).
Indebtedness. All obligations, contingent and otherwise, that
in accordance with generally accepted accounting principles should
be classified upon the obligor's balance sheet as liabilities, or
to which reference should be made by footnotes thereto, including
in any event and whether or not so classified: (a) all debt and
similar monetary obligations, whether direct or indirect
(including, without limitation, any obligations evidenced by bonds,
debentures, notes or similar debt instruments and all subordinated
debt); (b) all liabilities secured by any mortgage, pledge,
security interest, lien, charge or other encumbrance existing on
property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; (c) all
guarantees, endorsements and other contingent obligations whether
direct or indirect in respect of indebtedness of others, including
any obligation to supply funds to or in any manner to invest
directly or indirectly in a Person, to purchase indebtedness, or to
assure the owner of indebtedness against loss through an agreement
to purchase goods, supplies or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner
or otherwise, and the obligation to reimburse the issuer in respect
of any letter of credit; (d) any obligation as a lessee or obligor
under a Capitalized Lease; (e) all obligations to purchase under
agreements to acquire, or otherwise to contribute money with
respect to, properties under "development" within the meaning of
Section 8.9; and (f) a Person's pro rata share of any of the
above-described obligations of its unconsolidated affiliates.
Notwithstanding the foregoing, in the event that a Person has
incurred Indebtedness with respect to which another Person included
within the consolidated financial statements of the first Person is
also liable (by reason of a guaranty or otherwise), such
Indebtedness shall only be counted once for the purposes of such
consolidated financial statements.
Interest Payment Date. As to each Loan, the first day of each
calendar month during the term of such Loan, and with respect to
each LIBOR Rate Loan, the last day of the Interest Period relating
thereto.
Interest Period. With respect to each LIBOR Rate Loan (a)
initially, the period commencing on the Drawdown Date of such Loan
and ending one, two, three, six or twelve months thereafter, and
(b) thereafter, each period commencing on the day following the
last day of the next preceding Interest Period applicable to such
Loan and ending on the last day of one of the periods set forth
above, as selected by the Borrower in a Conversion Request;
provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period with respect to a LIBOR Rate Loan
would otherwise end on a day that is not a LIBOR Business Day,
that Interest Period shall end and the next Interest Period
shall commence on the next preceding or succeeding LIBOR
Business Day as determined conclusively by the Reference Bank in
accordance with the then current bank practice in the applicable
LIBOR interbank market;
(ii) if the Borrower shall fail to give notice as provided in
Section 4.1, the Borrower shall be deemed to have requested a
conversion of the affected LIBOR Rate Loan to a Base Rate Loan
on the last day of the then current Interest Period with respect
thereto; and
(iii) no Interest Period relating to any LIBOR Rate Loan
shall extend beyond the Maturity Date.
Investment Grade Rating. With respect to any Person, an Implied
Rating equal to or more favorable than BBB- with respect to a
rating issued by the Rating Agency. If, at any time after a Person
obtains an Investment Grade Rating, (a) no Implied Rating for such
Person's senior unsecured long-term debt shall have been issued or
confirmed in writing by the Rating Agency within the previous 365
days, or (b) the rating system of the Rating Agency (as opposed to
the rating of a Person) shall change, or (c) the Rating Agency
shall no longer perform the functions of a securities rating
agency, then the Borrower and the Agent shall promptly negotiate in
good faith to amend the reference to the specific ratings in this
definition for the determination of the Investment Grade Rating,
and pending such amendment, the applicable rating in effect as of
the date the event described in this paragraph occurred shall
continue to apply.
Investments. With respect to any Person, all shares of capital
stock, evidences of Indebtedness and other securities issued by any
other Person, all loans, advances, or extensions of credit to, or
contributions to the capital of, any other Person, all purchases of
the securities or business or integral part of the business of any
other Person and commitments and options to make such purchases,
all interests in real property, and all other investments;
provided, however, that the term "Investment" shall not include (i)
equipment, inventory and other tangible personal property acquired
in the ordinary course of business, or (ii) current trade and
customer accounts receivable for services rendered in the ordinary
course of business and payable in accordance with customary trade
terms. In determining the aggregate amount of Investments
outstanding at any particular time: (a) the amount of any
investment represented as a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still
outstanding; (b) there shall be included as an Investment all
interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (c) there shall
be deducted in respect of each such Investment any amount received
as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating
distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment,
whether as dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
LIBOR Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits)
in the London interbank market.
LIBOR Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other
office of such Bank, if any, that shall be making or maintaining
LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate
Loan, the rate per annum as determined by the Reference Bank's
LIBOR Lending Office to be the rate (rounded upwards to the nearest
1/16 of one percent) at which Dollar deposits are offered to prime
banks by such banks in the London Interbank Market as are selected
in good faith by the Reference Bank at approximately 11:00 a.m.
London time two LIBOR Business Days prior to the beginning of such
Interest Period for delivery on the first day of such Interest
Period for the number of days comprised therein and in an amount
comparable to the amount of the LIBOR Rate Loan to which such
Interest Period applies.
LIBOR Rate Loans. Loans bearing interest calculated by reference
to a LIBOR Rate.
Liens. See Section 8.2.
Loan Documents. This Agreement, the Notes, the Guaranty and all
other documents, instruments or agreements now or hereafter
executed or delivered by or on behalf of the Borrower or the
Guarantor in connection with the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate Loans (including Swing Loans) to be made
by the Banks hereunder.
Majority Banks. As of any date, the Bank or Banks whose
aggregate Commitment Percentage is equal to or greater than the
required percentage, as determined by the Banks, required to
approve such matter, as disclosed by the Agent to the Borrower from
time to time.
Maturity Date. February 8, 1999, as the same may be extended as
provided in Section 2.8, or such earlier date on which the Loans
shall become due and payable pursuant to the terms hereof.
Multiemployer Plan. Any multiemployer plan within the meaning
of Section 3(37) of ERISA maintained or contributed to by Walden or
any ERISA Affiliate.
Net Income (or Deficit). With respect to any Person (or any
asset of any Person) for any fiscal period, the net income (or
deficit) of such Person (or attributable to such asset), after
deduction of all expenses, taxes and other proper charges,
determined in accordance with generally accepted accounting
principles.
Non-Recourse Indebtedness. Indebtedness for borrowed money of
a Person which is secured by one or more parcels of Real Estate and
related personal property or interests therein and is not a general
obligation of such Person, the holder of such Indebtedness having
recourse solely to the parcels of Real Estate, the personal
property related thereto and the leases, rents and profits relating
thereto specifically pledged as security for such Indebtedness.
Notes. Collectively the Revolving Credit Notes and the Swing
Loan Note.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities of
the Borrower to any of the Banks and the Agent, individually or
collectively, under this Agreement or any of the other Loan
Documents or in respect of any of the Loans or the Notes, or other
instruments at any time evidencing any of the foregoing, whether
existing on the date of this Agreement or arising or incurred
hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or
otherwise.
Operating Cash Flow. With respect to any Person (or any asset
of any Person) for any period, an amount equal to the sum of (a)
the Net Income of such Person (or attributable to such asset) for
such period plus (b) depreciation and amortization, interest
expense, and any extraordinary or non-recurring losses deducted in
calculating such Net Income minus (c) any extraordinary or
nonrecurring gains included in calculating such Net Income all as
determined in accordance with generally accepted accounting
principles.
Outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by
Section 4002 of ERISA and any successor entity or entities having
similar responsibilities.
Permitted Liens. Liens, security interests and other
encumbrances permitted by Section 8.2.
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and
any government or any governmental agency or political subdivision
thereof.
Preferred Distributions. For any period, the amount of any and
all Distributions due and payable to the holders of any form of
preferred stock (whether perpetual, convertible or otherwise) or
other ownership or beneficial interest in Walden or any of its
Subsidiaries that entitles the holders thereof to preferential
payment or distribution priority with respect to dividends, assets
or other payments over the holders of any other stock or other
ownership or beneficial interest in such Person.
Prospectus. The 10K of Walden dated December 31, 1995 and filed
with the SEC.
Rating Agency. Standard & Poor's Corporation.
Rating Notice. See Section 7.4(j).
Rating Notice Date. The earlier of (a) the date a Rating Notice
is received by the Agent, or (b) the date the Agent, having
received actual notice of a change by the Rating Agency of its
Implied Rating, sends notice to the Borrower of such change,
provided that nothing contained herein shall imply any obligation
of the Agent to monitor such rating changes.
Real Estate. All real property at any time owned or leased (as
lessee or sublessee) by Walden, the Borrower or any of their
respective Subsidiaries, unless the context limits such reference
to Real Estate owned by a particular Person.
Record. The grid attached to any Note, or the continuation of
such grid, or any other similar record, including computer records,
maintained by any Bank with respect to any Loan referred to in such
Note.
Reference Bank. Agent.
Register. See Section 18.2.
REIT Status. With respect to Walden, its status as a real estate
investment trust as defined in Section 856(a) of the Code.
Release. See Section 6.17(c)(iii).
Revolving Credit Notes. See Section 2.4.
SEC. The federal Securities and Exchange Commission.
Shareholder's Equity. At any date, the total consolidated
shareholder's equity of Walden and its Subsidiaries (including
minority interest), determined in accordance with generally
accepted accounting principles.
Short-term Investments. Investments described in subsections (a)
through (g), inclusive, of Section 8.3. For all purposes of this
Agreement and the other Loan Documents, the value of Eligible
Short-term Investments at any time shall be the current market
value thereof determined in a manner reasonably satisfactory to the
Agent.
State. A state of the United States of America.
Swing Loan. See Section 2.4A.
Swing Loan Bank. FNBB, in its capacity as Swing Loan Bank.
Swing Loan Commitment. The sum of $10,000,000.00, as the same
may be changed from time to time in accordance with the terms of
this Agreement.
Swing Loan Note. See Section 2.4A.
Subsidiary. Any corporation, association, partnership, trust,
or other business entity of which the designated parent shall at
any time own directly or indirectly through a Subsidiary or
Subsidiaries at least a majority (by number of votes or controlling
interests) of the outstanding Voting Interests, and any other
entity the accounts of which are consolidated with the accounts of
the designated parent.
Test Period. See Section 9.2.
Total Commitment. The sum of the Commitments of the Banks, as
in effect from time to time.
Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR
Rate Loan.
Unencumbered Operating Properties. Unencumbered Operating
Properties shall mean Real Estate which is owned one hundred
percent (100%) in fee simple by the Borrower or Walden which
satisfies all of the following conditions:
(a) each of the Unencumbered Operating Properties shall be free
and clear of all Liens other than the Liens permitted in Section
8.2(i), (iii) and (v);
(b) to the best of the Borrower's and Walden's knowledge and
belief, none of the Unencumbered Operating Properties shall have
any material title, survey, environmental or other defects that
would give rise to a materially adverse effect as to the value, use
of or ability to sell or refinance such property; and
(c) each of the Unencumbered Operating Properties shall consist
solely of Real Estate (i) which is an income producing operating
property utilized principally for multifamily housing, (ii) which
is fully operational, and (iii) with respect to which valid
certificates of occupancy or the equivalent for all buildings
thereon have been issued and are in full force and effect.
Notwithstanding anything herein to the contrary, Unencumbered
Operating Properties having an Asset Value of not more than twenty
percent (20.0%) of the total Asset Value of the Unencumbered
Operating Properties may be owned by WROP or by an Additional
Guarantor; provided, that each such property shall otherwise
satisfy the foregoing conditions applicable to Unencumbered
Operating Properties, each and every covenant contained in, and
each and every warranty and representation made in, this Agreement
with respect to Real Estate shall be complied with and be true and
correct, as applicable, with respect to such Real Estate owned by
WROP or such Additional Guarantor, and as and when the Borrower or
Walden shall acquire any additional Real Estate which satisfies the
requirements in this Agreement for an Unencumbered Operating
Property, the Borrower shall promptly substitute such Real Estate
for any Unencumbered Operating Properties which are owned by WROP
or such Additional Guarantor.
Voting Interests. Stock or similar ownership interests, of any
class or classes (however designated), the holders of which are at
the time entitled, as such holders, (a) to vote for the election of
a majority of the directors (or persons performing similar
functions) of the corporation, association, partnership, trust or
other business entity involved, or (b) to control, manage, or
conduct the business of the corporation, partnership, association,
trust or other business entity involved.
Walden. Walden Residential Properties, Inc., a Maryland
corporation having its principal place of business at One Lincoln
Center, 5400 LBJ Freeway, Suite 400, LB45, Dallas, Texas 75420.
Walden Operating, Inc. Walden Operating, Inc., a Delaware
corporation having its principal place of business at One Lincoln
Center, 5400 LBJ Freeway, Suite 400, LB45, Dallas, Texas 75240.
WDN Properties, Inc. WDN Properties, Inc., a New York
corporation having its principal place of business at 80 Business
Park Drive, Suite 309, Armonk, New York 10504.
WROP. Walden Residential Operating Partnership, L.P., a Georgia
limited partnership having its principal place of business at One
Lincoln Center, 5400 LBJ Freeway, Suite 400, LB45, Dallas, Texas
75240.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented
from time to time in accordance with its terms and the terms of
this Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting entity
to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) The words "approval" and "approved", as the context so
determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving
approval of all material facts necessary in order to determine
whether approval should be granted.
(h) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the
Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts, have the meanings assigned to them therein.
(i) Reference to a particular "Section ", refers to that
section of this Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
Section 2. THE REVOLVING CREDIT FACILITY
Section 2.1. Commitment to Lend. Subject to the terms and
conditions set forth in this Agreement, each of the Banks severally
agrees to lend to the Borrower, and the Borrower may borrow (and
repay and reborrow) from time to time between the Closing Date and
the Maturity Date upon notice by the Borrower to the Agent given in
accordance with Section 2.6, such sums as are requested by the
Borrower for the purposes set forth in Section 7.11 up to the
lesser of (a) a maximum aggregate principal amount outstanding
(after giving effect to all amounts requested) at any one time
equal to such Bank's Commitment and (b) such Bank's Commitment
Percentage of the Borrowing Base, provided, that, in all events no
Default or Event of Default shall have occurred and be continuing;
and provided, further, that the outstanding principal amount of the
Loans (after giving effect to all amounts requested) shall not at
any time exceed the Total Commitment. The Loans (other than Swing
Loans) shall be made pro rata in accordance with each Bank's
Commitment Percentage. Each request for a Loan hereunder shall
constitute a representation and warranty by the Borrower that all
of the conditions set forth in Section 10 and Section 11, in the
case of the initial Loan, and Section 11, in the case of all other
Loans, have been satisfied on the date of such request. No Bank
shall have any obligation to make Loans to the Borrower in the
maximum aggregate principal amount outstanding of more than the
principal face amount of its Note.
Section 2.2. Facility Fee. The Borrower agrees to pay to the
Agent for the account of the Banks in accordance with their
respective Commitment Percentages a facility fee calculated at the
rate per annum as set forth below on the average daily amount by
which the Total Commitment exceeds the outstanding principal amount
of Loans during each calendar quarter or portion thereof commencing
on the date hereof and ending on the Maturity Date. The facility
fee shall be calculated based on the ratio (expressed as a
percentage) of (a) the average daily amount of the outstanding
principal amount of the Loans during such quarter to (b) the Total
Commitment as follows:
Ratio of Outstanding Principal
Balance to Total Commitment Rate
33.33% or less 0.25%
Greater than 33.33% but not
more than 66.67% 0.20%
Greater than 66.67% 0.15%
The facility fee shall be payable quarterly in arrears on the first
day of each calendar quarter for the immediately preceding calendar
quarter or portion thereof, and on any earlier date on which the
Commitments shall be reduced or shall terminate as provided in
Section 2.3, with a final payment on the Maturity Date.
Section 2.3. Reduction and Termination of Commitment. The
Borrower shall have the right at any time and from time to time
upon five Business Days' prior written notice to the Agent to
reduce by $5,000,000 or an integral multiple of $1,000,000 in
excess thereof (provided that in no event shall the Total
Commitment be reduced to an amount less than $50,000,000.00) or to
terminate entirely the unborrowed portion of the Commitments,
whereupon the Commitments of the Banks shall be reduced pro rata in
accordance with their respective Commitment Percentages of the
amount specified in such notice or, as the case may be, terminated,
any such termination or reduction to be without penalty (unless
such termination or reduction requires repayment of a LIBOR Rate
Loan); provided, however, that no such termination or reduction
shall be permitted if, after giving effect thereto, the Outstanding
Loans would exceed the Commitments of the Banks as so terminated or
reduced. In the event that as a result of the reduction or
termination of the Commitments, the Commitment of the Swing Loan
Bank shall be reduced to an amount less than the Swing Loan
Commitment, the Swing Loan Commitment shall automatically and
without further action of the parties be reduced to an equal
amount. Promptly after receiving any notice of the Borrower
delivered pursuant to this Section 2.3, the Agent will notify the
Banks of the substance thereof. Upon the effective date of any
such reduction or termination, the Borrower shall pay to the Agent
for the respective accounts of the Banks the full amount of any
facility fee under Section 2.2 then accrued on the amount of the
reduction. No reduction or termination of the Commitment or Swing
Loan Commitment may be reinstated.
Section 2.4. Notes. The Loans (other than Swing Loans) shall
be evidenced by separate promissory notes of the Borrower in
substantially the form of Exhibit A hereto (collectively, the
"Revolving Credit Notes"), dated the date of this Agreement and
completed with appropriate insertions. One Revolving Credit Note
shall be payable to the order of each Bank in the principal face
amount equal to such Bank's Commitment and shall be payable as set
forth below. The Borrower irrevocably authorizes each Bank to make
or cause to be made, at or about the time of the Drawdown Date of
any Loan (other than Swing Loans) or at the time of receipt of any
payment of principal thereof, an appropriate notation on such
Bank's Record reflecting the making of such Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the
Loans (other than Swing Loans) set forth on such Bank's Record
shall be prima facie evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any error in
so recording, any such amount on such Bank's Record shall not limit
or otherwise affect the obligations of the Borrower hereunder or
under any Revolving Credit Note to make payments of principal of or
interest on any Revolving Credit Note when due.
Section 2.4A Swing Loan Commitments.
(a) Subject to the terms and conditions set forth in this
Agreement, and if necessary to meet the Borrower's funding
deadlines, Swing Loan Bank agrees to lend to the Borrower (the
"Swing Loans"), and the Borrower may borrow (and repay and
reborrow) from time to time between the Closing Date and the date
which is seven (7) Business Days prior to the Maturity Date upon
notice by the Borrower to the Swing Loan Bank given in accordance
with this Section 2.4A, such sums as are requested by the Borrower
for the purposes set forth in Section 7.11 in an aggregate
principal amount at any one time outstanding not exceeding the
Swing Loan Commitment; provided that at no time shall the aggregate
principal balance of Swing Loans then outstanding, when added to
the Swing Loan Bank's Commitment Percentage of all other
Outstanding Loans (after giving effect to all amounts requested),
exceed the lesser of (i) such Bank's Commitment and (ii) such
Bank's Commitment Percentage of the Borrowing Base, provided,
further, that in all events no Default or Event of Default shall
have occurred and be continuing; and provided, further, that the
outstanding principal amount of the Loans (after giving effect to
all amounts requested) shall not at any time exceed the Total
Commitment. Swing Loans shall constitute "Loans" for all purposes
hereunder, but shall not be considered the utilization of a Bank's
Commitment. The funding of a Swing Loan hereunder shall constitute
a representation and warranty by the Borrower that all of the
conditions set forth in Section 10 and Section 11, in the case of
the initial Swing Loan, and Section 11, in the case of all other
Swing Loans, have been satisfied on the date of such funding.
(b) The Swing Loans shall be evidenced by a separate
promissory note of the Borrower in substantially the form of
Exhibit B hereto (the "Swing Loan Note"), dated the date of this
Agreement and completed with appropriate insertions. The Swing
Loan Note shall be payable to the order of the Swing Loan Bank in
the principal face amount equal to the Swing Loan Commitment and
shall be payable as set forth below. The Borrower irrevocably
authorizes the Swing Loan Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Swing Loan or at the
time of receipt of any payment of principal thereof, an appropriate
notation on the Swing Loan Bank's Record reflecting the making of
such Swing Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Swing Loans set forth on
the Swing Loan Bank's Record shall be prima facia evidence of the
principal amount thereof owing and unpaid to the Swing Loan Bank,
but the failure to record, or any error in so recording, any such
amount on the Swing Loan Bank's Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under the Swing
Loan Note to make payments of principal of or interest on any Swing
Loan Note when due.
(c) Each borrowing of Swing Loan shall be subject to the
limits for Base Rate Loans and LIBOR Rate Loans set forth in
Section 2.6. Borrower shall request a Swing Loan by delivering to
the Swing Loan Bank a Loan Request no later than 9:00 a.m. (Boston
time) on the requested Drawdown Date specifying the amount of the
requested Swing Loan. The Loan Request shall also contain the
statements and certifications required by Section 2.6(i) and (ii).
Each such Loan Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept such Swing Loan
on the Drawdown Date. Notwithstanding anything herein to the
contrary, a Swing Loan shall either be a Base Rate Loan or a LIBOR
Rate Loan having an Interest Period of one month, and in the event
that the Borrower fails to specify whether it has selected a Base
Rate Loan or a LIBOR Rate Loan, the Borrower shall be deemed
conclusively to have selected a LIBOR Rate Loan with an Interest
Period of one month. Notwithstanding the foregoing, upon the date
that the Banks shall be required to fund the Loans pursuant to
Section 2.4A(d) to refund such Swing Loan, the interest rate shall
be reset to a LIBOR Rate Loan with an Interest Period as specified
in the Loan Request given by the Borrower to the Agent in
connection with such Swing Loan, or if no Interest Period is
specified, then as a Base Rate Loan. The proceeds of the Swing
Loan will be made available by the Swing Loan Bank to the Borrower
at the Agent's Head Office by crediting the account of the Borrower
at such office with such proceeds.
(d) The Swing Loan Bank shall within three (3) Business Days
after the Drawdown Date with respect to such Swing Loan, request
each Bank, including the Swing Loan Bank, to make a Loan pursuant
to Section 2.1 in an amount equal to such Bank's Commitment
Percentage of the amount of the Swing Loan outstanding on the date
such notice is given. Borrower hereby irrevocably authorizes and
directs the Swing Loan Bank to so act on its behalf, and agrees
that any amount advanced to the Agent for the benefit of the Swing
Loan Bank pursuant to this Section 2.4A(d) shall be considered a
Loan pursuant to Section 2.1. Unless any of the events described
in paragraph (h), (i) or (j) of Section 12.1 shall have occurred
(in which event the procedures of Section 2.4A(e) shall apply),
each Bank shall make the proceeds of its Loan available to the
Swing Loan Bank for the account of the Swing Loan Bank at the
Agent's Head Office prior to 12:00 noon (Boston time) in funds
immediately available no later than the third (3rd) Business Day
after the date such notice is given just as if the Banks were
funding directly to the Borrower, so that thereafter such
Obligations shall be evidenced by the Revolving Credit Notes. The
proceeds of such Loan shall be immediately applied to repay the
Swing Loans.
(e) If prior to the making of a Loan pursuant to Section
2.4A(d) by all of the Banks, one of the events described in
Section 12.1(h), (i) or (j) shall have occurred, each Bank will, on
the date such Loan pursuant to Section 2.4A(d) was to have been
made, purchase an undivided participating interest in the Swing
Loan in an amount equal to its Commitment Percentage of such Swing
Loan. Each Bank will immediately transfer to the Swing Loan Bank
in immediately available funds the amount of its participation and
upon receipt thereof the Swing Loan Bank will deliver to such Bank
a Swing Loan participation certificate dated the date of receipt of
such funds and in such amount.
(f) Whenever at any time after the Swing Loan Bank has
received from any Bank such Bank's participating interest in a
Swing Loan, the Swing Loan Bank receives any payment on account
thereof, the Swing Loan Bank will distribute to such Bank its
participating interest in such amount (appropriately adjusted in
the case of interest payments to reflect the period of time during
which such Bank's participating interest was outstanding and
funded); provided, however, that in the event that such payment
received by the Swing Loan Bank is required to be returned, such
Bank will return to the Swing Loan Bank any portion thereof
previously distributed by the Swing Loan Bank to it.
(g) Each Bank's obligation to fund a Loan as provided in
Section 2.4A(d) or to purchase participating interests pursuant to
Section 2.4A(e) shall be absolute and unconditional and shall not
be affected by any circumstance, including, without limitation,
(i) any setoff, counterclaim, recoupment, defense or other right
which such Bank or the Borrower or Guarantors may have against the
Swing Loan Bank, the Borrower or Guarantors or anyone else for any
reason whatsoever; (ii) the occurrence or continuance of a Default
or an Event of Default; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower or Guarantors or any of
their respective Subsidiaries; (iv) any breach of this Agreement or
any of the other Loan Documents by the Borrower or Guarantors or
any Bank; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. Any
portions of a Swing Loan not so purchased or converted may be
treated by the Swing Loan Bank as a Loan which was not funded by
the non-purchasing Bank as contemplated by Section 2.7 and Section
12.4. Each Swing Loan, once so sold or converted, shall cease to
be a Swing Loan for the purposes of this Agreement, but shall be a
Loan made by each Bank under its Commitment.
Section 2.5. Interest on Loans
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the date on
which such Base Rate Loan is repaid or converted to a LIBOR Rate
Loan at the rate per annum equal to the sum of the Applicable
Margin plus the Base Rate.
(b) Each LIBOR Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto at the rate per
annum equal to the sum of the Applicable Margin plus the LIBOR Rate
determined for such Interest Period.
(c) The Borrower promises to pay interest on each Loan in
arrears on each Interest Payment Date with respect thereto. In the
event that any additional interest becomes due and payable for any
period with respect to a Loan as a result of the Applicable Margin
being determined based on the ratio of Walden's Consolidated Total
Liabilities to Consolidated Total Assets or any change in such
ratio, and the interest for such period has previously been paid by
the Borrower, the Borrower shall pay to the Agent for the account
of the Banks the amount of such increase within ten (10) days of
demand.
(d) Base Rate Loans and LIBOR Rate Loans may be converted to
Loans of the other Type as provided in Section 4.1.
Section 2.6. Requests for Loans. Except with respect to the
initial Loan on the Closing Date and Swing Loans, the Borrower
(a) shall notify the Agent of a potential request for a Loan as
soon as possible, and (b) shall give to the Agent written notice in
the form of Exhibit C hereto (or telephonic notice confirmed in
writing in the form of Exhibit C hereto) of each Loan requested
hereunder (a "Loan Request") no less than five (5) Business Days
prior to the proposed Drawdown Date. Each such notice shall
specify with respect to the requested Loan the proposed principal
amount, Drawdown Date, Interest Period (if applicable) and Type.
Each such notice shall also contain (i) a statement as to the
purpose for which such advance shall be used (which purpose shall
be in accordance with the terms of Section 7.11), and (ii) a
certification by the chief financial or chief accounting officer of
the sole general partner of the Borrower and the chief financial or
chief accounting officer of Walden that the Borrower and the
Guarantors are and will be in compliance with all covenants under
the Loan Documents after giving effect to the making of such Loan.
Promptly upon receipt of any such notice, the Agent shall notify
each of the Banks thereof. Except as provided in this Section 2.6,
each such Loan Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept the Loan
requested from the Banks on the proposed Drawdown Date, provided
that, in addition to the Borrower's other remedies against any Bank
which fails to advance its proportionate share of a requested Loan,
such Loan Request may be revoked by the Borrower by notice received
by the Agent no later than the Drawdown Date if any Bank fails to
advance its proportionate share of the requested Loan in accordance
with the terms of this Agreement, provided further that the
Borrower shall be liable in accordance with the terms of this
Agreement to any Bank which is prepared to advance its
proportionate share of the requested Loan for any costs, expenses
or damages incurred by such Bank as a result of the Borrower's
election to revoke such Loan Request. Nothing herein shall prevent
the Borrower from seeking recourse against any Bank that fails to
advance its proportionate share of a requested Loan as required by
this Agreement. The Borrower may without cost or penalty revoke a
Loan Request by delivering notice thereof to each of the Banks no
later than three (3) Business Days prior to the Drawdown Date.
Each Loan Request shall be (a) for a Base Rate Loan in a minimum
aggregate amount of $1,000,000 or an integral multiple of $100,000
in excess thereof, or (b) for a LIBOR Rate Loan in a minimum
aggregate amount of $2,000,000 or an integral multiple of $100,000
in excess thereof; provided, however, that there shall be no more
than ten (10) LIBOR Rate Loans outstanding at any one time.
Section 2.7. Funds for Loans.
(a) Not later than 11:00 a.m. (Boston time) on the proposed
Drawdown Date of any Loans (other than Swing Loans), each of the
Banks will make available to the Agent, at the Agent's Head Office,
in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Loans which
may be disbursed pursuant to Section 2.1. Upon receipt from each
Bank of such amount, and upon receipt of the documents required by
Section 10 and Section 11 and the satisfaction of the other
conditions set forth therein, to the extent applicable, the Agent
will make available to the Borrower the aggregate amount of such
Loans made available to the Agent by the Banks by crediting such
amount to the account of the Borrower maintained at the Agent's
Head Office. The failure or refusal of any Bank to make available
to the Agent at the aforesaid time and place on any Drawdown Date
the amount of its Commitment Percentage of the requested Loans
shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of such other
Bank's Commitment Percentage of any requested Loans, including any
additional Loans that may be requested subject to the terms and
conditions hereof to provide funds to replace those not advanced by
the Bank so failing or refusing, provided that the Borrower may by
notice received by the Agent no later than the Drawdown Date refuse
to accept any Loan which is not fully funded in accordance with the
Borrower's Loan Request subject to the terms of Section 2.6. In
the event of any such failure or refusal, the Banks not so failing
or refusing shall be entitled to a priority position as against the
Bank or Banks so failing or refusing for such Loans as provided in
Section 12.4.
(b) Unless Agent shall have been notified by any Bank prior
to the applicable Drawdown Date that such Bank will not make
available to Agent such Bank's pro rata share of a proposed Loan,
Agent may in its discretion assume that such Bank has made such
Loan available to Agent in accordance with the provisions of this
Agreement and Agent may, if it chooses, in reliance upon such
assumption make such Loan available to Borrower, and such Bank
shall be liable to the Agent for the amount of such advance.
Section 2.8. Extension of Maturity Date.
(a) Provided that no Default or Event of Default shall have
occurred and be continuing, the Borrower shall have the option, to
be exercised by giving written notice to the Agent in the form of
Exhibit D hereto at least 90 days prior to the Maturity Date,
subject to the terms and conditions set forth in this Agreement, to
extend the Maturity Date by one (1) year. The request by the
Borrower for extension of the Maturity Date shall constitute a
representation and warranty by the Borrower that all of the
conditions set forth in this Section shall have been satisfied on
the date of such request or shall be satisfied prior to the then
existing Maturity Date.
(b) The obligations of the Agent and the Banks to extend the
Maturity Date shall be subject to the satisfaction of the following
conditions precedent on or prior to the Maturity Date (without
regard to such extension request):
(i) Investment Grade Rating. Walden shall have obtained
an Investment Grade Rating from the Rating Agency, which
continues in full force and effect as to any such rating
obtained prior to the Maturity Date (without regard to such
extension).
(ii) Payment of Extension Fee. The Borrower shall pay to
the Agent for the pro rata accounts of the Banks in accordance
with their respective Commitment Percentages an extension fee
equal to 15/100ths of one percent (0.15%) of the Total
Commitment, which fee shall, when paid, be fully earned and
non-refundable under any circumstances.
(iii) No Default. On the date the Extension Request is
given and on the Maturity Date (as determined without regard to
such extension) there shall exist no Default or Event of
Default.
(iv) Representations and Warranties. The representations
and warranties made by the Borrower or the Guarantors in the
Loan Documents or otherwise made by or on behalf of the
Borrower, the Guarantors or any of the their respective
Subsidiaries in connection therewith or after the date thereof
shall have been true and correct in all material respects when
made and shall also be true and correct in all material respects
on the Maturity Date (as determined without regard to such
extension) other than for changes in the ordinary course of
business permitted by this Agreement that have not had any
materially adverse affect on the business of the Borrower, the
Guarantors or any of their respective Subsidiaries.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrower promises to pay on
the Maturity Date and there shall become absolutely due and payable
on the Maturity Date, all of the Loans outstanding on such date,
together with any and all accrued and unpaid interest thereon.
Section 3.2. Mandatory Prepayments.
(a) If at any time the aggregate outstanding principal amount
of the Loans exceeds the Total Commitment or the Borrowing Base,
then the Borrower shall immediately pay the amount of such excess
to the Agent for the respective accounts of the Banks for
application to the Loans, except that the amount of any Swing Loans
shall be paid solely to the Swing Loan Bank.
(b) All of the Borrower's interest in the gross proceeds of
each and every sale or refinancing of real estate assets of the
Borrower and its Subsidiaries (whether held directly or
indirectly), less all reasonable costs, expenses and commissions
paid to unrelated parties and less any Indebtedness (other than the
Obligations) secured by such asset to be satisfied as a part of
such sale or refinance, shall be promptly paid by the Borrower to
the Agent for the account of the Banks as a prepayment of the Loans
to the extent of the outstanding balance of the Loans.
Section 3.3. Optional Prepayments. The Borrower shall have the
right, at its election, to prepay the outstanding amount of the
Loans, as a whole or in part, at any time without penalty or
premium; provided, that the full or partial prepayment of the
outstanding amount of any LIBOR Rate Loans pursuant to this Section
3.3 may be made only on the last day of the Interest Period
relating thereto except as otherwise required pursuant to Section
4.7. The Borrower shall give the Agent, no later than 10:00 a.m.,
Boston time, at least five Business Days prior written notice of
any prepayment pursuant to this Section 3.3, in each case
specifying the proposed date of payment of Loans and the principal
amount to be paid. Notwithstanding the foregoing, no prior notice
shall be required for the prepayment of any Swing Loan.
Section 3.4. Partial Prepayments. Each partial prepayment of
the Loans under Section 3.2 and Section 3.3 shall be in an integral
multiple of $100,000, shall be accompanied by the payment of
accrued interest on the principal prepaid to the date of payment
and, after payment of such interest, shall be applied, in the
absence of instruction by the Borrower, first to the principal of
any Outstanding Swing Loans, and next to the principal of Base Rate
Loans and then to the principal of LIBOR Rate Loans.
Section 3.5. Effect of Prepayments. Amounts of the Loans
prepaid under Section 3.2 and Section 3.3 prior to the Maturity
Date may be reborrowed as provided in Section 2.
Section 3.6. Proceeds from Debt or Equity Offering. The
Borrower shall cause all gross proceeds of each and every Debt
Offering and Equity Offering, less all reasonable costs, fees,
expenses, underwriting commissions, fees and discounts incurred in
connection therewith, to be paid by the Borrower to the Agent for
the account of the Banks as a prepayment of the Loans within thirty
(30) days of the date of such offering to the extent of the
outstanding balance of the Loans.
Section 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type and such Loan shall
thereafter bear interest as a Base Rate Loan or a LIBOR Rate Loan,
as applicable; provided that (i) with respect to any such
conversion of a LIBOR Rate Loan to a Base Rate Loan, the Borrower
shall give the Agent at least three Business Days' prior written
notice of such election, and such conversion shall only be made on
the last day of the Interest Period with respect to such LIBOR Rate
Loan; (ii) with respect to any such conversion of a Base Rate Loan
to a LIBOR Rate Loan, the Borrower shall give the Agent at least
four LIBOR Business Days' prior written notice of such election and
the Interest Period requested for such Loan, the principal amount
of the Loan so converted shall be in a minimum aggregate amount of
$2,000,000 or an integral multiple of $100,000 in excess thereof
and, after giving effect to the making of such Loan, there shall be
no more than ten (10) LIBOR Rate Loans outstanding at any one time;
and (iii) no Loan may be converted into a LIBOR Rate Loan when any
Default or Event of Default has occurred and is continuing.
Promptly upon receipt of any such Conversion Request, the Agent
shall notify each of the Banks thereof. All or any part of the
outstanding Loans of any Type may be converted as provided herein,
provided that no partial conversion shall result in a Base Rate
Loan in an aggregate principal amount of less than $1,000,000 or a
LIBOR Rate Loan in an aggregate principal amount of less than
$2,000,000 and that the aggregate principal amount of each Loan
shall be in an integral multiple of $100,000. On the date on which
such conversion is being made, each Bank shall take such action as
is necessary to transfer its Commitment Percentage of such Loans to
its Domestic Lending Office or its LIBOR Lending Office, as the
case may be. Each Conversion Request relating to the conversion of
a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by the
Borrower.
(b) Any Loan may be continued as such Type upon the
expiration of an Interest Period with respect thereto by compliance
by the Borrower with the terms of Section 4.1; provided that no
LIBOR Rate Loan may be continued as such when any Default or Event
of Default has occurred and is continuing, but shall be
automatically converted to a Base Rate Loan on the last day of the
Interest Period relating thereto ending during the continuance of
any Default or Event of Default.
(c) In the event that the Borrower does not notify the Agent
of its election hereunder with respect to any Loan, such Loan shall
be automatically converted to a Base Rate Loan at the end of the
applicable Interest Period.
Section 4.2. Closing Fee.
(a) On or before the Closing Date the Borrower shall pay to
the Agent for the account of the Banks in accordance with their
separate agreement a closing fee in the amount of $225,000.00.
(b) The Borrower agrees to pay to FNBB certain fees for
services rendered or to be rendered in connection with the Loan as
provided pursuant to the Agreement Regarding Fees. All such fees
shall be solely for the account of FNBB as provided in the
Agreement Regarding Fees.
Section 4.3. Agent's Fee. The Borrower shall pay to the Agent,
for the Agent's own account, an annual Agent's fee as provided in
the Agreement Regarding Fees. The Agent's fee shall be payable
quarterly in arrears on the first day of each calendar quarter for
the immediately preceding calendar quarter or portion thereof. The
Agent's fee shall also be paid upon the Maturity Date or earlier
termination of the Commitments. The Agent's fee for any partial
quarter shall be prorated.
Section 4.4. Funds for Payments.
(a) All payments of principal, interest, facility fees,
Agent's fees, closing fees, and any other amounts due hereunder or
under any of the other Loan Documents shall be made to the Agent,
for the respective accounts of the Banks and the Agent, as the case
may be, at the Agent's Head Office, not later than 11:00 a.m.
(Boston time) on the day when due, in each case in immediately
available funds. The Agent is hereby authorized to charge the
account of the Borrower with FNBB, on the dates when the amount
thereof shall become due and payable, with the amounts of the
principal of and interest on the Loans and all fees, charges,
expenses and other amounts owing to the Agent and/or the Banks
(including the Swing Loan Bank) under the Loan Documents.
(b) All payments by the Borrower hereunder and under any of
the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any
taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority
therein unless the Borrower is compelled by law to make such
deduction or withholding. If any such obligation is imposed upon
the Borrower with respect to any amount payable by it hereunder or
under any of the other Loan Documents, the Borrower will pay to the
Agent, for the account of the Banks (including the Swing Loan Bank)
or (as the case may be) the Agent, on the date on which such amount
is due and payable hereunder or under such other Loan Document,
such additional amount in Dollars as shall be necessary to enable
the Banks or the Agent to receive the same net amount which the
Banks or the Agent would have received on such due date had no such
obligation been imposed upon the Borrower. The Borrower will
deliver promptly to the Agent certificates or other valid vouchers
for all taxes or other charges deducted from or paid with respect
to payments made by the Borrower hereunder or under such other Loan
Document.
Section 4.5. Computations. All computations of interest on the
Loans and of other fees to the extent applicable shall be based on
a 360-day year and paid for the actual number of days elapsed.
Except as otherwise provided in the definition of the term
"Interest Period" with respect to LIBOR Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such
payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The outstanding
amount of the Loans as reflected on the records of the Agent from
time to time shall be considered prima facie evidence of such
amount.
Section 4.6. Inability to Determine LIBOR Rate. In the event
that, prior to the commencement of any Interest Period relating to
any LIBOR Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the LIBOR Rate for
such Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the
Borrower and the Banks) to the Borrower and the Banks. In such
event (a) any Loan Request with respect to LIBOR Rate Loans shall
be automatically withdrawn and shall be deemed a request for Base
Rate Loans, and (b) each LIBOR Rate Loan will automatically, on the
last day of the then current Interest Period thereof, become a Base
Rate Loan, and the obligations of the Banks to make LIBOR Rate
Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist,
whereupon the Agent shall so notify the Borrower and the Banks.
Section 4.7. Illegality. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or
directive or the interpretation or application thereof shall make
it unlawful, or any central bank or other governmental authority
having jurisdiction over a Bank or its LIBOR Lending Office shall
assert that it is unlawful, for any Bank to make or maintain LIBOR
Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Agent and the Borrower and thereupon (a) the
commitment of the Banks to make LIBOR Rate Loans or convert Loans
of another type to LIBOR Rate Loans shall forthwith be suspended
and (b) the LIBOR Rate Loans then outstanding shall be converted
automatically to Base Rate Loans on the last day of each Interest
Period applicable to such LIBOR Rate Loans or within such earlier
period as may be required by law.
Section 4.8. Additional Interest. If any LIBOR Rate Loan or any
portion thereof is repaid or is converted to a Base Rate Loan for
any reason on a date which is prior to the last day of the Interest
Period applicable to such LIBOR Rate Loan, the Borrower will pay to
the Agent upon demand for the account of the Banks in accordance
with their respective Commitment Percentages (or to the Swing Loan
Bank with respect to a Swing Loan), in addition to any amounts of
interest otherwise payable hereunder, any amounts required to
compensate the Banks for any losses, costs or expenses which may
reasonably be incurred as a result of such payment or conversion,
including, without limitation, an amount equal to daily interest
for the unexpired portion of such Interest Period on the LIBOR Rate
Loan or portion thereof so repaid or converted at a per annum rate
equal to the excess, if any, of (a) the interest rate calculated on
the basis of the LIBOR Rate applicable to such LIBOR Rate Loan
minus (b) the yield obtainable by the Agent upon the purchase of
debt securities customarily issued by the Treasury of the United
States of America which have a maturity date most closely
approximating the last day of such Interest Period (it being
understood that the purchase of such securities shall not be
required in order for such amounts to be payable and that a Bank
shall not be obligated or required to have actually obtained funds
at the LIBOR Rate or to have actually reinvested such amount as
described above).
Section 4.9. Additional Costs, Etc. Notwithstanding anything
herein to the contrary, if any present or future applicable law,
which expression, as used herein, includes statutes, rules and
regulations thereunder and legally binding interpretations thereof
by any competent court or by any governmental or other regulatory
body or official with appropriate jurisdiction charged with the
administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to
time hereafter made upon or otherwise issued to any Bank or the
Agent by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Bank's
Commitment (including the Swing Loan Commitment) or the Loans
(other than taxes based upon or measured by the income or profits
of such Bank or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of
the principal of or the interest on any Loans or any other amounts
payable to any Bank under this Agreement or the other Loan
Documents, or
(c) impose or increase or render applicable any special
deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or
loans by, or letters of credit from, or commitments of an office of
any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Agreement, the other Loan
Documents, the Loans, such Bank's Commitment (including the Swing
Loan Commitment), or any class of loans or commitments of which any
of the Loans or such Bank's Commitment (including the Swing Loan
Commitment) forms a part; and the result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or
such Bank's Commitment (including the Swing Loan Commitment), or
(ii) to reduce the amount of principal, interest or other
amount payable to such Bank or the Agent hereunder on account of
such Bank's Commitment (including the Swing Loan Commitment) or any
of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable hereunder,
the amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable
or deemed received by such Bank or the Agent from the Borrower
hereunder, then, and in each such case, the Borrower will, within
fifteen (15) days of demand made by such Bank or (as the case may
be) the Agent at any time and from time to time and as often as the
occasion therefor may arise, pay to such Bank or the Agent such
additional amounts as such Bank or the Agent shall determine in
good faith to be sufficient to compensate such Bank or the Agent
for such additional cost, reduction, payment or foregone interest
or other sum. Each Bank and the Agent in determining such amounts
may use any reasonable averaging and attribution methods, generally
applied by such Bank or the Agent.
Section 4.10. Capital Adequacy. If after the date hereof any
Bank determines that (a) the adoption of or change in any law,
rule, regulation or guideline regarding capital requirements for
banks or bank holding companies or any change in the interpretation
or application thereof by any governmental authority charged with
the administration thereof, or (b) compliance by such Bank or its
parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or
not having the force of law), has the effect of reducing the return
on such Bank's or such holding company's capital as a consequence
of such Bank's commitment to make Loans hereunder to a level below
that which such Bank or holding company could have achieved but for
such adoption, change or compliance (taking into consideration such
Bank's or such holding company's then existing policies with
respect to capital adequacy and assuming the full utilization of
such entity's capital) by any amount deemed by such Bank to be
material, then such Bank may notify the Borrower thereof. The
Borrower agrees to pay to such Bank the amount of such reduction in
the return on capital as and when such reduction is determined,
upon presentation by such Bank of a statement of the amount setting
forth the Bank's calculation thereof. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
Section 4.11. Indemnity of Borrower. The Borrower agrees to
indemnify each Bank and to hold each Bank harmless from and against
any loss, cost or expense that such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment of the
principal amount of or any interest on any LIBOR Rate Loans as and
when due and payable, including any such loss or expense arising
from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate Loans, or (b)
default by the Borrower in making a borrowing or conversion after
the Borrower has given (or is deemed to have given) a Loan Request
or a Conversion Request.
Section 4.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law) interest
on the Loans and all other overdue amounts payable hereunder or
under any of the other Loan Documents shall bear interest payable
on demand at a rate per annum equal to five percent (5.00%) above
the Base Rate until such amount shall be paid in full (after as
well as before judgment). In addition, the Borrower shall pay a
late charge equal to three percent (3%) of any amount of interest
and/or principal payable on the Loans or any other amounts payable
hereunder or under the Loan Documents, which is not paid within ten
days of the date when due.
Section 4.13. Certificate. A certificate setting forth any
amounts payable pursuant to Section 4.8, Section 4.9, Section 4.10,
Section 4.11 or Section 4.12 and a brief explanation of such
amounts which are due, submitted by any Bank or the Agent to the
Borrower, shall be conclusive in the absence of manifest error.
Section 4.14. Limitation on Interest. Notwithstanding anything
in this Agreement to the contrary, all agreements between the
Borrower and the Banks and the Agent, whether now existing or
hereafter arising and whether written or oral, are hereby limited
so that in no contingency, whether by reason of acceleration of the
maturity of any of the Obligations or otherwise, shall the interest
contracted for, charged or received by the Banks exceed the maximum
amount permissible under applicable law. If, from any circumstance
whatsoever, interest would otherwise be payable to the Banks in
excess of the maximum lawful amount, the interest payable to the
Banks shall be reduced to the maximum amount permitted under
applicable law; and if from any circumstance the Banks shall ever
receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the
principal balance of the Obligations and to the payment of interest
or, if such excessive interest exceeds the unpaid balance of
principal of the Obligations, such excess shall be refunded to the
Borrower. All interest paid or agreed to be paid to the Banks
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full period until
payment in full of the principal of the Obligations (including the
period of any renewal or extension thereof) so that the interest
thereon for such full period shall not exceed the maximum amount
permitted by applicable law. This section shall control all
agreements between the Borrower and the Banks and the Agent.
Section 5. SECURITY.
The Banks have agreed to make the Loans to the Borrower on an
unsecured basis. Notwithstanding the foregoing, the Obligations
shall be guaranteed by the Guarantors pursuant to the Guaranty.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Agent and the Banks
as follows:
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. The Borrower is a Texas
limited partnership duly organized pursuant to a limited
partnership agreement dated January 18, 1994 and is validly
existing and in good standing under the laws of Texas. WROP is a
Georgia limited partnership duly organized pursuant to a limited
partnership agreement dated February 11, 1993 and is validly
existing and in good standing under the laws of Georgia. Walden is
a Maryland corporation duly organized pursuant to its Articles of
Incorporation and amendments thereto filed with the Secretary of
the State of Maryland and is validly existing and in good standing
under the laws of Maryland. WDN Properties, Inc. is a New York
corporation duly organized pursuant to its Articles of
Incorporation and amendments thereto filed with the Secretary of
State of New York and is validly existing and in good standing
under the laws of New York. Walden Operating, Inc. is a Delaware
corporation duly organized pursuant to its Articles of
Incorporation and amendments thereto filed with the Secretary of
State of Delaware and is validly existing and in good standing
under the laws of Delaware. Each of the Borrower, the Guarantors
and Walden Operating, Inc. (i) has all requisite power to own its
respective property and conduct its respective business as now
conducted and as presently contemplated, and (ii) as to the
Borrower and Walden and Walden Operating, Inc. (as general partners
of Borrower and WROP, respectively) only, is in good standing as a
foreign entity and is duly authorized to do business in the
jurisdictions where the Unencumbered Operating Properties are
located and in each other jurisdiction where a failure to be so
qualified in such other jurisdiction could have a materially
adverse effect on the business, assets or financial condition of
such Person. Walden is a real estate investment trust in full
compliance with and entitled to the benefits of Section 856 of the
Code. The Borrower and WROP are qualified subsidiaries of a real
estate investment trust within the meaning of the Code.
(b) Subsidiaries. Each of the Subsidiaries of the Borrower
and the Guarantors (i) is a corporation, limited partnership,
limited liability company or trust duly organized under the laws of
its State of organization and is validly existing and in good
standing under the laws thereof, (ii) has all requisite power to
own its property and conduct its business as now conducted and as
presently contemplated, and (iii) is in good standing and is duly
authorized to do business in each jurisdiction where a failure to
be so qualified could have a materially adverse effect on the
business, assets or financial condition of the Borrower, the
Guarantors or such Subsidiary.
(c) Authorization. The execution, delivery and performance
of this Agreement and the other Loan Documents to which any of the
Borrower, the General Partners or the Guarantors are or are to
become a party and the transactions contemplated hereby and thereby
(i) are within the authority of such Person, (ii) have been duly
authorized by all necessary proceedings on the part of such Person,
(iii) do not and will not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation
to which such Person is subject or any judgment, order, writ,
injunction, license or permit applicable to such Person, (iv) do
not and will not conflict with or constitute a default (whether
with the passage of time or the giving of notice, or both) under
any provision of the articles of incorporation, partnership
agreement, declaration of trust or other charter documents or
bylaws of, or any agreement or other instrument binding upon, such
Person or any of its properties, and (v) do not and will not result
in or require the imposition of any lien or other encumbrance on
any of the properties, assets or rights of such Person.
(d) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which any of the
Borrower, the General Partners or the Guarantors are or are to
become a party are valid and legally binding obligations of such
Person enforceable in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited
by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
Section 6.2. Governmental Approvals. The execution, delivery
and performance by the Borrower, the General Partners and the
Guarantors of this Agreement and the other Loan Documents to which
such Person is a party and the transactions contemplated hereby and
thereby do not require the approval or consent of, or filing with,
any governmental agency or authority other than those already
obtained.
Section 6.3. Title to Properties; Leases. Walden and its
Subsidiaries own all of the assets reflected in the consolidated
balance sheet of Walden as at the Balance Sheet Date or acquired
since that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases,
conditional sales agreements, title retention agreements, liens or
other encumbrances except Permitted Liens. Without limiting the
foregoing, Walden and its Subsidiaries have good and marketable fee
simple title to all real property reasonably necessary for the
operation of its business in whole, free from all liens or
encumbrances of any nature whatsoever, except for Permitted Liens.
Walden or its Subsidiaries, as the case may be, is the insured
under owner's policies of title insurance covering all real
property owned by it, in each case in an amount not less than the
purchase price for such real property.
Section 6.4. Financial Statements. The Borrower has furnished
or caused Walden to furnish to each of the Banks: (a) the
consolidated balance sheet of Walden and its Subsidiaries as of the
Balance Sheet Date, (b) an unaudited statement of operating income
for each of the properties within the Unencumbered Operating
Properties as of the Closing Date for the fiscal quarter ended
September 30, 1996 satisfactory in form to the Majority Banks and
certified by the chief financial or accounting officer of the sole
general partner of the Borrower or WROP, as applicable, as fairly
presenting the operating income for such parcels for such periods,
and (c) certain other financial information relating to the
Borrower, the Guarantors and the Real Estate. Such balance sheet
and statements have been prepared in accordance with generally
accepted accounting principles and fairly present the financial
condition of the Borrower and the Guarantors and their respective
Subsidiaries as of such dates and the results of the operations of
the Borrower, the Guarantors and their respective Subsidiaries for
such periods. There are no liabilities, contingent or otherwise,
of the Borrower, the Guarantors or any of their respective
Subsidiaries involving material amounts not disclosed in said
financial statements and the related notes thereto.
Section 6.5. No Material Changes. Since the Balance Sheet Date,
there has occurred no materially adverse change in the financial
condition or business of the Borrower, the Guarantors and their
respective Subsidiaries taken as a whole as shown on or reflected
in the consolidated balance sheet of Walden and the Borrower, as of
the Balance Sheet Date, or their respective consolidated statement
of income or cash flows for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any
materially adverse effect either individually or in the aggregate
on the business or financial condition of such Person.
Section 6.6. Franchises, Patents, Copyrights, Etc. The
Borrower, the General Partners, the Guarantors and their respective
Subsidiaries possess all franchises, patents, copyrights,
trademarks, trade names, servicemarks, licenses and permits, and
rights in respect of the foregoing, adequate for the conduct of
their business substantially as now conducted without known
conflict with any rights of others.
Section 6.7. Litigation. There are no actions, suits,
proceedings or investigations of any kind pending or to the
knowledge of such Person threatened against the Borrower, the
Guarantors the General Partners or any of their respective
Subsidiaries before any court, tribunal or administrative agency or
board that, if adversely determined, might, either in any case or
in the aggregate, materially adversely affect the properties,
assets, financial condition or business of such Person or
materially impair the right of such Person to carry on business
substantially as now conducted by it, or result in any liability
not adequately covered by insurance, or for which adequate reserves
are not maintained on the balance sheet of such Person, or which
question the validity of this Agreement or any of the other Loan
Documents, any action taken or to be taken pursuant hereto or
thereto or any lien or security interest created or intended to be
created pursuant hereto or thereto, or which will adversely affect
the ability of the Borrower or the Guarantors to pay and perform
the Obligations in the manner contemplated by this Agreement and
the other Loan Documents.
Section 6.8. No Materially Adverse Contracts, Etc. None of the
Borrower, the General Partners, the Guarantors or any of their
respective Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a
materially adverse effect on the business, assets or financial
condition of such Person. None of the Borrower, the General
Partners, the Guarantors or any of their respective Subsidiaries is
a party to any contract or agreement that has or is expected, in
the judgment of the officers or partners of such Person, to have
any materially adverse effect on the business of any of them.
Section 6.9. Compliance with Other Instruments, Laws, Etc. None
of the Borrower, the General Partners, the Guarantors or any of
their respective Subsidiaries is in violation of any provision of
its charter or other organizational documents, bylaws, or any
agreement or instrument to which it may be subject or by which it
or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the
financial condition, properties or business of such Person.
Section 6.10. Tax Status. The Borrower, the General Partners,
the Guarantors and each of their respective Subsidiaries (a) has
made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to
which it is subject, (b) has paid all taxes and other governmental
assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (c) has set aside on
its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers or partners of such Person know of
no basis for any such claim.
Section 6.11. No Event of Default. No Default or Event of
Default has occurred and is continuing.
Section 6.12. Holding Company and Investment Company Acts. None
of the Borrower, the General Partners, the Guarantors or any of
their respective Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of
a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is any of such Persons an
"investment company", or an "affiliated company" or a "principal
underwriter" of an "investment company", as such terms are defined
in the Investment Company Act of 1940.
Section 6.13. Absence of UCC Financing Statements, Etc. Except
with respect to Permitted Liens, there is no financing statement,
security agreement, chattel mortgage, real estate mortgage or other
document filed or recorded with any filing records, registry, or
other public office, that purports to cover, affect or give notice
of any present or possible future lien on, or security interest or
security title in, any property of the Borrower or its Subsidiaries
or rights thereunder.
Section 6.14. Certain Transactions. Except as set forth in the
Prospectus, none of the partners, officers, trustees, directors, or
employees of the Borrower, the General Partners or the Guarantors
or any of their respective Subsidiaries is a party to any
transaction with the Borrower or any of its Subsidiaries (other
than for services as partners, employees, officers, trustees and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any partner, officer, trustee,
director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any
partner, officer, trustee, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.
Section 6.15. Employee Benefit Plans. Walden and each ERISA
Affiliate has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each Employee
Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan and is
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each
Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension
Plan. Neither Walden nor any ERISA Affiliate has (a) sought a
waiver of the minimum funding standard under Section 412 of the
Code in respect of any Employee Benefit Plan, Multiemployer Plan or
Guaranteed Pension Plan, (b) failed to make any contribution or
payment to any Employee Benefit Plan, Multiemployer Plan or
Guaranteed Pension Plan, or made any amendment to any Employee
Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan, which
has resulted or could result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Code, or
(c) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
None of the Unencumbered Operating Properties constitutes a "plan
asset" of any Employee Plan, Multiemployer Plan or Guaranteed
Pension Plan.
Section 6.16. Regulations U and X. No portion of any Loan is
to be used for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations
U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. Parts 221 and 224.
Section 6.17. Environmental Compliance. The Borrower has taken
or caused to be taken all commercially reasonable steps to
investigate the past and present conditions and usage of the Real
Estate and the operations conducted thereon and, based upon such
investigation, makes the following representations and warranties.
(a) With respect to the Unencumbered Operating Properties,
and to the best of the Borrower's knowledge with respect to any
other Real Estate, except as set forth in Schedule 6.17, none of
the Borrower, the Guarantors or their respective Subsidiaries or
any operator of the Real Estate, or any operations thereon is in
violation, or alleged violation, of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental
matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any state or
local statute, regulation, ordinance, order or decree relating to
the environment (hereinafter "Environmental Laws"), which violation
involves the Unencumbered Operating Properties or other Real Estate
and would have a material adverse effect on the environment or the
business, assets or financial condition of the Borrower, the
Guarantors or any of their respective Subsidiaries. Although not
a violation of any Environmental Law, Borrower has disclosed to
Agent that the Unencumbered Operating Properties commonly known as
Preston Greens, Post Oak and Fountaingate/Willow Creek contain
elevated levels of lead in the drinking water as described in
environmental reports previously submitted to Agent.
(b) Neither the Borrower, the Guarantors nor any of their
respective Subsidiaries has received notice from any third party
including, without limitation, any federal, state or local
governmental authority, (i) that it has been identified by the
United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix
B (1986); (ii) that any hazardous waste, as defined by 42 U.S.C.
Section 9601(5), any hazardous substances as defined by 42 U.S.C.
Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) or any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which it has generated,
transported or disposed of have been found at any site at which a
federal, state or local agency or other third party has conducted
or has ordered that the Borrower, the Guarantors or any of their
respective Subsidiaries conduct a remedial investigation, removal
or other response action pursuant to any Environmental Law; or
(iii) that it is or shall be a named party to any claim, action,
cause of action, complaint, or legal or administrative proceeding
(in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous
Substances.
(c) With respect to the Unencumbered Operating Properties,
and to the best of the Borrower's knowledge, with respect to any
other Real Estate, except as set forth in Schedule 6.17, or in the
case of Real Estate acquired after the date hereof, except as may
be disclosed in writing to the Agent upon the acquisition of the
same: (i) no portion of the Real Estate has been used for the
handling, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws, and no
underground tank or other underground storage receptacle for
Hazardous Substances is located on any portion of such Real Estate;
(ii) in the course of any activities conducted by the Borrower, the
Guarantors or any of their respective Subsidiaries or the operators
of any of their properties, no Hazardous Substances have been
generated or are being used on the Real Estate of such Person
except in the ordinary course of business and in accordance with
applicable Environmental Laws; (iii) there has been no past or
present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping (a
"Release") or threatened Release of Hazardous Substances on, upon,
into or from such Real Estate, or, to the best of the Borrower's
knowledge, on, upon, into or from the other properties of the
Borrower, the Guarantors or any of their respective Subsidiaries,
which Release would have a material adverse effect on the value of
any of such Real Estate or adjacent properties or the environment;
(iv) to the best of the Borrower's knowledge, there have been no
Releases on, upon, from or into any real property in the vicinity
of any of such Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have
a material adverse effect on the value of, such Real Estate; and
(v) any Hazardous Substances that have been generated on any of
such Real Estate have been transported off-site only by carriers
having an identification number issued by the EPA or approved by a
state or local environmental regulatory authority having
jurisdiction regarding the transportation of such substance and
treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under all applicable
Environmental Laws, which transporters and facilities have been and
are, to the best of the Borrower's knowledge operating in
compliance with such permits and applicable Environmental Laws.
Upon the receipt by the Agent of any such disclosure, the Agent
shall promptly notify the Banks thereof.
(d) Neither the Borrower, the Guarantors, their respective
Subsidiaries nor any Real Estate of such Person is subject to any
applicable Environmental Law requiring the performance of Hazardous
Substances site assessments, or the removal or remediation of
Hazardous Substances, or the giving of notice to any governmental
agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a
condition to the effectiveness of any other transactions
contemplated hereby.
Section 6.18. Subsidiaries. Schedule 6.18 sets forth all of the
Subsidiaries of the Borrower and Walden. The form and jurisdiction
of organization of each of the Subsidiaries, and the Borrower's and
Walden's ownership interest therein, is set forth in said Schedule
6.18.
Section 6.19. Loan Documents and the Guarantors. All of the
representations and warranties of the Borrower and the Guarantors
made in this Agreement and the other Loan Documents or any document
or instrument delivered to the Agent or the Banks pursuant to or in
connection with any of such Loan Documents are true and correct in
all material respects, and neither the Borrower nor the Guarantors
has failed to disclose such information as is necessary to make
such representations and warranties not misleading.
Section 6.20. Property. All of the Borrower's, the Guarantors'
and their respective Subsidiaries' properties are in good repair
and condition, subject to ordinary wear and tear, other than with
respect to deferred maintenance existing as of the date of
acquisition of such property as permitted in this Section 6.20.
The Borrower further has completed or caused to be completed an
appropriate investigation of the environmental condition of each
such property as of the later of the date of the Borrower's, the
Guarantors' or such Subsidiaries' purchase thereof or the date upon
which such property was last security for Indebtedness of the
Borrower, the Guarantors or such Subsidiary, including preparation
of a "Phase I" report and, if appropriate, a "Phase II" report, in
each case prepared by a recognized environmental engineer in
accordance with customary standards which discloses that such
property is not in violation of the representations and covenants
set forth in this Agreement, unless such violation has been
disclosed in writing to the Agent and satisfactory remediation
actions are being taken. There are no unpaid or outstanding real
estate or other taxes or assessments on or against any property of
the Borrower, the Guarantors or any of their respective
Subsidiaries which are payable by such Person (except only real
estate or other taxes or assessments, that are not yet due and
payable). There are no pending eminent domain proceedings against
any property of the Borrower, the Guarantors or their respective
Subsidiaries or any part thereof, and, to the knowledge of the
Borrower, no such proceedings are presently threatened or
contemplated by any taking authority which may individually or in
the aggregate have any materially adverse effect on the business or
financial condition of the Borrower or the Guarantors. None of the
property of Borrower, the Guarantors or their respective
Subsidiaries is now damaged or injured as a result of any fire,
explosion, accident, flood or other casualty in any manner which
individually or in the aggregate would have any materially adverse
effect on the business or financial condition of the Borrower or
the Guarantors.
Section 6.21. Brokers. Neither the Borrower nor any of its
Subsidiaries has engaged or otherwise dealt with any broker, finder
or similar entity in connection with this Agreement or the Loans
contemplated hereunder.
Section 6.22. Other Debt. None of the Borrower, the General
Partners, the Guarantors or any of their respective Subsidiaries is
in default in the payment of any other Indebtedness or under any
agreement, mortgage, deed of trust, security agreement, financing
agreement, indenture or lease to which any of them is a party. The
Borrower is not a party to or bound by any agreement, instrument or
indenture that may require the subordination in right or time of
payment of any of the Obligations to any other indebtedness or
obligation of the Borrower. The Borrower has provided to the Agent
copies of all agreements, mortgages, deeds of trust, financing
agreements or other material agreements binding upon Borrower, the
General Partners, the Guarantors or their respective properties and
entered into by such Person as of the date of this Agreement with
respect to any Indebtedness of such Person.
Section 6.23. Solvency. As of the Closing Date and after giving
effect to the transactions contemplated by this Agreement and the
other Loan Documents, including all of the Loans made or to be made
hereunder, neither the Borrower nor any Guarantor is insolvent on
a balance sheet basis such that the sum of such Person's assets
exceeds the sum of such Person's liabilities, the Borrower and each
Guarantor is able to pay its debts as they become due, and the
Borrower and each Guarantor has sufficient capital to carry on its
business.
Section 6.24. Partners. Walden is the sole general partner of
the Borrower and owns a 1% partnership interest in the Borrower.
Walden Operating, Inc. is the sole general partner of WROP and owns
a 1% partnership interest in WROP. WDN Properties, Inc. is a
limited partner of the Borrower and WROP and owns a 99% partnership
interest in the Borrower and a 77.3784% partnership interest in
WROP. Walden owns one hundred percent (100%) of the issued and
outstanding shares of stock of WDN Properties, Inc. and Walden
Operating, Inc.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or
Note is outstanding or any Bank has any obligation to make any
Loans:
Section 7.1. Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on
the Loans and all interest and fees provided for in this Agreement,
all in accordance with the terms of this Agreement and the Notes as
well as all other sums owing pursuant to the Loan Documents.
Section 7.2. Maintenance of Office. The Borrower will maintain
its chief executive office at One Lincoln Center, 5400 LBJ Freeway,
Suite 400, LB45, Dallas County, Dallas, Texas 75240, or at such
other place in the United States of America as the Borrower shall
designate upon prior written notice to the Agent and the Banks,
where notices, presentations and demands to or upon the Borrower in
respect of the Loan Documents may be given or made.
Section 7.3. Records and Accounts. The Borrower will (a) keep,
and cause each of its Subsidiaries to keep, true and accurate
records and books of account in which full, true and correct
entries will be made in accordance with generally accepted
accounting principles and (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation,
depletion and amortization of its properties and the properties of
its Subsidiaries, contingencies and other reserves. Neither the
Borrower nor Walden nor any of their respective Subsidiaries shall,
without the prior written consent of the Majority Banks, (x) make
any material change to the accounting procedures used by such
Person in preparing the financial statements and other information
described Section 6.4 or (y) change its fiscal year.
Section 7.4. Financial Statements, Certificates and Information.
The Borrower will deliver or cause to be delivered to each of the
Banks:
(a) as soon as practicable, but in any event not later than
90 days after the end of each fiscal year of Walden, the audited
consolidated balance sheet of Walden and its Subsidiaries at the
end of such year, and the related audited consolidated statements
of income, changes in shareholder's equity and cash flows for such
year, each setting forth in comparative form the figures for the
previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with generally accepted accounting
principles, and accompanied by an auditor's report prepared without
qualification by Deloitte & Touche or by another "Big Six"
accounting firm, the Form 10-K filed with the SEC (unless the SEC
has approved an extension, in which event Walden will deliver to
the Agent and each of the Banks a copy of the Form 10-K
simultaneously with delivery to the SEC), and any other information
the Banks may need to complete a financial analysis of Walden and
its Subsidiaries, together with a written statement from such
accountants to the effect that they have read a copy of this
Agreement and the Guaranty, and that, in making the examination
necessary to said certification, they have obtained no knowledge of
any Default or Event of Default, or, if such accountants shall have
obtained knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or Event of
Default; provided that such accountants shall not be liable to the
Agent or the Banks for failure to obtain knowledge of any Default
or Event of Default;
(b) as soon as practicable, but in any event not later than
45 days after the end of each of the first three fiscal quarters of
Walden, copies of the unaudited consolidated balance sheet of
Walden and its Subsidiaries as at the end of such quarter, and the
related unaudited consolidated statements of income, changes in
shareholder's equity and cash flows for the portion of the Walden's
fiscal year then elapsed, all in reasonable detail and prepared in
accordance with generally accepted accounting principles (which may
be provided by inclusion in the Form 10-Q of Walden for such period
provided pursuant to subsection (c) below), together with a
certification by the principal financial or accounting officer of
Walden that the information contained in such financial statements
fairly presents the financial position of Walden and its
Subsidiaries on the date thereof (subject to year-end adjustments);
(c) as soon as practicable, but in any event not later than
45 days after the end of each of the first three fiscal quarters of
Walden in each year, copies of Form 10-Q filed with the SEC (unless
the SEC has approved an extension in which event Walden will
deliver such copies of the Form 10-Q to the Agent and each of the
Banks simultaneously with delivery to the SEC);
(d) as soon as practicable, but in any event not later than
45 days after the end of each fiscal quarter of Walden (including
the fourth fiscal quarter in each year), copies of a consolidated
statement of Operating Cash Flow for such fiscal quarter for Walden
and its Subsidiaries, prepared on a basis consistent with the
statement furnished pursuant to Section 6.4, together with a
certification by the chief financial or chief accounting officer of
Walden that the information contained in such statement fairly
presents the Operating Cash Flow of Walden and its Subsidiaries for
such period;
(e) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a
statement (a "Compliance Certificate") certified by the principal
financial or accounting officer of the general partner of the
Borrower and the principal financial or accounting officer of
Walden in the form of Exhibit E hereto (or in such other form as
the Agent may approve from time to time) setting forth in
reasonable detail computations evidencing compliance with the
covenants contained in Section 9 and the other covenants described
therein, and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet
Date;
(f) concurrently with the delivery of the financial
statements described in subsection (b) above, a certificate signed
by the President or Chief Financial Officer of the sole general
partner of the Borrower to the effect that, having read this
Agreement, and based upon an examination which they deem sufficient
to enable them to make an informed statement, there does not exist
any Default or Event of Default, or if such Default or Event of
Default has occurred, specifying the facts with respect thereto;
(g) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the SEC or
sent to the stockholders of Walden or the partners of either of the
Borrower;
(h) as soon as practicable but in any event not later than 45
days after the end of each fiscal quarter of the Borrower
(including the fourth fiscal quarter in each year), a summary rent
roll with respect to the Unencumbered Operating Properties in form
reasonably satisfactory to the Majority Banks;
(i) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and
amendments thereto of each of the Borrower and Guarantors;
(j) not later than five (5) Business Days after Walden
receives notice of the same from the Rating Agency or otherwise
learns of the same, notice of the issuance of any change in the
rating by the Rating Agency in respect of any debt of Walden
(including any change in an Implied Rating), together with the
details thereof, and of any announcement by the Rating Agency that
any such rating is "under review" or that any such rating has been
placed on a watch list or that any similar action has been taken by
the Rating Agency (collectively a "Rating Notice");
(k) not later than forty-five (45) days after the end of each
fiscal quarter of Walden (including the fourth fiscal quarter in
each year), a list setting forth the following information with
respect to each new Subsidiary of Walden: (i) the name and
structure of the Subsidiary, (ii) a description of the property
owned by such Subsidiary, and (iii) such other information as the
Agent may reasonably request;
(l) simultaneously within the delivery of the financial
statement referred to in subsection (a) above, a statement (i)
listing the Real Estate owned by Walden and its Subsidiaries (or in
which Walden or its Subsidiaries owns an interest) and stating the
location thereof, the date acquired and the acquisition cost, (ii)
listing the Indebtedness of Walden and its Subsidiaries (excluding
Indebtedness of the type described in Section 8.1(b)-(e)), which
statement shall include, without limitation, a statement of the
original principal amount of such Indebtedness and the current
amount outstanding, the holder thereof, the maturity date and any
extension options, the interest rate, the collateral provided for
such Indebtedness and whether such Indebtedness is recourse or
non-recourse, and (iii) listing the properties of Walden and its
respective Subsidiaries which are under "development" (as used in
Section 8.9) and providing a brief summary of the status of such
development; and
(m) from time to time such other financial data and
information in the possession of the Borrower, Walden or their
respective Subsidiaries (including without limitation auditors'
management letters, evidence of payment of taxes, property
inspection and environmental reports and information as to zoning
and other legal and regulatory changes affecting any of such
Persons) as the Agent may reasonably request.
Section 7.5. Notices.
(a) Defaults. The Borrower will promptly notify the Agent in
writing of the occurrence of any Default or Event of Default. If
any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event
of Default) under this Agreement or under any note, evidence of
indebtedness, indenture or other obligation to which or with
respect to which the Borrower, the General Partners, the Guarantors
or any of their respective Subsidiaries is a party or obligor,
whether as principal or surety, and such default would permit the
holder of such note or obligation or other evidence of indebtedness
to accelerate the maturity thereof, which acceleration would have
a material adverse effect on the Borrower, the General Partners or
the Guarantors or the existence of which claimed default might
become an Event of Default under Section 12.1(g), the Borrower
shall forthwith give written notice thereof to the Agent and each
of the Banks, describing the notice or action and the nature of the
claimed default.
(b) Environmental Events. The Borrower will promptly give
notice to the Agent (i) upon the Borrower or the Guarantors
obtaining knowledge of any potential or known Release, or threat of
Release, of any Hazardous Substances at or from any Real Estate;
(ii) of any violation of any Environmental Law that the Borrower,
the Guarantors or any of their respective Subsidiaries reports in
writing or is reportable by such Person in writing (or for which
any written report supplemental to any oral report is made) to any
federal, state or local environmental agency; and (iii) upon
becoming aware thereof, of any inquiry, proceeding, investigation,
or other action, including a notice from any agency of potential
environmental liability, of any federal, state or local
environmental agency or board, that in either case involves any
Real Estate or has the potential to materially affect the assets,
liabilities, financial conditions or operations of such Person.
(c) Notice of Litigation and Judgments. The Borrower will
give notice to the Agent in writing within 15 days of becoming
aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting the Borrower, the
General Partners, the Guarantors or any of their respective
Subsidiaries or to which any of such Persons is or is to become a
party involving an uninsured claim against such Person that could
reasonably be expected to have a materially adverse effect on the
Borrower or the Guarantors and stating the nature and status of
such litigation or proceedings. The Borrower will give notice to
the Agent, in writing, in form and detail satisfactory to the Agent
and each of the Banks, within ten days of any judgment not covered
by insurance, whether final or otherwise, against the Borrower, the
General Partners, the Guarantors, any of their respective
Subsidiaries in an amount in excess of $1,000,000.00.
(d) Notice of Proposed Sales, Encumbrances, Refinance or
Transfer. The Borrower will give notice to the Agent of any
proposed or completed sale, encumbrance, refinance or transfer of
any Real Estate within any fiscal quarter of the Borrower, such
notice to be submitted together with the Compliance Certificate
provided or required to be provided to the Banks under Section 7.4
with respect to such fiscal quarter. The Compliance Certificate
shall with respect to any proposed or completed sale, encumbrance,
refinance or transfer be adjusted in the best good-faith estimate
of the Borrower to give effect to such sale, encumbrance, refinance
or transfer and demonstrate that no Default or Event of Default
with respect to the covenants referred to therein shall exist after
giving effect to such sale, encumbrance, refinance or transfer.
Notwithstanding the foregoing, in the event of any sale,
encumbrance, refinance or transfer of any Real Estate involving an
aggregate amount in excess of $25,000,000.00, the Borrower shall
promptly give notice to the Agent of such transaction, which notice
shall be accompanied by a certification of the chief financial
officer of the sole general partner of the Borrower that no Default
or Event of Default shall exist after giving affect to such event.
(e) Notification of Banks. Promptly after receiving any
notice under this Section 7.5, the Agent will forward a copy
thereof to each of the Banks, together with copies of any
certificates or other written information that accompanied such
notice.
Section 7.6. Existence; Maintenance of Properties.
(a) The Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its
existence as a Texas limited partnership. The Borrower will cause
each of its Subsidiaries to do or cause to be done all things
necessary to preserve and keep in full force and effect its legal
existence. The Borrower will do or cause to be done all things
necessary to preserve and keep in full force all of its rights and
franchises and those of its Subsidiaries. The Borrower will, and
will cause each of its Subsidiaries to, continue to engage
primarily in the businesses now conducted by it and in related
businesses.
(b) Irrespective of whether proceeds of the Loans are
available for such purpose, the Borrower (i) will cause all of its
properties and those of its Subsidiaries used or useful in the
conduct of its business or the business of its Subsidiaries to be
maintained and kept in good condition, repair and working order
(ordinary wear and tear excepted) and supplied with all necessary
equipment, and (ii) will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof in all
cases in which the failure so to do would have a material adverse
effect on the condition of its properties or on the financial
condition, assets or operations of the Borrower and its
Subsidiaries.
Section 7.7. Insurance. The Borrower will, at its expense,
procure and maintain or cause to be procured and maintained
insurance covering the Borrower, its Subsidiaries and their
respective properties in such amounts and against such risks and
casualties as are customary for properties of similar character and
location, due regard being given to the type of improvements
thereon, their construction, location, use and occupancy.
Section 7.8. Taxes. The Borrower and each Subsidiary will duly
pay and discharge, or cause to be paid and discharged, before the
same shall become overdue, all taxes, assessments and other
governmental charges imposed upon it and upon the Real Estate,
sales and activities, or any part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon
any of its property; provided that any such tax, assessment,
charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate
proceedings and if the Borrower or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto; and
provided, further, that forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as
security therefor, the Borrower and each Subsidiary of the Borrower
either (i) will provide a bond issued by a surety reasonably
acceptable to the Agent and sufficient to stay all such proceedings
or (ii) if no such bond is provided, will pay each such tax,
assessment, charge, levy or claim. The Borrower shall certify
annually to the Agent that this Section 7.8 has been satisfied with
respect to the Unencumbered Operating Properties.
Section 7.9. Inspection of Properties and Books. The Borrower
shall permit the Banks, through the Agent or any representative
designated by the Agent, at the Borrower's expense to visit and
inspect any of the properties of the Borrower or any of its
Subsidiaries, to examine the books of account of the Borrower and
its Subsidiaries (and to make copies thereof and extracts
therefrom) and to discuss the affairs, finances and accounts of the
Borrower and its Subsidiaries with, and to be advised as to the
same by, its officers, all at such reasonable times and intervals
as the Agent or any Bank may reasonably request. The Banks shall
use good faith efforts to coordinate such visits and inspections so
as to minimize the interference with and disruption to the
Borrower's normal business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply with, and will cause each of its
Subsidiaries to comply in all respects with (i) all applicable laws
and regulations now or hereafter in effect wherever its business is
conducted, including all Environmental Laws, (ii) the provisions of
its corporate charter, partnership agreement or declaration of
trust, as the case may be, and other charter documents and bylaws,
(iii) all agreements and instruments to which it is a party or by
which it or any of its properties may be bound, (iv) all applicable
decrees, orders, and judgments, and (v) all licenses and permits
required by applicable laws and regulations for the conduct of its
business or the ownership, use or operation of its properties. If
at any time while any Loan or Note is outstanding or the Banks have
any obligation to make Loans hereunder, any authorization, consent,
approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or
required in order that the Borrower may fulfill any of its
obligations hereunder, the Borrower will immediately take or cause
to be taken all steps necessary to obtain such authorization,
consent, approval, permit or license and furnish the Agent and the
Banks with evidence thereof.
Section 7.11. Use of Proceeds. The Borrower will use the
proceeds of the Loans solely to provide short-term financing (a)
for the acquisition of fee interests in Real Estate which is
utilized principally for multifamily housing (including reasonable
transaction costs related thereto), (b) for working capital
purposes, and (c) for such other purposes as the Majority Banks in
their discretion from time to time may agree to in writing.
Notwithstanding anything herein to the contrary, the amount of
Loans outstanding at any time which has been advanced for the
purpose described in Section 7.11(b) shall not exceed
$25,000,000.00. Any repayment of a principal portion of the Loans
at a time when any amount of Loans has been advanced for the
purpose described in Section 7.11(b) shall be first allocated for
the purposes of this Section 7.11 to reduce the amount advanced for
the purpose described in Section 7.11(b).
Section 7.12. Further Assurances. The Borrower will cooperate
with, and will cause each of the Guarantors and their respective
Subsidiaries to cooperate with the Agent and the Banks and execute
such further instruments and documents as the Banks or the Agent
shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Loan
Documents.
Section 7.13. Management; Business Operations. The Borrower
shall cause all Unencumbered Operating Properties at all times to
be managed by Walden and no change shall occur in such management
without the prior written approval of the Majority Banks. The
Borrower and the Guarantors shall operate their respective
businesses as described in the Prospectus and in compliance with
the terms and conditions of this Agreement and the Loan Documents.
Walden shall at all time comply with all requirements of applicable
laws necessary to maintain REIT Status.
Section 7.14. Unencumbered Operating Properties.
(a) The Borrower and Walden shall (subject to the caveat set
forth in the definition of Unencumbered Operating Properties) at
all times own Unencumbered Operating Properties which satisfy all
of the following conditions:
(i) the Unencumbered Operating Properties shall consist
solely of Real Estate which has an aggregate occupancy level (on
a portfolio basis) of at least ninety percent (90%) for the
previous four (4) fiscal quarters of the Borrower based on bona
fide arms-length tenant leases requiring current rental
payments; and
(ii) no more than thirty percent (30%) of the Asset Value
of the Unencumbered Operating Properties may be located in any
one city or metropolitan area (it being agreed that Dallas and
Fort Worth and their respective suburbs shall be considered as
separate cities for the purposes hereof).
(b) The Borrower shall provide to the Agent and each of the
Banks as of the Closing Date and concurrently with the delivery of
the financial statements described in Section 7.4(a) (i) a list of
the Unencumbered Operating Properties, (ii) the certification of
the chief financial or chief accounting officer of the sole general
partner of the Borrower of the Asset Values and that such
properties are in compliance with Section 7.14(a) and Section 9.1,
(iii) operating statements setting forth the Operating Cash Flow
and capital expenditures for each of the Unencumbered Operating
Properties for the previous four (4) fiscal quarters certified as
true and correct by the chief financial or chief accounting officer
of the sole general partner of the Borrower, and (iv) that the
Unencumbered Operating Properties comply with the terms of Section
Section 6.17 and 6.20. In the event that all or any material
portion of a property within the Unencumbered Operating Properties
shall be damaged or taken by condemnation, then such property shall
no longer be a part of the Unencumbered Operating Properties unless
and until any damage to such Real Estate is repaired or restored,
such Real Estate becomes fully operational and the Agent shall
receive evidence satisfactory to the Agent of the value and
Operating Cash Flow of such Real Estate following such repair or
restoration.
Section 7.15. Limiting Agreements.
(a) Neither Borrower, any Guarantor nor any of their
respective Subsidiaries shall enter into, any agreement, instrument
or transaction which has or may have the effect of prohibiting or
limiting Borrower's or any Guarantor's ability to pledge to Agent
Real Estate which is owned by the Borrower or such Guarantor which
is free and clear of all Liens other than the Liens permitted in
Section 8.2(i), (iii) and (v) or any other assets of the Borrower
or such Guarantor as security for the Loans. Borrower shall take,
and shall cause the Guarantors and their respective Subsidiaries to
take, such actions as are necessary to preserve the right and
ability of Borrower and the Guarantors to pledge those Real Estate
and other assets as security for the Loans without any such pledge
after the date hereof causing or permitting the acceleration (after
the giving of notice or the passage of time, or otherwise) of any
other Indebtedness of Borrower, the Guarantors or any of their
respective Subsidiaries.
(b) Borrower shall, upon demand, provide to the Agent such
evidence as the Agent may reasonably require to evidence compliance
with this Section 7.15, which evidence shall include, without
limitation, copies of any agreements or instruments which would in
any way restrict or limit the Borrower's or any Guarantor's ability
to pledge assets as security for Indebtedness, or which provide for
the occurrence of a default (after the giving of notice or the
passage of time, or otherwise) if assets are pledged in the future
as security for Indebtedness of the Borrower or any of its
Subsidiaries.
Section 7.16. Ownership of Real Estate. Without the prior
written consent of the Majority Banks, which consent may be
withheld by the Majority Banks in their sole discretion, all
interests (whether direct or indirect) of the Borrower, the General
Partners, the Guarantors or their respective Subsidiaries in
income-producing real estate assets acquired after the Closing Date
shall be owned directly by the Borrower. Notwithstanding the
foregoing, (a) Walden and WROP may acquire income-producing real
estate assets after the Closing Date (i) as provided in Section
8.11, and (ii) in a like-kind exchange of Real Estate owned by such
Person as of the Closing Date, and (b) a Subsidiary of Walden or
the Borrower may be established to acquire income-producing real
estate assets after the Closing Date provided that such Subsidiary
shall be an Additional Guarantor and the real estate assets
acquired satisfy the conditions contained in this Agreement
applicable to Unencumbered Operating Properties.
Section 7.17. Distributions of Income to the Borrower. The
Borrower shall cause all of its Subsidiaries to promptly distribute
to the Borrower (but not less frequently than once each fiscal
quarter of the Borrower), whether in the form of dividends,
distributions or otherwise, all profits, proceeds or other income
relating to or arising from its Subsidiaries' use, operation,
financing, refinancing, sale or other disposition of their
respective assets and properties after (a) the payment by each
Subsidiary of its Debt Service and operating expenses for such
quarter and (b) the establishment of reasonable reserves for the
payment of operating expenses not paid on at least a quarterly
basis and capital improvements to be made to such Subsidiary's
assets and properties approved by such Subsidiary in the ordinary
course of business consistent with its past practices.
Section 7.18. More Restrictive Agreements. Should the Borrower
or any Guarantor enter into or modify any agreements or documents
pertaining to any existing or future Indebtedness, Debt Offering or
Equity Offering, which agreements or documents include covenants
(whether affirmative or negative), warranties, representations,
defaults or events of default (or any other provision which may
have the same practical effect as any of the foregoing) which are
individually or in the aggregate more restrictive against the
Borrower, any Guarantor or their respective Subsidiaries than those
set forth herein or in any of the other Loan Documents, the
Borrower shall promptly notify the Agent and, if requested by the
Majority Banks, the Borrower, the Agent, and the Majority Banks
shall (and if applicable, the Borrower shall cause the Guarantors
to) promptly amend this Agreement and the other Loan Documents to
include some or all of such more restrictive provisions as
determined by the Majority Banks in their sole discretion.
Section 7.19. Additional Guarantors. Except as provided in
Section 7.16(a) and Section 8.11, in the event that any of the
Borrower, the General Partners, the Guarantors or their respective
Subsidiaries desire to acquire an interest (whether direct or
indirect) in income-producing real estate assets after the Closing
Date, then such assets shall be acquired by a Subsidiary of the
Borrower or Walden (each such entity is hereinafter referred to as
an "Additional Guarantor") but only in the event that all of the
terms and conditions of this Section 7.19 are satisfied:
(a) Walden or the Borrower shall be the general partner of
such Additional Guarantor and shall have control over all major and
other day-to-day decisions with respect to the operation of such
Additional Guarantor;
(b) All representations in the Loan Documents made by or with
respect to Guarantors and their general partners shall be true and
correct with respect to such Additional Guarantor;
(c) All covenants and agreements herein of the Guarantors and
their general partners shall be true and correct with respect to
such Additional Guarantor;
(d) No Default or Event of Default shall exist or might exist
in the event that such Subsidiary becomes an Additional Guarantor
or acquires such assets;
(e) Such Additional Guarantor executes and delivers to Agent
a Guaranty;
(f) All of the conditions set forth in Section 10 applicable
to Guarantors or Loan Documents executed by Guarantors shall have
been satisfied; and
(g) The Real Estate assets acquired or owned by such
Additional Guarantor shall qualify as Unencumbered Operating
Properties hereunder, and such assets, when taken together with the
other Real Estate assets owned by the Guarantors (other than
Walden), shall not cause the Borrower to be in violation of the
twenty percent (20%) limitation on the ownership of Unencumbered
Operating Properties by entities other than the Borrower and
Walden.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or
Note is outstanding or any of the Banks has any obligation to make
any Loans:
Section 8.1. Restrictions on Indebtedness. The Borrower will
not, and will not permit Walden or any of their respective
Subsidiaries to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness
other than:
(a) Indebtedness to the Banks arising under any of the Loan
Documents;
(b) current liabilities of the Borrower, Walden or their
respective Subsidiaries incurred in the ordinary course of business
but not incurred through (i) the borrowing of money, or (ii) the
obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time
be required to be made in accordance with the provisions of Section
7.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect
of which Walden or the Borrower shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such
appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness in respect of reverse repurchase agreements
having a term of not more than 180 days with respect to Investments
described in Section 8.3(d) or (e);
(g) subject to the provisions of Section 9, Non-Recourse
Indebtedness of Walden and its Subsidiaries in an aggregate
outstanding principal amount not exceeding forty percent (40%) of
Walden's Consolidated Total Assets; and
(h) subject to the provisions of Section 9, secured or
unsecured recourse Indebtedness of Walden and its Subsidiaries,
provided that (i) the aggregate outstanding principal amount of
such Indebtedness (excluding the Obligations) shall not exceed five
percent (5%) of Walden's Consolidated Total Assets, (ii) at the
time such Indebtedness is issued the scheduled maturity date of
such Indebtedness is not sooner than 180 days after the Maturity
Date (after giving effect to any extension of the Maturity Date
which may have been requested by the Borrower prior to the issuance
of such Indebtedness or approved by the Banks, whether or not the
same has become effective), and (iii) any covenants or restrictions
imposed upon Walden or its Subsidiaries in connection with such
Indebtedness shall not individually or in the aggregate be more
restrictive against Walden and its Subsidiaries than the covenants
and restrictions imposed pursuant to this Agreement or the other
Loan Documents, and provided further that neither Walden nor any of
its Subsidiaries shall incur any of the Indebtedness described in
this Section 8.1(h) unless it shall have provided to the Banks
(A) prior written notice of the proposed issuance of such
Indebtedness, a statement that no Default or Event of Default
exists and a certificate that the Borrower will be in compliance
with its covenants referred to therein after giving effect to such
incurrence, (B) evidence reasonably satisfactory to the Agent that
the Rating Agency has been advised of the issuance of such
Indebtedness within five (5) days of such issuance, and (C) upon
the request of Agent, evidence that the annual rating maintenance
fee has been paid to the Rating Agency.
Section 8.2. Restrictions on Liens, Etc. The Borrower will not,
and will not permit Walden or any of their respective Subsidiaries
to, (a) create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, negative pledge,
charge, restriction or other security interest of any kind upon any
of its property or assets of any character whether now owned or
hereafter acquired, or upon the income or profits therefrom; (b)
transfer any of its property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an
option to acquire, any property or assets upon conditional sale or
other title retention or purchase money security agreement, device
or arrangement; (d) suffer to exist for a period of more than 30
days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; (e) sell, assign, pledge,
encumber or otherwise transfer any accounts, contract rights,
general intangibles, chattel paper or instruments, with or without
recourse; or (f) incur or maintain any obligation to any holder of
Indebtedness of the Borrower or such Subsidiary which prohibits the
creation or maintenance of any lien securing the Obligations
(collectively "Liens"); provided that the Borrower and any
Subsidiary of the Borrower may create or incur or suffer to be
created or incurred or to exist:
(i) liens on properties to secure taxes, assessments and
other governmental charges or claims for labor, material or
supplies in respect of obligations not overdue;
(ii) liens on properties in respect of judgments, awards or
indebtedness, the Indebtedness with respect to which is
permitted by Section 8.1(d) or Section 8.1(g);
(iii) encumbrances on properties consisting of easements,
rights of way, zoning restrictions, restrictions on the use of
real property, landlord's or lessor's liens under leases to
which Walden, the Borrower or a Subsidiary of such Person is a
party, and other minor non-monetary liens or encumbrances none
of which interferes materially with the use of the property
affected in the ordinary conduct of the business of Walden, the
Borrower or their respective Subsidiaries, which defects do not
individually or in the aggregate have a materially adverse
effect on the business of Walden or the Borrower individually or
of such Person and its Subsidiaries on a consolidated basis;
(iv) liens on Real Estate and Short-term Investments securing
Indebtedness permitted by Section 8.1(g) or Section 8.1(h); and
(v) liens in favor of the Agent and the Banks as security
for the Obligations.
Section 8.3. Restrictions on Investments. The Borrower will
not, and will not permit Walden or any of their respective
Subsidiaries to, make or permit to exist or to remain outstanding
any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase by the Borrower or its Subsidiary;
(b) marketable direct obligations of any of the following:
Federal Home Loan Mortgage Corporation, Student Loan Marketing
Association, Federal Home Loan Banks, Federal National Mortgage
Association, Government National Mortgage Association, Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Financing
Banks, Export-Import Bank of the United States, Federal Land Banks,
or any other agency or instrumentality of the United States of
America;
(c) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $100,000,000; provided, however, that the
aggregate amount at any time so invested with any single bank
having total assets of less than $1,000,000,000 will not exceed
$200,000;
(d) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any State which at the time of purchase are
rated by Moody's Investors Service, Inc. or by Standard & Poor's
Corporation at not less than "P 1" if then rated by Moody's
Investors Service, Inc., and not less than "A 1", if then rated by
Standard & Poor's Corporation;
(e) mortgage-backed securities guaranteed by the Government
National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation and other
mortgage-backed bonds which at the time of purchase are rated by
Moody's Investors Service, Inc. or by Standard & Poor's Corporation
at not less than "Aa" if then rated by Moody's Investors Service,
Inc. and not less than "AA" if then rated by Standard & Poor's
Corporation;
(f) repurchase agreements having a term not greater than 90
days and fully secured by securities described in the foregoing
subsection (a), (b) or (e) with banks described in the foregoing
subsection (c) or with financial institutions or other corporations
having total assets in excess of $500,000,000;
(g) shares of so-called "money market funds" registered with
the SEC under the Investment Company Act of 1940 which maintain a
level per-share value, invest principally in investments described
in the foregoing subsections (a) through (f) and have total assets
in excess of $50,000,000;
(h) Investments in fee interests in Real Estate utilized
principally for multifamily housing, including earnest money
deposits relating thereto and transaction costs;
(i) Investments in Subsidiaries of the Borrower; and
(j) Investments in real estate investment trusts which own
real property which is used principally for multifamily housing,
provided that in no event shall the aggregate cost of all
Investments pursuant to this Section 8.3(j) exceed $25,000,000.00.
Section 8.4. Merger, Consolidation. The Borrower will not, and
will not permit any of its Subsidiaries to, become a party to any
merger, consolidation or other business combination, or agree to
effect any asset acquisition, stock acquisition or other
acquisition without the prior written consent of the Majority
Banks, which consent shall not be unreasonably withheld, except
(i) the merger or consolidation of one or more of the Subsidiaries
of the Borrower with and into the Borrower and (ii) the merger or
consolidation of two or more Subsidiaries of the Borrower.
Section 8.5. Sale and Leaseback. The Borrower will not, and
will not permit Walden or any of their respective Subsidiaries to,
enter into any arrangement, directly or indirectly, whereby the
Borrower, Walden or any Subsidiary thereof shall sell or transfer
any Real Estate owned by it in order that then or thereafter such
Person shall lease back such Real Estate.
Section 8.6. Compliance with Environmental Laws. The Borrower
will not, and will not permit Walden or any of their respective
Subsidiaries to, do any of the following: (a) use any of the Real
Estate or any portion thereof as a facility for the handling,
processing, storage or disposal of Hazardous Substances, except for
small quantities of Hazardous Substances used in the ordinary
course of business and in compliance with all applicable
Environmental Laws, (b) cause or permit to be located on any of the
Real Estate any underground tank or other underground storage
receptacle for Hazardous Substances except in full compliance with
Environmental Laws, (c) generate any Hazardous Substances on any of
the Real Estate except in full compliance with Environmental Laws,
(d) conduct any activity at any Real Estate or use any Real Estate
in any manner so as to cause a Release of Hazardous Substances on,
upon or into the Real Estate or any surrounding properties or any
threatened Release of Hazardous Substances which might give rise to
liability under CERCLA or any other Environmental Law, or
(e) directly or indirectly transport or arrange for the transport
of any Hazardous Substances (except in compliance with all
Environmental Laws).
The Borrower shall:
(i) in the event of any change in Environmental Laws
governing the assessment, release or removal of Hazardous
Substances, which change would lead a prudent lender to require
additional testing to avail itself of any statutory insurance or
limited liability, take all action (including, without limitation,
the conducting of engineering tests at the sole expense of the
Borrower) to confirm that no Hazardous Substances are or ever were
Released or disposed of on the Real Estate; and
(ii) if any Release or disposal of Hazardous Substances shall
occur or shall have occurred on the Real Estate of the Borrower,
Walden or any of their respective Subsidiaries (including without
limitation any such Release or disposal occurring prior to the
acquisition of such Real Estate by such Person) cause the prompt
containment and removal of such Hazardous Substances and
remediation of such Real Estate in full compliance with all
applicable laws and regulations and to the satisfaction of the
Majority Banks; provided, that the Borrower shall be deemed to be
in compliance with Environmental Laws for the purpose of this
clause (ii) so long as it or a responsible third party with
sufficient financial resources is taking reasonable action to
remediate or manage any event of noncompliance to the satisfaction
of the Majority Banks and no action shall have been commenced by
any enforcement agency. The Majority Banks may engage their own
environmental engineer to review the environmental assessments and
the Borrower's compliance with the covenants contained herein.
At any time after an Event of Default shall have occurred
hereunder, or, whether or not an Event of Default shall have
occurred, at any time that the Agent or the Majority Banks shall
have reasonable grounds to believe that a Release or threatened
Release of Hazardous Substances may have occurred, relating to any
Real Estate, or that any of the Real Estate is not in compliance
with the Environmental Laws, the Agent may at its election (and
will at the request of the Majority Banks) obtain such
environmental assessments of such Real Estate prepared by an
environmental engineer as may be necessary or advisable for the
purpose of evaluating or confirming (i) whether any Hazardous
Substances are present in the soil or water at or adjacent to such
Real Estate and (ii) whether the use and operation of such Real
Estate comply with all Environmental Laws. Environmental
assessments may include detailed visual inspections of such Real
Estate including, without limitation, any and all storage areas,
storage tanks, drains, dry wells and leaching areas, and the taking
of soil samples, as well as such other investigations or analyses
as are necessary or appropriate for a complete determination of the
compliance of such Real Estate and the use and operation thereof
with all applicable Environmental Laws. All such environmental
assessments shall be at the sole cost and expense of the Borrower.
Section 8.7. Distributions. The Borrower shall not, and shall
not permit Walden to, make any Distributions which would cause it
to violate any of the following covenants:
(a) Borrower shall not pay any Distribution to the partners
of Borrower if such Distribution is in excess of the amount which,
when added to the amount of all other Distributions paid in the
same fiscal quarter and the preceding three (3) fiscal quarters,
would exceed ninety percent (90%) of its Funds from Operations for
the four consecutive fiscal quarters ending prior to the quarter in
which such Distribution is paid;
(b) Walden shall not pay any Distribution to the shareholders
of Walden if such Distribution is in excess of the amount which,
when added to the amount of all other Distributions paid in the
same fiscal quarter and the preceding three (3) fiscal quarters,
would exceed ninety percent (90%) of its Funds from Operations for
the four consecutive fiscal quarters ending prior to the quarter in
which such Distribution is paid;
(c) In the event that an Event of Default shall have occurred
and be continuing, the Borrower shall make no Distributions other
than Distributions to Walden in an amount equal to the minimum
Distributions required under the Code to maintain the REIT Status
of Walden, as evidenced by a certification of the principal
financial or accounting officer of Walden containing calculations
in reasonable detail satisfactory in form and substance to Agent;
and
(d) In the event that an Event of Default shall have occurred
and be continuing, Walden shall make no Distributions other than
the minimum Distributions required under the Code to maintain the
REIT Status of Walden, as evidenced by a certification of the
principal financial or accounting officer of Walden containing
calculations in reasonable detail satisfactory in form and
substance to Agent;
(e) Notwithstanding the foregoing, at any time when an Event
of Default shall have occurred and the maturity of the Obligations
has been accelerated, at the option of the Majority Banks, neither
the Borrower nor Walden shall make any Distributions whatsoever,
directly or indirectly.
Section 8.8. Asset Sales. Neither Walden, the Borrower nor any
Subsidiary thereof shall sell, transfer or otherwise dispose of any
Real Estate or any of the Unencumbered Operating Properties in
excess of $25,000,000.00 (except as the result of a condemnation or
casualty and except for the granting of Permitted Liens, as
applicable) unless there shall have been delivered to the Banks a
statement that no Default or Event of Default exists or will exist
and a certification that the Borrower will be in compliance with
its covenants referred to therein after giving effect to such sale,
transfer or other disposition.
Section 8.9. Development Activity. Neither Walden, the Borrower
nor any Subsidiary thereof shall engage, directly or indirectly, in
the development of properties to be used principally for
multifamily housing or otherwise, without the prior written consent
of the Majority Banks, which approval shall not be unreasonably
withheld. For purposes of this Section 8.9, the term "development"
shall include the new construction of an apartment complex or the
substantial renovation of improvements to real property, but shall
not include the addition of amenities or other related facilities
to existing Real Estate which is already used principally for
multifamily housing. The Borrower acknowledges that the decision
of the Majority Banks to grant or withhold such consent shall be
based on such factors as the Majority Banks deem relevant in their
sole discretion, including without limitation, evidence of
sufficient funds both from borrowings and equity to complete such
development and evidence that Walden, the Borrower or their
respective Subsidiary has the resources and expertise necessary to
complete such project. Nothing herein shall prohibit Walden, the
Borrower or any Subsidiary thereof from entering into an agreement
to acquire Real Estate which has been developed and initially
leased by another Person.
Section 8.10. Restriction on Prepayment of Indebtedness. The
Borrower shall not prepay the principal amount, in whole or in
part, of any Indebtedness other than the Obligations after the
occurrence of any Event of Default; provided, however, that this
Section 8.11 shall not prohibit the prepayment of Indebtedness
which is financed solely from the proceeds of a new loan which
would otherwise be permitted by the terms of Section 8.1.
Section 8.11. Bankruptcy Remote Subsidiaries. Without the
consent of the Majority Banks, neither Walden, the Borrower nor any
of their respective Subsidiaries shall create any new single
purpose, special purpose or other so-called bankruptcy remote
subsidiaries (such as a REMIC), as determined by the Agent in its
reasonable discretion; provided, however, that without the consent
of the Majority Banks, Walden, the Borrower and their Subsidiaries
may create such a Subsidiary for the purpose of acquiring a
property or properties having an Asset Value of not more than
$15,000,000.00 financed with tax-exempt bonds.
Section 9. FINANCIAL COVENANTS OF THE BORROWER AND WALDEN.
Section 9.1. Borrowing Base Covenant of the Borrower. The
Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans, the
Borrower will not, at the end of any fiscal quarter, permit the
outstanding principal balance of the Loans as of the date of
determination to be greater than the Borrowing Base as determined
as of the same date.
Section A. Covenants of Walden. The Borrower covenants and
agrees that, so long as any Loan or Note is outstanding or any Bank
has any obligations to make any Loans, the Borrower will cause
Walden to comply with the following:
(a) Liabilities to Assets Ratio. Walden will not, at the end
of any fiscal quarter, permit the ratio of Consolidated Total
Liabilities to Consolidated Total Assets of Walden to exceed 0.55
to 1.
(b) Consolidated Operating Cash Flow Coverage. Walden will
not, at the end of any fiscal quarter, permit the sum equal to
(i) the Consolidated Operating Cash Flow of Walden and its
Subsidiaries for any period of four consecutive fiscal quarters
(treated as a single accounting period) (the "Test Period") and
(ii) the Capital Improvement Reserve for the Test Period to be less
than two (2) times the Debt Service of Walden and its Subsidiaries
for the Test Period. In the event that Walden and its Subsidiaries
shall not have any of the foregoing components for four (4)
consecutive fiscal quarters, then such components shall be
annualized in such manner as the Majority Banks shall reasonably
determine.
(c) Fixed Charge Coverage. Walden will not, at the end of
any fiscal quarter, permit the ratio of the Consolidated Operating
Cash Flow of Walden and its Subsidiaries for the Test Period to be
less than 1.60 times the sum of (i) the Debt Service of Walden and
its Subsidiaries plus (ii) the Capital Improvement Reserve plus
(iii) Preferred Distributions for the Test Period. In the event
that Walden and its Subsidiaries shall not have any of the
foregoing components for four (4) consecutive fiscal quarters, then
such components shall be annualized in such manner as the Majority
Banks shall reasonably determine.
(d) Shareholder's Equity. Walden will not, at the end of any
fiscal quarter, permit the Shareholder's Equity to be less than the
sum of (a) $250,000,000.00 plus (b) ninety percent (90%) of the net
proceeds from any Equity Offering of Walden made after the Closing
Date.
Section 10. CLOSING CONDITIONS.
The obligations of the Agent and the Banks to make the initial
Loans shall be subject to the satisfaction of the following
conditions precedent on or prior to December 4, 1996:
Section 10.1. Loan Documents. Each of the Loan Documents shall
have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and
substance satisfactory to the Majority Banks. The Agent shall have
received a fully executed copy of each such document, except that
each Bank shall have received a fully executed counterpart of its
Note.
Section 10.2. Certified Copies of Organizational Documents. The
Agent shall have received from the Borrower a copy, certified as of
a recent date by the appropriate officer of each State in which the
Borrower, the General Partners and the Guarantors, as applicable,
is organized or (as to the Borrower, WROP and the General Partners
only) in which the Unencumbered Operating Properties are located
and a duly authorized officer or partner of such Person, as
applicable, to be true and complete, of the partnership agreement
or corporate charter of the Borrower, the General Partners and the
Guarantors, as applicable, or its qualification to do business, as
applicable, as in effect on such date of certification.
Section 10.3. Bylaws; Resolutions. All action on the part of
the Borrower, the General Partners and the Guarantors, as
applicable, necessary for the valid execution, delivery and
performance by such Person of this Agreement and the other Loan
Documents to which such Person is or is to become a party shall
have been duly and effectively taken, and evidence thereof
satisfactory to the Agent shall have been provided to the Agent.
The Agent shall have received from the General Partners and the
Guarantors true copies of their respective bylaws and the
resolutions adopted by their respective boards of directors
authorizing the transactions described herein, each certified by
its secretary as of a recent date to be true and complete.
Section 10.4. Incumbency Certificate; Authorized Signers. The
Agent shall have received from the General Partners and the
Guarantors an incumbency certificate, dated as of the Closing Date,
signed by a duly authorized partner or officer of such Person and
giving the name and bearing a specimen signature of each individual
who shall be authorized to sign, in the name and on behalf of such
Person, each of the Loan Documents to which such Person is or is to
become a party. The Agent shall have also received from the
Borrower a certificate, dated as of the Closing Date, signed by a
duly authorized partner of the Borrower and giving the name of and
specimen signature of each individual who shall be authorized to
make Loan and Conversion Requests and to give notices and to take
other action on behalf of the Borrower under the Loan Documents.
Section 10.5. Opinion of Counsel. The Agent shall have received
a favorable opinion addressed to the Banks and the Agent and dated
as of the Closing Date, in form and substance satisfactory to the
Agent, from counsel of the Borrower, the General Partners and the
Guarantors, as to such matters as the Agent shall reasonably
request.
Section 10.6. Payment of Fees. The Borrower shall have paid to
the Agent the fees required to be paid as of the Closing Date
pursuant to Section 4.2(a).
Section 10.7. Performance; No Default. The Borrower shall have
performed and complied with all terms and conditions herein
required to be performed or complied with by it on or prior to the
Closing Date, and on the Closing Date there shall exist no Default
or Event of Default.
Section 10.8. Representations and Warranties. The
representations and warranties made by the Borrower and the
Guarantors in the Loan Documents or otherwise made by or on behalf
of the Borrower, the General Partners, the Guarantors or any
Subsidiaries thereof in connection therewith or after the date
thereof shall have been true and correct in all material respects
when made and shall also be true and correct in all material
respects on the Closing Date.
Section 10.9. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement and
the other Loan Documents shall be reasonably satisfactory to the
Agent and the Agent's Special Counsel in form and substance, and
the Agent shall have received all information and such counterpart
originals or certified copies of such documents and such other
certificates, opinions or documents as the Agent and the Agent's
Special Counsel may reasonably require.
Section 10.10. Compliance Certificate. A Compliance Certificate
dated as of the date of the Closing Date demonstrating compliance
with each of the covenants calculated therein as of the most recent
fiscal quarter end for which the Borrower and Walden have provided
financial statements under Section 6.4 adjusted in the best good
faith estimate of the Borrower and Walden dated as of the date of
the Closing Date shall have been delivered to the Agent.
Section 10.11. Partner Consents. The Agent shall have received
evidence satisfactory to the Agent that all necessary partner
consents required in connection with the consummation of the
transactions contemplated by this Agreement and the other Loan
Documents have been obtained.
Section 10.12. Other. The Agent shall have reviewed such other
documents, instruments, certificates, opinions, assurances,
consents and approvals as the Agent or the Agent's Special Counsel
may reasonably have requested.
Section 11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, whether on or
after the Closing Date, shall also be subject to the satisfaction
of the following conditions precedent:
Section 11.1. Prior Conditions Satisfied. All conditions set
forth in Section 10 shall continue to be satisfied as of the date
upon which any Loan is to be made.
Section 11.2. Representations True; No Default. Each of the
representations and warranties made by or on behalf of the
Borrower, the General Partners or the Guarantors contained in this
Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this
Agreement shall be true as of the date as of which they were made
and shall also be true at and as of the time of the making of such
Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions
contemplated or permitted by this Agreement and the other Loan
Documents and changes occurring in the ordinary course of business
that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties
relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing.
Section 11.3. No Legal Impediment. There shall be no law or
regulations thereunder or interpretations thereof that in the
reasonable opinion of any Bank would make it illegal for such Bank
to make such Loan.
Section 11.4. Governmental Regulation. Each Bank shall have
received such statements in substance and form reasonably
satisfactory to such Bank as such Bank shall require for the
purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
Section 11.5. Proceedings and Documents. All proceedings in
connection with the Loan shall be satisfactory in substance and in
form to the Agent, and the Agent shall have received all
information and such counterpart originals or certified or other
copies of such documents as the Agent may reasonably request.
Section 11.6. Borrowing Documents. In the case of any request
for a Loan, the Agent shall have received a copy of the request for
a Loan required by Section 2.6 in the form of Exhibit C hereto,
fully completed.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice
or the lapse of time or both is required, then, prior to such
notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any
other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans
or any other sums due hereunder or under any of the other Loan
Documents, when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or
at any other date fixed for payment;
(c) the Borrower shall fail to comply with any covenant
contained in Section 7.14 or Section 7.15;
(d) the Borrower shall fail to comply with any covenant
contained in Section 9, and such failure shall continue for 30 days
after written notice thereof shall have been given to the Borrower
by the Agent;
(e) any of the Borrower, the General Partners, the Guarantors
or any of their respective Subsidiaries shall fail to perform any
other term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified above in this
Section 12);
(f) any representation or warranty made by or on behalf of
the Borrower, the General Partners, the Guarantors or any of their
respective Subsidiaries in this Agreement or any other Loan
Document, or in any report, certificate, financial statement,
request for a Loan, or in any other document or instrument
delivered pursuant to or in connection with this Agreement, any
advance of a Loan or any of the other Loan Documents shall prove to
have been false in any material respect upon the date when made or
deemed to have been made or repeated;
(g) any of the Borrower, the General Partners, the Guarantors
or any of their respective Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation
for borrowed money or credit received or other Indebtedness, or
fail to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound, evidencing or
securing any such borrowed money or credit received or other
Indebtedness for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(h) any of the Borrower, the General Partners, the Guarantors
or any of their respective Subsidiaries, (i) shall make an
assignment for the benefit of creditors, or admit in writing its
general inability to pay or generally fail to pay its debts as they
mature or become due, or shall petition or apply for the
appointment of a trustee or other custodian, liquidator or receiver
of any such Person or of any substantial part of the assets of any
thereof, (ii) shall commence any case or other proceeding relating
to any such Person under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in
effect, or (iii) shall take any action to authorize or in
furtherance of any of the foregoing;
(i) a petition or application shall be filed for the
appointment of a trustee or other custodian, liquidator or receiver
of any of the Borrower, the General Partners, the Guarantors or any
of their respective Subsidiaries or any substantial part of the
assets of any thereof, or a case or other proceeding shall be
commenced against any such Person under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now
or hereafter in effect, and any such Person shall indicate its
approval thereof, consent thereto or acquiescence therein or such
petition, application, case or proceeding shall not have been
dismissed within 60 days following the filing or commencement
thereof;
(j) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any of the
Borrower, the General Partners, the Guarantors or any of their
respective Subsidiaries bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order
for relief is entered in respect of any such Person, in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(k) there shall remain in force, undischarged, unsatisfied
and unstayed, for more than 60 days, whether or not consecutive,
any uninsured final judgment against any of the Borrower, the
General Partners, the Guarantors or any of their respective
Subsidiaries that, with other outstanding uninsured final
judgments, undischarged, against such Persons exceeds in the
aggregate $1,000,000.00;
(l) if any of the Loan Documents shall be canceled,
terminated, revoked or rescinded otherwise than in accordance with
the terms thereof or with the express prior written agreement,
consent or approval of the Banks, or any action at law, suit in
equity or other legal proceeding to cancel, revoke or rescind any
of the Loan Documents shall be commenced by or on behalf of any of
the Borrower, the General Partners, the Guarantors or any of their
respective holders of Voting Interests, or any court or any other
governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance
with the terms thereof;
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of any of the Borrower, the
General Partners, the Guarantors or any sale, transfer or other
disposition of the assets of any of the Borrower, the General
Partners, the Guarantors other than as permitted under the terms of
this Agreement or the other Loan Documents;
(n) any suit or proceeding shall be filed against any of the
Borrower, the General Partners or the Guarantors or any of their
respective assets which in the good faith business judgment of the
Majority Banks after giving consideration to the likelihood of
success of such suit or proceeding and the availability of
insurance to cover any judgment with respect thereto and based on
the information available to them, if adversely determined, would
have a materially adverse affect on the ability of the Borrower or
a Guarantor to perform each and every one of its obligations under
and by virtue of the Loan Documents;
(o) any of the Borrower, the General Partners or the
Guarantors shall be indicted for a federal crime, a punishment for
which could include the forfeiture of any assets of such Person;
(p) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall
have determined in their reasonable discretion that such event
reasonably could be expected to result in liability of any of the
Borrower, the General Partners, the Guarantors or any of their
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $1,000,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee
shall have been appointed by the United States District Court to
administer such Plan; or the PBGC shall have instituted proceedings
to terminate such Guaranteed Pension Plan;
(q) any of the Guarantors denies that such Guarantor has any
liability or obligation under the Guaranty, or shall notify the
Agent or any of the Banks of such Guarantor's intention to attempt
to cancel or terminate the Guaranty, or shall fail to observe or
comply with any term, covenant, condition or agreement under the
Guaranty;
(r) Don R. Daseke, Marshall B. Edwards, Mark S. Dillinger and
Steve T. Lamberti shall in the aggregate own directly or indirectly
less than five percent (5.0%) of the issued and outstanding shares
of the capital stock of Walden;
(s) Don R. Daseke shall cease to be the Chairman and Chief
Executive Officer of, or Marshall B. Edwards shall cease to be the
President and Chief Acquisitions Officer of, or Mark S. Dillinger
shall cease to be the Chief Financial Officer of, or Steve T.
Lamberti shall cease to be the Chief Operating Officer of, Walden,
and a competent and experienced successor for such Person shall not
be approved by the Majority Banks within six (6) months of such
event, such approval not to be unreasonably withheld; or
(t) any Event of Default as defined in any of the other Loan
Documents, shall occur;
then, and in any such event, the Agent may, and upon the request of
the Majority Banks shall, by notice in writing to the Borrower
declare all amounts owing with respect to this Agreement, the Notes
and the other Loan Documents to be, and they shall thereupon
forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event
of any Event of Default specified in Section 12.1(h), Section
12.1(i) or Section 12.1(j), all such amounts shall become
immediately due and payable automatically and without any
requirement of notice from any of the Banks or the Agent. The
Borrower and any other Person shall be entitled to conclusively
rely on a statement from the Agent that it has the authority to act
for and bind the Banks pursuant to this Agreement and the other
Loan Documents.
Section 12.1A. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 12.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the
occurrence of any failure described in Section 12.1(a) or Section
12.1(b) in the event that the Borrower cures such default within
five (5) days following receipt of written notice of such default,
provided, however, that Borrower shall not be entitled to receive
more than two (2) notices in the aggregate pursuant to this clause
(i) in any period of 365 days ending on the date of any such
occurrence of default, and provided further that no such cure
period shall apply to any payments due upon the maturity of the
Notes, and (ii) no Event of Default shall exist hereunder upon the
occurrence of any failure described in Section 12.1(e) in the event
that the Borrower cures such default within thirty (30) days
following receipt of written notice of such default, provided that
the provisions of this clause (ii) shall not pertain to any default
consisting of a failure to comply with Section 7.4(e), or to any
default excluded from any provision of cure of defaults contained
in any other of the Loan Documents.
(b) Notwithstanding the provisions of subsections (d) and (e)
of Section 12.1, the cure periods provided therein shall not be
allowed and the occurrence of a Default thereunder immediately
shall constitute an Event of Default for all purposes of this
Agreement and the other Loan Documents if, within the period of
twelve months immediately preceding the occurrence of such Default,
there shall have occurred two periods of cure or portions thereof
under any one or more than one of said subsections.
Section 12.2. Termination of Commitments. If any one or more
Events of Default specified in Section 12.1(h), Section 12.1(i) or
Section 12.1(j) shall occur, then immediately and without any
action on the part of the Agent or any Bank any unused portion of
the credit hereunder shall terminate and the Banks shall be
relieved of all obligations to make Loans to the Borrower. If any
other Event of Default shall have occurred, the Agent, upon the
election of the Majority Banks, may by notice to the Borrower
terminate the obligation to make Loans to the Borrower. No
termination under this Section 12.2 shall relieve the Borrower of
its obligations to the Banks arising under this Agreement or the
other Loan Documents.
Section 12.3. Remedies. In case any one or more of the Events
of Default shall have occurred and be continuing, and whether or
not the Banks shall have accelerated the maturity of the Loans
pursuant to Section 12.1, the Agent on behalf of the Banks, may,
with the consent of the Majority Banks but not otherwise, proceed
to protect and enforce their rights and remedies under this
Agreement, the Notes or any of the other Loan Documents by suit in
equity, action at law or other appropriate proceeding, whether for
the specific performance of any covenant or agreement contained in
this Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations are evidenced, including to the
full extent permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right. No remedy
herein conferred upon the Agent or the holder of any Note is
intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law. In the event
that all or any portion of the Obligations is collected by or
through an attorney-at-law, the Borrower shall pay all costs of
collection including, but not limited to, reasonable attorney's
fees not to exceed fifteen percent (15%) of such portion of the
Obligations.
Section 12.4. Distribution of Proceeds. In the event that,
following the occurrence or during the continuance of any Event of
Default, any monies are received in connection with the enforcement
of any of the Loan Documents, or otherwise with respect to the
realization upon any of the assets of the Borrower or any other
Person liable with respect to the Obligations, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of, the Agent for or in respect of all reasonable
costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Agent in connection with the
collection of such monies by the Agent, for the exercise,
protection or enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent under this Agreement
or any of the other Loan Documents or in support of any provision
of adequate indemnity to the Agent against any taxes or liens which
by law shall have, or may have, priority over the rights of the
Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Banks shall determine; provided,
however, that (i) Swing Loans shall be repaid first, (ii)
distributions in respect of such other Obligations shall be made
pari passu among Obligations with respect to the Agent's fee
payable pursuant to Section 4.3 and all other Obligations, (iii) in
the event that any Bank shall have wrongfully failed or refused to
make an advance under Section 2.7 and such failure or refusal shall
be continuing, advances made by other Banks during the pendency of
such failure or refusal shall be entitled to be repaid as to
principal and accrued interest in priority to the other Obligations
described in this subsection (b), and (iv) Obligations owing to the
Banks with respect to each type of Obligation such as interest,
principal, fees and expenses (but excluding Swing Loans), shall be
made among the Banks pro rata; and provided, further that the
Majority Banks may in their discretion make proper allowance to
take into account any Obligations not then due and payable; and
(c) Third, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
Section 13. SETOFF.
Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or
specific, time or demand, provisional or final, regardless of
currency, maturity, or the branch of where such deposits are held)
or other sums credited by or due from any of the Banks to the
Borrower or the Guarantors and any securities or other property of
the Borrower or the Guarantors in the possession of such Bank may
be applied to or set off against the payment of Obligations of such
Person and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising, of such Person to such Bank. Each of the Banks
agrees with each other Bank that if such Bank shall receive from
any of the Borrower or the Guarantors, whether by voluntary
payment, exercise of the right of setoff, or otherwise, and shall
retain and apply to the payment of the Note or Notes held by such
Bank (but excluding the Swing Loan Note) any amount in excess of
its ratable portion of the payments received by all of the Banks
with respect to the Notes held by all of the Banks, such Bank will
make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in
each Bank receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided
that if all or any part of such excess payment is thereafter
recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such
recovery, but without interest.
Section 14. THE AGENT.
Section 14.1. Authorization. The Agent is authorized to take
such action on behalf of each of the Banks and to exercise all such
powers as are hereunder and under any of the other Loan Documents
and any related documents delegated to the Agent, together with
such powers as are reasonably incident thereto, provided that no
duties or responsibilities not expressly assumed herein or therein
shall be implied to have been assumed by the Agent. The
obligations of Agent hereunder are primarily administrative in
nature, and nothing contained in this Agreement or any of the other
Loan Documents shall be construed to constitute the Agent as a
trustee for any Bank or to create an agency or fiduciary
relationship. The Borrower and any other Person shall be entitled
to conclusively rely on a statement from the Agent that it has the
authority to act for and bind the Banks pursuant to this Agreement
and the other Loan Documents.
Section 14.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties under
this Agreement and the other Loan Documents. The Agent may utilize
the services of such Persons as the Agent may reasonably determine,
and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower.
Section 14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent, or employee thereof,
shall be liable to any of the Banks for any waiver, consent or
approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error of
judgment whatsoever, except that the Agent or such other Person, as
the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
Section 14.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this
Agreement, the Notes, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes,
or for any recitals or statements, warranties or representations
made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf
of the Borrower or the Guarantors or any of their respective
Subsidiaries, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
covenants or agreements herein or in any other of the Loan
Documents. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower
or the Guarantors or any holder of any of the Notes shall have been
duly authorized or is true, accurate and complete. The Agent has
not made nor does it now make any representations or warranties,
express or implied, nor does it assume any liability to the Banks,
with respect to the creditworthiness or financial condition of the
Borrower, its partners, the Guarantors or any of their respective
Subsidiaries. Each Bank acknowledges that it has, independently
and without reliance upon the Agent or any other Bank, and based
upon such information and documents as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will, independently
and without reliance upon the Agent or any other Bank, based upon
such information and documents as it deems appropriate at the time,
continue to make its own credit analysis and decisions in taking or
not taking action under this Agreement and the other Loan
Documents.
Section 14.5. Payments.
(a) A payment by the Borrower or the Guarantors to the Agent
hereunder or under any of the other Loan Documents for the account
of any Bank shall constitute a payment to such Bank. The Agent
agrees to distribute to each Bank not later than one Business Day
after the Agent's receipt of good funds, determined in accordance
with the Agent's customary practices, such Bank's pro rata share of
payments received by the Agent for the account of the Banks except
as otherwise expressly provided herein or in any of the other Loan
Documents.
(b) If in the opinion of the Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes
or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right
to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to
be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Agent its proportionate share
of the amount so adjudged to be repaid or shall pay over the same
in such manner and to such Persons as shall be determined by such
court.
(c) Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, any Bank that
fails (i) to make available to the Agent its pro rata share of any
Loan or (ii) to comply with the provisions of Section 13 with
respect to making dispositions and arrangements with the other
Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata share of such
payments due and payable to all of the Banks, in each case as, when
and to the full extent required by the provisions of this
Agreement, shall be deemed delinquent (a "Delinquent Bank") and
shall be deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be deemed to
have assigned any and all payments due to it from the Borrower and
the Guarantors, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective pro rata shares
of all outstanding Loans. The Delinquent Bank hereby authorizes
the Agent to distribute such payments to the nondelinquent Banks in
proportion to their respective pro rata shares of all outstanding
Loans. A Delinquent Bank shall be deemed to have satisfied in full
a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans of the nondelinquent
Banks or as a result of other payments by the Delinquent Banks to
the nondelinquent Banks, the Banks' respective pro rata shares of
all outstanding Loans have returned to those in effect immediately
prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
Section 14.6. Holders of Notes. Subject to the terms of Article
18, the Agent may deem and treat the payee of any Note as the
absolute owner or purchaser thereof for all purposes hereof until
it shall have been furnished in writing with a different name by
such payee or by a subsequent holder, assignee or transferee.
Section 14.7. Indemnity. The Banks ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all
claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (including any expenses for which
the Agent has not been reimbursed by the Borrower as required by
Section 15), and liabilities of every nature and character arising
out of or related to this Agreement, the Notes, or any of the other
Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Agent's actions taken hereunder or thereunder,
except to the extent that any of the same shall be directly caused
by the Agent's willful misconduct or gross negligence.
Section 14.8. Agent as Bank. In its individual capacity, FNBB
shall have the same obligations and the same rights, powers and
privileges in respect to its Commitment and the Loans made by it,
and as the holder of any of the Notes as it would have were it not
also the Agent.
Section 14.9. Resignation. The Agent may resign at any time by
giving 60 days' prior written notice thereof to the Banks and the
Borrower. Upon any such resignation, the Majority Banks shall have
the right to appoint as a successor Agent any Bank or any other
bank whose senior debt obligations are rated not less than "A" or
its equivalent by Moody's Investors Service, Inc. or not less than
"A" or its equivalent by Standard & Poor's corporation and which
has a net worth of not less than $500,000,000. Unless a Default or
Event of Default shall have occurred and be continuing, such
successor Agent shall be reasonably acceptable to the Borrower. If
no successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be any Bank or a bank whose debt obligations are
rated not less than "A" or its equivalent by Moody's Investors
Service, Inc. or not less than "A" or its equivalent by Standard &
Poor's Corporation and which has a net worth of not less than
$500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder as
Agent. After any retiring Agent's resignation, the provisions of
this Agreement and the other Loan Documents shall continue in
effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as Agent.
Section 14.10. Duties in the Case of Enforcement. In case one
or more Events of Default have occurred and shall be continuing,
and whether or not acceleration of the Obligations shall have
occurred, the Agent shall, if (a) so requested by the Majority
Banks and (b) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the
Agent may reasonably request, proceed to exercise all or any legal
and equitable and other rights or remedies as it may have. The
Majority Banks may direct the Agent in writing as to the method and
the extent of any such exercise, the Banks hereby agreeing to
indemnify and hold the Agent harmless from all liabilities incurred
in respect of all actions taken or omitted in accordance with such
directions, provided that the Agent need not comply with any such
direction to the extent that the Agent reasonably believes the
Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 15. EXPENSES.
The Borrower agrees to pay (a) the reasonable costs of producing
and reproducing this Agreement, the other Loan Documents and the
other agreements and instruments mentioned herein, (b) any taxes
(including any interest and penalties in respect thereto) payable
by the Agent or any of the Banks (other than taxes based upon the
Agent's or any Bank's gross or net income), including any
recording, mortgage, documentary or intangibles taxes in connection
with the Loan Documents, or other taxes payable on or with respect
to the transactions contemplated by this Agreement, including any
such taxes payable by the Agent or any of the Banks after the
Closing Date (the Borrower hereby agreeing to indemnify the Agent
and each Bank with respect thereto), (c) all reasonable internal
charges of the Agent (determined in good faith and in accordance
with the Agent's internal policies applicable generally to its
customers) for commercial finance exams and engineering and
environmental reviews and the reasonable fees, expenses and
disbursements of the counsel to the Agent incurred in connection
with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein (excluding,
however, the preparation of agreements evidencing participations
granted under Section 18.4), each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or
hereunder, (d) the reasonable fees, expenses and disbursements of
the Agent incurred by the Agent in connection with the preparation,
administration or interpretation of the Loan Documents and other
instruments mentioned herein, and the making of each advance
hereunder, (e) all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or the Agent and the fees and costs of
appraisers, engineers, investment bankers or other experts retained
by any Bank or the Agent) incurred by any Bank or the Agent in
connection with (i) the enforcement of or preservation of rights
under any of the Loan Documents against the Borrower, its general
partners or the Guarantors or the administration thereof after the
occurrence of a Default or Event of Default and (ii) any
litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to the Agent's or any of the Bank's
relationship with the Borrower, its general partners or the
Guarantors, (f) all reasonable fees, expenses and disbursements of
any Bank or the Agent incurred in connection with UCC searches, UCC
filings, title rundowns or title searches, and (g) all costs and
expenses (including reasonable attorney's fees) of Agent in
releasing any liens or security interests securing the obligations
of Borrower and WROP under that certain Master Revolving Credit
Agreement dated as of February 8, 1996 among Borrower, WROP, Agent,
FNBB and the other banks a party thereto. The covenants of this
Section 15 shall survive payment or satisfaction of payment of
amounts owing with respect to the Notes.
Section 16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and
the Banks and each director, officer, employee, agent and Person
who controls the Agent or any Bank from and against any and all
claims, actions and suits, whether groundless or otherwise, and
from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of or relating
to this Agreement or any of the other Loan Documents or the
transactions contemplated hereby and thereby including, without
limitation, (a) any leasing fees and any brokerage, finders or
similar fees asserted against any Person indemnified under this
Section 16 based upon any agreement, arrangement or action made or
taken, or alleged to have been made or taken, by the Borrower, the
General Partners, the Guarantors or any of their respective
Subsidiaries, (b) any condition of the Real Estate, (c) any actual
or proposed use by the Borrower of the proceeds of any of the
Loans, (d) any actual or alleged infringement of any patent,
copyright, trademark, service mark or similar right of the
Borrower, the General Partners, the Guarantors or any of their
respective Subsidiaries, (e) the Borrower and the Guarantors
entering into or performing this Agreement or any of the other Loan
Documents, (f) any actual or alleged violation of any law,
ordinance, code, order, rule, regulation, approval, consent, permit
or license relating to the Real Estate, or (g) with respect to the
Borrower, the General Partners, the Guarantors and their respective
Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the Release or threatened
Release of any Hazardous Substances or any action, suit, proceeding
or investigation brought or threatened with respect to any
Hazardous Substances (including, but not limited to claims with
respect to wrongful death, personal injury or damage to property),
in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel
incurred in connection with any such investigation, litigation or
other proceeding; provided, however, that the Borrower shall not be
obligated under this Section 16 to indemnify any Person for
liabilities arising from such Person's own gross negligence or
willful misconduct. In litigation, or the preparation therefor,
the Banks and the Agent shall be entitled to select a single law
firm as their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees
and expenses of such counsel. If, and to the extent that the
obligations of the Borrower under this Section 16 are unenforceable
for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The provisions of this
Section 16 shall survive the repayment of the Loans and the
termination of the obligations of the Banks hereunder.
Section 17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made
herein, in the Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of the
Borrower, the General Partners, the Guarantors or any of their
respective Subsidiaries pursuant hereto or thereto shall be deemed
to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Banks of any of
the Loans, as herein contemplated, and shall continue in full force
and effect so long as any amount due under this Agreement or the
Notes or any of the other Loan Documents remains outstanding or any
Bank has any obligation to make any Loans. The indemnification
obligations of the Borrower provided herein and the other Loan
Documents shall survive the full repayment of amounts due and the
termination of the obligations of the Banks hereunder and
thereunder to the extent provided herein and therein. All
statements contained in any certificate or other paper delivered to
any Bank or the Agent at any time by or on behalf of the Borrower,
the General Partners, the Guarantors or any of their respective
Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties
by such Person hereunder.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. Conditions to Assignment by Banks. Except as
provided herein, each Bank may assign to one or more banks or other
entities all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment
Percentage and Commitment and the same portion of the Loans at the
time owing to it, and the Notes held by it); provided that (a) the
Agent shall have given its prior written consent to such
assignment, which consent shall not be unreasonably withheld or
delayed (provided that such consent shall not be required for any
assignment to another Bank, to a bank which is under common control
with the assigning Bank or to a wholly-owned Subsidiary of such
Bank provided that such assignee shall remain a wholly-owned
Subsidiary of such Bank), (b) each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Bank's
rights and obligations under this Agreement, (c) the parties to
such assignment shall execute and deliver to the Agent, for
recording in the Register (as hereinafter defined), a notice of
such assignment, together with any Notes subject to such
assignment, (d) in no event shall any voting, consent or approval
rights of a Bank be assigned to any Person controlling, controlled
by or under common control with, or which is not otherwise free
from influence or control by, the Borrower, the General Partners or
the Guarantors, which rights shall instead be allocated pro rata
among the other remaining Banks, (e) such assignee shall have a net
worth as of the date of such assignment of not less than
$500,000,000, and (f) such assignee shall acquire an interest in
the Loans of not less than $10,000,000. Upon such execution,
delivery, acceptance and recording, of such notice of assignment,
(i) the assignee thereunder shall be a party hereto and all other
Loan Documents executed by the Banks and, to the extent provided in
such assignment, have the rights and obligations of a Bank
hereunder, (ii) the assigning Bank shall, to the extent provided in
such assignment and upon payment to the Agent of the registration
fee referred to in Section 18.2, be released from its obligations
under this Agreement, and (iii) the Agent may unilaterally amend
Schedule 1 to reflect such assignment. In connection with each
assignment, the assignee shall represent and warrant to the Agent,
the assignor and each other Bank as to whether such assignee is
controlling, controlled by, under common control with or is not
otherwise free from influence or control by, the Borrower, the
General Partners and the Guarantors.
Section 18.2. Register. The Agent shall maintain a copy of each
assignment delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the
Banks and the Commitment Percentages of, and principal amount of
the Loans owing to the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and
the Borrower, the Agent and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and
from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Bank agrees to pay to the Agent a
registration fee in the sum of $2,000.
Section 18.3. New Notes. Upon its receipt of an assignment
executed by the parties to such assignment, together with each Note
subject to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt
notice thereof to the Borrower and the Banks (other than the
assigning Bank). Within five Business Days after receipt of such
notice, the Borrower, at its own expense, shall execute and deliver
to the Agent, in exchange for each surrendered Note, a new Note to
the order of such assignee in an amount equal to the amount assumed
by such assignee pursuant to such assignment and, if the assigning
Bank has retained some portion of its obligations hereunder, a new
Note to the order of the assigning Bank in an amount equal to the
amount retained by it hereunder, and shall cause the Guarantors to
deliver to the Agent an acknowledgment in form and substance
satisfactory to the Agent to the effect that the Guaranty extends
to and is applicable to each new Note. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall
be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the
effective date of such assignment and shall otherwise be in
substantially the form of the assigned Notes. The surrendered
Notes shall be canceled and returned to the Borrower.
Section 18.4. Participations. Each Bank may sell participations
to one or more banks or other entities in all or a portion of such
Bank's rights and obligations under this Agreement and the other
Loan Documents; provided that (a) any such sale or participation
shall not affect the rights and duties of the selling Bank
hereunder to the Borrower, (b) such sale and participation shall
not entitle such participant to any rights or privileges under this
Agreement or the Loan Documents (including, without limitation, the
right to approve waivers, amendments or modifications), (c) such
participant shall have no direct rights against the Borrower or the
Guarantors except the rights granted to the Banks pursuant to
Section 13, (d) such sale is effected in accordance with all
applicable laws, and (e) such participant shall not be a Person
controlling, controlled by or under common control with, or which
is not otherwise free from influence or control by, the Borrower,
the General Partners or the Guarantors. Any Bank which sells a
participation shall promptly notify the Agent of such sale and the
identity of the purchaser of such interest.
Section 18.5. Pledge by Bank. Any Bank may at any time pledge
all or any portion of its interest and rights under this Agreement
(including all or any portion of its Note) to any of the twelve
Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or the
enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
Section 18.6. No Assignment by Borrower. The Borrower shall not
assign or transfer any of its rights or obligations under any of
the Loan Documents without the prior written consent of each of the
Banks.
Section 18.7. Disclosure. The Borrower agrees that in addition
to disclosures made in accordance with standard banking practices
any Bank may disclose information obtained by such Bank pursuant to
this Agreement to assignees or participants and potential assignees
or participants hereunder.
Section 19. NOTICES.
Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement (hereinafter in
this Section 19 referred to as "Notice"), but specifically
excluding to the maximum extent permitted by law any notices of the
institution or commencement of foreclosure proceedings, must be in
writing and shall be deemed to have been properly given or served
by personal delivery or by sending same by overnight courier or by
depositing same in the United States Mail, postpaid and registered
or certified, return receipt requested, or as expressly permitted
herein, by telegraph, telecopy, telefax or telex, and addressed as
follows:
If to the Agent or any Bank, at the address set forth on the
signature page for the Agent or such Bank; and
If to the Borrower:
WDN Properties, Ltd.
One Lincoln Center
5400 LBJ Freeway
Suite 400, LB45
Dallas, Texas 75240
Attn: Mark S. Dillinger
Facsimile: 214/788-1550
With a copy to:
Robin K. Minick, Esq.
Munsch Hardt Kopf Harr & Dinan
1445 Ross Avenue
4000 Fountain Place
Dallas, Texas 75202
and to each other Bank which may hereafter become a party to this
Agreement at such address as may be designated by such Bank. Each
Notice shall be effective upon being personally delivered or upon
being sent by overnight courier or upon being deposited in the
United States Mail as aforesaid. The time period in which a
response to such Notice must be given or any action taken with
respect thereto (if any), however, shall commence to run from the
date of receipt if personally delivered or sent by overnight
courier, or if so deposited in the United States Mail, the earlier
of three (3) Business Days following such deposit or the date of
receipt as disclosed on the return receipt. Rejection or other
refusal to accept or the inability to deliver because of changed
address for which no notice was given shall be deemed to be receipt
of the Notice sent. By giving at least fifteen (15) days prior
Notice thereof, the Borrower, a Bank or Agent shall have the right
from time to time and at any time during the term of this Agreement
to change their respective addresses and each shall have the right
to specify as its address any other address within the United
States of America.
Section 20. RELATIONSHIP.
The relationship between each Bank and the Borrower is solely
that of a lender and borrower, and nothing contained herein or in
any of the other Loan Documents shall in any manner be construed as
making the parties hereto partners, joint venturers or any other
relationship other than lender and borrower.
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE
OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN Section
19. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 22. HEADINGS.
The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
Section 23. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original,
and all of which together shall constitute one instrument. In
proving this Agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party
against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the
parties with respect to the transactions contemplated hereby.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided in Section 27.
Section 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.
EACH OF THE BORROWER, THE AGENT AND THE BANKS HEREBY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR
ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(B) ACKNOWLEDGES THAT THE AGENT AND THE BANKS HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH
THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS Section 25. BORROWER ACKNOWLEDGES
THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS Section 25 WITH ITS
LEGAL COUNSEL AND THAT BORROWER AGREES TO THE FOREGOING AS ITS
FREE, KNOWING AND VOLUNTARY ACT.
Section 26. DEALINGS WITH THE BORROWER.
The Banks and their affiliates may accept deposits from, extend
credit to and generally engage in any kind of banking, trust or
other business with the Borrower, the Guarantors, their respective
Subsidiaries, or any of their affiliates regardless of the capacity
of the Bank hereunder.
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Agreement, any
consent or approval required or permitted by this Agreement may be
given, and any term of this Agreement or of any other instrument
related hereto or mentioned herein may be amended, and the
performance or observance by the Borrower of any terms of this
Agreement or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in
a particular instance and either retroactively or prospectively)
with, but only with, the written consent of the Majority Banks.
Notwithstanding the foregoing, none of the following may occur
without the written consent of each Bank: a change in the rate of
interest on and the term of the Notes; a change in the amount of
the Commitments of the Banks; a forgiveness, reduction or waiver of
the principal of any unpaid Loan or any interest thereon or fee
payable under the Loan Documents; a change in the amount of any fee
payable to a Bank hereunder; the postponement of any date fixed for
any payment of principal of or interest on the Loan; an extension
of the Maturity Date (except as provided in Section 2.8); a change
in the manner of distribution of any payments to the Banks or the
Agent; the release of the Borrower or the Guarantors except as
otherwise provided herein; an amendment of the definition of
Majority Banks or of any requirement for consent by all of the
Banks; any modification to require a Bank to fund a pro rata share
of a request for an advance of the Loan made by the Borrower other
than based on its Commitment Percentage; an amendment to this
Section 27; an amendment of the definition of Majority Banks; or an
amendment of any provision of this Agreement or the Loan Documents
which requires the approval of all of the Banks or the Majority
Banks to require a lesser number of Banks to approve such action.
The amount of the Agent's fee payable for the Agent's account and
the provisions of Section 14 may not be amended without the written
consent of the Agent. There shall be no amendment, modification or
waiver of any provision in the Loan Documents with respect to Swing
Loans without the consent of the Swing Loan Bank. No waiver shall
extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Bank in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial
thereto. No notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or
other circumstances.
Section 28. SEVERABILITY.
The provisions of this Agreement are severable, and if any one
clause or provision hereof shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or
part thereof, in such jurisdiction, and shall not in any manner
affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
Section 29. TIME OF THE ESSENCE.
Time is of the essence with respect to each and every covenant,
agreement and obligation of the Borrower under this Agreement and
the other Loan Documents.
Section 30. NO UNWRITTEN AGREEMENTS.
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument as of the date first set forth
above.
WDN PROPERTIES, LTD.,
a Texas limited partnership,
by its sole general partner
By: Walden Residential Properties,
Inc., a
Maryland corporation
By:__________________________
Name:_____________________
Title:____________________
[CORPORATE SEAL]<PAGE>
THE FIRST NATIONAL BANK OF
BOSTON, individually and as
Agent
By: _________________________
Jeffrey L. Warwick,
Director
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
The First National Bank of Boston
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jeffrey L. Warwick
Facsimile: 770/390-8434
BANK OF MONTREAL,
CHICAGO BRANCH
By: _________________________
Title: ______________________
Bank of Montreal, Chicago Branch
Real Estate Division
115 South LaSalle Street
Chicago, Illinois 60603
Attn: Mary Lou Koys
Facsimile: 312/750-4352
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES
By: _________________________
Title: ______________________
Attest: ______________________
Title: ______________________
Dresdner Bank AG New York and
Grand Cayman Branches
75 Wall Street
New York, New York 10005-2889
Attn: Johannes Boeckmann
Facsimile: 212/429-2129
SIGNET BANK
By: _________________________
Title: ______________________
Signet Bank
7799 Leesburg Pike
Falls Church, Virginia 22043
Attn: John Schissel
Facsimile: 703/506-0284
UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE
FOR AND IN CONSIDERATION OF the sum of Ten and No/100 Dollars
($10.00) and other good and valuable consideration paid or
delivered to the undersigned WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation (hereinafter referred to as "Walden"),
WALDEN RESIDENTIAL OPERATING PARTNERSHIP, L.P., a Georgia limited
partnership (hereinafter referred to as "WROP"), and WDN
PROPERTIES, INC., a New York corporation (hereinafter referred to
as "WDN Properties"; Walden, WROP and WDN Properties are
sometimes hereinafter referred to individually as "Guarantor" and
collectively as "Guarantors"), the receipt and sufficiency
whereof are hereby acknowledged by Guarantors, and for the
purpose of seeking to induce THE FIRST NATIONAL BANK OF BOSTON, a
national banking association, BANK OF MONTREAL, CHICAGO BRANCH,
DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES, and SIGNET
BANK (hereinafter referred to collectively as"Lender", which term
shall also include each other Bank which may now or hereafter
become party to the "Credit Agreement" (as hereinafter defined)
and shall also include any such individual Bank acting as agent
for all of the Banks), to extend credit or otherwise provide
financial accommodations to WDN PROPERTIES, LTD., a Texas limited
partnership (hereinafter referred to as "Borrower"), which
extension of credit and provision of financial accommodations
will be to the direct interest, advantage and benefit of
Guarantors, Guarantors do hereby, jointly and severally
absolutely, unconditionally and irrevocably guarantee to Lender:
(a) the full and prompt payment when due, whether by
acceleration or otherwise, either before or after maturity
thereof, of (i) that certain Note of even date herewith made by
Borrower to the order of FNBB in the principal face amount of
Eighty Million and No/100 Dollars ($80,000,000.00) and that
certain Swing Loan Note of even date herewith made by Borrower to
the order of FNBB in the principal face amount of Ten Million and
No/100 Dollars ($10,000,000.00) (hereinafter referred to
collectively as the "FNBB Note"), and (ii) those certain Notes
(hereinafter referred to collectively as the "Additional Notes")
of even date herewith made by Borrower to the order of the Banks
(other than FNBB) in the aggregate principal face amount of
Seventy Million and No/100 Dollars ($70,000,000.00), together
with interest as provided in the FNBB Note and the Additional
Notes, together with any replacements, supplements, renewals,
modifications, consolidations, restatements and extensions
thereof; and
(b) the full and prompt payment when due, whether by
acceleration or otherwise, either before or after maturity
thereof, of each other note as may be issued under that certain
Revolving Credit Agreement dated of even date herewith
(hereinafter referred to as the "Credit Agreement") among
Borrower and FNBB, for itself and as agent, and the other lenders
now or hereafter a party thereto, together with interest as
provided in each such note, together with any replacements,
supplements, renewals, modifications, consolidations,
restatements and extensions thereof (the FNBB Note, the
Additional Notes and each of the notes described in this
subparagraph (b) is hereinafter referred to collectively as the
"Note"); and
(c) the full and prompt payment and performance of all
obligations of Borrower to Lender under the terms of the Credit
Agreement, including, without limitation, the obligations of
Borrower concerning hazardous materials contained in Section 8.6 of the
Credit Agreement, together with any replacements, supplements,
renewals, modifications, consolidations, restatements and
extensions thereof; and
(d) the full and prompt payment and performance of any and
all other obligations of Borrower to Lender under any other
agreements, documents or instruments now or hereafter evidencing,
securing or otherwise relating to the indebtedness evidenced by
the Note or the Credit Agreement (the Note, the Credit Agreement
and said other agreements, documents and instruments are
hereinafter collectively referred to as the "Loan Documents" and
individually referred to as a "Loan Document"). All terms used
herein and not otherwise defined herein shall have the meanings
set forth in the Credit Agreement.
1. Agreement to Pay and Perform; Costs of Collection.
Guarantors do hereby agree that if the Note is not paid by
Borrower in accordance with its terms, or if any and all sums
which are now or may hereafter become due from Borrower to Lender
under the Loan Documents are not paid by Borrower in accordance
with their terms, or if any and all other obligations of Borrower
to Lender under the Note and the Loan Documents are not performed
by Borrower in accordance with their terms, Guarantors will
immediately make such payments and perform such obligations.
Guarantors further agree to pay Lender on demand all reasonable
costs and expenses (including court costs and reasonable
attorneys' fees and disbursements) paid or incurred by Lender in
endeavoring to collect the indebtedness guaranteed hereby, to
enforce any of the other obligations of Borrower guaranteed
hereby, or any portion thereof, or to enforce this Guaranty, and
until paid to Lender, such sums shall bear interest at the
default rate set forth in the Credit Agreement unless collection
from Guarantors of interest at such rate would be contrary to
applicable law, in which event such sums shall bear interest at
the highest rate which may be collected from Guarantors under
applicable law.
2. Reinstatement of Refunded Payments. If, for any reason,
any payment to Lender of any of the obligations guaranteed
hereunder is required to be refunded by Lender to Borrower, or
paid or turned over to any other person, including, without
limitation, by reason of the operation of bankruptcy,
reorganization, receivership or insolvency laws or similar laws
of general application relating to creditors' rights and remedies
now or hereafter enacted, Guarantors agree to pay the amount so
required to be refunded, paid or turned over (the "Turnover
Payment"), the obligations of Guarantors shall not be treated as
having been discharged by the original payment to Lender giving
rise to the Turnover Payment, and this Guaranty shall be treated
as having remained in full force and effect for any such Turnover
Payment so made by Lender, as well as for any amounts not
theretofore paid to Lender on account of such obligations.
3. Rights of Lender to Deal with Collateral, Borrower and
Other Persons. Each Guarantor hereby consents and agrees that
Lender may at any time, and from time to time, without thereby
releasing any Guarantor from any liability hereunder and without
notice to or further consent from any other Guarantor, either
with or without consideration: release or surrender any lien or
other security of any kind or nature whatsoever held by it or by
any person, firm or corporation on its behalf or for its account,
securing any indebtedness or liability hereby guaranteed;
substitute for any collateral so held by it, other collateral of
like kind, or of any kind; modify the terms of the Note or the
Loan Documents; extend or renew the Note for any period; grant
releases, compromises and indulgences with respect to the Note or
the Loan Documents and to any persons or entities now or
hereafter liable thereunder or hereunder; release any other
Guarantor, surety, endorser or accommodation party of the Note or
any other Loan Documents; or take or fail to take any action of
any type whatsoever. No such action which Lender shall take or
fail to take in connection with the Note or the Loan Documents,
or any of them, or any security for the payment of the
indebtedness of Borrower to Lender or for the performance of any
obligations or undertakings of Borrower, nor any course of
dealing with Borrower or any other person, shall release any
Guarantor's obligations hereunder, affect this Guaranty in any
way or afford any Guarantor any recourse against Lender. The
provisions of this Guaranty shall extend and be applicable to all
replacements, supplements, renewals, amendments, extensions,
consolidations, restatements and modifications of the Note and
the Loan Documents, and any and all references herein to the Note
and the Loan Documents shall be deemed to include any such
replacements, supplements, renewals, extensions, amendments,
consolidations, restatements or modifications thereof. Without
limiting the generality of the foregoing, Guarantors acknowledge
the terms of Section 18.3 of the Credit Agreement and agrees that
this Guaranty shall extend and be applicable to each new or
replacement note delivered by Borrower pursuant thereto without
notice to or further consent from Guarantors.
4. No Contest with Lender; Subordination. So long as any
obligation hereby guaranteed remains unpaid or undischarged,
Guarantors will not, by paying any sum recoverable hereunder
(whether or not demanded by Lender) or by any means or on any
other ground, claim any set-off or counterclaim against Borrower
in respect of any liability of Guarantors to Borrower or, in
proceedings under federal bankruptcy law or insolvency
proceedings of any nature, prove in competition with Lender in
respect of any payment hereunder or be entitled to have the
benefit of any counterclaim or proof of claim or dividend or
payment by or on behalf of Borrower or the benefit of any other
security for any obligation hereby guaranteed which, now or
hereafter, Lender may hold or in which it may have any share.
Guarantors hereby expressly waive any right of contribution from
or indemnity against Borrower, whether at law or in equity,
arising from any payments made by Guarantors pursuant to the
terms of this Guaranty, and Guarantors acknowledge that
Guarantors have no right whatsoever to proceed against Borrower
for reimbursement of any such payments. In connection with the
foregoing, Guarantors expressly waive any and all rights of
subrogation to Lender against Borrower, and Guarantors hereby
waive any rights to enforce any remedy which Lender may have
against Borrower and any rights to participate in any collateral
for Borrower's obligations under the Loan Documents. Guarantors
hereby subordinate any and all indebtedness of Borrower now or
hereafter owed to Guarantors to all indebtedness of Borrower to
Lender, and agree with Lender that (a) Guarantors shall not
demand or accept any payment from Borrower on account of such
indebtedness, (b) Guarantors shall not claim any offset or other
reduction of Guarantors' obligations hereunder because of any
such indebtedness, and (c) Guarantors shall not take any action
to obtain any interest in any of the security described in and
encumbered by the Loan Documents because of any such
indebtedness; provided, however, that, if Lender so requests,
such indebtedness shall be collected, enforced and received by
Guarantors as trustee for Lender and be paid over to Lender on
account of the indebtedness of Borrower to Lender, but without
reducing or affecting in any manner the liability of Guarantors
under the other provisions of this Guaranty except to the extent
the principal amount of such outstanding indebtedness shall have
been reduced by such payment.
5. Waiver of Defenses. Guarantors hereby agree that their
obligations hereunder shall not be affected or impaired by, and
hereby waive and agree not to assert or take advantage of any
defense based on:
(a) any statute of limitations in any action hereunder or
for the collection of the Note or for the payment or performance
of any obligation hereby guaranteed;
(b) the incapacity, lack of authority, death or disability
of Borrower or any other person or entity, or the failure of
Lender to file or enforce a claim against the estate (either in
administration, bankruptcy or in any other proceeding) of
Borrower or any Guarantor or any other person or entity;
(c) the dissolution or termination of existence of Borrower
or any Guarantor;
(d) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of
Borrower;
(e) the voluntary or involuntary receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, assignment, composition, or readjustment of, or
any similar proceeding affecting, Borrower or any Guarantor, or
any of Borrower's or any Guarantor's properties or assets;
(f) the damage, destruction, condemnation, foreclosure or
surrender of all or any part of the Real Estate or any of the
improvements located thereon;
(g) the failure of Lender to give notice of the existence,
creation or incurring of any new or additional indebtedness or
obligation or of any action or nonaction on the part of any other
person whomsoever in connection with any obligation hereby
guaranteed;
(h) any failure or delay of Lender to commence an action
against Borrower, to assert or enforce any remedies against
Borrower under the Note or the Loan Documents, or to realize upon
any security;
(i) any failure of any duty on the part of Lender to
disclose to any Guarantor any facts it may now or hereafter know
regarding Borrower, the Real Estate or any of the improvements
located thereon, whether such facts materially increase the risk
to Guarantors or not;
(j) failure to accept or give notice of acceptance of this
Guaranty by Lender;
(k) failure to make or give notice of presentment and
demand for payment of any of the indebtedness or performance of
any of the obligations hereby guaranteed;
(l) failure to make or give protest and notice of dishonor
or of default to Guarantors or to any other party with respect to
the indebtedness or performance of obligations hereby guaranteed;
(m) any and all other notices whatsoever to which
Guarantors might otherwise be entitled;
(n) any lack of diligence by Lender in collection,
protection or realization upon any collateral securing the
payment of the indebtedness or performance of obligations hereby
guaranteed;
(o) the invalidity or unenforceability of the Note or any
of the Loan Documents;
(p) the compromise, settlement, release or termination of
any or all of the obligations of Borrower under the Note or the
Loan Documents;
(q) any transfer by Borrower of all or any part of the
security encumbered by the Loan Documents;
(r) the failure of Lender to perfect any security or to
extend or renew the perfection of any security; or
(s) to the fullest extent permitted by law, any other
legal, equitable or surety defenses whatsoever to which
Guarantors might otherwise be entitled, it being the intention
that the obligations of Guarantors hereunder are absolute,
unconditional and irrevocable.
6. Guaranty of Payment and Performance and Not of
Collection. This is a Guaranty of payment and performance and
not of collection. The liability of Guarantors under this
Guaranty shall be primary, direct and immediate and not
conditional or contingent upon the pursuit of any remedies
against Borrower or any other person, nor against securities or
liens available to Lender, its successors, successors in title,
endorsees or assigns. Guarantors hereby waive any right to
require that an action be brought against Borrower or any other
person or to require that resort be had to any security or to any
balance of any deposit account or credit on the books of Lender
in favor of Borrower or any other person.
7. Rights and Remedies of Lender. In the event of a default
under the Note or the Loan Documents, or any of them, Lender
shall have the right to enforce its rights, powers and remedies
thereunder or hereunder or under any other agreement, document or
instrument now or hereafter evidencing, securing or otherwise
relating to the indebtedness evidenced by the Note or secured by
the Loan Documents, in any order, and all rights, powers and
remedies available to Lender in such event shall be nonexclusive
and cumulative of all other rights, powers and remedies provided
thereunder or hereunder or by law or in equity. Accordingly,
Guarantors hereby authorize and empower Lender upon the
occurrence of any event of default under the Note or the Loan
Documents, at its sole discretion, and without notice to
Guarantors, to exercise any right or remedy which Lender may
have, including, but not limited to, judicial foreclosure,
exercise of rights of power of sale, acceptance of a deed or
assignment in lieu of foreclosure, appointment of a receiver to
collect rents and profits, exercise of remedies against personal
property, or enforcement of any assignment of leases, as to any
security, whether real, personal or intangible. At any public or
private sale of any security or collateral for any indebtedness
or any part thereof guaranteed hereby, whether by foreclosure or
otherwise, Lender may, in its discretion, purchase all or any
part of such security or collateral so sold or offered for sale
for its own account and may apply against the amount bid therefor
all or any part of the balance due it pursuant to the terms of
the Note or any other Loan Document without prejudice to Lender's
remedies hereunder against Guarantors for deficiencies. If the
indebtedness guaranteed hereby is partially paid by reason of the
election of Lender to pursue any of the remedies available to
Lender, or if such indebtedness is otherwise partially paid, this
Guaranty shall nevertheless remain in full force and effect, and
Guarantors shall remain liable for the entire balance of the
indebtedness guaranteed hereby even though any rights which
Guarantors may have against Borrower may be destroyed or
diminished by the exercise of any such remedy.
8. Application of Payments. Guarantors hereby authorize
Lender, without notice to Guarantors, to apply all payments and
credits received from Borrower or from Guarantors or realized
from any security in such manner and in such priority as Lender
in its sole judgment shall see fit to the indebtedness,
obligation and undertakings which are the subject of this
Guaranty.
9. Business Failure, Bankruptcy or Insolvency. In the event
of the business failure of any Guarantor or if there shall be
pending any bankruptcy or insolvency case or proceeding with
respect to any Guarantor under federal bankruptcy law or any
other applicable law or in connection with the insolvency of any
Guarantor, or if a liquidator, receiver, or trustee shall have
been appointed for any Guarantor or any Guarantor's properties or
assets, Lender may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of Lender allowed in any proceedings relative to such
Guarantor, or any of such Guarantor's properties or assets, and,
irrespective of whether the indebtedness or other obligations of
Borrower guaranteed hereby shall then be due and payable, by
declaration or otherwise, Lender shall be entitled and empowered
to file and prove a claim for the whole amount of any sums or
sums owing with respect to the indebtedness or other obligations
of Borrower guaranteed hereby, and to collect and receive any
moneys or other property payable or deliverable on any such
claim. Guarantors covenant and agree that upon the commencement
of a voluntary or involuntary bankruptcy proceeding by or against
Borrower, Guarantors shall not seek a supplemental stay or
otherwise pursuant to 11 U.S.C. Section 105 or any other provision of
the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law, or
otherwise) of any jurisdiction whatsoever, now or hereafter in
effect, which may be or become applicable, to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any
rights of Lender against Guarantors by virtue of this Guaranty or
otherwise.
10. Financial Statements and Other Information. Guarantors
hereby represent and warrant to Lender that all financial
statements of Guarantors and their respective Subsidiaries
heretofore delivered by Guarantors to Lender are true and correct
in all material respects, have been prepared in accordance with
generally accepted accounting principles consistently applied,
and fairly present the financial condition of Guarantors and
their respective Subsidiaries as at the close of business on the
date thereof and the results of operations for the period then
ended; that no material adverse change has occurred in the
assets, liabilities, financial condition or business of
Guarantors and their respective Subsidiaries as shown or
reflected therein since the date thereof; and that Guarantors and
their respective Subsidiaries have no liabilities or known
contingent liabilities involving material amounts which are not
reflected in such financial statements or referred to in the
notes thereto other than Guarantors' obligations under this
Guaranty. Guarantors hereby agree that until all indebtedness
guaranteed hereby has been completely repaid, all obligations and
undertakings of Borrower under, by reason of, or pursuant to the
Note and the Loan Documents have been completely performed and
Lender has no further obligation to make Loans to Borrower
pursuant to the Credit Agreement, Guarantors will deliver to
Lender:
(a) all financial statements, balance sheets, reports,
certifications or other financial information required to be
delivered by Guarantors to Lender pursuant to the Credit
Agreement as and when required;
(b) contemporaneously with the delivery of the financial
statements referred to in Section 7.4(a) of the Credit Agreement, a
statement of all contingent liabilities of Guarantors which are
not reflected in such financial statements or referred to in the
notes thereto (including, without limitation, all guarantees,
endorsements and other contingent obligations in respect of
indebtedness of others, and obligations to reimburse the issuer
in respect of any letters of credit), and a statement of
projected cash flows of Guarantors for the current fiscal year,
all in reasonable detail and certified by the principal financial
or accounting officer of Guarantors;
(c) promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and
amendments thereto of Guarantors;
(d) concurrently with the delivery of the financial
statements described in Section 7.4(b) and (c) of the Credit Agreement,
a certificate signed by the President or Chief Financial Officer
of Guarantors to the effect that, having read this Guaranty, and
that based upon an examination which they deem sufficient to
enable them to make an informed statement, there does not exist
any Default or Event of Default, or if such Default or Event of
Default has occurred, specifying the facts with respect thereto;
(e) promptly upon becoming aware thereof, written notice
from Guarantors of any event or condition which might have a
material adverse effect on the business, operations, assets,
condition (financial or otherwise) or prospects of Guarantors or
the ability of Guarantors to perform under this Guaranty
(including but not limited to, litigation commenced or threatened
in writing against any Guarantor, judgments rendered against any
Guarantor, liens filed against any property of a Guarantor,
defaults claimed under indebtedness for borrowed money for which
a Guarantor is primarily or secondarily liable, or bankruptcy,
insolvency or trustee or receivership proceedings commenced
against a Guarantor), such notice to specify the nature and the
period of existence of such event or condition, the anticipated
effect thereof, and what action Guarantors are taking or propose
to take with respect thereto; and
(f) with reasonable promptness, such other information
respecting the business, operations, assets, liabilities and
financial condition of Guarantors as Lender may from time to time
reasonably request.
Guarantors will permit any officer designated by Lender, at
Guarantors' expense, to visit and inspect any of the properties
of Guarantors and their respective Subsidiaries, to examine the
records and books of account of Guarantors (and to make copies
thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of Guarantors with, and to be advised as to
the same by, its officers, all at such reasonable times and
intervals Lender may reasonably request.
11. Covenants of Guarantors. Guarantors hereby covenant and
agree with Lender that until all indebtedness guaranteed hereby
has been completely repaid, all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed and Lender has no
further obligation to make Loans to Borrower pursuant to the
Credit Agreement:
(a) Guarantors will, and will cause each of their
respective Subsidiaries to, do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate or legal existence, material rights and franchises, as
applicable, to effect and maintain its foreign qualifications,
licensing, domestication or authorization, and to comply with all
applicable laws and regulations (including, without limitation,
environmental laws);
(b) Guarantors will, and will cause each of their
respective Subsidiaries to, duly pay and discharge, before the
same shall become in arrears, all taxes, assessments and other
governmental charges imposed upon it and its properties, sales or
activities, or upon the income or profits therefrom, as well as
claims for labor, material, or supplies which if unpaid might
become a lien or charge on any of its property; provided that any
such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if Guarantors or such
Subsidiary shall have set aside on its books adequate reserves
with respect thereto; and provided further that Guarantors or
such Subsidiary shall pay all such taxes, assessments, charges
and claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor;
(c) Guarantors will, and will cause each of their
respective Subsidiaries to, maintain and keep the properties used
or deemed by it to be useful in its business in first-class
repair, working order and condition, and make or cause to be made
all necessary and proper repairs thereto and replacements
thereof;
(d) Guarantors will, and will cause each of their
respective Subsidiaries to, maintain with financially sound and
reputable insurers, insurance with respect to its properties and
business against such casualties and contingencies and in such
types and amounts as shall be in accordance with sound business
practices for companies in similar business similarly situated;
(e) Guarantors will keep, and will cause each of their
respective Subsidiaries to keep, complete, proper and accurate
records and books of account in which full, true and correct
entries will be made in accordance with generally accepted
accounting principles consistent with the preparation of the
financial statements heretofore delivered to Lender and will
maintain adequate accounts and reserves for all taxes (including
income taxes), all depreciation, depletion, and amortization of
its properties and the properties of its Subsidiaries, all other
contingencies, and all other proper reserves;
(f) Guarantors will not, and will not permit any of
Walden's Subsidiaries to, create, incur, assume, guarantee or be
or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(i) Indebtedness to Lender arising under any of the
Note, the Loan Documents and this Guaranty;
(ii) current liabilities of Guarantors incurred in
the ordinary course of business but not incurred through the
borrowing of money or the obtaining of credit except for
credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods
and services;
(iii) Indebtedness in respect of taxes, assessments
and governmental charges to the extent that payment therefor
shall not at the time be required to be made in accordance
with the provisions of subparagraph (b) of this paragraph;
(iv) Indebtedness in respect of judgments or awards
that have been in force for less than the applicable period
for taking an appeal so long as execution is not levied
thereunder or in respect of which Guarantors shall at the
time in good faith be prosecuting an appeal or proceedings
for review and in respect of which a stay of execution shall
have been obtained pending such appeal or review;
(v) endorsements for collection, deposit or
negotiation and warranties of products or services, in each
case incurred in the ordinary course of business; and
(vi) Indebtedness permitted under Section8.1 of the
Credit Agreement.
(g) Guarantors will not, and will not permit any of
their respective Subsidiaries to, create or incur or suffer to
be created or incurred or to exist any Lien; provided that
Guarantors and any Subsidiary of Guarantors may create or incur
or suffer to be created or incurred or to exist:
(i) liens to secure taxes, assessments and other
governmental charges or claims for labor, material or
supplies in respect of obligations not overdue;
(ii) liens with respect of judgments or awards, the
Indebtedness with respect to which is permitted by
subparagraph (f)(iv) of this paragraph;
(iii) liens in favor of Lender as security for the
Obligations; and
(iv) liens specifically permitted pursuant to
Section 8.2 of the Credit Agreement;
(h) Guarantors will not, and will not permit any of
their respective Subsidiaries to, become a party to any merger,
consolidation or other business combination, or agree to effect
any asset acquisition, stock acquisition or other acquisition
without the prior written consent of the Majority Banks, which
consent shall not be unreasonably withheld, except (i) the merger
or consolidation or one or more of the Subsidiaries of a
Guarantor with and into a Guarantor, or (ii) the merger or
consolidation of two or more Subsidiaries of a Guarantor;
provided, however, that in no event shall the Borrower or any
Guarantor be merged, consolidated or combined with or into any
Guarantor or any Subsidiary thereof without the prior written
consent of the Majority Banks;
(i) Walden will not, and will not permit any of its
Subsidiaries to, become a party to or agree to or affect any
disposition of assets, other than Distributions to its
shareholders as permitted in the Credit Agreement;
(j) Walden will not, directly or indirectly, make or
permit to be made, by voluntary or involuntary means, (i) any
sale, assignment, transfer, disposition, mortgage, pledge,
hypothecation or encumbrance of its interest in Borrower, WDN
Properties, WROP or WDN Operating, Inc., or any dilution of its
interest in Borrower, WDN Properties, WROP or WDN Operating,
Inc., or (ii) any sale, assignment, transfer, disposition,
mortgage, pledge, hypothecation or encumbrance of the interest of
Walden Operating, Inc. in WROP, or any dilution of the interest
of Walden Operating, Inc. in WROP;
(k) WDN Properties will not, directly or indirectly,
make or permit to be made, by voluntary or involuntary means, any
sale, assignment, transfer, disposition, mortgage, pledge,
hypothecation or encumbrance of its interest in Borrower or WROP,
or any dilution of its interest in Borrower or WROP;
(l) Walden shall contribute or otherwise downstream to
Borrower any cash or other assets received by Walden from third
parties (including, without limitation, the proceeds from any
Debt Offering or Equity Offering);
(m) Subject to the terms of the Credit Agreement,
Walden shall at all times comply with all requirements of
applicable laws and regulations necessary to maintain REIT Status
and shall operate, and shall cause its Subsidiaries to operate,
their respective businesses as described in the Prospectus and in
compliance with the terms and conditions of this Guaranty and the
other Loan Documents;
(n) Subject to Section 8.7 of the Credit Agreement, Walden
shall cause all of its Subsidiaries to promptly distribute to
Walden (but not less frequently than once each fiscal quarter of
Walden), whether in the form of dividends, distributions or
otherwise, all profits, proceeds or other income relating to or
arising from its Subsidiaries' use, operation, financing,
refinancing, sale or other disposition of their respective assets
and properties after (a) the payment by each Subsidiary of its
Debt Service and operating expenses for such quarter and (b) the
establishment of reasonable reserves for the payment of operating
expenses not paid on at least a quarterly basis and capital
improvements to be made to such Subsidiary's assets and
properties approved by such Subsidiary in the ordinary course of
business consistent with its past practices;
(o) Guarantors shall at all times comply with all
covenants and provisions of the Credit Agreement and the Loan
Documents applicable to Guarantors, including without limitation,
the provisions of Section 8.7 and Section 9.2 of the Credit Agreement
applicable to Walden; and
(p) Guarantors will cooperate with Lender and execute
such further instruments and documents as Lender shall reasonably
request to carry out to their satisfaction the transactions
contemplated by this Guaranty and the other Loan Documents.
12. Security and Rights of Set-off. Guarantors hereby
grant to Lender, as security for the full and prompt payment and
performance of Guarantors' obligations hereunder, a continuing
lien on and security interest in any and all securities or other
property belonging to Guarantors now or hereafter held by Lender
and in any and all deposits (general or specific, time or demand,
provisional or final, regardless of currency, maturity, or the
branch of Lender where the deposits are held) now or hereafter
held by Lender and other sums credited by or due from Lender to a
Guarantor or subject to withdrawal by a Guarantor; and regardless
of the adequacy of any collateral or other means of obtaining
repayment of such obligations, during the continuance of any
Event of Default under the Note or the Loan Documents, Lender may
at any time and without notice to Guarantors set-off and apply
the whole or any portion or portions of any or all such deposits
and other sums against amounts payable under this Guaranty,
whether or not any other person or persons could also withdraw
money therefrom. Any security now or hereafter held by or for
Guarantors and provided by Borrower, or by anyone on Borrower's
behalf, in respect of liabilities of Guarantors hereunder shall
be held in trust for Lender as security for the liabilities of
Guarantors hereunder.
13. Changes in Writing; No Revocation. This Guaranty may
not be changed orally, and no obligation of Guarantors can be
released or waived by Lender except by a writing signed by a duly
authorized officer of Lender. This Guaranty shall be irrevocable
by Guarantors until all indebtedness guaranteed hereby has been
completely repaid and all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed and Borrower has no
further rights to receive Loans under the Credit Agreement.
14. Notices. All notices, demands or requests provided for
or permitted to be given pursuant to this Guaranty (hereinafter
in this paragraph referred to as "Notice") must be in writing and
shall be deemed to have been properly given or served by personal
delivery or by sending same by overnight courier or by depositing
the same in the United States mail, postpaid and registered or
certified, return receipt requested, at the addresses set forth
below. Each Notice shall be effective upon being delivered
personally or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid. The time
period in which a response to any such Notice must be given or
any action taken with respect thereto, however, shall commence to
run from the date of receipt if personally delivered or sent by
overnight courier or, if so deposited in the United States Mail,
the earlier of three (3) Business Days following such deposit and
the date of receipt as disclosed on the return receipt.
Rejection or other refusal to accept or the inability to deliver
because of changed address of which no Notice was given shall be
deemed to be receipt of the Notice sent. By giving at least
fifteen (15) days prior Notice thereof, Guarantors or Lender
shall have the right from time to time and at any time during the
term of this Guaranty to change their respective addresses and
each shall have the right to specify as its address any other
address within the United States of America. For the purposes of
this Guaranty:
The address of Lender is:
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
with a copy to:
The First National Bank of Boston
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jeffrey L. Warwick
and a copy to each other Lender which may now or hereafter become
a party to the Credit Agreement at such address as may be
designated by such Lender.
The address of Guarantors is:
Walden Residential Properties, Inc.
One Lincoln Center
5400 LBJ Freeway
Suite 400, LB45
Dallas, Texas 75240
Attn: Mark S. Dillinger
and to:
Walden Residential Operating Partnership, L.P.
One Lincoln Center
5400 LBJ Freeway
Suite 400, LB45
Dallas, Texas 75240
Attn: Mark S. Dillinger
and to:
WDN Properties, Inc.
80 Business Park Drive
Suite 309
Armonk, New York 10504
Attn: President
with a copy to:
Robin K. Minick, Esq.
Munsch Hardt Kopf Harr & Dinan
1445 Ross Avenue
4000 Fountain Place
Dallas, Texas 75202
15. Governing Law. GUARANTORS ACKNOWLEDGE AND AGREE THAT
THIS GUARANTY AND THE OBLIGATIONS OF GUARANTORS HEREUNDER SHALL
BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
16. CONSENT TO JURISDICTION; WAIVERS. GUARANTORS HEREBY
IRREVOCABLY AND UNCONDITIONALLY (A) SUBMIT TO PERSONAL
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY,
AND (B) WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, (II) TO OBJECT
TO JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE
IN ANY PARTICULAR FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS,
AND (III) TO THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN OR IN ADDITION TO ACTUAL DAMAGES. GUARANTORS AGREE THAT, IN
ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION
OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO GUARANTORS AT THE ADDRESS SET
FORTH IN PARAGRAPH 14 ABOVE, AND SERVICE SO MADE SHALL BE
COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL BE SO MAILED.
NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER FROM
BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS
AGAINST ANY SECURITY AND AGAINST GUARANTORS PERSONALLY, AND
AGAINST ANY PROPERTY OF GUARANTORS, WITHIN ANY OTHER STATE.
INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION
IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE
AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF
GUARANTORS AND LENDER HEREUNDER OR OF THE SUBMISSION HEREIN MADE
BY GUARANTORS TO PERSONAL JURISDICTION WITHIN THE COMMONWEALTH OF
MASSACHUSETTS. EACH GUARANTOR HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
GUARANTORS CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND ACKNOWLEDGE THAT LENDER HAS BEEN INDUCED TO
ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS TO WHICH
THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS PARAGRAPH 16. GUARANTORS
ACKNOWLEDGE THAT THEY HAVE HAD AN OPPORTUNITY TO REVIEW THIS
PARAGRAPH 16 WITH THEIR LEGAL COUNSEL AND THAT GUARANTORS AGREE
TO THE FOREGOING AS THEIR FREE, KNOWING AND VOLUNTARY ACT.
17. Successors and Assigns. The provisions of this
Guaranty shall be binding upon Guarantors and their respective
heirs, successors, successors in title, legal representatives,
and assigns, and shall inure to the benefit of Lender, its
successors, successors in title, legal representatives and
assigns.
18. Assignment by Lender. This Guaranty is assignable by
Lender in whole or in part in conjunction with any assignment of
the Note or portions thereof, and any assignment hereof or any
transfer or assignment of the Note or portions thereof by Lender
shall operate to vest in any such assignee the rights and powers,
in whole or in part, as appropriate, herein conferred upon and
granted to Lender.
19. Severability. If any term or provision of this
Guaranty shall be determined to be illegal or unenforceable, all
other terms and provisions hereof shall nevertheless remain
effective and shall be enforced to the fullest extent permitted
by law.
20. Disclosure. Guarantors agree that in addition to
disclosures made in accordance with standard banking practices,
any Lender may disclose information obtained by such Lender
pursuant to this Guaranty to assignees or participants and
potential assignees or participants hereunder.
21. No Unwritten Agreements. THIS GUARANTY REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
22. Time of the Essence. Time is of the essence with
respect to each and every covenant, agreement and obligation of
Guarantors under this Guaranty.
23. Ratification. Guarantors do hereby restate, reaffirm
and ratify each and every warranty and representation regarding
Guarantors or their Subsidiaries set forth in the Credit
Agreement as if the same were more fully set forth herein.
24. Joint and Several Liability. Each of the Guarantors
covenants and agrees that each and every covenant and obligation
of Guarantors hereunder shall be the joint and several
obligations of each of the Guarantors.
25. Counterparts. This Guaranty and any amendment hereof
may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Guaranty it shall not
be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is
sought.
IN WITNESS WHEREOF, Guarantors have executed this Guaranty
under seal this _____ day of December, 1996.
WALDEN RESIDENTIAL PROPERTIES,
INC.,
a Maryland corporation
By: ______________________________
Title: ___________________________
[CORPORATE SEAL]
WALDEN RESIDENTIAL OPERATING
PARTNERSHIP, L.P., a Georgia
limited partnership, by its sole
general partner
By: Walden Operating, Inc.
a Delaware corporation
By: _________________________
Title: ______________________
[CORPORATE SEAL]
WDN PROPERTIES, INC.,
a New York corporation
By: ______________________________
Title: ___________________________
[CORPORATE SEAL]
SECOND AMENDMENT TO AGREEMENT
OF SALE AND PURCHASE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (this
"Amendment") is entered into effective as of December ___, 1996, by
and between NASHBORO VILLAGE, L.L.C., a Delaware limited liability
company ("Additional Property Seller"), NASHBORO VILLAGE
APARTMENTS, L.P., a Delaware limited partnership ("Seller"), and
WALDEN RESIDENTIAL, INC., a Maryland corporation ("Purchaser").
R E C I T A L S:
A. Seller and Purchaser entered into that certain Agreement
of Sale and Purchase dated as of November 15, 1996 (the
"Agreement"), as amended by that certain First Amendment to
Agreement of Sale and Purchase executed effective as of
November 25, 1996 (the "First Amendment") pertaining to the sale of
certain property more particularly described therein and commonly
known as the Nashboro Village Apartments, Nashville, Tennessee
("Property"). Unless otherwise defined herein, all words
designated with initial capital letters shall have the meanings as
set forth in the Agreement.
B. Purchaser and Seller desire to further amend the
Agreement, and Additional Property Seller desires to join in this
Amendment and in the Agreement as amended hereby, to the extent
that the Agreement as to amended covers the Additional Property and
provides for rights and obligations of Additional Property Seller,
to reflect said parties' agreement regarding certain matters as set
forth below.
NOW, THEREFORE, for and in consideration of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the undersigned parties
agree as follows:
1. ADDITIONAL SELLER. The introductory paragraph of the
Agreement is hereby amended to add, after the defined term
("Seller"), the following:
and Nashboro Village, L.L.C., a Delaware limited
liability company ("Additional Property Seller")
2. ADDITIONAL PROPERTY.
(A) The Agreement is hereby amended to add a new Section
1.2, in its entirety as follows:
1.2 Sale and Purchase. Additional Property Seller
agrees to sell and convey unto Purchaser, and Purchaser agrees
to purchase and accept from Additional Property Seller, for
the price and subject to the terms, covenants, conditions and
provisions herein set forth, the following:
(a) All of that certain land (the "Additional Land") in
Nashville, Tennessee, being more particularly described on
Exhibit "A-1" attached hereto and incorporated herein by this
reference for all purposes;
(b) All right, title and interest of Additional Property
Seller in and to all structures, improvements and fixtures
(collectively, "Additional Improvements") located on the
Additional Land. The Additional Land and the Additional
Improvements are sometimes referred to herein collectively as
the "Additional Real Property", and consist primarily of a
tennis facility, marketing center and undeveloped land.
(c) All right, title and interest of Additional Property
Seller, if any, in and to any land lying in the bed of any
street, road or access way, opened or proposed, in front of,
at a side of or adjoining the Additional Land to the
centerline thereof ("Additional Property Rights");
(d) All right, title and interest of Additional Property
Seller, reversionary or otherwise, in and to all easements in
or upon the Additional Land and all other rights and
appurtenances belonging or in anywise pertaining thereto, if
any ("Additional Appurtenances");
(e) All furniture, carpeting, draperies, appliances,
building supplies, equipment, machinery, inventory and other
items of personal property owned by Seller and presently
affixed or attached to, placed or situated upon the Additional
Real Property and used solely in connection with the
ownership, operation and occupancy of the Additional Real
Property ("Additional Personalty"), but specifically excluding
property owned by third parties and leased to Additional
Property Seller;
(f) Additional Property Seller's interest in all
assignable leasing, service, supply and maintenance contracts
relating solely to the Additional Real Property or Additional
Personalty ("Additional Contracts"); and
(g) All right, title and interest of Seller, in any, in
and to all intangible property relating solely to the
ownership or operation of the Additional Real Property or
Additional Personalty, in each case only to the extent
assignable, including licenses, permits, guaranties,
warranties and trade names, if any, but in each case without
warranty, including right to use the name "Nashboro Village"
on a non-exclusive basis ("Additional Intangible Property").
The items described in (a) through (g) of this Section 1.2 are
hereinafter collectively called the "Additional Property".
(B) Except for Articles IV, V, VI and Sections 7.2(a),
7.2(b), 7.2(c), 7.3(e) and 7.2(f) of the Agreement, the
Agreement is also hereby amended to additionally insert the
corresponding defined terms relative to the Additional
Property (from new Section 1.2(a) as provided for above),
where appropriate, at every place where a defined term
relative to the Property occurs in the Agreement, so that such
provisions of the Agreement will also apply to the Additional
Property and its various component parts.
(C) The Agreement is also hereby amended to attach and
incorporate Exhibit "A-1" attached hereto (describing the
Additional Land).
3. PURCHASE PRICE. Section 2.1 is hereby amended to reflect
an aggregate Purchase Price for the Property and the Additional
Property of Forty-Eight Million Eight-Hundred Thousand and No/100
Dollars ($48,800,000.00).
4. ADDITIONAL PROPERTY CLOSING.
(A) Section 7.1 of the Agreement is amended to change
the Closing Date to 1:00 p.m. Central Time on December 16,
1996.
(B) Article VII is also hereby amended to add to the
Agreement new Sections 7.5 and 7.6, in their entirety as
follows:
Section 7.5 Additional Property Closing for Additional
Property.
(a) If on the Closing Data Purchaser has not reviewed
the title and a survey of the Additional Property as described
in Section 7.5(c) below, the Closing with respect to the
Property shall occur, and the portion of the Closing
consisting of the sale and purchase of the Additional Property
(the "Additional Property Closing") shall be deferred;
provided, however, that the Additional Property Closing shall
occur in all cases on or before 1:00 p.m. Central Time on
December 31, 1996 ("Additional Property Closing Deadline").
(b) If the Additional Property Closing is postponed as
provided for immediately preceding Section 7.5(a), then Two
Million Eight Hundred Thousand and No/100 Dollars
($2,800,000.00) ("Additional Property Escrow") shall be
withheld from the Purchase Price to be paid by Purchaser on
the Closing Date, and shall be held in escrow by the Title
Company pending the Additional Property Closing on the same
terms as the Earnest Money Deposit is held, as set forth in
Section 2.2(b) of the Agreement.
(c) As soon as practicably following the date of this
Amendment, Seller shall at Seller's sole cost and expense
deliver to Purchaser (i) an update of the most recent survey
of the Additional Real Property ("Additional Property
Survey"), additionally showing Tract 4B as described in
Section 10.16 below and containing a certificate substantially
in accordance with the form attached hereto as Exhibit "G";
(ii) a title commitment ("Additional Property Commitment") by
the terms of which the Title Company agrees to issue to
Purchaser an owner policy of title insurance ("Additional
Property Title Policy") for the Additional Property in
accordance with Section 5.1(a) of this Agreement; and (iii)
photocopies of all documents ("Additional Property Title
Documents") referenced or described in the exceptions shown on
the Additional Property Commitment.
(d) At the Additional Property Closing, Additional
Property Seller shall:
(i) Cause the Title Company to modify (by interlineation
or otherwise) the Additional Property Commitment to reflect
the "Additional Property Permitted Exceptions" (defined as the
Permitted Exceptions as defined in Section 5.1(b) of this
Agreement, to the extent the same affect the Additional Real
Property, and any additional matters of record, which matters
should be reflected on the Additional Property Survey or the
Additional Property Commitment and shall be approved by
Purchaser);
(ii) To the extent available and in Seller's possession
or control, deliver originals of all Additional Contracts
affecting the Additional Real Property either at Additional
Property Closing or by making same available at the Additional
Property;
(iii) Deliver possession of the Additional Property,
subject to the Additional Property Permitted Exceptions, the
rights of parties in possession and all rights and obligations
under the Additional Contracts;
(iv) To the extent available and in Seller's possession,
deliver copies of all necessary permits issued by appropriate
governmental authorities and utility companies relating to the
Additional Property;
(v) Execute, acknowledge and deliver a special warranty
deed ("Additional Deed") in the form attached hereto as
Exhibit "T", conveying the Additional Real Property;
(vi) Execute, acknowledge and deliver a bill of sale,
assignment and assumption ("Additional Bill of Sale") in the
form attached hereto as Exhibit "J", conveying without
warranty the Additional Personalty and assigning Additional
Property Seller's interest in the Additional Intangible
Property and the Additional Contracts;
(vii) Delivery evidence of its authority to execute
the Additional Deed and the Additional Bill of Sale;
(viii) Deliver a non-foreign entity certification in
the form attached hereto as Exhibit "K", certifying in
compliance with Section 1445 of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder
that Additional Property Seller is not a "foreign person";
(ix) Deliver an affidavit or certificate reasonably
requested by the Title Company in connection with its issuance
of the Additional Property Title Policy; and
(x) Deliver the restrictions relating to Tract 4B, as
more particularly described in Section 10.16(b)(i) herein.
(xi) Delivery such other documents as may be reasonably
requested by Purchaser (including an audit letter in the form
attached hereto as Exhibit "B-1") or Title Company, including
transfer tax affidavits and evidence of authority to sell the
Additional property in accordance with this Agreement.
(e) At the Additional Property Closing, Purchaser shall:
(i) Authorize the Title Company to release the
Additional Property Escrow funds to Additional Property
Seller;
(ii) Execute and deliver such documents as may be
reasonably required by Additional Property Seller or Title
Company, including but not limited to, a certified copy of a
resolution of the Board of Directors of Purchaser (if a
corporation) authorizing Purchaser to consummate the purchase
of the Additional Property and designating those persons
authorized to execute and deliver all necessary documents at
the Additional Property Closing;
(iii) Deliver (A) Certificates of Good Standing and
Corporate Existence of Purchaser, and (B) copies of any and
all of the documents evidencing the corporate structure of
Purchaser which Additional Property Seller reasonably may
request;
(iv) Execute and deliver the Additional Bill of Sale,
assuming the obligations under the Additional Contracts from
and after Additional Property Closing and the obligation,
whether arising before or after Additional Property Closing,
relating to the physical or environmental condition of the
Additional Property;
(v) As the Additional Property Closing, Purchaser and
Seller shall execute and deliver an Additional Closing
Statement setting forth the amount held in the Additional
Property Escrow and all prorations, adjustments and credits
thereto and, if necessary, a post-closing agreement for the
Additional Property Closing, with respect to any adjustment
based on the estimates that are to be readjusted after the
Additional Property Closing
(f) At the Additional Property Closing, prorations shall
be governed by Section 7.2(d) of this Agreement, and the
allocation of costs for the Additional Property Closing shall
be governed by Section 7.3.
(g) Purchaser agrees to assume and perform (i) all of
the covenants of Additional Property Seller and Additional
Property Seller's predecessor in title pursuant to the
Additional Contacts, which are performable subsequent to the
Additional Property Closing Date, and (ii) all obligations,
whether arising before or after the Additional Property
Closing Date, relating to the physical or environmental
condition of the Additional Property. Purchaser indemnifies
and holds Seller harmless from and against any and all claims,
costs and expenses (including reasonable attorneys' fees)
asserted against or incurred by Additional property Seller and
arising out of the failure of Purchaser to perform its
obligations pursuant to this Section 7.6(f). The provisions
of this Section 7.5(f) shall survive the Additional Property
Closing.
Section 7.6 Additional Property Remedies. In the event that
Additional Property Seller is unwilling to unable to convey the
Additional property in accordance herewith by the Additional
Property Closing Deadlines, Purchaser may elect, as its sole
remedy, either to: (i) terminate its obligation to purchase the
Additional Property by giving Additional Property Seller timely
written notice of such election, and upon such termination
Purchaser shall be entitled to the return of the Additional
property Escrow; or (ii) pursue specific performance of its right
to acquire the Additional property under the terms of this
Agreement. In the event that Purchaser is unwilling or unable to
close on the Additional Property in accordance herewith by the
Additional Property Closing Deadline, Additional Property Seller's
sole remedy shall be to recover from the Additional Property
Escrow, and the Title Company shall disburse to Additional Property
Seller from the Additional Property Escrow, liquidated damages in
the amount of Two Hundred Thousand and No/100 Dollars ($200,000).
The parties hereby agree that such liquidated damages amount
represents the parties' agreed best estimate of the damages which
will result to Additional Property Seller from any such default by
Purchaser, which damages are subjective in nature and difficulty to
ascertain. The balance of the Additional Property Escrow remaining
after payment of such liquidated damages shall be returned and
disbursed by the Title Company to Purchaser.
5. SPECIAL PROVISIONS. The Agreement is hereby amended to
add new Section 10.16, in its entirety as follows:
Section 10.16 Special Provisions. The following special
provisions shall survive the Closing and the Additional Property
Closing, and shall be evidenced of record by a memorandum to be
executed by Additional Property Seller and Purchaser and filed of
record against the Property, Additional Property, Tract 28 and
Tract 4B:
(a) Tract 28.
(i) Rezoning. Purchaser acknowledges that Additional
Property Seller intends that Tract 28 of Nashboro Village
("Tract 28"), as more particularly described on the Survey
dated November 26, 1996 prepared by Wamble & Associates (the
"Existing Survey"), and to be shown on the Additional Property
Survey, be rezoned for commercial use as a commercial planned
unit development ("Commercial PUD") which shall not permit
industrial or light industrial uses. In connection with the
Commercial PUD, Purchaser hereby agrees not to object to any
application made by Additional Property Seller or other party
for the Commercial PUD.
(ii) Other Development. In the event that Tract 28 is
not rezoned as a Commercial PUD, Purchaser acknowledges and
agrees that Additional Property Seller may itself develop
Tract 28 as a multi-family apartment project, or subject to
Section 10.16(a)(iii) below sell Tract 28 to a buyer who plans
to develop Tract 28 as a multi-family apartment project. In
connection with the development of Tract 28 as a multi-family
apartment project, Purchaser hereby agrees that Tract 28 shall
have such development rights as necessary out of the rights
available under the applicable Planned Unit Development so as
to allow for development of Tract 28 with a unit density of at
least 135 units or ten units per acre.
(iii) Right of First Offer. If Additional Property
Seller desires to sell Tract 28 for an amount (the "Proposed
Offer Price") of less than One Dollar and 56/100 ($1.56)
p.s.f., Additional Property Seller shall first offer to sell
Tract 28 to Purchaser by providing to Purchaser written notice
(the "Offer Notice") of all material terms of such sale,
including but not limited to the Proposed Offer Price.
Purchaser shall within ten (10) days from receipt by Purchaser
of the Offer Notice (the "Acceptance Period") provide to
Additional Property Seller written notice (the "Acceptance
Notice") of Purchaser's acceptance of such offer and intention
to purchase Tract 28 on the terms and conditions set forth in
the Offer Notice. If Additional Property Seller received the
Acceptance Notice within the Acceptance Period, Additional
Property Seller shall be obligated to sell Tract 28 to
Purchaser on the terms and conditions set forth in the Offer
Notice, and Purchaser shall be obligated to purchase Tract 28
on the terms and conditions set forth in the Offer Notice,
including but not limited to the Proposed Offer Price.
Purchaser shall pay the Proposed Offer Price in cash at
closing, and closing of Purchaser's acquisition of Tract 28
pursuant to the Offer Notice will occur within thirty (30)
days following Additional Property Seller's receipt of the
Acceptance Notice. If Purchaser fails to deliver the
Acceptance Notice within the Acceptance Period, Additional
Property Seller may, for one (1) year following the expiration
of the Acceptance Period, sell Tract 28 to a third party for
a price equal to or greater than ninety-five percent (95%) of
the Proposed Offer Price. Upon closing of such sale to a
third party within such 1-year period, Purchaser's right of
first offer as provided for in this subsection shall
terminate. Failing such sale within such 1-year period,
Purchaser's right of first offer as provided for in this
subsection shall again be effective on the same terms and
conditions as set forth herein.
(b) Tract 4B.
(i) Conveyance to Purchaser. Purchaser acknowledges
that Tract 4B of Nashboro Village, as more particularly
described on the Existing Survey and to be shown on the
Additional Property Survey ("Tract 4B") is not included as a
part of the Property or the Additional Property to be
purchased by Purchaser pursuant to this Agreement . Purchaser
and Additional Property Seller hereby acknowledge that in
connection with obtaining the Commercial PUD for Tract 28,
Additional Property Seller may relocate a certain existing
historical homesite (the "Homesite") from Tract 28 to Tract
4B. If the Homesite is to be relocated to Tract 4B,
Additional Property Seller shall convey Tract 4B in its
entirety to the appropriate historical society, municipal
authority, governmental entity, neighborhood or homeowners'
association or other non-profit organization or entity, with
the understanding that Tract 4B will be held and maintained
for public, community or neighborhood purposes. Such
conveyance will be only by a deed containing restrictions
mutually acceptable to Additional Property Seller and
Purchaser. In the event that Additional Property Seller sells
Tract 28 and retains ownership of Tract 4B, Additional
Property Seller shall convey Tract 4B to Purchaser for no
further consideration beyond the Purchaser Price to be paid by
Purchaser hereunder.
(ii) Boat Storage. Purchaser hereby agrees that within
thirty (30) days after the Closing for the Property, it will
notify its Tenants to remove and relocate any and all items of
personality stored by such Tenants in the boat storage
facility located on Tract 4B (the "Boat Storage Facility"),
Purchaser hereby indemnifies and holds Seller harmless from
any claims after the closing for the Property arising as a
result of or relating to the use by Purchaser's Tenants of the
Boat Storage Facility, including but not limited to incidents
arising from or as the result of the removal of personalty
therefrom. Purchaser shall use its best efforts to enforce
the timely removal from the Boat Storage Facility of all
personalty belonging to the Tenants, and within sixty (60)
days after expiration of the above-specified 30-day period,
Purchaser shall seek to enforce all remedies available under
any storage agreements applicable to the Boat Storage
Facility.
(c) Sales Center Interim Lease. In the event that the
Additional Property Closing is postponed as provided for in
Section 7.5(a) of this Agreement, in return for the
consideration to be paid by Purchaser and Seller and
Additional Property Seller hereunder, Additional Property
Seller hereby leases to Purchaser on an interim basis a
portion of that certain information center located on Tract 29
of Nashboro Village, as said Tract 29 and said information
center are more particularly described and shown on the
Existing Survey and will be shown on the Additional Property
Survey (the "Premises"), on the following terms and
conditions:
(i) Term. The lease of the Premises to Purchaser shall
commence upon the Closing for the Property and shall terminate
on the earlier to occur of (A) the Additional Property Closing
or (B) December 31, 1996;
(ii) Use. Purchaser shall be entitled to use the
Premises only as an information center and leasing office for
the Property, and such use by Purchaser will be subject to (A)
Additional Property Seller's right to leave in place on the
Premises all of Additional property Seller's documents and
records and other personal property, furnishings and equipment
currently situated on the Premises and (B) a right of
Additional Property Seller, its employees, contractors,
customers, clients and invitees to go on the Premises from
time to time and to have access to and use Additional Property
Seller, its employee, contractors, customers, clients and
invitees to go on the Premises from time to time and to have
access to and use Additional Property Seller's documents and
records and other personal property, furnishings and equipment
on the Premises; and
(iii) Indemnification. Purchaser hereby indemnifies
and holds harmless Additional Property Seller from and against
any and all claims and liability of any kind whatsoever
relating to or arising out of the Premises, Purchaser's use,
operation and maintenance of the Premises or activities on the
Premises by Purchaser's employees, contractors, customers,
clients and invitees, except to the extent any such claims or
liability arise out of Additional property Seller's use,
operation and maintenance of the Premises, or activities on
the Premises by Additional Property Seller's employees,
contractors, customers, clients and invitees.
<PAGE>
EXECUTED as of the date set forth on the first page hereof.
"SELLER"
NASHBORO VILLAGE APARTMENTS, L.P.,
a Delaware limited partnership
By: NVA, INC., a Delaware
corporation, General Partner
By: ______________________________
Name: _______________________
Title: _______________________
"PURCHASER"
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By: ______________________________
Name: _______________________
Title: _______________________
"ADDITIONAL PROPERTY SELLER"
NASHBORO VILLAGE, L.L.C.,
a Delaware limited liability company
By: ______________________________
Name: _______________________
Title: _______________________
Exhibit 11.1
WALDEN RESIDENTIAL PROPERTIES, INC.
COMPUTATION OF NET INCOME PER SHARE (1)
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------- February 9 through
1996 1995 December 31, 1994
---- ---- ------------------
<S> <C> <C> <C>
Income before extraordinary item . . $19,122 $10,685 $ 5,356
Extraordinary loss on debt
extinguishment . . . . . . . . . . (1,848) (1,352) --
------- ------- -------
Net income . . . . . . . . . . . . . 17,274 9,333 5,356
Preferred distributions. . . . . . . (4,092) (922) --
------- ------- -------
Net income available to common
stockholders . . . . . . . . . . . $13,182 $ 8,411 $ 5,356
======= ======= =======
Income per share - Primary:
Before extraordinary item, less
preferred distributions . . . . $ 1.02 $ .80 $ .62
Extraordinary loss on debt
extinguishment. . . . . . . . . (.12) (.11) --
------- ------- -------
Net income available to common
stockholders. . . . . . . . . . $ .90 $ .69 $ .62
======= ======= =======
Income per share - Additional Primary (2):
Before extraordinary item, less
preferred distributions . . . . $ 1.02 $ .80 $ .62
Extraordinary loss on debt
extinguishment. . . . . . . . . (.13) (.11) --
------- ------- -------
Net income available to common
stockholders. . . . . . . . . . $ .89 $ .69 $ .62
======= ======= =======
Income per share - Fully diluted (2):
Before extraordinary item, less
preferred distributions . . . . $ 1.00 $ .80 $ .62
Extraordinary loss on debt
extinguishment. . . . . . . . . (.12) (.11) --
------- ------- -------
Net income available to common
stockholders. . . . . . . . . . $ .88 $ .69 $ .62
======= ======= =======
Weighted average number of shares
outstanding:
Primary . . . . . . . . . . . . . 14,720 12,155 8,689
Dilutive effect of outstanding
options . . . . . . . . . . . . 83 -- --
------- ------- -------
Additional Primary (2). . . . . . 14,803 12,155 8,689
Fully dilutive effect of
outstanding options . . . . . . 166 62 --
------- ------- -------
Fully diluted (2) . . . . . . . . 14,969 12,217 8,689
======= ======= =======
</TABLE>
(1) Fully diluted net income per share does not include the
convertible equity securities and preferred stock since they
are anti-dilutive.
(2) This calculation is submitted in accordance with Securities
Exchange Act of 1934 Release No. 9083, although not required
by APB Opinion No. 15, because it results in dilution of less
than three percent.
EXHIBIT 12.1
Exhibit 12.1
WALDEN RESIDENTIAL PROPERTIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (2)
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the Period
Year Ended February 9, 1994
December 31, (Commencement of
---------------- Operations) through
1996 1995 December 31, 1994
---- ---- -------------------
<S> <C> <C> <C>
Income before extraordinary item . . . . . . $19,122 $10,685 $ 5,356
Add:
Interest on indebtedness. . . . . . . . . 20,573 17,111 6,288
Amortization. . . . . . . . . . . . . . . 916 900 371
------- ------- -------
Earnings. . . . . . . . . . . . . . . . $40,611 $28,696 $12,015
======= ======= =======
Fixed charges and preferred stock dividends:
Interest on indebtedness. . . . . . . . . $20,573 $17,111 $ 6,288
Amortization. . . . . . . . . . . . . . . 916 900 371
------- ------- -------
Fixed charges . . . . . . . . . . . . . 21,489 18,011 6,659
Add:
Preferred stock dividends (1) . . . . . 4,092 922 --
------- ------- -------
Combined fixed charges and
preferred stock dividends. . . . . $25,581 $18,933 $ 6,659
======= ======= =======
Ratio of earnings to fixed charges . . . . . 1.89x 1.59x 1.80x
Ratio of earnings to fixed charges and
preferred stock dividends. . . . . . . . . 1.59x 1.52x 1.80x
</TABLE>
(1) Includes preferred stock dividends on convertible equity
securities and preferred stock.
(2) Computation of the ratio of earnings to combined fixed charges
and preferred stock dividends has not been provided for Walden
Predecessors because the capital structure has changed
substantially since the Company's formation and the
information relating to Walden Predecessors would be
meaningless.
EXHIBIT 18.1
Exhibit 18.1
October 29, 1996
Walden Residential Properties, Inc.
One Lincoln Centre
5400 LBJ Freeway
Suite 400, LB 45
Dallas, Texas 75240
Dear Sirs:
At your request, we have read the description included in your
Form 10-Q to the Securities and Exchange Commission for the
quarter ended September 30, 1996, of the facts relating to the
capitalization of carpeting replaced after initial rehabilitation
of properties acquired. Because such change is a change in
estimate affected by a change in accounting principle, we
understand that this change is being applied prospectively
commencing with the quarter of the change. We believe, on the
basis of the facts so set forth and other information furnished
to us by appropriate officials of the Company, that the
accounting change described in your Form 10-Q is to an
alternative accounting principle that is preferable under the
circumstances.
We have not audited any consolidated financial statements of
Walden Residential Properties, Inc. and its consolidated
subsidiaries as of any date or for any period subsequent to
December 31, 1995. Therefore, we are unable to express, and we
do not express, an opinion on the facts set forth in the
above-mentioned Form 10-Q, on the related information furnished to us
by officials of the Company, or on the financial position,
results of operations, or cash flows of Walden Residential
Properties, Inc. and its consolidated subsidiaries as of any date
or for any period subsequent to December 31, 1995.
Yours truly,
/ s / Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
EXHIBIT 21.1
Exhibit 21.1
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE OF SUBSIDIARIES OF THE COMPANY
Percentage
Subsidiaries Equity Ownership
WDN Properties, Inc. . . . . . . . . . . . . . . . . . . . . . . .100%
(New York)
Walden Special Corp. . . . . . . . . . . . . . . . . . . . . . . .100%
(Texas)
Chimney Trace Special Corp.. . . . . . . . . . . . . . . . . . . .100%
(Texas)
Walden Operating, Inc. . . . . . . . . . . . . . . . . . . . . . .100%
(Delaware)
Walden Glen Corporation. . . . . . . . . . . . . . . . . . . . . .100%
(Delaware)
Walden AZ Corporation. . . . . . . . . . . . . . . . . . . . . . .100%
(Delaware)
Crossing and Meadows Corporation . . . . . . . . . . . . . . . . .100%
(Texas)
Resident Profiles, Inc.. . . . . . . . . . . . . . . . . . . . . .100%
(Texas)
EXHIBIT 23.1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the
Registration Statements on Form S-3 (Registration Nos. 33-90138,
33-90852 and 33-92328) and on Form S-8 (Registration No. 333-22547)
of Walden Residential Properties, Inc. and in the related
prospectuses of our report dated March 3, 1997 (which expresses
an unqualified opinion and includes an explanatory paragraph
relating to a change in the method of accounting for the cost of
replacement carpets as discussed in Note 2), with respect to the
consolidated financial statements and schedule of Walden
Residential Properties, Inc., and our report dated March 3,
1995, with respect to the combined financial statements of
Walden Predecessors, included in the Annual Report on Form 10-K
for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Dallas, Texas
March 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 29,720
<SECURITIES> 0
<RECEIVABLES> 1,324
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 683,515
<DEPRECIATION> 41,707
<TOTAL-ASSETS> 689,714
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
58
<COMMON> 169
<OTHER-SE> 411,194
<TOTAL-LIABILITY-AND-EQUITY> 689,714
<SALES> 0
<TOTAL-REVENUES> 109,475
<CGS> 0
<TOTAL-COSTS> 47,560
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,573
<INCOME-PRETAX> 17,188
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,188
<DISCONTINUED> 0
<EXTRAORDINARY> (1,848)
<CHANGES> 0
<NET-INCOME> 13,182
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
