SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
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:
Name of each exchange on
Title of each class: 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 reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that 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 Part
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 $429,708,040 at February 28, 1998.
The number of shares of common stock outstanding at February 28,
1998 was 18,395,311.
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 1998 Annual Meeting of Stockholders is incorporated
by reference in Part III hereof.
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
metropolitan areas. 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, the "Walden
Predecessors"). The Company owned and operated 154 multifamily
properties (the "Properties") as of December 31, 1997, containing
42,482 apartment units. Approximately 92% of the Properties are
located in the Houston, Dallas/Fort Worth, Austin, Phoenix,
Nashville, Jacksonville, Tampa, Oklahoma City, San Antonio,
Atlanta, Salt Lake City and San Diego areas (the "Target Markets"),
with the remaining Properties primarily located in other areas in
the Southwest and Southeast regions of the United States. Of the
total units owned, 29% are located in Houston (in 14 different
submarkets), and 28% are located in Dallas/Fort Worth (in 20
different submarkets). The Properties had a weighted average
physical occupancy rate of approximately 93.3% for 1997 and 93.0%
for the month of February 1998. In addition, the Company currently
manages on a fee basis two additional multifamily properties
consisting of 772 apartment units.
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 146 properties (the "Acquisition Properties")
(of which a 242-unit property was sold in December 1995, a 304-
unit property was sold in August 1996, a 392-unit property was sold
in October 1997 and six properties were combined in 1997 with
certain other properties owned to achieve operating efficiencies,
containing an aggregate of 37,904 apartments units, for an
aggregate acquisition cost of $1.3 billion. 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 and enhancement programs.
On October 1, 1997, the Company acquired the assets and
business of Drever Partners, Inc. and its affiliates, including 18
partnerships of which Drever Partners, Inc. and certain of its
affiliates were the general partners, (collectively, "Drever"), a
private real estate management company based in San Francisco and
Houston. This transaction included the acquisition by the Company
of 79 apartment properties (consisting of 18,118 units), which are
included in the 146 properties acquired by the Company since its
IPO. Pursuant to an Exchange Agreement with Drever, the
consideration exchanged by the Company consisted of approximately
$94.7 million of cash, the assumption of $286.0 million of mortgage
debt (of which the Company repaid $119.0 million with proceeds from
an unsecured term loan and its unsecured credit facility) and
$303.5 million of operating partnership units (the "Common OP
Units" and "Preferred OP Units", collectively the "Units") issued
by a newly-formed operating partnership subsidiary of the Company,
Walden/Drever Operating Partnership, L.P. ("WDOP"), to the
shareholders and partners of and equity participants in Drever.
The Units are exchangeable on or after October 1, 1998, into an
aggregate of 10,322,397 shares of the Company's common stock,
1,999,909 shares of the Company's 9.00% Redeemable Preferred Stock
and 6,666,363 Series B Warrants (each of which is exercisable for
one-third of one share of the Company's common stock at $26.875 per
share). The 9.00% Redeemable Preferred Stock and the Preferred OP
Units are redeemable at the option of the Company in 10 years at a
redemption price of $25 per share or unit.
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.
BUSINESS STRATEGIES
The Company's primary business objective is to maximize
stockholder value by maintaining long-term growth in funds from
operations for distributions to its stockholders. To achieve this
objective, the Company will focus on maximizing the internal growth
of its expanded portfolio through property management and resident
services, implementation of a property enhancement program and
acquisition of garden apartment properties that have strong cash
flow growth potential and are located in the Company's Target
Markets. The completion of the Drever combination has provided the
Company with increased management depth and expertise in property
and asset management and property redevelopment. Specifically, the
Company intends to implement the following business strategies:
Increased Property Cash Flow. The integration of the
Company's and Drever's property management operations is expected
to produce a level of service that is successful at resident
retention and focused on increasing occupancy and rental rates.
The Company also anticipates increasing its cash flow by
controlling operating expenses and implementing programs to
generate ancillary income (such as cable, telephone and laundry).
Property Enhancement/Repositioning Program. The Company has
initiated a property enhancement program to upgrade the physical
appearance (both exterior and interior) of certain properties.
These property enhancements are expected to generate high yields
through increased rental rates and resident retention. In
addition, certain of the Company's properties have been targeted
for repositioning. By reinvesting in its properties, the Company
expects to set them apart from deteriorating, similar aged
properties and increase their competitiveness with newly
constructed units that are generally available at considerably
higher rates. These upgrades are expected to yield substantially
increased revenue streams.
Acquisitions. The Company also seeks to increase its funds
from operations by acquiring multifamily properties that have
prospects for long-term growth and can be purchased at prices
substantially below replacement cost. Following the IPO, the
Company has engaged in an active acquisition program, acquiring 146
multifamily properties, containing 37,904 apartment units
(including the Drever transaction of 79 properties consisting of
18,118 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.
Dispositions. Through the Company's asset management
function, properties are routinely evaluated to determine that
optimal operating results are achieved. In connection with this
evaluation, properties may be targeted for disposition once a
determination is made that such properties have achieved their
maximum investment return. In addition, certain properties not
located in the Company's core markets may be targeted for
disposition.
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. 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 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 12
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 households 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.
EMPLOYEES
As of February 27, 1998, the Company had 1,252 employees, of
which 172 are located at the Company's headquarters in Dallas,
Texas and its regional offices located in Atlanta, Austin, Dallas,
Fort Worth, Houston, Jacksonville, Phoenix, San Antonio, Tampa and
Tulsa. The remaining 1,080 employees are located at the properties
owned by the Company and those fee managed. None of the Company's
employees are 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 also compete directly with
single family homes that are available in the markets in which the
Properties are located.
The Company 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.
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 households with lower or moderate incomes (currently,
68% of the total number of apartment units in the 14 affected
properties and 8% 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, three 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 operations
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, 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 the remodeling, renovation or
demolition of a building. Such laws may impose liability for the
release of ACMs and may provide for third parties to seek recovery
from 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 154 Properties
have revealed elevated lead content in the drinking water at three
of the Properties and ACMs at 75 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.
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, 1997, the
Company's portfolio consisted of 154 multifamily properties
containing 42,482 apartment units located in 11 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 276 apartment
units, with the largest property containing 994 apartment units.
The apartment units have an average size of 787 square feet. The
Properties were built between 1967 and 1988 and have a weighted
average age by number of apartment units of approximately 15 years.
The Properties (as owned effective January 1, 1998) are
concentrated in the following markets:
Number Number Percent
Location of Properties of Units of Total Units
- -------- ------------- -------- --------------
Houston 52 12,125 28.54%
Dallas/Fort Worth 40 11,749 27.66%
Austin 11 3,216 7.57%
Phoenix 7 2,360 5.56%
Nashville 4 1,858 4.37%
Jacksonville 5 1,748 4.11%
Tampa 5 1,528 3.60%
Oklahoma City 4 1,196 2.82%
San Antonio 5 1,146 2.70%
Atlanta 4 1,002 2.36%
Salt Lake City 2 768 1.81%
San Diego 3 480 1.13%
--- ------ -------
Subtotal 142 39,176 92.22%
Other Markets (a) 12 3,306 7.78%
--- ------ -------
Total 154 42,482 100.00%
=== ====== =======
(a) Represents properties in six different states.
No single property accounts for greater than 4.1% of the
Company's total revenues. The Properties had a weighted average
physical occupancy of 93.3% for 1997 and 93.5% for the month of
February 1998. Resident leases are generally for six to 12 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,
landscaping, pest control, electrical, plumbing, cleaning units,
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 1997 were approximately $13.0 million, or $477 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 carports initially
installed on the property. The Company also capitalizes all
deferred maintenance items of an acquisition property which are
planned at the time of acquisition to bring the property to
satisfactory operating condition. Such renovation of an
acquisition property generally takes six to 18 months to complete,
depending on the magnitude of the renovations.
The Company's management believes that asset quality is one of
the most important characteristics of an apartment property. Asset
quality can be significantly improved by repositioning the asset
through capital improvements that create an attractive, upscale
residential appearance, like building facades or enhancements that
improve with age, such as landscaping enhancements. The Company's
repositioning program includes professional design of exterior
buildings and clubhouse interiors. This program also includes
interior upgrades such as modern lighting, wall mirrors and crown
molding. All of these capital improvements help distinguish the
Properties from their aging contemporaries. The economic
justification for the Company's repositioning program is the
anticipated higher yield on the total cost of a property, which is
achieved through sustained high occupancy rates and rental rate
increases.
For the year ended December 31, 1997, the Company spent
approximately $32.4 million of capital expenditures to its
Properties, of which $13.9 million related to acquisition
renovation costs for properties acquired in 1997 and 1996. An
additional $9.2 million was expended on non-recurring items, $0.8
million was expended for repositioning programs and $8.5 million
was expended for normal recurring capital expenditures to
properties not under renovation (the "Matured Properties") (of
which $6.1 million related to the Company's 15,981 same store
units, as defined later, resulting in an average cost of $384 per
unit).
For 1998, the Company has budgeted total capital expenditures
of $52.1 million. The breakdown by type of capital expenditure is
as follows (in thousands):
Normal recurring capital expenditures ($378 per unit) . . . . . . . $14,490
Acquisition renovation costs (for properties acquired in 1997). . . 5,935
Non-recurring capital expenditures (including $4.3 million for
carports) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,512
Repositioning program capital expenditures. . . . . . . . . . . . . 22,143
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52,080
=======
Walden Residential Properties, Inc.
Apartments Owned
<TABLE>
<CAPTION>
Total
Number Year Rentable
of Construction Area Total
Metropolitan Area/Property Location Units Completed (1) (Sq. Ft.) Acreage
- -------------------------- -------- ----- ------------- -------- -------
<S> <C> <C> <C> <C> <C>
Austin
- ------
Arbors of Austin (2) Austin, TX 226 1985 154,920 9.68
Arbors of Wells Branch Austin, TX 212 1986 156,228 11.20
Ashbury Parke Austin, TX 416 1983 278,936 13.20
Audubon Square Austin, TX 164 1985 139,476 6.50
Harper's Creek Austin, TX 268 1982 201,838 8.00
Lakes of Renaissance Austin, TX 308 1987 215,024 11.60
Oak Ridge Austin, TX 253 1978 173,699 9.29
Pinto Creek Austin, TX 249 1985 199,146 22.60
Polo Club Austin, TX 304 1986 203,784 11.20
Shadow Creek Austin, TX 420 1982 314,936 18.02
Trestles of Austin Austin, TX 396 1984 275,904 10.66
------ ---- ---------- --------
Austin Total/Weighted Average 3,216 1984 2,313,891 131.95
------ ---- ---------- --------
Corpus Christi
- --------------
Rafters, The Corpus Christi, TX 250 1984 216,496 12.00
Wharf, The Corpus Christi, TX 250 1984 216,496 17.13
Willowick Corpus Christi, TX 250 1984 216,496 12.00
------ ---- ---------- --------
Corpus Christi Total/Weighted Average 750 1984 649,488 41.13
------ ---- ---------- --------
Dallas/Ft. Worth
- ----------------
Arbor Creek Dallas, TX 280 1984 216,676 12.22
Arbor Park (2) Dallas, TX 430 1983 319,668 14.94
Arbors of Bedford (2) Bedford, TX 204 1983 161,332 8.56
Arbors of Carrollton (2) Carrollton, TX 131 1984 112,418 8.56
Arbors of Euless (2) Euless, TX 272 1984 213,794 12.82
Bent Creek Dallas, TX 326 1980 234,082 11.72
Braden's Walk (2) Bedford, TX 706 1983 514,220 32.79
Brittany Park Dallas, TX 217 1978 193,556 8.67
Canyon Ridge Dallas, TX 164 1983 120,812 7.33
Casa Valley Dallas, TX 150 1986 130,926 5.46
Cinnamon Park Arlington, TX 272 1985 213,192 13.00
Clover Hill (2) Arlington, TX 216 1984 178,928 8.87
Club at Springlake Haltom City, TX 200 1986 146,328 8.04
Creekwood Village Dallas, TX 362 1985 256,584 9.40
Fielder's Glen Arlington, TX 220 1985 165,752 10.00
Gables, The McKinney, TX 220 1986 169,880 10.00
Greens Crossing Dallas, TX 364 1984 262,761 10.50
Hillcrest (2) Grand Prairie, TX 310 1984 204,146 12.94
Hilltop North Richland Hills, TX 238 1984 179,256 12.20
La Prada Club Dallas, TX 273 1985 223,630 9.71
Montfort Oaks Dallas, TX 276 1979 215,476 12.07
Newport Irving, TX 308 1982 238,768 12.40
Parks at Treepoint (2) Arlington, TX 586 1985 471,968 29.52
Pinnacle Lewisville, TX 150 1985 119,774 6.30
Post Oak Place Euless, TX 354 1983 255,798 11.08
Preston Greens Dallas, TX 256 1980 246,340 11.21
Reflections of Highpoint Dallas, TX 372 1986 281,940 11.10
Remington Hill Fort Worth, TX 440 1986 339,008 15.00
Rivercrest Arlington, TX 420 1979 337,056 19.30
Shadow Creek North Richland Hills, TX 240 1986 181,896 12.20
Shadowridge Village Dallas, TX 144 1985 118,804 5.97
Springfield Mesquite, TX 264 1985 193,212 9.00
Summer Meadows Plano, TX 389 1986 323,434 21.60
Summer Villas Dallas, TX 460 1984 328,020 15.80
Summers Crossing Plano, TX 293 1986 238,697 15.70
Summers Landing Fort Worth, TX 196 1985 139,300 7.80
Trinity Mills Dallas, TX 208 1982 162,960 10.53
Trinity Oaks Dallas, TX 240 1983 150,318 4.90
Waterford on the Meadow Plano, TX 350 1985 310,746 21.98
Woodridge Fort Worth, TX 248 1984 197,600 10.38
------ ---- ---------- --------
Dallas Total/Weighted Average 11,749 1984 9,069,056 491.57
------ ---- ---------- --------
Houston
- -------
Arbor Point Houston, TX 65 1984 57,000 2.20
Ashton Woods Houston, TX 177 1978 151,142 6.85
Aston Brook Houston, TX 152 1982 119,376 5.29
Bar Harbor Houston, TX 316 1983 209,076 13.19
Bayou Oaks Houston, TX 210 1984 158,470 6.08
Brandon Oaks Houston, TX 196 1984 168,856 8.00
Briarcrest Houston, TX 376 1982 296,760 13.90
Brookfield Houston, TX 250 1984 188,974 10.93
Carriage Hill Houston, TX 252 1980 242,088 11.20
Central Park Condos Houston, TX 93 1985 99,080 7.20
Central Park Regency Houston, TX 348 1983 318,968 13.38
Charleston, The Houston, TX 312 1981 226,499 5.69
Cimarron Park Houston, TX 162 1984 134,756 6.50
Cimarron Parkway Houston, TX 272 1983 238,264 9.26
Colony Oaks Houston, TX 162 1967 166,830 6.20
Colorado Club Houston, TX 300 1986 225,788 10.13
Copper Cove Houston, TX 270 1983 204,240 7.00
Enclave at Cypress Park Houston, TX 384 1984 329,844 11.20
Foxboro Houston, TX 220 1982 162,712 6.30
Georgetown Houston, TX 156 1968 237,328 34.40
Harbor Pointe Houston, TX 198 1968 178,700 4.80
Harpers Mill Houston, TX 180 1981 143,252 6.79
Hidden Lake Houston, TX 440 1986 318,748 32.63
Holiday on Hayes Houston, TX 312 1981 250,564 10.47
Hunt Club, The Houston, TX 204 1984 135,948 8.25
Huntley, The Houston, TX 214 1985 165,054 7.35
Laurel Creek Houston, TX 428 1985 323,568 15.80
Live Oak Houston, TX 162 1978 121,558 5.49
Meadows on Memorial Houston, TX 96 1982 94,940 3.56
Mill Creek Houston, TX 174 1982 149,640 5.59
Monticello on Cranbrook Houston, TX 244 1983 203,500 11.20
Northwoods Houston, TX 200 1978 237,636 17.44
One Camden Court Houston, TX 136 1982 104,216 4.47
One Cypress Landing Houston, TX 464 1979 358,156 15.27
One Westfield Lake Houston, TX 246 1984 269,454 19.98
One Willow Chase Houston, TX 136 1983 104,216 4.36
One Willow Park Houston, TX 178 1984 140,165 6.00
Pathway, The Houston, TX 144 1978 139,498 5.95
Pine Creek Houston, TX 216 1980 170,184 8.06
Polo Club on Cranbrook I Houston, TX 228 1981 161,456 9.30
Polo Club on Cranbrook II Houston, TX 292 1982 215,080 7.00
Richmond Green Houston, TX 224 1980 214,494 8.76
Riverwalk Houston, TX 184 1984 140,560 7.58
Silverado Houston, TX 344 1979 248,960 11.31
Stony Creek Houston, TX 252 1980 194,240 9.30
Timbers of Cranbrook Houston, TX 274 1984 206,884 9.50
Tranquility Lake Houston, TX 90 1983 84,446 10.10
Wimbledon Houston, TX 161 1978 154,601 6.30
Woodborough Houston, TX 320 1983 222,640 10.30
Woodchase Houston, TX 270 1978 252,542 9.98
Woodedge Houston, TX 126 1982 113,850 6.65
Woodlake Houston, TX 315 1976 242,587 8.28
------ ---- ---------- --------
Houston Total/Weighted Average 12,125 1981 9,997,388 502.72
------ ---- ---------- --------
San Antonio
- -----------
Costa del Sol San Antonio, TX 244 1985 180,798 10.00
Country View San Antonio, TX 272 1981 213,120 11.00
Remington San Antonio, TX 158 1986 112,018 4.90
Summer Oaks San Antonio, TX 256 1983 171,464 9.50
Villas of St. Moritz San Antonio, TX 216 1986 149,040 7.50
------ ---- ---------- --------
San Antonio Total/Weighted Average 1,146 1984 826,440 42.90
------ ---- ---------- --------
Other Texas
- -----------
Fountaingate Wichita Falls, TX 280 1980 252,040 17.79
Settler's Cove Beaumont, TX 182 1982 133,654 6.24
------ ---- ---------- --------
Other Texas Total/Weighted Average 462 1981 385,694 24.03
------ ---- ---------- --------
Texas Total/Weighted Average 29,448 1983 23,241,957 1,234.30
------ ---- ---------- --------
Jacksonville
- ------------
Bentley Green Jacksonville, FL 444 1986 308,096 25.69
Brookwood Club Jacksonville, FL 360 1987 287,480 15.00
Huntington at Hidden Hills Jacksonville, FL 224 1986 183,200 14.97
Remington at Ponte Vedra Ponte Vedra Beach, FL 344 1986 302,904 28.60
Sandpiper Jacksonville, FL 376 1985 289,112 17.00
------ ---- ---------- --------
Jacksonville Total/Weighted Average 1,748 1986 1,370,792 101.26
------ ---- ---------- --------
Tampa
- -----
Ashton Park (2) Tampa, FL 192 1988 152,072 10.93
Bel Shores Largo, FL 250 1985 189,874 22.30
Carlyle at Waters Tampa, FL 392 1986 281,893 13.00
Oak Ramble (2) Tampa, FL 256 1985 229,384 20.56
Three Palms Tampa, FL 438 1986 369,362 34.70
------ ---- ---------- --------
Tampa Total/Weighted Average 1,528 1986 1,222,585 101.49
------ ---- ---------- --------
Other Florida
- -------------
Saratoga Melbourne, FL 210 1986 146,732 14.00
------ ---- ---------- --------
Florida Total/Weighted Average 3,486 1986 2,740,109 216.75
------ ---- ---------- --------
Phoenix
- -------
Casa Verde Phoenix, AZ 268 1983 178,140 8.23
Crestwood Phoenix, AZ 276 1984 149,433 8.29
Fairways, The Phoenix, AZ 160 1981 118,192 5.80
Garden Place Phoenix, AZ 286 1979 231,120 14.20
Meadow Glen Glendale, AZ 290 1987 242,020 11.20
Terra Vida Mesa, AZ 384 1988 305,600 15.40
Woodstone Phoenix, AZ 696 1986 573,564 19.70
------ ---- ---------- --------
Phoenix Total/Weighted Average 2,360 1985 1,798,069 82.82
------ ---- ---------- --------
Oklahoma City
- -------------
Copperfield Oklahoma City, OK 262 1983 187,080 7.70
Hunter's Ridge Oklahoma City, OK 212 1984 155,587 6.00
Summerfield Place Oklahoma City, OK 224 1981 154,528 9.00
Woodscape Oklahoma City, OK 498 1985 363,073 15.60
------ ---- ---------- --------
Oklahoma City Total/Weighted Average 1,196 1984 860,268 38.30
------ ---- ---------- --------
Tulsa
- -----
Burning Tree Tulsa, OK 256 1978 156,848 11.32
Cinnamon Stick Tulsa, OK 424 1978 256,672 14.57
Lift, The Tulsa, OK 328 1979 194,168 14.23
------ ---- ---------- --------
Tulsa Total/Weighted Average 1,008 1978 607,688 40.12
------ ---- ---------- --------
Oklahoma Total/Weighted Average 2,204 1981 1,467,956 78.42
------ ---- ---------- --------
Nashville
- ---------
Nashboro Village (2) Nashville, TN 994 1982 959,153 60.73
Brandywine Nashville, TN 300 1985 203,418 21.00
Raintree Nashville, TN 332 1985 216,930 24.90
Windsor Park (2) Hendersonville, TN 232 1985 151,954 13.35
------ ---- ---------- --------
Nashville Total/Weighted Average 1,858 1984 1,531,455 119.98
------ ---- ---------- --------
Salt Lake City
- --------------
James Pointe Murray, UT 312 1985 236,928 11.60
Stillwater Murray, UT 456 1986 343,216 15.34
------ ---- ---------- --------
Salt Lake City Total/Weighted Average 768 1986 580,144 26.94
------ ---- ---------- --------
Atlanta
- -------
Parkway Station (2) Atlanta, GA 344 1986 369,960 28.63
Saratoga Springs Atlanta, GA 266 1985 223,402 20.00
Shannon Chase Atlanta, GA 156 1987 163,400 26.00
Villas at Indian Trails Atlanta, GA 236 1986 242,044 39.70
------ ---- ---------- --------
Atlanta Total/Weighted Average 1,002 1986 998,806 114.33
------ ---- ---------- --------
San Diego
- ---------
Felicita Creek San Diego, CA 136 1987 104,440 6.20
Park Bonita San Diego, CA 184 1984 154,256 11.12
Sun Ridge San Diego, CA 160 1986 134,800 5.44
------ ---- ---------- --------
San Diego Total/Weighted Average 480 1986 393,496 22.76
------ ---- ---------- --------
Other Markets
- -------------
Eagle Pointe Indianapolis, IN 256 1988 202,000 19.77
Silverado Albuquerque, NM 256 1985 183,656 8.10
Winridge Aurora, CO (Denver) 364 1986 303,438 15.80
------ ---- ---------- --------
Other Markets Total/Weighted Average 876 1986 689,094 43.67
------ ---- ---------- --------
Total/Weighted Average 42,482 1983 33,441,086 1,939.97
====== ==== ========== ========
</TABLE>
(1) Year construction completed indicates the year in which the
final certificate of occupancy for the property was issued.
(2) Represents recently acquired property for which historical
information is not available.
Walden Residential Properties, Inc.
Apartments Owned
<TABLE>
<CAPTION>
Average
Monthly Rental
Physical Rate
Occupancy Per Unit
Unit Type Average ----------------- -----------------
------------------- Apt. Size December December December December
1BR 2BR 3BR/4BR (Sq. Ft.) 1997 1996 1997 1996
--- --- ------- --------- -------- -------- -------- --------
<S> <C> <C> <S> <C> <C> <C> <C> <C>
Austin
- ------
Arbors of Austin (2) 182 44 -- 685 96.0% N/A $551 N/A
Arbors of Wells Branch 164 48 -- 737 97.1% 91.0% 595 590
Ashbury Parke 304 112 -- 671 95.2% 96.6% 549 533
Audubon Square 36 128 -- 850 94.8% 91.8% 611 609
Harper's Creek 228 40 -- 753 95.8% 94.1% 570 584
Lakes of Renaissance 218 84 6 698 97.1% 90.6% 579 567
Oakridge 151 102 -- 687 97.5% 97.5% 563 551
Pinto Creek 162 87 -- 800 95.4% 93.3% 636 637
Polo Club 240 64 -- 670 95.2% 94.6% 534 531
Shadow Creek 354 66 -- 750 94.6% 91.8% 531 530
Trestles of Austin 252 144 -- 697 93.6% 93.9% 613 614
------ ------ ------ ----- ----- ----- ---- ----
Austin Total/
Weighted Average 2,291 919 6 719 95.5% 93.7% 572 569
------ ------ ------ ----- ----- ----- ---- ----
Corpus Christi
- --------------
Rafters, The 74 132 44 866 92.8% 89.7% 573 548
Wharf, The 74 132 44 866 94.1% 96.0% 599 564
Willowick 74 132 44 866 94.9% 98.4% 595 557
------ ------ ------ ----- ----- ----- ---- ----
Corpus Christi Total/
Weighted Average 222 396 132 866 93.9% 94.7% 589 556
------ ------ ------ ----- ----- ----- ---- ----
Dallas/Ft. Worth
- ----------------
Arbor Creek 136 144 -- 774 92.8% 92.9% 593 562
Arbor Park (2) 334 96 -- 743 88.6% N/A 548 N/A
Arbors of Bedford (2) 128 76 -- 791 89.7% N/A 569 N/A
Arbors of Carrollton (2) 55 76 -- 858 95.7% N/A 624 N/A
Arbors of Euless (2) 136 136 -- 786 91.7% N/A 556 N/A
Bent Creek 284 42 -- 718 93.9% 89.8% 495 479
Braden's Walk (2) 468 238 -- 728 N/A N/A N/A N/A
Brittany Park 149 68 -- 892 91.8% 95.9% 625 592
Canyon Ridge 76 88 -- 737 97.2% 98.2% 573 540
Casa Valley 120 30 -- 873 94.2% 90.3% 704 675
Cinnamon Park 144 112 16 784 90.6% 91.2% 563 550
Clover Hill (2) 104 112 -- 828 92.6% N/A 530 N/A
Club at Springlake 128 72 -- 732 86.2% 93.4% 516 483
Creekwood Village 328 34 -- 709 95.9% 94.4% 519 503
Fielder's Glen 140 80 -- 753 93.4% 94.0% 513 500
Gables, The 160 60 -- 772 94.8% 95.6% 617 602
Greens Crossing 292 72 -- 722 89.9% 89.1% 495 482
Hillcrest (2) 264 46 -- 659 94.3% N/A 472 N/A
Hilltop 150 88 -- 753 95.6% 90.8% 528 505
La Prada 168 105 -- 819 93.0% 94.6% 599 575
Montfort Oaks 160 116 -- 781 98.1% 96.2% 605 579
Newport 208 100 -- 775 94.4% 96.6% 575 549
Parks at Treepoint (2) 276 294 16 805 92.7% N/A 543 N/A
Pinnacle 86 64 -- 798 95.5% 94.1% 610 586
Post Oak Place 270 84 -- 723 91.3% 92.5% 541 528
Preston Greens 164 92 -- 962 91.4% 94.7% 693 668
Reflections of Highpoint 276 96 -- 758 92.6% 95.4% 613 581
Remington Hill 300 140 -- 770 93.3% 96.0% 563 541
Rivercrest 320 100 -- 803 89.3% 87.9% 535 510
Shadow Creek 120 120 -- 758 93.6% 95.2% 545 518
Shadowridge Village 112 32 -- 825 87.7% 94.1% 614 606
Springfield 192 72 -- 732 95.4% 91.6% 534 520
Summer Meadows 236 153 -- 831 92.0% 91.6% 667 630
Summer Villas 380 80 -- 713 91.9% 94.5% 565 548
Summers Crossing 215 78 -- 815 94.7% 94.2% 652 626
Summers Landing 172 24 -- 711 97.0% 94.7% 563 536
Trinity Mills 128 80 -- 783 91.3% 95.4% 612 570
Trinity Oaks 189 51 -- 626 96.9% 95.7% 538 518
Waterford on the Meadow 102 248 -- 888 93.0% 91.9% 654 632
Woodridge 128 104 16 797 81.3% 89.6% 477 470
------ ------ ------ ----- ----- ----- ---- ----
Dallas Total/
Weighted Average 7,798 3,903 48 772 92.6% 93.3% 569 552
------ ------ ------ ----- ----- ----- ---- ----
Houston
- -------
Arbor Point 43 22 -- 877 97.0% 96.5% 631 607
Ashton Woods 76 74 27 854 93.2% 96.3% 496 468
Aston Brook 88 64 -- 785 95.5% 90.9% 463 432
Bar Harbor 260 56 -- 662 92.8% 96.2% 487 462
Bayou Oaks 138 72 -- 755 96.9% 93.8% 480 445
Brandon Oaks 88 108 -- 862 90.2% 91.6% 540 512
Briarcrest 232 144 -- 789 90.5% 94.3% 511 469
Brookfield 190 60 -- 756 95.8% 95.9% 505 473
Carriage Hill 96 120 36 961 95.5% 94.0% 568 538
Central Park Condos 29 52 12 1,065 97.2% 91.8% 715 670
Central Park Regency 132 216 -- 917 95.6% 97.5% 570 543
Charleston, The 228 84 -- 726 96.1% 97.4% 452 437
Cimarron Park 100 54 8 832 95.2% 98.0% 546 506
Cimarron Parkway 216 56 -- 876 97.1% 97.4% 536 501
Colony Oaks 92 70 -- 1,030 97.6% 97.3% 604 583
Colorado Club 220 80 -- 753 96.4% 93.1% 523 513
Copper Cove 192 78 -- 756 88.8% 95.9% 496 479
Enclave at Cypress Park 232 124 28 859 93.7% 92.6% 563 537
Foxboro 160 60 -- 740 93.0% 90.6% 487 468
Georgetown 42 33 81 1,521 97.9% 98.8% 941 904
Harbor Pointe 90 104 4 903 91.4% 91.4% 636 616
Harpers Mill 88 92 -- 796 90.7% 92.2% 462 443
Hidden Lake 288 152 -- 724 96.4% 93.8% 639 614
Holiday on Hayes 172 140 -- 803 96.2% 94.8% 536 509
Hunt Club, The 168 36 -- 666 97.7% 96.6% 456 433
Huntley, The 128 86 -- 771 95.8% 88.4% 617 603
Laurel Creek 304 100 24 756 93.2% 92.4% 578 563
Live Oak 136 26 -- 750 95.5% 92.1% 515 487
Meadows on Memorial -- 75 21 989 97.6% 98.8% 612 588
Mill Creek 76 98 -- 860 97.4% 95.9% 484 454
Monticello on Cranbrook 73 171 -- 834 96.8% 94.5% 502 473
Northwoods -- 100 100 1,188 96.2% 98.5% 675 639
One Camden Court 60 76 -- 766 95.6% 92.8% 422 405
One Cypress Landing 396 68 -- 772 90.9% 93.0% 442 412
One Westfield Lake 72 126 48 1,095 95.5% 93.9% 637 596
One Willow Chase 60 76 -- 766 97.5% 96.8% 482 448
One Willow Park 131 47 -- 787 96.9% 98.5% 509 475
Pathway, The 136 8 -- 969 96.4% 96.1% 655 627
Pine Creek 128 88 -- 788 91.9% 94.1% 475 449
Polo Club on Cranbrook I 156 72 -- 708 94.3% 89.0% 429 404
Polo Club on Cranbrook II 176 116 -- 737 91.4% 90.4% 443 420
Richmond Green 74 150 -- 958 97.7% 96.5% 644 619
Riverwalk 128 56 -- 764 94.9% 95.5% 527 491
Silverado 272 72 -- 724 97.3% 97.8% 526 485
Stoney Creek 164 88 -- 771 96.7% 92.4% 464 439
Timbers of Cranbrook 184 90 -- 755 95.5% 95.3% 470 437
Tranquility Lake 35 55 -- 938 98.0% 92.1% 699 689
Wimbledon 49 106 6 960 96.8% 97.8% 567 533
Woodborough 240 80 -- 696 95.4% 97.2% 428 403
Woodchase 86 184 -- 935 94.5% 97.9% 601 571
Woodedge 21 104 1 904 95.4% 97.9% 541 513
Woodlake 260 52 3 770 95.8% 97.6% 517 495
------ ------ ------ ----- ----- ----- ---- ----
Houston Total/
Weighted Average 7,205 4,521 399 825 94.9% 94.8% 535 508
------ ------ ------ ----- ----- ----- ---- ----
San Antonio
- -----------
Costa Del Sol 170 74 -- 741 89.6% 95.4% 522 526
Country View 176 96 -- 784 96.3 95.1% 486 487
Remington 108 50 -- 709 91.6 90.6% 504 523
Summer Oaks 184 72 -- 670 91.0 90.6% 464 465
Villas of St. Moritz 136 80 -- 690 98.5 90.6% 483 475
------ ------ ------ ----- ---- ----- ---- ----
San Antonio Total/
Weighted Average 774 372 -- 721 93.5% 92.7% 491 493
------ ------ ------ ----- ----- ----- ---- ----
Other Texas
- -----------
Fountaingate 160 104 16 900 89.6% 91.9% 526 521
Settler's Cove 138 44 -- 734 94.8% 94.8% 501 483
------ ------ ------ ----- ----- ----- ---- ----
Other Texas Total/
Weighted Average 298 148 16 835 91.6% 93.1% 516 506
------ ------ ------ ----- ----- ----- ---- ----
Texas Total/
Weighted Average 18,588 10,259 601 789 93.9% 94.0% 551 531
------ ------ ------ ----- ----- ----- ---- ----
Jacksonville
- ------------
Bentley Green 336 108 -- 694 94.0% 92.5% 559 555
Brookwood Club 200 160 -- 799 87.0% 87.4% 547 540
Huntington at Hidden Hills 64 160 -- 818 95.6% 89.5% 541 511
Remington at Ponte Vedra 136 208 -- 881 93.1% 93.7% 651 648
Sandpiper 200 144 32 769 89.7% 93.9% 548 535
------ ------ ------ ----- ----- ----- ---- ----
Jacksonville Total/
Weighted Average 936 780 32 784 91.6% 91.6% 570 560
------ ------ ------ ----- ----- ----- ---- ----
Tampa
- -----
Ashton Park (2) 122 70 -- 792 N/A N/A N/A N/A
Bel Shores 138 112 -- 759 93.9% 89.8% 608 586
Carlyle at Waters 310 82 -- 719 90.6% 91.6% 511 492
Oak Ramble (2) 128 128 -- 896 94.3% N/A 621 N/A
Three Palms 254 184 -- 843 86.0% 92.4% 623 595
------ ------ ------ ----- ----- ----- ---- ----
Tampa Total/
Weighted Average 952 576 -- 800 90.4% 91.5% 587 555
------ ------ ------ ----- ----- ----- ---- ----
Other Florida
- -------------
Saratoga 160 50 -- 699 93.4% 93.2% 514 536
------ ------ ------ ----- ----- ----- ---- ----
Florida Total/
Weighted Average 2,048 1,406 32 786 91.3% 91.7% 573 557
------ ------ ------ ----- ----- ----- ---- ----
Phoenix
- -------
Casa Verde 184 84 -- 665 93.3% 95.8% 408 381
Crestwood 255 21 -- 541 95.5% 91.4% 450 437
Fairways, The 108 52 -- 739 92.8% 97.0% 546 517
Garden Place 132 154 -- 808 94.8% 97.1% 580 546
Meadow Glen 90 200 -- 835 96.3% 96.7% 610 604
Terra Vida 128 224 32 796 96.5% 95.2% 613 556
Woodstone 432 240 24 824 89.5% 94.1% 589 567
------ ------ ------ ----- ----- ----- ---- ----
Phoenix Total/
Weighted Average 1,329 975 56 762 93.5% 95.0% 554 528
------ ------ ------ ----- ----- ----- ---- ----
Oklahoma City
- -------------
Copperfield 196 66 -- 714 94.7% 98.5% 473 459
Hunter's Ridge 148 64 -- 734 90.7% 93.1% 455 440
Summerfield Place 176 48 -- 690 89.9% 94.9% 445 440
Woodscape 348 150 -- 729 88.8% 93.2% 475 463
------ ------ ------ ----- ----- ----- ---- ----
Oklahoma City Total/
Weighted Average 868 328 -- 719 90.6% 94.6% 465 454
------ ------ ------ ----- ----- ----- ---- ----
Tulsa
- -----
Burning Tree 208 48 -- 613 97.0% 90.4% 359 346
Cinnamon Stick 360 64 -- 605 92.5% 91.1% 352 332
Lift, The 280 48 -- 592 90.9% 87.0% 348 333
------ ------ ------ ----- ----- ----- ---- ----
Tulsa Total/
Weighted Average 848 160 -- 603 93.1% 89.6% 352 336
------ ------ ------ ----- ----- ----- ---- ----
Oklahoma Total/
Weighted Average 1,716 488 -- 666 91.8% 92.3% 414 400
------ ------ ------ ----- ----- ----- ---- ----
Nashville
- ---------
Nashboro Village (2) 456 426 112 965 91.0% N/A 632 N/A
Brandywine 240 60 -- 678 88.0% 90.0% 543 532
Raintree 252 80 -- 653 84.9% 86.3% 545 536
Windsor Park (2) 186 46 -- 655 92.8% N/A 534 N/A
------ ------ ------ ----- ----- ----- ---- ----
Nashville Total/
Weighted AveragE 1,134 612 112 824 89.7% 88.1% 590 534
------ ------ ------ ----- ----- ----- ---- ----
Salt Lake City
- --------------
James Pointe 144 168 -- 759 90.4% 92.7% 588 572
Stillwater 152 304 -- 753 94.5% 95.9% 597 594
------ ------ ------ ----- ----- ----- ---- ----
Salt Lake City Total/
Weighted Average 296 472 -- 755 92.9% 94.6% 593 585
------ ------ ------ ----- ----- ----- ---- ----
Atlanta
- -------
Parkway Station (2) 72 164 108 1,075 N/A N/A N/A N/A
Saratoga Springs 128 138 -- 840 94.8% 97.9% 635 605
Shannon Chase 50 106 -- 1,047 90.6% 95.7% 674 641
Villas at Indian Trails 60 176 -- 1,026 84.5% 88.4% 684 663
------ ------ ------ ----- ----- ----- ---- ----
Atlanta Total/
Weighted Average 310 584 108 997 90.1% 94.0% 662 634
------ ------ ------ ----- ----- ----- ---- ----
San Diego
- ---------
Felicita Creek 36 100 -- 768 97.9% 96.4% 649 606
Park Bonita 36 148 -- 838 94.0% 97.0% 789 741
Sun Ridge 16 144 -- 843 93.6% 94.7% 629 591
------ ------ ------ ----- ----- ----- ---- ----
San Diego Total/
Weighted Average 88 392 -- 820 95.0% 96.0% 696 653
------ ------ ------ ----- ----- ----- ---- ----
Other Markets
- -------------
Eagle Pointe 152 104 -- 789 90.1% 88.7% 576 571
Silverado 180 76 -- 717 88.6% 87.9% 560 569
Winridge 262 102 -- 834 93.7% 93.5% 627 605
------ ------ ------ ----- ----- ----- ---- ----
Other Markets Total/
Weighted Average 594 282 -- 787 91.1% 90.5% 593 585
------ ------ ------ ----- ----- ----- ---- ----
Total/Weighted Average 26,103 15,470 909 787 93.2% 93.7% $553 $531
====== ====== ====== ===== ===== ===== ==== ====
</TABLE>
(1) Year construction completed indicates the year in which the final
certificate of occupancy for the property was issued.
(2) Represents recently acquired property for which historical information
is not available.
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 VOITE OF SECURITY HOLDERS
None.
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 common share for each
such period in 1997 and 1996:
Distributions
Quarter Ended High Low Per Share
- ------------- ---- --- ------------
March 31, 1997 . . . . . . . . . $26.875 $24.000 $0.4825
June 30, 1997. . . . . . . . . . 25.688 21.250 0.4825
September 30, 1997 . . . . . . . 25.750 22.750 0.4825
December 31, 1997. . . . . . . . 26.000 23.500 0.4825
March 31, 1996 . . . . . . . . . $22.125 $20.000 $0.465
June 30, 1996. . . . . . . . . . 21.875 20.250 0.465
September 30, 1996 . . . . . . . 21.875 19.750 0.465
December 31, 1996. . . . . . . . 26.000 20.875 0.465
As of February 28, 1998, the Common Stock was held by 1,594
stockholders of record, including shares held in nominee or street
name by brokers.
For the year ended December 31, 1997, the Company declared and
paid distributions totaling $1.93 per share of Common Stock. On
March 4, 1998, the Company paid a distribution of $.4825 per share
to record holders of Common Stock on February 18, 1998,
representing 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 its distributions to be restricted by 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 the 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, ordinary gain or capital gain. 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 the sale of such shares of Common Stock),
and thereafter as taxable gain.
Following is an allocation of the 1997 distributions to common
stockholders:
Amount of Distribution
Distribution Type per Common Share Percentage
- ----------------- ---------------------- ----------
Ordinary Taxable Dividend $1.02 52.90%
20% Rate Capital Gain 0.04 2.23%
Section 1250 Ordinary Gain 0.02 0.81%
Return of Capital 0.85 44.06%
----- -------
$1.93 100.00%
===== =======
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 the assets,
liabilities and operations of the Walden Predecessors' operating
companies. The historical consolidated operating data for the
Company for the years ended December 31, 1997, 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, 1997, 1996, 1995 and 1994 and the combined operating
data of the Walden Predecessors for the period January 1, 1994 to
February 8, 1994 and the year ended December 31, 1993 and the
balance sheet data as of December 31, 1993 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.
<TABLE>
<CAPTION>
The Company
------------------------------------------------------
February 9 to
Year Ended December 31, December 31,
----------------------------------- -------------
1997 (a) 1996 1995 1994
-------- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING DATA
Revenues
Rental income . . . . . . . . . . . . $ 163,224 $ 105,602 $ 78,469 $ 39,602
Other property income . . . . . . . . 6,313 3,873 3,090 1,493
Interest income . . . . . . . . . . . 1,598 1,433 856 365
Other income. . . . . . . . . . . . . -- 263 409 533
---------- --------- --------- ---------
Total revenues. . . . . . . . . . . 171,135 111,171 82,824 41,993
Expenses
Property operating and maintenance. . 56,483 37,521 28,748 15,607
Real estate taxes . . . . . . . . . . 16,805 10,039 7,337 3,275
General and administrative. . . . . . 7,734 5,124 3,811 2,507
Unusual charge - officer settlement
agreement . . . . . . . . . . . . . 1,940 -- -- --
Interest expense. . . . . . . . . . . 28,447 20,573 17,111 6,288
Depreciation and amortization . . . . 34,668 20,726 16,634 8,960
---------- --------- --------- ---------
Total expenses. . . . . . . . . . . 146,077 93,983 73,641 36,637
---------- --------- --------- ---------
Operating income . . . . . . . . . . . . 25,058 17,188 9,183 5,356
Gain on disposition of real property . . 2,055 1,934 1,502 --
Extraordinary loss on debt
extinguishment . . . . . . . . . . . . (422) (1,848) (1,352) --
---------- --------- --------- ---------
Income before income allocated
to minority interests. . . . . . . . . 26,691 17,274 9,333 5,356
Income allocated to minority interests . (4,109) (1,705) (922) --
---------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . 22,582 15,569 8,411 5,356
Preferred distributions. . . . . . . . . (13,186) (2,387) -- --
---------- --------- --------- ---------
Net income available to common
stockholders . . . . . . . . . . . . . $ 9,396 $ 13,182 $ 8,411 $ 5,356
========== ========= ========= =========
Basic net income per share . . . . . . . $ 0.53 $ 0.90 $ 0.69 $ 0.62
========== ========= ========= =========
Diluted net income per share . . . . . . $ 0.53 $ 0.89 $ 0.69 $ 0.62
========== ========= ========= =========
Distributions per share of common stock. $ 1.93 $ 1.86 $ 1.82 $ 1.09
========== ========= ========= =========
Basic weighted average number of common
shares . . . . . . . . . . . . . . . . 17,590 14,720 12,155 8,689
========== ========= ========= =========
PROPERTY DATA
Total properties (at end of period) (b). 154 68 55 40
Total units (at end of period) . . . . . 42,482 21,407 17,205 12,319
Total units (weighted average) . . . . . 27,346 18,430 14,601 9,140
Weighted average monthly property revenue
per unit (c) . . . . . . . . . . . . . $ 517 $ 495 $ 465 $ 420
OTHER DATA
Funds from operations (d). . . . . . . . $ 50,233 $ 36,998 $ 24,917 $ 13,945
Cash flows provided by (used in):
Operating activities. . . . . . . . . $ 70,822 $ 38,281 $ 31,317 $ 16,420
Investing activities. . . . . . . . . $ 327,814 $(158,668) $ (86,926) $(256,114)
Financing activities. . . . . . . . . $ 237,029 $ 143,306 $ 58,121 $ 243,982
December 31,
-----------------------------------------------
1997 1996 1995 1994
---- ---- ---- ----
BALANCE SHEET DATA
Real estate assets . . . . . . . . . . . $1,507,613 $ 683,515 $ 513,341 $329,206
Accumulated depreciation . . . . . . . . (74,584) (41,707) (23,734) (8,589)
Total assets . . . . . . . . . . . . . . 1,469,472 689,714 510,548 334,937
Mortgage notes payable, credit facility
and term loan. . . . . . . . . . . . . 702,354 258,908 259,015 165,439
Minority interests . . . . . . . . . . . 321,916 14,886 18,608 --
Stockholders' equity . . . . . . . . . . 395,215 396,535 216,519 160,267
</TABLE>
(a) On October 1, 1997, the Company acquired Drever. For a
discussion of the Drever transaction, see the general section
located in Item 1 of Part I.
(b) The number of properties was reduced to 154 as of December 31,
1997, upon the combination of six properties during 1997 with
certain other properties owned by the Company to achieve
operating efficiencies.
(c) Represents rental income and other property income, divided by
weighted average units, divided by the number of months.
(d) Management generally considers funds from operations ("FFO")
to be an appropriate measure of the performance of an equity
REIT. The National Association of Real Estate Investment
Trusts ("NAREIT") currently defines FFO 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, amortization and income allocated to minority
interests. In addition, extraordinary or unusual items that
are non-recurring events which would materially distort the
comparative measure of FFO are typically excluded. 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. The Company's FFO is not necessarily comparable to
similar entitled items reported by other REITs. The Company's
computation of FFO assumes the conversion of all convertible
securities, including minority interest securities. FFO for
the 1995 and 1994 periods have been restated to reflect
NAREIT's revised definition of FFO.
<TABLE>
<CAPTION>
Walden Predecessors
-----------------------------
January 1 to Year Ended
February 8, December 31,
1994 1993
------------ ------------
<S> <C> <C>
OPERATING DATA
Revenues
Rental income. . . . . . . . . . . . . . . . $ 3,047 $ 27,336
Other property income. . . . . . . . . . . . 134 1,286
Interest income. . . . . . . . . . . . . . . 37 124
Property management fees . . . . . . . . . . 150 1,266
-------- --------
Total revenues . . . . . . . . . . . . . . 3,368 30,012
Expenses
Property operating and maintenance . . . . . 1,242 11,398
Real estate taxes . . . . . . . . . . . . . 226 2,159
General and administrative. . . . . . . . . 217 2,263
Interest expense. . . . . . . . . . . . . . 1,075 11,456
Amortization and financing costs. . . . . . 20 1,417
Depreciation. . . . . . . . . . . . . . . . 633 6,114
-------- --------
Total expenses. . . . . . . . . . . . . . 3,413 34,807
Net loss (a) . . . . . . . . . . . . . . . . . $ (45) $ (4,795)
======== ========
PROPERTY DATA
Total properties (at end of period) . . . . . . 18 18
Total units (at end of period). . . . . . . . . 5,895 5,895
Total units (weighted average). . . . . . . . . 5,895 5,895
Weighted average monthly property revenue
per unit (b). . . . . . . . . . . . . . . . . $ 421 $ 405
OTHER DATA
Funds from operations (c) . . . . . . . . . . . $ 588 $ 1,370
Cash flows provided by (used in):
Operating activities . . . . . . . . . . . . $ 1,858 $ 1,698
Investing activities . . . . . . . . . . . . $ -- $ (23)
Financing activities . . . . . . . . . . . . $ (311) $ (1,476)
December 31,
1993
------------
BALANCE SHEET DATA
Real estate assets. . . . . . . . . . . . . . . $195,421
Accumulated depreciation and impairment
allowance . . . . . . . . . . . . . . . . . . (83,026)
Total assets. . . . . . . . . . . . . . . . . . 121,889
Mortgage notes payable. . . . . . . . . . . . . 147,322
Partners' deficit . . . . . . . . . . . . . . . (33,610)
</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 funds from operations ("FFO")
to be an appropriate measure of the performance of an equity
REIT. The National Association of Real Estate Investment
Trusts ("NAREIT") currently defines FFO 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, amortization and income allocated to minority
interests. In addition, extraordinary or unusual items that
are non-recurring events which would materially distort the
comparative measure of FFO are typically excluded. 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. The Company's FFO is not necessarily comparable to
similar entitled items reported by other REITs. The Company's
computation of FFO assumes the conversion of all convertible
securities, including minority interest securities. FFO for
the 1994 and 1993 periods have been restated to reflect
NAREIT's revised definition of FFO.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATONS
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 three
years ended December 31, 1997 and the balance sheets of the Company
as of December 31, 1997 and 1996. (See the Walden Residential
Properties, Inc. Consolidated Financial Statements and related
Notes included elsewhere in this report.)
Changes in revenues and expenses related to the Properties
during 1997, 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.
RESULTS OF OPERATIONS
Results of Operations for the Company for the Year Ended
December 31, 1997 Compared to the Year Ended December 31,1996
The weighted average number of units owned increased by 8,916
in 1997, or 48.4%, from 18,430 units in 1996 to 27,346 in 1997 as
a result of the acquisition of additional properties. Total units
owned at December 31, 1996 and 1997 were 21,407 and 42,482,
respectively. The portfolio had a weighted average physical
occupancy of 93.5% for 1996 and 93.3% for 1997.
The Company owned 51 properties with 15,981 apartment units
throughout both calendar years 1997 and 1996 ("same store"). The
operating performance of these same store properties is summarized
as follows:
Year Ended December 31,
-----------------------
1997 1996 % Change
---- ---- --------
Rental and other property revenue
(in thousands) . . . . . . . . . . . . $97,520 $95,294 2.3%
Property operating expenses
(in thousands) (1) . . . . . . . . . . 41,412 41,437 (0.1%)
------- -------
Property operating income
(in thousands) . . . . . . . . . . . . $56,108 $53,857 4.2%
======= =======
Weighted average physical occupancy. . . 92.7% 93.6% N/A
======= =======
Average monthly revenue per unit . . . . $ 509 $ 497 2.3%
======= =======
Average annual operating and
maintenance expenses per unit. . . . . $ 2,005 $ 2,041 (1.8%)
======= =======
Average annual real estate taxes
per unit . . . . . . . . . . . . . . . $ 586 $ 552 6.2%
======= =======
Operating expense ratio. . . . . . . . . 42.5% 43.5% N/A
======= =======
(1) Consists of property operating and maintenance and real estate
tax expenses.
The operating performance of properties not owned throughout
both calendar years 1997 (103 properties) and 1996 (17 properties)
is summarized as follows:
Year Ended December 31,
-----------------------
1997 1996
---- ----
Rental and other property revenue
(in thousands). . . . . . . . . . . . . . . . $72,017 $14,181
Property operating expenses (in
thousands) (1). . . . . . . . . . . . . . . . 31,876 6,123
------- -------
Property operating income (in thousands). . . . $40,141 $ 8,058
======= =======
Weighted average number of units. . . . . . . . 11,365 2,449
======= =======
Weighted average physical occupancy . . . . . . 94.1% 92.9%
======= =======
Average monthly revenue per unit. . . . . . . . $ 528 $ 483
======= =======
Average annual operating and maintenance
expenses per unit . . . . . . . . . . . . . . $ 2,151 $ 2,005
======= =======
Average annual real estate taxes per unit . . . $ 654 $ 495
======= =======
Operating expense ratio . . . . . . . . . . . . 44.3% 43.2%
======= =======
(1) Consists of property operating and maintenance and real
estate tax expenses.
Interest income increased $165,000 in 1997, or 11.5%, from
$1,433,000 in 1996 to $1,598,000 in 1997, primarily as the result
of increased cash balances during 1997.
The other income of $263,000 in 1996 was primarily
attributable to the net income from WDN Management Company
allocated to the Company. WDN Management Company was merged into
the Company effective December 31, 1996.
General and administrative expenses increased $2.6 million in
1997, or 51.0%, from $5.1 million in 1996 to $7.7 million in 1997.
This represented a weighted average increase of $5 per unit, or
1.8%. The increases in general and administrative expenses were
primarily the result of adding corporate personnel, due to the
acquisition of properties during 1997, increased salary costs,
higher professional fees, higher costs related to stockholders
(quarterly mailings to stockholders, transfer services, etc.) and
a one-time severance charge relating to the departure of an
executive of the Company during the second quarter of 1997.
The $1.9 million unusual charge resulted from a settlement
agreement relating to the resignation of the Company's former
Chairman of the Board of Directors and Chief Executive Officer in
October 1997.
Interest expense increased $7.8 million in 1997, or 37.9%,
from $20.6 million in 1996 to $28.4 million in 1997, due to an
increase in weighted average indebtedness outstanding of
approximately $99.3 million associated with the acquisition of
properties and a slight increase in the weighted average interest
rate in 1997 of approximately 0.1%.
Depreciation expense increased $14.0 million in 1997, or
70.7%, from $19.8 million in 1996 to $33.8 million in 1997, due to
depreciation on additional properties acquired and capital
improvements on existing properties. This represented a weighted
average increase of $162 per unit, or 15.1%.
The $2.1 million gain on disposition of real property in 1997
related to the sale of a 392-unit property located in Dallas,
Texas on October 2, 1997. The Company received total net sales
proceeds from the disposition of approximately $4.1 million ($8.7
million sale proceeds less $4.6 million repayment of related debt),
which was used to purchase additional properties.
The $0.4 million extraordinary loss on debt extinguishment in
1997 resulted from the write-off of unamortized deferred financing
costs and prepayment penalties incurred in connection with the
repayment of debt on the property sold in October 1997.
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.
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:
Year Ended December 31,
-----------------------
1996 1995 % Change
---- ---- --------
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% N/A
======= =======
(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:
Year Ended December 31,
-----------------------
1996 1995 % Change
---- ---- --------
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% N/A
======= =======
(1) Consists of property operating and maintenance and real
estate tax expenses.
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 weighted average increase of $17 per unit, 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 salary 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 an
increase in weighted average indebtedness outstanding of
approximately $60.9 million associated with the acquisition of
properties, offset by a decrease in the 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. This represented a weighted
average decrease of $1 per unit, or 0.1%.
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
the largest publicly traded apartment REITs and provides a better
matching of expenses with the related benefit of the expenditures.
LIQUIDITY AND CAPITAL RESOURCES
The Company intends to maintain what it believes is a
conservative capital structure by: (i) maintaining a debt-to-total-
market capitalization of 50% or less, (ii) managing interest
exposure by obtaining fixed rate debt or hedging interest rates,
(iii) obtaining unsecured indebtedness when possible, (iv)
staggering principal maturities when possible and (v) maintaining
an interest coverage ratio (operating income before interest
expense, depreciation and amortization to interest expense) of 2.5
times or greater.
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 1997, the Company received a total of $28.2 million in net
equity proceeds from the exercise of the overallotment option on a
public offering closed in December 1996 and from its dividend
reinvestment plan. The Company also received $274.0 million from
net borrowings under the Company's credit facility and term loan.
In addition, the Company received net cash proceeds of
approximately $4.1 million from the sale of a property in October
1997. These funds were primarily used to purchase 93 properties
(21,467 units) with an aggregate net cash purchase price of
approximately $304.1 million.
As more fully described below, cash and cash equivalents
decreased $19.9 million, from $29.7 million as of December 31,
1996 to $9.8 million as of December 31, 1997.
Net cash provided by operating activities increased by $32.5
million in 1997, from $38.3 million in 1996 to $70.8 million in
1997, 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 1997.
Net cash used in investing activities was $327.8
million for the year ended December 31, 1997, primarily due to
$304.1 million of property acquisitions and $32.4 million of
capital improvements on the properties, offset by $8.7 million of
cash proceeds from the sale of a property in October 1997.
Net cash provided from financing activities was $237.0
million for the year ended December 31, 1997, primarily due to
$28.2 million of net proceeds from the issuance of stock and $393.1
million of fundings received under the Company's term loan and
credit facility, less repayments and principal amortization of
mortgage financings and the credit facility of $127.5 million,
distributions to stockholders and minority interest holders of
$48.0 million and $6.7 million of purchases of the Company's common
stock.
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 and borrowings under its unsecured credit facility (the
"Credit Facility"). 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 the Credit
Facility, as described below, to fund such payments, if necessary.
During the year ended December 31, 1997, the Company spent
approximately $32.4 million in capital expenditures and
rehabilitation expenditures on acquisition properties.
Rehabilitation costs of $13.9 million and capital expenditures on
Matured Properties of $8.5 million were funded from net cash
provided by operating activities. Non-recurring capital
expenditures of $9.2 million and capital expenditures under the
Company's repositioning program of $0.8 million were funded from
borrowings under the Credit Facility. The Company has budgeted
capital improvements of $24.0 million for 1998 on its Matured
Properties (of which $9.5 million represents non-recurring costs
for the construction of covered carports, the installation of
access gates with perimeter fencing, retaining walls and the
reconstruction of balconies and exterior stairwells), $5.9 million
to complete necessary renovations to properties acquired in 1997
and $22.2 million to reposition certain properties. Both
acquisition renovation and repositioning capital expenditures are
anticipated to be funded from borrowings under the Credit Facility.
For the year ended December 31, 1997, the Company paid
distributions of $33.9 million to common stockholders, $12.5
million to preferred stockholders and $1.6 million to minority
interest holders. On March 4, 1998, the Company paid distributions
of $8.7 million to common stockholders, $3.3 million to preferred
stockholders and $6.5 million to minority interest holders of
record on February 18, 1998. The distributions paid to common
stockholders and minority interest holders of common units were
$0.4825 per share or unit, which equates to an annualized
distribution of $1.93 per share or unit. Distributions on the
Company's preferred stock, Preferred OP Units and certain of the
minority interests of common stock have a priority over other
distributions.
As of December 31, 1997, the Company had outstanding
indebtedness in the aggregate principal amount of $702.4 million,
consisting of $370.1 million of conventional and tax-exempt fixed
rate debt and $332.3 million of variable rate debt (including
$274.0 million outstanding under the Company's unsecured term loan
and unsecured credit facility).
During the year ended December 31, 1997, 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
12/31/96 Proceeds Assumed Repaid Amortization 12/31/97
-------- -------- ------- ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Fixed rate indebtedness $207,823 $ -- $170,611 $ 4,649 $ 3,716 $370,069
Unsecured Term Loan -- 200,000 -- -- -- 200,000
Unsecured Credit Facility -- 193,098 -- 119,098 -- 74,000
Other variable rate debt 51,085 -- 7,200 -- -- 58,285
-------- -------- -------- -------- -------- --------
Total $258,908 $393,098 $177,811 $123,747 $ 3,716 $702,354
======== ======== ======== ======== ======== ========
</TABLE>
The following table sets forth certain information regarding
the Company's outstanding indebtedness as of December 31, 1997:
Weighted Average
------------------ Outstanding Percentage
Interest Years to Principal of
Rate Maturity Balance (1) Total
-------- -------- ----------- ----------
Conventional fixed rate 7.98% 4.1 $294,431 41.9%
Tax-exempt fixed rate 6.51% 19.3 75,638 10.8%
----- ---- -------- ------
Total fixed rate 7.68% 7.2 370,069 52.7%
----- ---- -------- ------
Tax-exempt variable rate 5.53% 0.5 51,085 7.3%
Conventional variable rate 8.63% 2.9 7,200 1.0%
Unsecured Term Loan 7.98% 0.9 200,000 28.5%
Unsecured Credit Facility 7.72% 1.1 74,000 10.5%
----- ---- -------- ------
Total variable rate 7.56% 0.9 332,285 47.3%
----- ---- -------- ------
Total 7.62% 4.2 $702,354 100.0%
===== ==== ======== ======
(1) In thousands.
As of December 31, 1997, the Company's total indebtedness
becomes due as follows (in thousands):
Balloon
Principal Payments Total
--------- -------- -----
1998 . . . . . . . . . . . . . . . . $ 5,199 $336,007 $341,206
1999 . . . . . . . . . . . . . . . . 5,612 74,000 79,612
2000 . . . . . . . . . . . . . . . . 6,003 14,267 20,270
2001 . . . . . . . . . . . . . . . . 4,938 67,952 72,890
2002 . . . . . . . . . . . . . . . . 4,986 -- 4,986
Thereafter . . . . . . . . . . . . . 54,433 128,957 183,390
------- -------- --------
Total. . . . . . . . . . . . . . . $81,171 $621,183 $702,354
======= ======== ========
The Company has a Credit Facility with BankBoston, as agent
for a group of financial institutions. This Credit Facility
provides an unsecured borrowing capacity of up to $150 million,
with borrowings outstanding under the Credit Facility generally
bearing interest at LIBOR (5.7% at December 31, 1997) plus
1.375%. The Credit Facility expires in February 1999. As
of March 6, 1998, $89.0 million was outstanding under the Credit
Facility.
In December 1997, the Company entered into a term loan
agreement (the "Term Loan") with BankBoston, as agent for a group
of financial institutions. The term loan provides unsecured
borrowings of $200 million, bears interest at 1.375% over LIBOR and
matures December 15, 1998.
The Credit Facility and Term Loan contain customary
representations, warranties and events of default which require the
Company to comply with certain affirmative and negative covenants.
The primary restrictive covenants provide that: (1) distributions
to stockholders may not exceed 90% of funds from operations, as
defined in the Credit Facility and Term Loan; (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 1.25; and (4) the Company's debt service
coverage ratio, as defined, must exceed 2.0. As of December 31,
1997, the Company is in compliance with all covenants of the Credit
Facility and Term Loan.
Balloon payments in the amount of $336 million and $74 million
come due in 1998 and 1999, respectively. The Company has
commitments to refinance $57.9 million of tax-exempt mortgage loans
with FNMA and for $110.0 million from J.P. Morgan which the Company
anticipates closing during the first six months of 1998. The
Company also anticipates issuing secured or unsecured fixed rate
debt during the year prior to the December maturity of the $200
million term loan. In addition, the Credit Facility, which matures
in February 1999, is anticipated to be modified in 1998 to extend
the maturity beyond 1999. In order to minimize the risk of
fluctuation of interest rates, the Company has entered into forward
treasury lock agreements to be utilized in the Company's
anticipated 1998 debt transactions.
As of December 31, 1997, the Company had 88 real estate assets
collateralized under various secured 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 1997, the Company was able to raise additional equity and
incur indebtedness to acquire 93 properties. As of February 28,
1998, the Company's debt-to-total-market capitalization ratio was
approximately 43.6%, leaving the Company the ability to borrow
funds to acquire additional properties in the amount of
approximately $214.5 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
The Company considers funds from operations ("FFO") to be an
appropriate measure of the performance of an equity REIT. The
National Association of Real Estate Investment Trusts ("NAREIT")
currently defines FFO 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, amortization and
income allocated to minority interests. In addition, extraordinary
or unusual items that are non-recurring events which would
materially distort the comparative measure of FFO are typically
excluded. 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. The Company's FFO is not necessarily
comparable to similar entitled items reported by other REITs. The
Company's computation of FFO assumes the conversion of all
convertible securities, including minority interest securities.
During 1995, NAREIT adopted certain changes to the calculation
of FFO. The Company 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 who used 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):
1997 1996 1995
Net income available to common
stockholders . . . . . . . . . $ 9,396 $13,182 $ 8,411
Preferred distributions (1). . . 2,861 2,387 --
Income allocated to minority
interests (2). . . . . . . . . 4,109 1,705 922
Extraordinary loss on debt
extinguishment . . . . . . . . 422 1,848 1,352
Gain on disposition of real
property . . . . . . . . . . . (2,055) (1,934) (1,502)
Depreciation of real estate
assets . . . . . . . . . . . . 33,560 19,810 15,734
Unusual charge - officer
settlement agreement . . . . . 1,940 -- --
------- ------- -------
Funds from operations. . . . . $50,233 $36,998 $24,917
======= ======= =======
(1) Distributions on convertible preferred stock were added back
in computing FFO since the conversion to common shares has been
assumed.
(2) Cumulative undeclared distributions on the Preferred OP Units
were deducted in computing FFO ($1,125 for 1997).
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 of this change in accounting policy for the year
ended December 31, 1996:
Adjustment for change in accounting policy to capitalize
carpet replacement costs (and effect on FFO) . . . . . . . . $ 864
Adjustment for effect of depreciation on capitalized carpet
replacement costs. . . . . . . . . . . . . . . . . . . . . . (43)
------
Net effect on net income . . . . . . . . . . . . . . . . . . . $ 821
======
FFO increased $13.2 million, or 35.7%, from $37.0
million for the year ended December 31, 1996 to $50.2 million for
the year ended December 31, 1997. 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
In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings Per Share. SFAS No. 128, which is
effective for periods ending after December 15, 1997, specifies the
computation, presentation and disclosure requirements of earnings
per share and supersedes Accounting Principles Board Opinion No.
15. SFAS No. 128 requires a dual presentation of basic and diluted
earnings per share. Basic earnings per share, which excludes the
impact of common share equivalents, replaces primary earnings per
share. Diluted earnings per share, which utilizes the average
market price per share as opposed to the greater of the average or
ending market price per share when applying the treasury stock
method in determining common share equivalents, replaces fully
diluted earnings per share. The Company adopted the provisions of
SFAS No. 128 in 1997.
In February 1997, the FASB issued SFAS No. 129, Disclosure of
Information about Capital Structure, which establishes standards
for disclosing information about an entity's capital structure.
SFAS No. 129 is effective for periods ending after December 15,
1997. The adoption of SFAS No. 129 did not impact the Company's
capital structure disclosures as the Company was already in
compliance with this accounting standard.
In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, and SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information. SFAS No. 130 establishes
standards for reporting and displaying comprehensive income and its
components. SFAS No. 131 establishes standards for the way that
public business enterprises report information about operating
segments and related information in interim and annual financial
statements. SFAS Nos. 130 and 131 are effective for periods
beginning after December 15, 1997. SFAS No. 131 will not impact
the Company as it reports as a single segment. Management believes
no additional disclosures will be required upon implementation of
SFAS No. 130.
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, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, 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
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.
YEAR 2000 CONVERSION
Many of the world's computer systems currently record years in
a two-digit format. Such computer systems will be unable to
properly interpret dates beyond the year 1999, which could lead to
disruptions in the Company's operations (commonly referred to as
the "Year 2000" issue). The Company has identified three of its
systems which are vulnerable to the Year 2000 issue:
(1) General Ledger/Accounts Payable System. The current
system is not Year 2000 compliant. The Company has engaged
external consultants to assist in the selection and installation of
a new system by the fourth quarter of 1998. The new system will be
Year 2000 compliant.
(2) Payroll. The Company processes its payroll through ADP,
an outside payroll vendor. ADP's current payroll processing system
is not Year 2000 compliant, but is expected to be by the second
quarter of 1998. The Company continues to monitor ADP's progress
and expects to convert to the revised payroll system during 1998.
(3) On-Site Accounting. The Company processes its on-site
accounting (rent roll activities) on AMSI. The AMSI version which
the Company currently uses is not Year 2000 compliant. However,
AMSI has available an updated version which is Year 2000 compliant.
The Company has already started the conversion of the on-site
systems to the new version, and expects to complete the conversion
in the second quarter of 1998.
The Company will utilize both internal and external resources
to reprogram, replace and test its systems for Year 2000
modifications. The Company anticipates completing the Year 2000
project by the end of 1998. However, there can be no guarantee
that the systems of other companies on which the Company's systems
rely will be timely converted and would not have an adverse effect
on the Company's operations. The cost of the new general
ledger/accounts payable system and the Year 2000 project is
estimated at $750,000, which is expected to be funded through cash
flow from operations.
The cost of the project and the estimated date of completion
of necessary modifications is based on the Company's best
estimates, which were derived from various assumptions of future
events, including the continued availability of certain resources,
third party modification plans and other factors. However, there
can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary financial information
are contained on pages F-1 through F-30 and S-1 through S-7 of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by
reference from the Company's definitive Proxy Statement for its
1998 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
1998 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
1998 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
1998 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-30 of this report.
(2) Financial Statement Schedules:
III. Real Estate and Accumulated Depreciation are
presented on pages S-1 through S-7 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.
(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 October 1, 1997, was filed
with the Securities and Exchange Commission, reporting
information regarding the acquisition of the assets and
business of Drever Partners, Inc. and its affiliates,
including the acquisition of 79 apartment properties,
consisting of 18,118 units.
A Report on Form 8-K, dated December 16, 1997, was filed
with the Securities and Exchange Commission, reporting
information regarding the acquisition of six apartment
properties, consisting of 1,568 units and the disposition
of one 392-unit apartment property.
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/ Marshall B. Edwards
-----------------------
Marshall B. Edwards
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of Walden Residential Properties, Inc. and in the capacities
and on the dates indicated.
Signatures Title Date
/s/ Marshall B. Edwards Chief Executive Officer, March 25, 1998
- ------------------------ President and Director (Principal
Marshall B. Edwards Executive Officer)
/s/ Mark S. Dillinger Executive Vice President, Chief March 25, 1998
- ------------------------ Financial Officer and Director
Mark S. Dillinger (Principal Financial and Accounting
Officer)
/s/ Michael E. Masterson Chairman of the Board of Directors March 25, 1998
- ------------------------
Michael E. Masterson
/s/ Don R. Daseke Chairman Emeritus March 25, 1998
- ------------------------
Don R. Daseke
/s/ Maxwell B. Drever Chairman Emeritus March 25, 1998
- ------------------------
Maxwell B. Drever
/s/ Linda Walker Bynoe Director March 25, 1998
- ------------------------
Linda Walker Bynoe
/s/ Francesco Galesi Director March 25, 1998
- ------------------------
Francesco Galesi
/s/ Robert Honstein Director March 25, 1998
- ------------------------
Robert L. Honstein
/s/ Arch K. Jacobson Director March 25, 1998
- ------------------------
Arch K. Jacobson
/s/ Louis G. Munin Director March 25, 1998
- ------------------------
Louis G. Munin
/s/ J. Otis Winters Director March 25, 1998
- ------------------------
J. Otis Winters
INDEX TO FINANCIAL STATEMENTS
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996 . . . . . F-3
Consolidated Statements of Income for the three year period ended
December 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Stockholders' Equity for the
three year period ended December 31, 1997. . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows for the three year period ended
December 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . F-7
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
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, 1997 and 1996, and the related consolidated statements
of income, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. 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, 1997
and 1996, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1997
in conformity with generally accepted accounting principles. 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
- ---------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
March 25, 1998
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share information)
December 31,
-----------------
1997 1996
---- ----
ASSETS
Real estate assets, at cost
Land . . . . . . . . . . . . . . . . . . . . . . . $ 173,635 $ 80,914
Buildings and improvements . . . . . . . . . . . . 1,333,978 602,601
---------- ----------
1,507,613 683,515
Less: Accumulated depreciation . . . . . . . . (74,584) (41,707)
---------- ----------
1,433,029 641,808
Rent and other receivables . . . . . . . . . . . . . 1,613 1,324
Prepaid and other assets . . . . . . . . . . . . . . 6,903 3,146
Deferred financing costs, net. . . . . . . . . . . . 6,603 5,827
Cash and cash equivalents. . . . . . . . . . . . . . 9,757 29,720
Restricted cash:
Escrow deposits. . . . . . . . . . . . . . . . . . 9,047 5,369
Additional collateral on loans . . . . . . . . . . 2,520 2,520
---------- ----------
Total assets. . . . . . . . . . . . . . . . . . $1,469,472 $ 689,714
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable . . . . . . . . . . . . . . $ 428,354 $ 258,908
Unsecured term loan. . . . . . . . . . . . . . . . 200,000 --
Unsecured credit facility. . . . . . . . . . . . . 74,000 --
Accrued real estate taxes. . . . . . . . . . . . . 22,571 7,960
Accounts payable . . . . . . . . . . . . . . . . . 13,648 5,653
Accrued expenses and other liabilities . . . . . . 13,377 5,395
Preferred distribution payable to minority
interests. . . . . . . . . . . . . . . . . . . . 391 377
---------- ----------
Total liabilities . . . . . . . . . . . . . . . 752,341 278,293
Commitments and contingencies (Note 13)
Minority interests . . . . . . . . . . . . . . . . . 321,916 14,886
Stockholders' equity:
Preferred stock, $.01 par value per share,
10,000 shares authorized, 5,712 and 5,786
shares issued and outstanding as of
December 31, 1997 and 1996, respectively
(aggregate liquidation value of $142,805). . . . 57 58
Common stock, $.01 par value per share,
50,000 shares authorized, 18,030 and 16,880
shares issued and outstanding as of
December 31, 1997 and 1996, respectively . . . . 180 169
Excess stock, $.01 par value per share,
60,000 shares authorized, no shares issued . . . -- --
Additional paid in capital . . . . . . . . . . . . 456,842 432,974
Officer and director notes for stock purchases . . (5,263) (5,263)
Deferred compensation on Restricted Stock. . . . . (1,404) --
Distributions in excess of net income. . . . . . . (55,197) (31,403)
---------- ----------
Total stockholders' equity. . . . . . . . . . . 395,215 396,535
---------- ----------
Total liabilities and stockholders' equity. . $1,469,472 $ 689,714
========== ==========
See Notes to Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share information)
For the Year Ended
December 31,
------------------------
1997 1996 1995
---- ---- ----
REVENUES
Rental income. . . . . . . . . . . . . . . . $163,224 $105,602 $ 78,469
Other property income. . . . . . . . . . . . 6,313 3,873 3,090
Interest income. . . . . . . . . . . . . . . 1,598 1,433 856
Other income . . . . . . . . . . . . . . . . -- 263 409
-------- -------- --------
Total revenues. . . . . . . . . . . . . . 171,135 111,171 82,824
EXPENSES
Property operating and maintenance . . . . . 56,483 37,521 28,748
Real estate taxes. . . . . . . . . . . . . . 16,805 10,039 7,337
General and administrative . . . . . . . . . 7,734 5,124 3,811
Unusual charge - officer settlement
agreement. . . . . . . . . . . . . . . . . 1,940 -- --
Interest . . . . . . . . . . . . . . . . . . 28,447 20,573 17,111
Amortization . . . . . . . . . . . . . . . . 827 916 900
Depreciation . . . . . . . . . . . . . . . . 33,841 19,810 15,734
-------- -------- --------
Total expenses. . . . . . . . . . . . . . 146,077 93,983 73,641
-------- -------- --------
Operating income . . . . . . . . . . . . . . . 25,058 17,188 9,183
Gain on disposition of real property . . . . 2,055 1,934 1,502
-------- -------- --------
Income before extraordinary item and
income allocated to minority interests . . . 27,113 19,122 10,685
Extraordinary loss on debt extinguishment. . (422) (1,848) (1,352)
-------- -------- --------
Income before income allocated
to minority interests. . . . . . . . . . . . 26,691 17,274 9,333
Income allocated to minority interests . . . (4,109) (1,705) (922)
-------- -------- --------
Net income . . . . . . . . . . . . . . . . . . 22,582 15,569 8,411
Preferred distributions. . . . . . . . . . . (13,186) (2,387) --
-------- -------- --------
Net income available to common stockholders. . $ 9,396 $ 13,182 $ 8,411
======== ======== ========
Basic net income per share . . . . . . . . . . $ 0.53 $ 0.90 $ 0.69
======== ======== ========
Diluted net income per share . . . . . . . . . $ 0.53 $ 0.89 $ 0.69
======== ======== ========
Basic weighted average number of common
shares outstanding . . . . . . . . . . . . . 17,590 14,720 12,155
======== ======== ========
Diluted weighted average number of common
shares and common share equivalents
outstanding. . . . . . . . . . . . . . . . . 17,747 14,792 12,155
======== ======== ========
See Notes to Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1997
(In thousands)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional Officer/Director Distributions
----------------- ----------------- Paid In Notes for Stock Deferred Stock in Excess
Shares Par Value Shares Par Value Capital Purchases Compensation Repurchases Net Income
------ --------- ------ --------- ------- --------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995. . . -- $ -- 10,070 $ 101 $167,546 $ (3,438) $ -- $ -- $ (3,942)
Stock issued to purchase
real estate assets . . . . 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 . . (2,038)
Officers'/Directors' stock
purchase . . . . . . . . . (27) (1,533) 2,038
Distributions. . . . . . . . (22,020)
Net income . . . . . . . . . 8,411
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance, December 31, 1995. . -- -- 14,190 142 238,899 (4,971) -- -- (17,551)
Repurchases of the
Company's common stock . . (6,462)
Officers'/Directors' stock
purchase . . . . . . . . . 19 -- (22) (292) 387
Retirement of common stock
repurchased. . . . . . . . (318) (3) (6,075) 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
Purchase and cancellation
of minority interest
securities . . . . . . . . (253)
Distributions. . . . . . . . (29,421)
Net income . . . . . . . . . 15,569
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance, December 31, 1996. . 5,786 58 16,880 169 432,974 (5,263) -- -- (31,403)
Repurchases of the
Company's common stock . . (6,666)
Retirement of common stock
purchased. . . . . . . . . (278) (3) (6,663) 6,666
Public offerings, net of
offering costs . . . . . . 161 2 3,522
Conversion of preferred
stock to common stock. . . (74) (1) 84 1
Stock issued under the
dividend reinvestment
plan . . . . . . . . . . 955 9 21,950
Stock issued through
exercise of options. . . . 138 1 2,700
Restricted stock issuance. . 108 1 2,833 (2,834)
Restricted stock
cancellation . . . . . . . (18) -- (474) 474
Amortization of deferred
compensation . . . . . . . 956
Distributions. . . . . . . . (46,376)
Net income . . . . . . . . . 22,582
-------- -------- -------- -------- -------- -------- -------- -------- --------
Balance, December 31, 1997. . 5,712 $ 57 18,030 $ 180 $456,842 $ (5,263) $ (1,404) $ -- $(55,197)
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
December 31,
--------------------------
1997 1996 1995
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . $ 22,582 $ 15,569 $ 8,411
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income allocated to minority
interests. . . . . . . . . . . . 4,109 1,705 922
Depreciation and amortization. . . 34,668 20,726 16,634
Amortization of deferred
compensation on restricted
stock. . . . . . . . . . . . . . 956 -- --
Amortization of prepaid interest
expense. . . . . . . . . . . . . 121 -- --
Gain on disposition of real
property . . . . . . . . . . . . (2,055) (1,934) (1,502)
Extraordinary loss on debt
extinguishment . . . . . . . . . 422 1,848 1,352
Net effect of changes in
operating accounts:
Escrow deposits . . . . . . . . (1,099) (1,299) (850)
Other assets. . . . . . . . . . 622 (784) 203
Accrued real estate taxes . . . 6,172 1,438 3,521
Accounts payable. . . . . . . . 294 492 1,352
Other liabilities . . . . . . . 4,030 520 1,274
-------- -------- --------
Net cash provided by
operating activities. . . . 70,822 38,281 31,317
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of net assets of Drever
Partners, Inc. and its
affiliates, net of noncash
items shown below. . . . . . . . (201,032) -- --
Purchase of real estate assets,
net of noncash items shown below. . (103,114) (168,219) (103,631)
Real estate asset additions . . . . . (32,363) (9,455) (6,451)
Proceeds from disposition of real
property, net of noncash items
shown below . . . . . . . . . . . . 8,695 18,667 23,156
Purchase of WDN Management net
assets, net of noncash item
shown below . . . . . . . . . . . . -- 339 --
-------- -------- --------
Net cash used in investing
activities . . . . . . . . . . . (327,814) (158,668) (86,926)
-------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from stock issuance, net
of issuance costs . . . . . . . . . 28,185 200,614 67,723
Purchase of the Company's common
stock . . . . . . . . . . . . . . . (6,666) (6,573) (1,928)
Purchase of minority interest
securities. . . . . . . . . . . . . -- (3,975) --
Distributions paid on common and
preferred stock and minority
interests . . . . . . . . . . . . . (47,979) (31,210) (22,481)
Proceeds from term loan and
credit facility . . . . . . . . . . 393,098 166,770 152,471
Payment of mortgage notes payable
and credit facility . . . . . . . . (123,747) (172,188) (130,753)
Principal reductions of mortgage
notes payable . . . . . . . . . . . (3,716) (5,242) (1,197)
Payment of financing costs. . . . . . (1,798) (4,143) (3,751)
Prepayment penalties on debt
extinguishment. . . . . . . . . . . (348) (97) (914)
Additional collateral on loans. . . . -- (650) (1,049)
-------- -------- --------
Net cash provided by financing
activities . . . . . . . . . . . 237,029 143,306 58,121
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS. . . . . . . . . . . (19,963) 22,919 2,512
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD . . . . . . . . . 29,720 6,801 4,289
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF
PERIOD. . . . . . . . . . . . . . . . $ 9,757 $ 29,720 $ 6,801
WALDEN RESIDENTIAL PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
For the Year Ended
December 31,
--------------------------
1997 1996 1995
---- ---- ----
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid for interest. . . . . . . . $ 26,342 $ 20,706 $ 16,916
========= ======== ========
SUPPLEMENTAL DISCLOSURE OF
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Purchase of net assets of
Drever Partners, Inc. and its
affiliates:
Rent and other receivables . . . . $ 4,635 $ -- $ --
Prepaid and other assets . . . . . 315 -- --
Escrow deposits. . . . . . . . . . 2,579 -- --
Mortgage notes payable . . . . . . (166,995) -- --
Accrued real estate taxes. . . . . (8,433) -- --
Accounts payable . . . . . . . . . (7,765) -- --
Accrued expenses and other
liabilities. . . . . . . . . . . (3,998) -- --
Minority interest securities . . . (303,488) -- --
--------- -------- --------
$(483,150) $ -- $ --
========= ======== ========
Items related to purchase of assets:
Mortgage notes assumed . . . . . . $ 10,816 $ 14,748 $ 73,055
========= ======== ========
Securities issued for purchase of
assets . . . . . . . . . . . . . $ 1,050 $ -- $ 22,825
========= ======== ========
Accrued real estate asset additions . $ 104 $ 517 $ 416
========= ======== ========
Mortgage notes assumed by buyer
upon disposition of property. . . . $ -- $ 4,195 $ --
========= ======== ========
Purchase of WDN Management net assets:
Rent and other receivables . . . . $ -- $ 48 $ --
Prepaid and other assets . . . . . -- 1,022 --
Amortizable assets . . . . . . . . -- 8 --
Accounts payable . . . . . . . . . -- 58 --
Accrued expenses and other
liabilities. . . . . . . . . . . -- (267) --
Notes payable to the Company . . . -- (923) --
Stockholders' equity . . . . . . . -- (300) --
--------- -------- --------
$ -- $ (354) $ --
========= ======== ========
Notes receivable for officers'
and directors' stock purchases. . . $ -- $ 292 $ 1,533
========= ======== ========
Deferred compensation on restricted
stock net of cancellations. . . . . $ 2,359 $ -- $ --
========= ======== ========
Distribution payable to minority
interest holders. . . . . . . . . . $ 391 $ 377 $ 461
========= ======== ========
See Notes to Consolidated Financial Statements.
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
Walden Residential Properties, Inc. (the "Company") was formed
on September 29, 1993 as a Maryland corporation. 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. On February 9, 1994, the Company completed an initial
public offering ("IPO") of its common stock, which is listed on the
New York Stock Exchange. As of December 31, 1997, the Company
owned 154 multifamily properties, containing 42,482 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, its wholly-owned corporation and
partnership subsidiaries and two limited partnerships in which the
Company has a controlling interest. The limited partnership
interests not owned by the Company are accounted for as minority
interests (see Note 11). 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, 1997, the Company owned 154 multifamily
properties in eleven states; with 69% of its apartment units
located in Texas and 25% located in Florida, Oklahoma, Arizona,
Tennessee and Utah. Of the total units owned, 12,125 or 29% are
located in the Houston area and 11,749 or 28% are located in the
Dallas/Fort Worth area. 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 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.
Unusual Charge - Officer Settlement Agreement
---------------------------------------------
In October 1997, the Company entered into a settlement
agreement in connection with the resignation of its former Chief
Executive Officer ("CEO") and Chairman of the Board. The Company
has recorded the total cost of this settlement ($1.9 million) as an
unusual charge in the statement of income. The vesting of the
restricted stock that was issued to this individual was accelerated
and these shares now vest in October 2000. The vesting of all
stock options held by this individual was accelerated such that
they vested immediately and expire in October 2002.
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 of reviewing for impairment of long-lived
assets by reviewing expected future cash flows of its properties,
there were no adjustments necessary for impairment of properties
during the three year period ended December 31, 1997.
Deferred Financing Costs and Amortization
-----------------------------------------
Legal fees and other costs associated with obtaining financing
have been capitalized and are being amortized over the terms of the
related debt. Financing costs were reported net of accumulated
amortization of $1,625,000 and $632,000 as of December 31, 1997 and
1996, respectively.
Forward Treasury Lock Agreements
--------------------------------
During 1997, the Company entered into forward treasury lock
agreements in order to hedge its exposure to interest rate
fluctuations. Any gains or losses under the forward treasury lock
agreements will be amortized as interest expense over the term of
the financing.
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 ended 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, 1996 and 1995 and anticipates that its
method of operations will enable it to continue to satisfy the
requirements for such qualification.
Minority Interests
------------------
Minority interests represent limited partnership interests not
owned by the Company. Amounts are recorded based on the fair value
of the cash and securities issued in exchange for the net assets
acquired (see Note 11). Partnership units are convertible into
common stock (11,176,904 units at December 31, 1997) ("Common OP
Units") and preferred stock (1,999,909 units at December 31, 1997)
("Preferred OP Units") (collectively, the "OP Units") in accordance
with the partnership agreements. Minority interest holders are
entitled to cash distributions at rates equivalent to common or
preferred stockholders as defined in the partnership agreements.
Certain Common OP Units have guaranteed distributions. Income
allocated to minority interests is equal to either (i) the
preferred distributions paid or accrued or (ii) an amount equal to
income before income allocated to minority interests divided by the
number of common shares and Common OP Units.
The Company revised its prior financial statements by
reclassifying the convertible equity securities formerly reported
as a component of stockholders' equity in its consolidated balance
sheets to minority interests and by restating its statements of
income to reflect distributions or income on such convertible
equity securities as income allocated to minority interests which
is deducted in arriving at net income. The Company believes these
changes were necessary to conform the Company's prior financial
statements to generally accepted accounting principles. These
changes had no impact on the financial condition, business or
assets of the Company and did not change the Company's net income
available to common stockholders per share.
Stock-based Compensation
------------------------
The Company has elected not to recognize compensation expense
for stock options issued as calculated under Statement of Financial
Accounting Standards ("SFAS") No. 123, but rather will continue
recognizing expense as prescribed by APB Opinion No. 25.
Disclosure of amounts required by SFAS No. 123 for stock options
issued are included in Note 10. The Company also accounts for
restricted stock issued as prescribed by APB Opinion No. 25 (see
Note 11).
Net Income Per Share of Common Stock
------------------------------------
Basic net income per share has been computed by dividing net
income available to common stockholders by the weighted average
number of common shares outstanding. Diluted net income per share
has been computed by dividing net income available to common
stockholders by the weighted average number of common shares
outstanding plus potential dilutive common share equivalents.
The following table presents information necessary to
calculate basic and diluted net income per share for the periods
indicated, with 1996 and 1995 being restated to conform with the
requirements of the SFAS No. 128, Earnings per Share (in thousands,
except per share amounts):
For the Year Ended December 31,
-------------------------------
1997 1996 1995
---- ---- ----
Net Income for Basic and Diluted
Computation:
Income before extraordinary item and
income allocated to minority
interests . . . . . . . . . . . . . . $27,113 $19,122 $10,685
Extraordinary loss on debt
extinguishment. . . . . . . . . . . . (422) (1,848) (1,352)
------- ------- -------
Income before minority interests. . . . 26,691 17,274 9,333
Income allocated to minority interests. (4,109) (1,705) (922)
------- ------- -------
Net income. . . . . . . . . . . . . . . 22,582 15,569 8,411
Preferred distributions . . . . . . . . (13,186) (2,387) --
------- ------- -------
Net income available to common
stockholders (basic and diluted
net income per share computation) . . $ 9,396 $13,182 $ 8,411
======= ======= =======
Basic Net Income per Share:
Before extraordinary item, less
preferred distributions . . . . . . . $ 0.55 $ 1.02 $ 0.80
Extraordinary loss on debt
extinguishment. . . . . . . . . . . . (0.02) (0.12) (0.11)
------- ------- -------
Net income available to common
stockholders. . . . . . . . . . . . . $ 0.53 $ 0.90 $ 0.69
======= ======= =======
Diluted Net Income per Share:
Before extraordinary item, less
preferred distributions . . . . . . . $ 0.55 $ 1.02 $ 0.80
Extraordinary loss on debt
extinguishment. . . . . . . . . . . . (0.02) (0.13) (0.11)
------- ------- -------
Net income available to common
stockholders. . . . . . . . . . . . . $ 0.53 $ 0.89 $ 0.69
======= ======= =======
Weighted Average Number of Shares
Outstanding (a):
Basic . . . . . . . . . . . . . . . . . 17,590 14,720 12,155
Dilutive effect of outstanding options. 157 72 --
------- ------- -------
Diluted . . . . . . . . . . . . . . . . 17,747 14,792 12,155
======= ======= =======
(a) Excludes the convertible preferred shares, warrants and Common
OP Units (see Note 11) and 1,696,750 stock options, which are
anti-dilutive.
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 aware of any
environmental remediation obligations which would materially affect
the operations, financial position or cash flows of the Company.
New Accounting Pronouncements
-----------------------------
In December 1997, the Company adopted the provisions of
Financial Accounting Standards Board ("FASB") SFAS No. 128,
Earnings Per Share. SFAS No. 128 specifies the computation,
presentation and disclosure requirements of earnings per share and
supersedes Accounting Principles Board Opinion No. 15. SFAS No.
128 requires a dual presentation of basic and diluted earnings per
share. Basic earnings per share, which excludes the impact of
common share equivalents, replaces primary earnings per share.
Diluted earnings per share, which utilizes the average market price
per share as opposed to the greater of the average or ending market
price per share when applying the treasury stock method in
determining common share equivalents, replaces fully diluted
earnings per share.
In February 1997, the FASB issued SFAS No. 129, Disclosure of
Information about Capital Structure, which establishes standards
for disclosing information about an entity's capital structure.
SFAS No. 129 is effective for periods ending after December 15,
1997. The adoption of SFAS No. 129 did not impact the Company's
capital structure disclosures, as the Company was already in
compliance with this accounting standard.
In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, and SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information. SFAS No. 130 establishes
standards for reporting and displaying comprehensive income and its
components. SFAS No. 131 establishes standards for the way that
public business enterprises report information about operating
segments and related information in interim and annual financial
statements. SFAS No. 130 and 131 are effective for periods
beginning after December 15, 1997. SFAS No. 131 will not impact
the Company as it reports as a single segment. Management believes
no additional disclosures will be required upon the implementation
of SFAS No. 130.
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 $0.06 for
basic and diluted net income per share). 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 January 1, 1995 (in
thousands, except per share data):
Year Ended
December 31,
--------------
1996 1995
---- ----
Income before extraordinary item and
income allocated to minority
interests as reported . . . . . . . . . . . . $19,122 $10,685
Add: Adjustment for change in accounting
policy to capitalize
carpet replacement costs. . . . . . . . . . . 264 875
------- -------
Income before extraordinary item and
income allocated to minority
interests as adjusted . . . . . . . . . . . . $19,386 $11,560
======= =======
Net income as adjusted. . . . . . . . . . . . . $15,833 $ 9,286
======= =======
Net income available to common stockholders
as adjusted . . . . . . . . . . . . . . . . . $13,446 $ 9,286
======= =======
Basic net income per share:
Before extraordinary item, less preferred
distributions and income allocated to
minority interests as reported. . . . . . . . $ 1.02 $ 0.80
Adjustment for effect of change in
accounting policy . . . . . . . . . . . . . . 0.02 0.08
------- -------
Income before extraordinary item, less
preferred distributions and income
allocated to minority interests as
adjusted. . . . . . . . . . . . . . . . . . $ 1.04 $ 0.88
======= =======
Net income available to common stockholders
as reported . . . . . . . . . . . . . . . . $ 0.90 $ 0.69
Adjustment for effect of change in
accounting policy . . . . . . . . . . . . . 0.02 0.08
------- -------
Net income available to common stockholders
as adjusted . . . . . . . . . . . . . . . . $ 0.92 $ 0.77
======= =======
Diluted net income per share:
Before extraordinary item, less preferred
distributions and income allocated to
minority interests as reported. . . . . . . . $ 1.02 $ 0.80
Adjustment for effect of change in
accounting policy . . . . . . . . . . . . . 0.02 0.07
------- -------
Income before extraordinary item, less
preferred distributions and income
allocated to minority interests as
adjusted. . . . . . . . . . . . . . . . . . $ 1.04 $ 0.87
======= =======
Net income available to common stockholders
as reported . . . . . . . . . . . . . . . . $ 0.89 $ 0.69
Adjustment for effect of change in
accounting policy . . . . . . . . . . . . . 0.02 0.07
------- -------
Net income available to common stockholders
as adjusted . . . . . . . . . . . . . . . . $ 0.91 $ 0.76
======= =======
(4) ACQUISITIONS AND DISPOSITIONS
Acquisitions
------------
During 1997 the Company acquired 93 apartment properties
containing 21,467 units (or 6,037 weighted average units) for a
cost of $799.2 million. 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. The properties acquired in 1997 and 1996 are located in
the states of Texas, Florida, California, 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 October 1, 1997, the Company acquired the assets and
business of Drever Partners, Inc. and its affiliates, including 18
partnerships of which Drever Partners, Inc. and certain of its
affiliates were the general partners, (collectively, "Drever"), a
private real estate management company based in San Francisco and
Houston. This transaction included the acquisition by the Company
of 79 apartment properties (consisting of 18,118 units), which are
included in the 93 properties acquired by the Company during 1997.
Pursuant to an Exchange Agreement with Drever, the consideration
exchanged by the Company consisted of approximately $94.7 million
of cash, the assumption of $286.0 million of mortgage debt (of
which the Company repaid $119.0 million with proceeds from an
unsecured term loan and its unsecured credit facility) and $303.5
million (based upon the price of the Company's stock at the time of
the announcement of the acquisition) of Common OP Units and
Preferred OP Units, issued by a newly-formed operating partnership
subsidiary of the Company, Walden/Drever Operating Partnership,
L.P. ("WDOP"), to the shareholders and partners of and equity
participants in Drever. The Units are exchangeable on or after
October 1, 1998 into an aggregate of 10,322,397 shares of the
Company's common stock, 1,999,909 shares of the Company's 9.00%
Redeemable Preferred Stock and 6,666,363 Series B Warrants (each of
which is exercisable for one-third of one share of the Company's
common stock at $26.875 per share). The 9.00% Redeemable Preferred
Stock and the Preferred OP Units are redeemable at the option of
the Company in ten years at a redemption price of $25 per share or
unit.
On February 18, 1998, the Company acquired two apartment
properties with a total of 376 units located in Tampa, Florida for
approximately $16.2 million. The Company funded these acquisitions
by assuming $5.8 million of variable rate tax-exempt debt maturing
in the year 2007, assuming $5.1 million of 7.35% fixed rate debt
maturing in the year 2005, and borrowing the remaining amount under
the Company's unsecured credit facility. The credit enhancement on
the $5.8 million variable rate debt expires in November 1998 and is
guaranteed by the Company.
Dispositions
------------
On October 2, 1997, the Company disposed of one 392-unit
property located in Dallas, Texas. During 1996 the Company
disposed 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.
In connection with these dispositions, the Company reported gains
in the amount of $2,055,000 and $1,934,000 for the year ended
December 31, 1997 and 1996, respectively.
Pro Forma Information (Unaudited)
---------------------------------
The following unaudited condensed pro forma information for
the two years ended December 31, 1997 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 1997 and 1996, including debt used to finance acquisitions or
repaid from proceeds of dispositions, as if all of these
transactions had occurred on January 1, 1996. 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 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.)
Pro Forma
Year Ended December 31,
-----------------------
1997 1996
---- ----
Revenues . . . . . . . . . . . . . . . . . . . . $268,113 $261,070
Expenses . . . . . . . . . . . . . . . . . . . . 245,361 237,814
-------- --------
Income before income allocated to minority
interests. . . . . . . . . . . . . . . . . . . 22,752 23,256
Income allocated to minority interests . . . . . (7,362) (7,619)
-------- --------
Net income . . . . . . . . . . . . . . . . . . . 15,390 15,637
Preferred distributions. . . . . . . . . . . . . (13,186) (13,296)
-------- --------
Net income available to common stockholders. . . $ 2,204 $ 2,341
======== ========
Basic net income per share . . . . . . . . . . . $ 0.13 $ 0.14
======== ========
Diluted net income per share . . . . . . . . . . $ 0.12 $ 0.14
======== ========
(5) REAL ESTATE ASSETS
Changes in real estate assets and related accumulated
depreciation for the years ended December 31, 1997 and 1996 are as
follows (in thousands):
Real estate assets:
Balance at January 1, 1996. . . . . . . . . . . . . . . . . $ 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
Purchase of real estate assets . . . . . . . . . . . . . . . . 799,162
Sale of real estate assets . . . . . . . . . . . . . . . . . . (7,323)
Fixed asset additions. . . . . . . . . . . . . . . . . . . . . 32,259
----------
Balance at December 31, 1997. . . . . . . . . . . . . . . . $1,507,613
==========
Accumulated depreciation:
Balance at January 1, 1996 . . . . . . . . . . . . . . . . . . $ 23,734
Depreciation expense . . . . . . . . . . . . . . . . . . . . . 19,810
Write off related to real estate assets sold . . . . . . . . . (1,837)
----------
Balance at December 31, 1996. . . . . . . . . . . . . . . . 41,707
Depreciation expense . . . . . . . . . . . . . . . . . . . . . 33,560
Write off related to real estate assets sold . . . . . . . . . (683)
----------
Balance at December 31, 1997. . . . . . . . . . . . . . . . $ 74,584
==========
(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% 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.
(7) MORTGAGE NOTES PAYABLE, UNSECURED TERM LOAN AND UNSECURED
CREDIT FACILITY
Mortgage notes payable and the Company's unsecured term loan
(the "Term Loan") and unsecured credit facility (the "Credit
Facility") consist of the following (in thousands):
<TABLE>
<CAPTION>
As of December 31, 1997 Principal Balance
------------------------------------- As of December 31,
Weighted Average Weighted Average ------------------
Interest Rate Years to Maturity 1997 1996
---------------- ----------------- ---- ----
<S> <C> <C> <C> <C>
Conventional Fixed Rate
Mortgage Notes:
Mortgage notes payable
to the Federal National
Mortgage Association. . . 8.81% 6.1 $ 43,101 $ 48,343
Mortgage notes payable
to insurance companies. . 7.83% 3.8 248,155 86,452
Mortgage notes - other. . . 8.50% 2.6 3,175 3,208
----- ---- -------- --------
7.98% 4.1 294,431 138,003
Tax-exempt Mortgage Notes:
Fixed rate. . . . . . . . . 6.51% 19.3 75,638 69,820
Variable rate . . . . . . . 5.53% 0.5 51,085 51,085
----- ---- -------- --------
6.11% 11.7 126,723 120,905
Variable Rate Notes:
Unsecured Term Loan . . . . 7.98% 0.9 200,000 --
Unsecured Credit Facility . 7.72% 1.1 74,000 --
Other . . . . . . . . . . . 8.63% 2.9 7,200 --
----- ---- -------- --------
7.93% 1.0 281,200 --
----- ---- -------- --------
Total/Weighted Average. . . 7.62% 4.2 $702,354 $258,908
===== ==== ======== ========
</TABLE>
As of December 31, 1997, the Company had collateralized 88 of
its 154 properties under various mortgage loans.
Conventional Mortgage Notes Payable
-----------------------------------
Conventional mortgage notes payable include 60 loans
encumbering 75 properties at December 31, 1997. Mortgage notes for
$294.4 million are payable in monthly installments aggregating
approximately $2.3 million, including principal and interest at
various fixed rates ranging from 6.95% to 9.22% per annum. One
mortgage loan for $7.2 million is a variable rate loan requiring
monthly payments of interest only (8.63% interest rate at December
31, 1997). Scheduled maturities are at various dates ranging from
March 31, 1998 through December 1, 2005.
Tax-Exempt Mortgage Notes Payable
---------------------------------
At December 31, 1997, 13 of the Company's properties are
encumbered by 12 mortgage notes which were financed from the
proceeds of tax-exempt bonds and which have credit enhancements.
Mortgage notes of approximately $75.7 million are payable in
monthly installments of approximately $0.5 million, including
principal and interest at fixed rates ranging from 6.13% to 6.75%
per annum. Mortgage notes in the amount of $68.8 million have
scheduled maturities ranging from October 1, 2005 through
September 1, 2028. The remaining mortgage note of $6.9 million was
refinanced in February 1998 (see below). The remaining tax-exempt
mortgage notes in the amount of $51.1 million have variable
interest rates, are payable in monthly installments of interest
only and have a weighted average interest rate of 5.53% as of
December 31, 1997. 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
of the tax-exempt mortgage notes as of December 31, 1997 and 1996.
On January 29, 1998 and February 12, 1998, the Company
refinanced $12.7 million and $6.9 million, respectively, of the
variable rate tax-exempt mortgage loans and extended the mortgage
loan and credit enhancement maturity to February 15, 2028. The
Company has also received a commitment to refinance the remaining
variable rate tax-exempt mortgage loans to provide a 30-year credit
enhancement.
In March 1998, $78.1 million of conventional fixed-rate
mortgage notes were refinanced with $110.0 million of fixed-rate
debt, of which 80.0 million of such debt bears interest at 6.62%
and matures in December 2007 and the remaining $30.0 million bears
interest at 7.06% and matures in December 2017.
Unsecured Term Loan and Unsecured Credit Facility
-------------------------------------------------
On December 15, 1997, the Company entered into an unsecured
$200 million one year term loan agreement (the "Term Loan") with
BankBoston, as agent for a group of financial institutions. The
interest rate on the borrowing is identical to that of the Credit
Facility (see below). This borrowing was utilized to repay a $110
million term loan obtained on October 1, 1997 in connection with
the acquisition of the apartment properties owned by Drever. The
balance of the proceeds of the Term Loan were used to reduce the
Credit Facility borrowings. The Company paid a loan fee of $1.2
million dollars for the Term Loan which is being amortized over the
life of the loan.
The Company has a $150 million unsecured Credit Facility with
BankBoston, as agent for a group of financial institutions, which
matures February 1999. At the Company's election, the interest
rate on any borrowings under its Credit Facility is at a floating
rate equal to either (i) BankBoston's base rate (8.5% at December
31, 1997) plus 0.5%, or (ii) LIBOR (5.7% at December 31, 1997) plus
1.375%.
The Term Loan and Credit Facility contain customary
representations, warranties and events of default which require the
Company to comply with certain affirmative and negative covenants.
The primary restrictive covenants provide that: (i) distributions
to stockholders may not exceed 90% of funds from operations, as
defined in the Term Loan and Credit Facility; (ii) secured mortgage
indebtedness may not exceed 40% of the Company's total assets
before depreciation; (iii) the Company's fixed charge coverage
ratio, as defined, must exceed 1.25; and (iv) the Company's debt
service coverage ratio, as defined, must exceed 2.0. As of
December 31, 1997, the Company is in compliance with all covenants
of the Term Loan and Credit Facility.
Principal Debt Maturities
-------------------------
Principal debt maturities, including balloon payments, for the
next five years are as follows (in thousands):
1998. . . . . . . . . . . . . . . . . . . . . . . . . . $341,206
1999. . . . . . . . . . . . . . . . . . . . . . . . . . 79,612
2000. . . . . . . . . . . . . . . . . . . . . . . . . . 20,270
2001. . . . . . . . . . . . . . . . . . . . . . . . . . 72,890
2002. . . . . . . . . . . . . . . . . . . . . . . . . . 4,986
Thereafter. . . . . . . . . . . . . . . . . . . . . . . 183,390
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . $702,354
========
Extraordinary Items
-------------------
As a result of the sale of a property during 1997, the
Company recorded an extraordinary loss in the amount of $0.4
million, which represented the write-off of unamortized deferred
financing costs and prepayment penalties from the early retirement
of debt. 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. These losses represented prepayment fees and unamortized
financing costs related to the debt retired.
Forward Treasury Lock Agreements
--------------------------------
The Company has entered into five forward treasury lock
agreements in order to hedge its exposure to interest rate
fluctuations on anticipated debt financing expected to close in
1998. Under these agreements, the Company will pay or receive an
amount equal to the difference between the Reference Yield and the
Market Yield, as defined, on the date of exercise. The exercise
date may be any date up to the settlement date. Any gain or loss
under these agreements will be amortized to interest expense over
the term of the financing. The following forward treasury lock
agreements were in place as of December 31, 1997:
Notional Amount Settlement Date Reference Yield Reference Treasury
- --------------- --------------- --------------- ------------------
(In thousands)
$ 75,000 November 23, 1998 5.8950% 5.750% due 11/30/02
25,000 November 23, 1998 5.9600% 6.125% due 08/15/07
100,000 May 22, 1998 6.3205% 6.125% due 08/15/07
75,000 May 21, 1998 6.4745% 6.125% due 08/15/07
20,000 May 22, 1998 6.2594% 6.625% due 02/15/27
--------
$295,000
========
(8) EMPLOYEE BENEFIT PLAN
Effective October 1, 1995, WDN Management adopted a 401(k)
Plan for its employees and the employees of the Company. The
401(k) plan is a voluntary defined contribution plan. Qualified
employees may participate in the plan by contributing up to 15%
(20% effective October 1, 1997) of the participant's annual
compensation (not to exceed $9,500, $9,500 and $9,240 per annum for
1997, 1996 and 1995, respectively). In 1997, the Company made an
annual matching contribution on the participants' behalf of
$136,000, representing up to 3% of the participant's annual
compensation for the periods from October 1, 1996 through September
30, 1997 and from October 1, 1997 through December 31, 1997. In
1996, WDN Management made an annual matching contribution on the
participant's behalf of $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 amount relating to
the Company's employees was reimbursed to WDN Management by the
Company in 1996. A participant's salary deferral contribution is
100% vested and nonforfeitable. A participant will become vested
in the Company's matching contributions after five years.
(9) 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 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 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 authorized the issuance of
shares of its 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 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 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 11). 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.
On February 17, 1998, the Company implemented a new officer
loan program allowing officers to purchase the Company's common
stock at current market prices and to exercise vested stock options
with the assistance of a loan from the Company. Under this
program, officers are eligible to purchase stock on March 1 and
September 1 of each year in an aggregate amount of up to three
times the officer's annual salary. A cash payment of 5% to 15% of
the purchase price is required by the officer, depending upon the
amount of the purchase, with the remainder loaned on a full
recourse basis to the officer. Each loan is evidenced by a note
with a five-year term, requiring quarterly payments of interest
only at a fixed interest rate equal to the Company's then current
interest rate under its Credit Facility. The loan is secured by a
pledge of the shares of common stock purchased by each officer
pursuant to such loan.
On March 2, 1998, the Company issued 138,692 shares of its
common stock, at $24.75 per share (the closing price of the common
stock on the New York Stock Exchange for the previous trading day)
and 26,192 shares of its common stock at a stock option grant price
of $19.25 per share, to 25 officers under the officer loan program.
The Company issued loans to officers in the amount of approximately
$3.6 million, bearing interest at 7%.
(10) STOCK OPTION PLAN
The Company adopted a stock option plan (the "Option Plan") in
1994 to provide incentives to officers, key employees and
directors. Stock options granted under the Option Plan include non-
qualified options and incentive stock options ("ISOs"). Options
granted to non-employee directors vest over a one-year period.
Options granted to officers and other 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
Option Plan are in an amount equal to 10% of the Company's
outstanding shares including exchangeable or convertible
securities. As of December 31, 1997, 3,115,953 shares of common
stock were reserved for issuance under the Option Plan. The Option
Plan limits the number of shares of common stock issuable pursuant
to ISOs to 1,500,000. Following is a summary of stock option
activity for the three years ended December 31, 1997:
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ -------------------
Weighted Weighted Weighted
Average Average Average
Price Options Price Options Price Options
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, beginning
of year. . . . . . . . . . . . $20.07 1,392,750 $19.23 792,500 $19.25 521,350
Granted . . . . . . . . . . . 25.34 1,778,250 21.16 603,250 19.21 286,150
Exercised . . . . . . . . . . 19.56 (138,813) 19.25 (125) 19.25 (1,875)
Canceled. . . . . . . . . . . 22.83 (148,562) 20.64 (2,875) 19.25 (13,125)
------ --------- ------ --------- ------ ---------
Options outstanding, end of
year . . . . . . . . . . . . . $23.20 2,883,625 $20.07 1,392,750 $19.23 792,500
====== ========= ====== ========= ====== =========
Exercisable options, end of
year . . . . . . . . . . . . . $21.21 1,076,619 $19.22 356,900 $19.25 141,713
====== ========= ====== ========= ====== =========
</TABLE>
As of December 31, 1997, options for 1,076,619 shares of
common stock were exercisable at prices ranging from $18.47 to
$26.00 per share and had a weighted average remaining contractual
life of 5.5 years. Outstanding options as of December 31, 1997 had
a weighted average contractual life of 7.9 years.
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 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 of the stock option grants at the grant dates 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:
1997 1996 1995
---- ---- ----
Net income available to common stockholders:
As reported (in thousands) . . . . . . . . . $ 9,396 $13,182 $ 8,411
Pro forma (in thousands) . . . . . . . . . . $ 8,180 $12,806 $ 8,184
Basic net income per share:
As reported. . . . . . . . . . . . . . . . . $ 0.53 $ 0.90 $ 0.69
Pro forma. . . . . . . . . . . . . . . . . . $ 0.47 $ 0.87 $ 0.67
Diluted net income per share:
As reported. . . . . . . . . . . . . . . . . $ 0.53 $ 0.89 $ 0.69
Pro forma. . . . . . . . . . . . . . . . . . $ 0.46 $ 0.87 $ 0.67
Stock options issued (in thousands). . . . . . 1,778 603 286
Weighted average exercise price. . . . . . . . $ 25.34 $ 21.16 $ 19.21
Weighted average compensation value of
options granted per option (1) . . . . . . . $ 2.38 $ 1.14 $ 1.20
Compensation cost (in thousands) . . . . . . . $ 1,397 $ 376 $ 227
(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
April 1995 through September 1997 for the year ended December
31, 1997, with an average market price volatility of 13.4% and
the period February 1994 through July 1996 for the periods
ended December 31, 1996 and 1995, with an average market price
volatility of 11.92%; (ii) expected dividend yield ranging
from 7.42% to 9.90%; (iii) expected option term of six years;
(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 and (v) forfeiture rate of 4.0%.
(11) STOCKHOLDERS' EQUITY AND MINORITY INTERESTS
Minority Interests
------------------
In connection with apartment acquisitions in June 1995, the
Company issued Common OP Units that are exchangeable for an
aggregate of 810,128 shares of the Company's common stock at the
option of the unit holders. Prior to exchange, the holders of
these Common OP Units will be entitled to receive quarterly
distributions equal to the greater of the Company's actual
distributions on 810,128 shares of common stock, or $369,000 in the
aggregate ($391,000 was accrued as of December 31, 1997).
Distributions of $1,564,000, $1,789,000 and $461,000 were paid to
these unit holders for the years ended December 31, 1997, 1996 and
1995, respectively. These securities have been recorded as minority
interests in the accompanying balance sheets.
In connection with an apartment acquisition in April 1997, the
Company issued $1.1 million of Common OP Units which are convertible
into 44,379 shares of the Company's common stock. Prior to
conversion, the holders of these Common OP Units will be entitled to
receive quarterly distributions on the equivalent of 44,379 shares
of common stock if and when declared and paid ($38,000 was declared
and paid during the year ended December 31, 1997). These securities
have been recorded as minority interests in the accompanying balance sheets.
In connection with the properties acquired from Drever in
October 1997 (see Note 4), the Company issued $303.5 million of
Common OP Units and Preferred OP Units which are exchangeable on or
after October 1, 1998, into common stock and 9.00% redeemable
preferred stock with detachable warrants, respectively.
Approximately half of these Common OP Units and Preferred OP Units
must convert to common and preferred shares, respectively, on
October 1, 1998. Beginning in 1998, the holders of the Preferred
OP Units will be entitled to receive quarterly distributions of
$0.5625 per unit and the holders of the Common OP Units will be
entitled to receive quarterly distributions equal to those on the
Company's common stock. These securities have been recorded as
minority interests in the accompanying balance sheets.
On March 4, 1998, the Company paid distributions of $5.4
million on the Common OP Units (which represented $0.4825 per unit)
and $1.1 million on the Preferred OP Units (which represented
$0.5625 per unit).
Dividend Reinvestment Program
-----------------------------
The Company has a Dividend Reinvestment and Stock Purchase
Program ("DRP") which allows stockholders to reinvest their common
or preferred distributions quarterly into shares of the Company's
common stock, in lieu of receiving cash distributions. The current
DRP provides that the issue price of dividend reinvestment
purchases are at 95% of the average closing market price of the
Company's common stock for the five days preceding such purchase.
The Company has filed various shelf registration statements for an
aggregate of 2,500,000 shares of common stock to be issued pursuant
to the DRP, of which 923,726 shares were available for issuance as
of December 31, 1997. Pursuant to the DRP, the Company issued
216,867 and 955,434 shares of its common stock during 1996 and
1997, respectively.
Other Shelf Registrations
-------------------------
On June 2, 1995, the Company filed a shelf registration
statement for $150,000,000 in shares of common or preferred stock.
On October 9, 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, 1997 were
$6,032,000 and $19,993,000, respectively.
Public Offerings
----------------
Following is a summary of the Company's public offerings
through December 31, 1997:
<TABLE>
<CAPTION>
Description Date Issued Issue 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 1,237 28,233 (3)
------ --------
16,303 $291,418
====== ========
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 . . . . 22,103 $430,262
====== ========
</TABLE>
(1) Includes 645,000 shares issued to Walden and certain officers
of Walden (the "Restricted Shares").
(2) Includes overallotment option exercised.
(3) Includes 161,000 shares issued in January 1997 pursuant to an
overallotment option. Net proceeds were $3,524,000.
On February 19, 1998, the Company issued 323,232 shares of its
common stock at a price of $23.515 per share, resulting in net
equity proceeds of $7.6 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"). On
July 1, 1996, 14,000 shares of Series A were converted into 15,968
shares of common stock. During 1997, 73,818 shares of Series B
were converted into 84,194 shares of common stock. On July 2,
1997, the remaining Series A shares which had not converted to
shares of the Company's common stock, were automatically exchanged
for Series B shares pursuant to the terms of the Series A shares.
Distributions on Series B shares are cumulative and are equal to
the greater of (i) $2.29 per annum or (ii) the distribution on the
number of shares of common stock into which a share of Series B is
convertible. Series B shares are convertible into 1.1406 shares of
common stock and are redeemable at the option of the Company on or
after April 30, 2006 at $25.00 per share.
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 was $142,805,000 as of December 31, 1997.
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. The recipients of the
Company's restricted shares of common stock (the "Restricted
Stock") are required to pay the $0.01 par value of the common
stock. On February 12, 1997, the Company issued 107,500 shares of
Restricted Stock under this plan to four executive officers, its
non-employee directors and certain other employees of the Company
(of which 18,000 shares of Restricted Stock were canceled upon
departures of certain individuals). 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. Deferred
compensation related to the Restricted Stock was computed based
upon the market value of the shares at the date of issuance less
the amount paid for the shares. This deferred compensation is
being amortized over the respective vesting periods. The
unamortized amount as of December 31, 1997 was $1,404,000.
The vesting period of the Restricted Stock issued to the
Company's former CEO and Chairman of the Board was accelerated to
October 2000, pursuant to a settlement agreement. In addition, the
balance of the deferred compensation on such Restricted Stock
($739,000) was fully amortized in 1997, and is included in the
unusual charge - officer settlement agreement in the statement of
income.
On February 4, 1998, the Company issued 4,000 restricted
shares of common stock to two executive officers which shares
vest ratably over a three year period.
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.
As discussed in Note 9, 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 at the then current market
price.
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 pursuant to an officer and director stock purchase
agreement (see Note 9). During 1996, the Company repurchased
318,300 shares of its common stock at a cost of $6,462,000; of
which 18,800 shares were reissued on January 18, 1996 pursuant to
an officer and director stock purchase agreement (see Note 9). The
remaining 299,500 shares were retired in 1996.
In July 1997, the Company announced its intention to
repurchase additional shares of its common stock. During 1997 the
Company repurchased and retired 278,500 shares of its common stock
at a cost of $6,666,000.
Distributions to Common and Preferred Stockholders
--------------------------------------------------
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 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 (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, 1997, the Company paid
distributions of $33,852,000 (or $1.93 per share of common stock),
of which 44.06% represented a return of capital, 2.23% represented
a 20% long-term capital gain and 53.71% represented ordinary
taxable dividend income. In addition, the Company paid
distributions of $3,986,000 on its 9.16% Convertible Redeemable
Preferred Stock (or $2.29 per share) and $8,538,000 on its 9.2%
Senior Preferred Stock (or $2.30 per share), of which 3.99%
represented a long-term capital gain and 96.01% represented
ordinary taxable dividend income.
On March 4, 1998, the Company paid distributions of $12.0
million to stockholders of record on February 18, 1998. The common
stockholders were paid $0.4825 per share; the 9.16% Convertible
Redeemable Preferred Stockholders were paid $0.5725 per share and
the 9.20% Senior Preferred Stockholders were paid $0.575 per share.
Distribution Preferences
------------------------
Distributions on the Company's preferred stock and certain of
its minority interest securities have priority over other
distributions. Following are the Company's distribution
preferences:
(a) First, to holders of the 9.20% Senior Preferred Stock
(4,000,000 shares at December 31, 1997, with an annual
dividend rate of $2.30 per share); then
(b) to holders of the 9.16% Series B Convertible Redeemable
Preferred Stock (1,712,182 shares at December 31, 1997,
with an annual dividend rate of $2.29 per share) and the
holders of 1,999,909 Preferred OP Units (with an annual
distribution of $2.25 per unit); then
(c) to holders of 810,128 Common OP Units (at a minimum
cumulative annual distribution equal to $1.82 per unit);
and
(d) finally, to all remaining holders of Common OP Units and
common stock.
(12) 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.
As of December 31, 1997, the outstanding balance of fixed rate
mortgage notes payable of $370.1 million had a fair value of $379.1
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, 1997. Of these
mortgages, $179.0 million were not prepayable at December 31, 1997.
The remaining notes were subject to prepayment penalties of $5.6
million at December 31, 1997, which would be required to retire
these notes prior to maturity. The floating rate mortgage notes
payable balance at December 31, 1997 reasonably approximates fair
value.
As of December 31, 1996, the outstanding balance of fixed rate
mortgage notes payable of $207.8 million had 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 were not prepayable at December 31,
1996. The remaining notes were 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 fair value of the Company's forward treasury lock
agreements (used to hedge against exposure to interest rate
fluctuations) is $9.3 million, the estimated amount that the
Company would pay to terminate the agreements as of December 31,
1997. The amount was determined based on a quote received from a
financial institution which transacts these type of settlements.
The fair value estimates presented herein are based on
information available to management as of December 31, 1997 and
1996. 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.
(13) 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.
In January 1998, the Company executed a lease agreement for
additional office space. The lease requires monthly lease payments
commencing at $66,000 up to $78,000 for a period of 120 months,
beginning May 1998.
As of December 31, 1997, the Company had employment agreements
with five executive officers for five-year periods ending in
February or October 2002. The aggregate remaining compensation due
under these agreements was approximately $4.9 million as of
December 31, 1997. Under such agreements, the Company is liable
for the compensation benefits for one year if an executive officer
were to be terminated without cause, as defined.
On various dates in 1996 and 1997, the Company entered into
contractual obligations with a third party to construct carports on
59 of the Company's properties. The total cost of the carports was
estimated to be approximately $13.6 million, of which $9.3 million
had been incurred as of December 31, 1997. The remaining $4.3
million is expected to be paid during 1998.
On February 27, 1998, the Company signed a joint venture
agreement with The Grupe Company ("Grupe") to purchase, for
approximately $47 million, two Sacramento area properties which
will consist of 616 apartment units. Under the terms of the joint
venture, Grupe will build and lease-up the two properties before
the Company would purchase 100% of both properties from the joint
venture. The purchase is anticipated to occur sometime in late
1999.
(14) QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial information for the two year
period ended December 31, 1997 is as follows (in thousands, except
per share amounts):
<TABLE>
<CAPTION>
1997 Quarters Ended
----------------------------------------------------
March 31 June 30 September 30 December 31 (a) Total
-------- ------- ------------ --------------- -----
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . $33,291 $34,750 $36,499 $66,595 $171,135
Expenses . . . . . . . . . . . 26,556 29,065 30,328 60,128 146,077
------- ------- ------- ------- --------
Operating income . . . . . . . 6,735 5,685 6,171 6,467 25,058
Gain on disposition of real
property . . . . . . . . . . -- -- -- 2,055 2,055
Extraordinary loss on debt
extinguishment . . . . . . . -- -- -- (422) (422)
Income allocated to minority
interests. . . . . . . . . . (405) (395) (397) (2,912) (4,109)
------- ------- ------- ------- --------
Net income . . . . . . . . . . 6,330 5,290 5,774 5,188 22,582
Preferred distributions. . . . (3,312) (3,311) (3,282) (3,281) (13,186)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ 3,018 $ 1,979 $ 2,492 $ 1,907 $ 9,396
======= ======= ======= ======= ========
Basic net income per share:
Before extraordinary item,
less preferred distributions
and income allocated to
minority interests . . . . . $ 0.18 $ 0.11 $ 0.14 $ 0.13 $ 0.55
Extraordinary loss on debt
extinguishment . . . . . . . -- -- -- (0.02) (0.02)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ 0.18 $ 0.11 $ 0.14 $ 0.11 $ 0.53
======= ======= ======= ======= ========
Diluted net income per share:
Before extraordinary item,
less preferred distributions
and income allocated to
minority interests . . . . . $ 0.17 $ 0.11 $ 0.14 $ 0.13 $ 0.55
Extraordinary loss on debt
extinguishment . . . . . . . -- -- -- (0.02) (0.02)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ 0.17 $ 0.11 $ 0.14 $ 0.11 $ 0.53
======= ======= ======= ======= ========
(a) Operations for the fourth quarter of 1997 include Drever, which was
acquired on October 1, 1997 (see Note 11).
</TABLE>
<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)
Income allocated to minority
interests. . . . . . . . . . (471) (471) (387) (376) (1,705)
------- ------- ------- ------- --------
Net income . . . . . . . . . . 2,561 4,550 4,612 3,846 15,569
Preferred distributions. . . . -- (342) (1,022) (1,023) (2,387)
Net income available to
common stockholders. . . . . $ 2,561 $ 4,208 $ 3,590 $ 2,823 $ 13,182
======= ======= ======= ======= ========
Basic net income per share:
Before extraordinary item,
less preferred distributions
and income allocated to
minority interests . . . . . $ 0.21 $ 0.31 $ 0.28 $ 0.23 $ 1.02
Extraordinary loss on debt
extinguishment . . . . . . . (0.03) (0.01) (0.03) (0.05) (0.12)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ 0.18 $ 0.30 $ 0.25 $ 0.18 $ 0.90
======= ======= ======= ======= ========
Diluted net income per share:
Before extraordinary item,
less preferred distributions
and income allocated to
minority interests . . . . . $ 0.21 $ 0.31 $ 0.28 $ 0.23 $ 1.01
Extraordinary loss on debt
extinguishment . . . . . . . (0.03) (0.01) (0.03) (0.05) (0.12)
------- ------- ------- ------- --------
Net income available to
common stockholders. . . . . $ 0.18 $ 0.30 $ 0.25 $ 0.18 $ 0.89
======= ======= ======= ======= ========
</TABLE>
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Initial Cost to Company
Description -----------------------
- ------------------------------------ Buildings &
Property Name Location Encumbrances Land Improvements
- ------------- -------- ------------ ---- ------------
<S> <C> <C> <C> <C>
Original Properties
- -------------------
Burning Tree Tulsa, OK 2,379 635 3,475
Casa Verde Phoenix, AZ 1,997 1,027 3,586
Cinnamon Stick Tulsa, OK 3,177 962 5,565
Club at Springlake Haltom City, TX -- 613 2,648
Country View San Antonio, TX (A) 719 5,302
Eagle Pointe Indianapolis, IN (A) 494 7,993
Fountaingate Wichita Falls, TX -- 751 6,498
James Pointe Murray, UT 8,234 1,040 10,937
Lift, The Tulsa, OK 2,743 804 4,164
Post Oak Place Euless, TX -- 1,570 6,582
Preston Greens Dallas, TX -- 1,468 6,687
Raintree Nashville, TN 5,245 715 6,457
Settler's Cove Beaumont, TX 3,175 159 5,056
Stillwater Murray, UT 11,994 2,019 16,839
Trestles of Austin Austin, TX (A) 1,100 9,977
Woodridge Fort Worth, TX -- 340 2,586
Woodstone Phoenix, AZ 12,636 4,325 14,210
------- ------- ---------
Subtotal 51,580 18,741 118,562
------- ------- ---------
1994 Acquisitions
- -----------------
Bel Shores Largo, FL 4,653 1,847 6,072
Brookwood Club Jacksonville, FL 6,872 952 8,647
Carlyle at Waters Tampa, FL (B) 1,678 11,154
Cinnamon Park Arlington, TX (A) 855 7,723
Copper Cove Houston, TX -- 935 6,194
Copperfield Oklahoma City, OK 4,150 357 6,473
Fielder's Glen Arlington, TX (A) 556 5,031
Foxboro Houston, TX (A) 800 3,882
Gables, The McKinney, TX (A) 544 6,885
Greens Crossing Dallas, TX (B) 1,368 6,795
Harper's Creek Austin, TX (A) 868 8,871
Hunter's Ridge Oklahoma City, OK 3,547 300 4,927
Newport Irving, TX 7,097 1,200 8,878
Rivercrest Arlington, TX 5,390 1,650 7,877
Silverado Albuquerque, NM (B) 1,194 8,082
Springfield Mesquite, TX (A) 1,042 6,507
Summerfield Place Oklahoma City, OK (A) 619 5,586
Woodscape Oklahoma City, OK (A) 1,077 13,280
------- ------- ---------
Subtotal 31,709 17,842 132,864
------- ------- ---------
1995 Acquisitions
- -----------------
Braden's Walk (E) Bedford, TX -- 1,839 18,495
Hilltop North Richland Hills, TX -- 801 5,314
Laurel Creek Houston, TX (A) 2,067 12,011
Pinnacle Lewisville, TX -- 672 4,190
Pinto Creek Austin, TX (A) 487 8,403
Reflections of Highpoint Dallas, TX 12,490 1,984 12,358
Remington at Ponte Vedra Ponte Vedra Beach, FL 12,000 1,425 13,468
Remington Hill Fort Worth, TX 13,880 1,846 11,847
Sandpiper Jacksonville, FL (B) 1,102 10,377
Shadow Creek North Richland Hills, TX -- 666 5,899
Summer Meadows Plano, TX 12,296 2,393 14,908
Summer Villas Dallas, TX -- 2,270 14,140
Summers Crossing Plano, TX 9,176 1,730 10,774
Summers Landing Fort Worth, TX -- 819 5,259
Three Palms Tampa, FL (C) 1,735 14,017
Winridge Aurora, CO 12,715 790 15,939
------- ------- ---------
Subtotal 72,557 22,626 177,399
------- ------- ---------
1996 Acquisitions
- -----------------
Ashbury Parke Austin, TX -- 2,007 11,591
Bentley Green Jacksonville, FL -- 1,430 14,095
Brandywine Nashville, TN -- 646 8,479
Costa del Sol San Antonio, TX -- 871 6,432
Huntington at Hidden Hills Jacksonville, FL -- 722 6,165
Meadow Glen Mesa, AZ 7,049 1,802 10,754
Nashboro Village Nashville, TN -- 6,186 42,869
Parks at Treepoint (F) Arlington, TX -- 1,966 15,036
Remington San Antonio, TX -- 427 4,411
Saratoga Melbourne, FL -- 676 5,788
Summer Oaks San Antonio, TX -- 826 5,624
Terra Vida Mesa, AZ 7,383 1,929 13,383
Villas of St. Moritz San Antonio, TX -- 653 5,544
Waterford Plano, TX -- 2,156 11,423
------- ------- ---------
Subtotal 14,432 22,297 161,594
------- ------- ---------
1997 Acquisitions
- -----------------
Arbor Park Dallas, TX -- 916 12,104
Arbors of Austin Austin, TX -- 670 7,306
Arbors of Bedford Bedford, TX -- 531 5,623
Arbors of Carrollton Carrollton, TX -- 684 4,019
Arbors of Euless Euless, TX -- 1,206 6,733
Ashton Park Tampa, FL 3,946 935 6,094
Clover Hill Arlington, TX -- 725 5,944
Hillcrest Grand Prairie, TX -- 1,040 6,823
Oak Ramble Tampa, FL -- 1,247 8,797
Parkway Station Atlanta, GA -- 666 17,761
Windsor Park Hendersonville, TN 6,870 500 9,012
------- ------- ---------
Subtotal 10,816 9,120 90,216
------- ------- ---------
Drever Transaction
- ------------------
Arbor Creek Dallas, TX -- 2,284 9,841
Arbor Point Houston, TX 1,457 313 2,568
Arbors of Wells Branch Austin, TX -- 912 7,522
Ashton Woods Houston, TX -- 251 4,423
Aston Brook Houston, TX 1,653 194 3,676
Audubon Square Austin, TX -- 529 6,284
Bar Harbor Houston, TX 5,202 1,149 9,326
Bayou Oaks Houston, TX 2,777 222 6,120
Bent Creek Dallas, TX 4,174 1,802 8,155
Brandon Oaks Houston, TX 2,612 293 6,454
Briarcrest Houston, TX 4,057 714 11,199
Brittany Park Dallas, TX -- 1,620 7,892
Brookfield Houston, TX -- 400 8,422
Canyon Ridge Dallas, TX 2,394 1,127 5,620
Carriage Hill Houston, TX 4,273 410 8,474
Casa Valley Dallas, TX -- 1,020 6,010
Central Park Condos Houston, TX 2,076 370 3,945
Central Park Regency Houston, TX 5,943 490 12,636
Charleston, The Houston, TX 4,356 810 8,469
Cimarron Park Houston, TX 2,250 334 4,888
Cimarron Parkway Houston, TX -- 1,319 9,527
Colony Oaks Houston, TX 2,519 540 6,044
Colorado Club Houston, TX 7,200 883 9,780
Creekwood Village Dallas, TX 5,098 1,433 11,173
Crestwood Phoenix, AZ -- 932 9,151
Enclave at Cypress Park Houston, TX -- 1,595 12,455
Fairways, The Phoenix, AZ -- 766 5,747
Felicita Creek San Diego, CA 3,112 1,594 5,550
Garden Place Phoenix, AZ -- 1,596 12,480
Georgetown Houston, TX -- 1,565 7,826
Harbor Pointe Houston, TX -- 413 7,506
Harpers Mill Houston, TX 2,071 967 3,657
Hidden Lake Houston, TX -- 2,843 19,840
Holiday on Hayes Houston, TX 4,787 1,491 10,600
Hunt Club, The Houston, TX 2,820 1,175 5,184
Huntley, The Houston, TX 5,285 640 8,974
La Prada Club Dallas, TX -- 1,493 9,485
Lakes of Renaissance Austin, TX -- 945 10,463
Live Oak Houston, TX -- 782 4,475
Meadows on Memorial Houston, TX -- 609 2,348
Mill Creek Houston, TX 1,633 205 4,595
Montfort Oaks Dallas, TX 5,170 2,256 11,177
Monticello on Cranbrook Houston, TX 3,434 410 7,522
Northwoods Houston, TX 2,853 638 8,176
Oak Ridge Austin, TX -- 834 10,389
One Camden Court Houston, TX -- 164 2,479
One Cypress Landing Houston, TX -- 559 11,830
One Westfield Lake Houston, TX -- 731 9,692
One Willow Chase Houston, TX -- 160 3,425
One Willow Park Houston, TX -- 219 5,880
Park Bonita San Diego, CA 5,777 6,951 5,647
Pathway, The Houston, TX -- 848 5,855
Pine Creek Houston, TX -- 414 5,697
Polo Club Austin, TX 6,346 912 10,586
Polo Club on Cranbrook I Houston, TX 2,851 340 5,693
Polo Club on Cranbrook II Houston, TX 3,909 256 7,362
Rafters, The Corpus Christi, TX 3,926 899 8,304
Richmond Green Houston, TX -- 1,248 10,049
Riverwalk Houston, TX 2,892 390 6,497
Saratoga Springs Atlanta, GA 4,404 1,568 12,041
Shadow Creek Austin, TX 6,080 1,617 13,250
Shadowridge Village Dallas, TX 2,662 918 5,055
Shannon Chase Atlanta, GA 3,016 3,465 4,564
Silverado Houston, TX 5,027 1,611 12,003
Stony Creek Houston, TX 2,986 478 6,540
Sun Ridge San Diego, CA 3,231 3,400 3,316
Timbers of Cranbrook Houston, TX -- 348 8,273
Tranquility Lake Houston, TX -- 742 3,231
Trinity Mills Dallas, TX 3,531 1,968 6,372
Trinity Oaks Dallas, TX 3,110 916 8,688
Villas at Indian Trails Atlanta, GA 3,625 3,119 6,138
Wharf, The Corpus Christi, TX 3,882 1,283 8,928
Willowick Corpus Christi, TX 3,902 899 9,161
Wimbledon Houston, TX -- 231 5,667
Woodborough Houston, TX -- 376 8,731
Woodchase Houston, TX 4,495 1,422 10,826
Woodedge Houston, TX 1,747 243 3,606
Woodlake Houston, TX -- 1,179 10,338
------- ------- ---------
Subtotal 166,605 83,042 601,772
------- ------- ---------
Subtotal - 1997 177,421 92,162 691,988
------- ------- ---------
Grand Total 347,699 173,668 1,282,407
======= ======= =========
</TABLE>
(A) Property is pledged as collateral under a $57.17 million mortgage
note payable to an insurance company.
(B) Property is pledged as collateral under a $23.38 million mortgage
note payable to an insurance company.
(C) Property is pledged as 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) Braden's Walk, Oak Forest and Woods of Bedford were combined on
December 31, 1997 to be operated as one property.
(F) Timber Creek and Treepoint were combined on January 8, 1997 and
Quayle Walk was combined on December 31, 1997, to be
operated as one property - Parks at Treepoint.
(G) The aggregate cost for Federal income tax purposes at
December 31, 1997 is approximately $1.3 billion.
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
Cost Capitalized Gross Amount
Subsequent to at Which Carried
Acquisition at December 31, 1997
------------------- --------------------
Buildings & Buildings & Accumulated Date Depreciable
Property Name Land Improvements Land Improvements Total Depreciation Acquired Life (Years) (D)
- ------------- ---- ------------ ---- ------------ ----- ------------ -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Original Properties
- -------------------
Burning Tree -- 638 635 4,113 4,748 (1,066) 02/94
Casa Verde -- 379 1,027 3,965 4,992 (812) 02/94
Cinnamon Stick -- 670 962 6,235 7,197 (1,695) 02/94
Club at Springlake -- 334 613 2,982 3,595 (557) 02/94
Country View -- 689 719 5,991 6,710 (1,284) 02/94
Eagle Pointe (4) 377 490 8,370 8,860 (1,421) 02/94
Fountaingate -- 592 751 7,090 7,841 (1,429) 02/94
James Pointe (28) 397 1,012 11,334 12,346 (2,060) 02/94
Lift, The -- 525 804 4,689 5,493 (1,083) 02/94
Post Oak Place -- 859 1,570 7,441 9,011 (1,449) 02/94
Preston Greens -- 573 1,468 7,260 8,728 (1,621) 02/94
Raintree -- 1,200 715 7,657 8,372 (1,420) 02/94
Settler's Cove -- 591 159 5,647 5,806 (1,193) 02/94
Stillwater 3 647 2,022 17,486 19,508 (3,132) 02/94
Trestles of Austin -- 1,070 1,100 11,047 12,147 (2,094) 02/94
Woodridge -- 505 340 3,091 3,431 (602) 02/94
Woodstone -- 664 4,325 14,874 19,199 (2,620) 02/94
----- ------ ------- --------- --------- -------
Subtotal (29) 10,710 18,712 129,272 147,984 (25,538)
----- ------ ------- --------- --------- -------
1994 Acquisitions
- -----------------
Bel Shores -- 812 1,847 6,884 8,731 (986) 03/94
Brookwood Club -- 1,104 952 9,751 10,703 (1,204) 11/94
Carlyle at Waters -- 1,368 1,678 12,522 14,200 (1,349) 12/94
Cinnamon Park (4) 499 851 8,222 9,073 (940) 09/94
Copper Cove -- 639 935 6,833 7,768 (859) 06/94
Copperfield -- 252 357 6,725 7,082 (850) 06/94
Fielder's Glen -- 443 556 5,474 6,030 (726) 05/94
Foxboro -- 656 800 4,538 5,338 (619) 06/94
Gables, The -- 553 544 7,438 7,982 (965) 05/94
Greens Crossing -- 918 1,368 7,713 9,081 (836) 12/94
Harper's Creek -- 653 868 9,525 10,393 (1,138) 06/94
Hunter's Ridge -- 246 300 5,173 5,473 (669) 06/94
Newport -- 338 1,200 9,215 10,415 (1,134) 06/94
Rivercrest -- 866 1,650 8,743 10,393 (1,221) 04/94
Silverado -- 245 1,194 8,327 9,521 (898) 12/94
Springfield -- 494 1,042 7,001 8,043 (851) 06/94
Summerfield Place -- 392 619 5,978 6,597 (657) 11/94
Woodscape -- 486 1,077 13,766 14,843 (1,717) 06/94
----- ------ ------- --------- --------- -------
Subtotal (4) 10,964 17,838 143,828 161,666 (17,619)
----- ------ ------- --------- --------- -------
1995 Acquisitions
- -----------------
Braden's Walk (E) -- 1,136 1,839 19,631 21,470 (708) 12/95, 10/96 & 12/97
Hilltop -- 464 801 5,778 6,579 (427) 12/95
Laurel Creek -- 1,023 2,067 13,034 15,101 (1,282) 04/95
Pinnacle -- 353 672 4,543 5,215 (400) 06/95
Pinto Creek -- 762 487 9,165 9,652 (949) 01/95
Reflections of Highpoint -- 677 1,984 13,035 15,019 (1,122) 06/95
Remington at Ponte Vedra -- 853 1,425 14,321 15,746 (1,263) 06/95
Remington Hill -- 418 1,846 12,265 14,111 (1,094) 06/95
Sandpiper -- 934 1,102 11,311 12,413 (943) 10/95
Shadow Creek -- 563 666 6,462 7,128 (476) 12/95
Summer Meadows -- 462 2,393 15,370 17,763 (1,367) 06/95
Summer Villas -- 1,059 2,270 15,199 17,469 (1,291) 06/95
Summers Crossing -- 771 1,730 11,545 13,275 (1,010) 06/95
Summers Landing -- 571 819 5,830 6,649 (538) 06/95
Three Palms -- 925 1,735 14,942 16,677 (1,325) 06/95
Winridge -- 523 790 16,462 17,252 (1,453) 06/95
----- ------ ------- --------- --------- -------
Subtotal -- 11,494 22,626 188,893 211,519 (15,648)
----- ------ ------- --------- --------- -------
1996 Acquisitions
- -----------------
Ashbury Parke -- 928 2,007 12,519 14,526 (658) 06/96
Bentley Green -- 1,344 1,430 15,439 16,869 (767) 08/96 & 09/96
Brandywine -- 1,052 646 9,531 10,177 (499) 08/96
Costa del Sol -- 557 871 6,989 7,860 (377) 06/96
Huntington at Hidden Hills -- 1,393 722 7,558 8,280 (409) 08/96
Meadow Glen -- 353 1,802 11,107 12,909 (426) 11/96
Nashboro Village -- 2,451 6,186 45,320 51,506 (1,595) 12/96
Parks at Treepoint (F) -- 1,634 1,966 16,670 18,636 (728) 09/96 & 01/97
Remington -- 485 427 4,896 5,323 (263) 06/96
Saratoga -- 589 676 6,377 7,053 (303) 09/96
Summer Oaks -- 598 826 6,222 7,048 (335) 06/96
Terra Vida -- 909 1,929 14,292 16,221 (802) 06/96
Villas of St. Moritz -- 613 653 6,157 6,810 (347) 06/96
Waterford -- 965 2,156 12,388 14,544 (574) 09/96
----- ------ ------- --------- --------- -------
Subtotal -- 13,871 22,297 175,465 197,762 (8,083)
----- ------ ------- --------- --------- -------
1997 Acquisitions
- -----------------
Arbor Park -- 399 916 12,503 13,419 (302) 04/97
Arbors of Austin -- 395 670 7,701 8,371 (180) 04/97
Arbors of Bedford -- 385 531 6,008 6,539 (152) 04/97
Arbors of Carrollton -- 257 684 4,276 4,960 (105) 04/97
Arbors of Euless -- 830 1,206 7,563 8,769 (184) 04/97
Ashton Park -- -- 935 6,094 7,029 (35) 12/97
Clover Hill -- 101 725 6,045 6,770 (35) 10/97
Hillcrest -- 133 1,040 6,956 7,996 (125) 06/97
Oak Ramble -- 87 1,247 8,884 10,131 (51) 11/97
Parkway Station -- 2 666 17,763 18,429 (100) 12/97
Windsor Park -- 181 500 9,193 9,693 (132) 07/97
----- ------ ------- --------- --------- -------
Subtotal -- 2,770 9,120 92,986 102,106 (1,401)
----- ------ ------- --------- --------- -------
Drever Transaction
- ------------------
Arbor Creek -- 22 2,284 9,863 12,147 (103) 10/97
Arbor Point -- 8 313 2,576 2,889 (27) 10/97
Arbors of Wells Branch -- 20 912 7,542 8,454 (79) 10/97
Ashton Woods -- 19 251 4,442 4,693 (47) 10/97
Aston Brook -- 15 194 3,691 3,885 (39) 10/97
Audubon Square -- 26 529 6,310 6,839 (66) 10/97
Bar Harbor -- 42 1,149 9,368 10,517 (99) 10/97
Bayou Oaks -- 16 222 6,136 6,358 (65) 10/97
Bent Creek -- 19 1,802 8,174 9,976 (86) 10/97
Brandon Oaks -- 19 293 6,473 6,766 (68) 10/97
Briarcrest -- 40 714 11,239 11,953 (118) 10/97
Brittany Park -- 28 1,620 7,920 9,540 (83) 10/97
Brookfield -- 23 400 8,445 8,845 (88) 10/97
Canyon Ridge -- 28 1,127 5,648 6,775 (59) 10/97
Carriage Hill -- 21 410 8,495 8,905 (89) 10/97
Casa Valley -- 19 1,020 6,029 7,049 (63) 10/97
Central Park Condos -- 9 370 3,954 4,324 (41) 10/97
Central Park Regency -- 31 490 12,667 13,157 (133) 10/97
Charleston, The -- 20 810 8,489 9,299 (89) 10/97
Cimarron Park -- 15 334 4,903 5,237 (52) 10/97
Cimarron Parkway -- 18 1,319 9,545 10,864 (100) 10/97
Colony Oaks -- 29 540 6,073 6,613 (64) 10/97
Colorado Club -- 27 883 9,807 10,690 (103) 10/97
Creekwood Village -- 36 1,433 11,209 12,642 (118) 10/97
Crestwood -- 21 932 9,172 10,104 (96) 10/97
Enclave at Cypress Park -- 62 1,595 12,517 14,112 (132) 10/97
Fairways, The -- 19 766 5,766 6,532 (60) 10/97
Felicita Creek -- 15 1,594 5,565 7,159 (59) 10/97
Garden Place -- 22 1,596 12,502 14,098 (131) 10/97
Georgetown -- 16 1,565 7,842 9,407 (51) 10/97
Harbor Pointe -- 23 413 7,529 7,942 (79) 10/97
Harpers Mill -- 13 967 3,670 4,637 (39) 10/97
Hidden Lake -- 40 2,843 19,880 22,723 (208) 10/97
Holiday on Hayes -- 15 1,491 10,615 12,106 (111) 10/97
Hunt Club, The -- 14 1,175 5,198 6,373 (55) 10/97
Huntley, The -- 21 640 8,995 9,635 (94) 10/97
La Prada Club -- 26 1,493 9,511 11,004 (100) 10/97
Lakes of Renaissance -- 26 945 10,489 11,434 (110) 10/97
Live Oak -- 29 782 4,504 5,286 (47) 10/97
Meadows on Memorial -- 20 609 2,368 2,977 (26) 10/97
Mill Creek -- 18 205 4,613 4,818 (49) 10/97
Montfort Oaks -- 26 2,256 11,203 13,459 (117) 10/97
Monticello on Cranbrook -- 22 410 7,544 7,954 (79) 10/97
Northwoods -- 24 638 8,200 8,838 (86) 10/97
Oak Ridge -- 28 834 10,417 11,251 (109) 10/97
One Camden Court -- 15 164 2,494 2,658 (26) 10/97
One Cypress Landing -- 33 559 11,863 12,422 (125) 10/97
One Westfield Lake -- 30 731 9,722 10,453 (102) 10/97
One Willow Chase -- 7 160 3,432 3,592 (36) 10/97
One Willow Park -- 13 219 5,893 6,112 (62) 10/97
Park Bonita -- 10 6,951 5,657 12,608 (59) 10/97
Pathway, The -- 11 848 5,866 6,714 (62) 10/97
Pine Creek -- 16 414 5,713 6,127 (60) 10/97
Polo Club -- 24 912 10,610 11,522 (111) 10/97
Polo Club on Cranbrook I -- 22 340 5,715 6,055 (62) 10/97
Polo Club on Cranbrook II -- 26 256 7,388 7,644 (76) 10/97
Rafters, The -- 13 899 8,317 9,216 (87) 10/97
Richmond Green -- 26 1,248 10,075 11,323 (106) 10/97
Riverwalk -- 14 390 6,511 6,901 (68) 10/97
Saratoga Springs -- 23 1,568 12,064 13,632 (126) 10/97
Shadow Creek -- 38 1,617 13,288 14,905 (140) 10/97
Shadowridge Village -- 20 918 5,075 5,993 (53) 10/97
Shannon Chase -- 15 3,465 4,579 8,044 (12) 10/97
Silverado -- 29 1,611 12,032 13,643 (126) 10/97
Stony Creek -- 18 478 6,558 7,036 (69) 10/97
Sun Ridge -- 15 3,400 3,331 6,731 (35) 10/97
Timbers of Cranbrook -- 28 348 8,301 8,649 (87) 10/97
Tranquility Lake -- 13 742 3,244 3,986 (33) 10/97
Trinity Mills -- 18 1,968 6,390 8,358 (67) 10/97
Trinity Oaks -- 31 916 8,719 9,635 (92) 10/97
Villas at Indian Trails -- 21 3,119 6,159 9,278 (93) 10/97
Wharf, The -- 37 1,283 8,965 10,248 (94) 10/97
Willowick -- 24 899 9,185 10,084 (96) 10/97
Wimbledon -- 15 231 5,682 5,913 (60) 10/97
Woodborough -- 31 376 8,762 9,138 (92) 10/97
Woodchase -- 47 1,422 10,873 12,295 (114) 10/97
Woodedge -- 11 243 3,617 3,860 (38) 10/97
Woodlake -- 18 1,179 10,356 11,535 (109) 10/97
----- ------ ------- --------- --------- -------
Subtotal -- 1,762 83,042 603,534 686,576 (6,295)
----- ------ ------- --------- --------- -------
Subtotal - 1997 -- 4,532 92,162 696,520 788,682 (7,696)
----- ------ ------- --------- --------- -------
Grand Total (33) 51,571 173,635 1,333,978 1,507,613 (74,584)
===== ====== ======= ========= ========= =======
</TABLE>
(A) Property is pledged as collateral under a $57.17 million mortgage note
payable to an insurance company.
(B) Property is pledged as collateral under a $23.38 million mortgage note
payable to an insurance company.
(C) Property is pledged as 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) Braden's Walk, Oak Forest and Woods of Bedford were combined on
December 31, 1997 to be operated as one property.
(F) Timber Creek and Treepoint were combined on January 8, 1997 and
Quayle Walk was combined on December 31, 1997, to be operated as
one property - Parks at Treepoint.
(G) The aggregate cost for Federal income tax purposes at December 31, 1997
is approximately $1.3 billion.
EXHIBIT INDEX
Exhibit No. Description
2.1 Contribution Agreement by and among Walden/Drever
Operating Partnership, L.P., Walden Residential
Properties, Inc., the Shareholders of Drever Partners,
Inc., AOF, Inc., and AOF II, Inc. (1)
2.2 Exchange Agreement among Walden Residential Properties,
Inc., Walden/Drever Operating Partnership, L.P., Drever
Partners, Inc., AOF, Inc. and AOF II, Inc. (1)
3.1 Articles of Amendment and Restatement of the Company. (2)
3.2 Restated Bylaws of the Company. (2)
4.1 Specimen of certificate representing shares of Common
Stock. (3)
4.2 Form of certificate representing shares of 9.16% Series
B Convertible Redeemable Preferred Stock. (4)
4.3 Form of certificate representing shares of 9.20% Senior
Preferred Stock. (5)
4.4 Form of Articles Supplementary relating to 9.16% Series
B Convertible Redeemable Preferred Stock. (4)
4.5 Form of Articles Supplementary designating the rights of
the holders of 9.20% Senior Preferred Stock. (5)
10.1 Dividend Reinvestment and Stock Purchase Plan. (6)
10.2 Transfer and Assignment Agreement between The Arbors of
Austin and Walden Residential Operating Partnership, L.P.
(Arbors of Austin Apartments) (1)
10.3 Transfer and Assignment Agreement between Arbors of
Bedford Limited and Walden Residential Operating
Partnership, L.P. (Arbors of Bedford Apartments) (1)
10.4 Transfer and Assignment Agreement between Euless II
Limited and Walden Residential Operating Partnership,
L.P. (Arbors of Euless Apartments) (1)
10.5 Transfer and Assignment Agreement between The Arbors on
Forest Lane Limited and Walden Residential Operating
Partnership, L.P. (Arbors on Forest Lane Apartments) (1)
10.6 Transfer and Assignment Agreement between Arbor Park
Limited and Walden Residential Operating Partnership,
L.P. (Arbor Park Apartments) (1)
10.7 Transfer and Assignment Agreement between Arbor Mill
Limited and Walden Residential Operating Partnership,
L.P. (Arbors of Carrollton Apartments) (1)
10.8 Real Estate Sales Contract by and between
Village/Hillcrest Limited Partnership and Walden
Residential Properties, Inc. (Hillcrest Apartments) (1)
10.9 Purchase and Sale Agreement by and between Windsor Park
Apartments, Inc. and Walden Residential Operating
Partnership, L.P. (Windsor Park Apartments) (7)
10.10 Real Estate Sales Contract by and between 1990 Clover
Hill Limited Partnership and Walden Residential
Properties, Inc. (Clover Hill Apartments) (7)
10.11 Third Amendment to the Revolving Credit Agreement by and
among WDN Properties, Ltd., Walden Residential
Properties, Inc., Walden Residential Operating
Partnership, L.P., WDN Properties, Inc., Walden/Drever
Operating Partnership, L.P., BankBoston, N.A.,
individually, Bank of Montreal, Chicago Branch,
Corestates Bank, N.A., Dresdner Bank AG New York and
Grand Cayman Branches, Keybank National Association,
Signet Bank, and BankBoston, N.A. as Agent, dated October
1, 1997. *
10.12 Agreement to Sell Real Estate between MIG-Oak Ramble
Associates Limited Partnership and Walden Residential
Properties, Inc., dated as of September 16, 1997. (Oak
Ramble Apartments) *
10.13 Purchase and Sale Agreement and Joint Escrow Instructions
between Pacific Life Insurance Company and Walden
Residential Properties, Inc., dated as of November 10,
1997. (Woods of Bedford Apartments) *
10.14 First Amendment to the Purchase and Sale Agreement and
Joint Escrow Instructions between Pacific Life Insurance
Company and Walden Residential Properties, Inc., dated as
of December 15, 1997. (Woods of Bedford Apartments) *
10.15 Contract of Sales between MGI Properties and Walden
Residential Operating Partnership, L.P. dated as of
November 7, 1997. (St. James Crossing and South Pointe
Apartments) *
10.16 Purchase and Sale Agreement by and between Windsor at
Ashton Park Limited Partnership and Walden Residential
Properties, Inc., dated as of November 14, 1997. (Ashton
Park Apartments) *
10.17 Agreement of Sale and Purchase by and between Windsor at
Parkway Station Limited Partnership and Walden
Residential Properties, Inc., dated as of November 14,
1997. (Parkway Station Apartments) *
10.18 Revolving Credit Agreement dated December 15, 1997, by
and among Walden Residential Properties, Inc.,
Walden/Drever Operating Partnership, L.P., BankBoston,
N.A. and BankBoston, N.A., as Managing Agent for the
Banks. *
10.19 Term Loan Agreement dated December 15, 1997, by and among
Walden Residential Properties, Inc., Walden/Drever
Operating Partnership, L.P., BankBoston, N.A. and
BankBoston, N.A., as Managing Agent for the Banks. *
10.20 Settlement and Employment Agreement, dated as of October
20, 1997, between Walden Residential Properties, Inc. and
Don R. Daseke. *
10.21 Employment Agreement, dated as of October 1, 1997,
between Walden Residential Properties, Inc. and Maxwell
B. Drever. *
10.22 Employment Agreement, dated as of October 1, 1997,
between Walden Residential Properties, Inc. and Michael
E. Masterson. *
10.23 Employment Agreement, dated as of October 1, 1997,
between Walden Residential Properties, Inc. and Michael
L. Collier. *
10.24 Employment Agreement, dated as of October 20, 1997,
between Walden Residential Properties, Inc. and Marshall
B. Edwards. *
10.25 Construction Loan Agreement by and among Walden/Grupe Elk
Grove, L.P., BankBoston, N.A. and BankBoston, N.A. as
Agent for Other Banks, dated as of February 27, 1998. *
10.26 Construction Loan Agreement by and among Walden/Grupe
Roseville, L.P., BankBoston, N.A. and BankBoston, N.A. as
Agent for Other Banks, dated as of February 27, 1998. *
10.27 Treasury Lock Agreement by and between Walden Residential
Properties, Inc. and Smith Barney Capital Services, Inc.,
dated as of August 29, 1997. *
10.28 Treasury Lock Agreement by and between BankBoston, N.A.
and Walden Residential Properties, Inc., dated as of
December 17, 1997. ($75,000,000) *
10.29 Treasury Lock Agreement by and between BankBoston, N.A.
and Walden Residential Properties, Inc., dated as of
December 17, 1997. ($25,000,000) *
12.1 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends. *
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 Company's Form 10-Q filed with the
Securities and Exchange Commission on August 12, 1997 and
incorporated herein by reference.
(2) 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.
(3) 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.
(4) 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.
(5) 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)
(6) Previously filed with the Company's Registration Statement on
Form S-3D (Registration No. 333-34507) filed with the
Securities and Exchange Commission on August 28, 1997 and
incorporated herein by reference.
(7) Previously filed with the Company's Form 10-Q filed with the
Securities and Exchange Commission on November 14, 1997 and
herein incorporated by reference. (Previously numbered
Exhibits 10.1 through 10.2)
THIRD AMENDMENT TO
REVOLVING CREDIT AGREEMENT
THIS THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT (this
"Amendment") made as of this 1st day of October, 1997, by and among
WDN PROPERTIES, LTD., a Texas limited partnership ("Borrower"),
WALDEN RESIDENTIAL PROPERTIES, INC., a Maryland corporation
("Walden"), WALDEN RESIDENTIAL OPERATING PARTNERSHIP, L.P., a
Georgia limited partnership ("WROP"), WDN PROPERTIES, INC., a New
York corporation ("WDN Properties"; Walden, WROP and WDN Properties
are sometimes hereinafter referred to collectively as the "Initial
Guarantors"), WALDEN/DREVER OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership ("Additional Guarantor"; the Initial Guarantors
and the Additional Guarantor are sometimes hereinafter referred to
collectively as the "Guarantors"), BANKBOSTON, N.A. (formerly known
as The First National Bank of Boston), individually ("BKB"), BANK
OF MONTREAL, CHICAGO BRANCH ("BOM"), CORESTATES BANK, N.A.
("CoreStates"), DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES
("Dresdner"), KEYBANK NATIONAL ASSOCIATION ("Key Bank"), SIGNET
BANK ("Signet"; BKB, BOM, CoreStates, Dresdner, Key Bank and Signet
are hereinafter referred to collectively as the "Banks"), and
BANKBOSTON, N.A. (formerly known as The First National Bank of
Boston), as Agent (the "Agent").
W I T N E S E T H:
WHEREAS, Borrower, Agent and the other banks a party thereto
entered into that certain Revolving Credit Agreement dated December
4, 1996, as amended by that certain First Amendment to Revolving
Credit Agreement dated as of April 23, 1997 among the Borrower, the
Initial Guarantors, the Banks and the Agent and that certain Second
Amendment to Revolving Credit Agreement dated as of June 27, 1997
among the Borrower, the Initial Guarantors, the Banks and the Agent
(collectively the "Credit Agreement"); and
WHEREAS, Initial Guarantors have executed and delivered to the
Agent and the Banks that certain Unconditional Guaranty of Payment
and Performance dated December 4, 1996 (the "Guaranty"); and
WHEREAS, Borrower has requested that Agent and the Banks
modify and amend certain terms and provisions of the Credit
Agreement to permit Walden to consummate the proposed acquisition
of interests in a portfolio of properties; and
WHEREAS, as a condition to such modification, Agent and the
Banks have required that Borrower and Guarantors execute this
Amendment;
NOW, THEREFORE, for and in consideration of the sum of TEN and
NO/100 DOLLARS ($10.00), and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do hereby covenant and agree as follows:
1. Definitions. All terms used herein which are not
otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
2. Modification of the Credit Agreement. Borrower, the
Banks and Agent do hereby modify and amend the Credit Agreement as
follows:
(a) By inserting the following definition in Section 1.1
Credit Agreement:
"WDOP. Walden/Drever Operating Partnership, L.P., a
Delaware limited partnership.";
(b) By deleting the words and numbers "twenty-eight
percent (28%)" appearing in the second (2nd) line of the second
(2nd) paragraph on page 13 of the Credit Agreement, and inserting
in lieu thereof the words and numbers "fifty percent (50%)";
(c) By inserting the following sentence at the end of
the second (2nd) paragraph on page 13 of the Credit Agreement:
"Notwithstanding anything herein to the contrary,
the Real Estate owned by Subsidiaries of Additional
Guarantor in the projects to be acquired on or about the
date hereof in the transaction with Drever Partners, Inc.
shall not be precluded from consideration as Unencumbered
Operating Properties because such assets are not owned by
WDOP in fee simple, and shall be considered as
Unencumbered Operating Properties in the event that all
other requirements relating to an asset being considered
as an Unencumbered Operating Property are satisfied
(which requirements, for the purposes hereof, shall be
applied at the level of WDOP, the underlying Real Estate
and the Persons that own the underlying Real Estate,
provided that WDOP directly or indirectly owns 100% of
the interests in the general partners of such
Subsidiaries of WDOP and not less than 100% of the
limited partner interests in each Subsidiary, and
provided further that the terms of Section 7.19 are and continue
to be satisfied at all times.";
(d) By inserting the words "; provided that no more than
forty percent (40%) of the Asset Value of the Unencumbered
Operating Properties may be located in Houston, Texas until October
1, 1998, and thereafter such Asset Value shall not exceed thirty
percent (30%) as provided above" following the words "the purposes
hereof)" appearing in the last line of Section 7.14(a)(ii) of the Credit
Agreement;
(e) By deleting the words and numbers "twenty percent
(20%)" appearing in the fourth (4th) line of Section 7.19(g) of the Credit
Agreement, and inserting in lieu thereof the words and numbers
"fifty percent (50%)";
(f) By inserting the words "(provided, however, that
with respect to senior unsecured recourse Indebtedness of Walden
only, the aggregate outstanding amount of such Indebtedness
(excluding the Obligations, but including any of such Indebtedness
permitted within the five percent (5%) threshold described above)
shall not exceed fifty percent (50%) of Walden's Consolidated Total
Assets)" following the words "Walden's Consolidated Total Assets"
appearing in the fourth (4th) line of Section 8.1(h) of the Credit
Agreement; and
(g) By deleting the number "1.60" appearing in the third
(3 rd) line of Section 9.2(c) of the Credit Agreement, and inserting in
lieu thereof the number " 1.25".
3. Additional Guaranty. Contemporaneously with the
execution of this Amendment, Additional Guarantor has executed and
delivered to Agent for the benefit of Agent and the Banks that
certain Unconditional Guaranty of Payment and Performance (the
"Additional Guaranty"). The parties hereto acknowledge and agree
that from and after the date hereof, Additional Guarantor shall be
an "Additional Guarantor" pursuant to the terms of the Credit
Agreement, the Additional Guaranty shall be a "Guaranty" for the
purposes of the Credit Agreement, and Walden, as the general
partner of Additional Guarantor, shall be a "General Partner for
the purposes of the Credit Agreement. The Borrower and Additional
Guarantor hereby restate and reaffirm with respect to Additional
Guarantor each and every representation and warranty in the Loan
Documents made by or with respect to Guarantors and their general
partners as if the same were more fully set forth herein, and
represent and warrant that each such representation and warranty is
true and correct with respect to Additional Guarantor and its
general partner, and that all covenants and agreements in the Loan
Documents of the Guarantors and their general partners are true and
correct with respect to Additional Guarantor.
4. References to Credit Agreement. All references in the
Loan Documents to the Credit Agreement shall be deemed a reference
to the Credit Agreement as modified and amended herein.
5. Consent. By execution of this Amendment, Guarantors
hereby expressly consent to the modifications and amendments
relating to the Credit Agreement as set forth herein, and Borrower
and Guarantors hereby acknowledge, represent and agree that the
Loan Documents (including without limitation the Guaranty and the
Additional Guaranty) remain in full force and effect and constitute
the valid and legally binding obligation of Borrower and Guarantors
enforceable against such Persons in accordance with their
respective terms, that the Guaranty extends to and applies to the
Credit Agreement as modified and amended, and that the execution
and delivery of this Amendment does not constitute, and shall not
be deemed to constitute, a release, waiver or satisfaction of
Borrower's or Guarantors' obligations under the Loan Documents
(including without limitation the Guaranty and the Additional
Guaranty).
6. Representations. Borrower and Guarantors represent and
warrant to Agent and the Banks as follows:
(a) Existence. Additional Guarantor is a Delaware
limited partnership duly organized pursuant to a limited
partnership agreement dated August 12, 1997 and is validly existing
and in good standing under the laws of Delaware. Additional
Guarantor has all requisite power to own its property and conduct
its business as now conducted and presently contemplated, and is in
good standing as a foreign entity and is duly authorized to do
business in each jurisdiction where a failure to be so qualified in
such jurisdiction could have a materially adverse effect on the
business, assets or financial condition of Additional Guarantor.
(b) Subsidiaries. Each of the Subsidiaries of
Additional Guarantor (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 the
Unencumbered Operating Properties of the Subsidiaries of Additional
Guarantor are located and in each other jurisdiction where a
failure to be so qualified could have a materially adverse effect
on the business, assets or financial condition of the Additional
Guarantor or such Subsidiary. Schedule I attached hereto sets
forth all of the Subsidiaries of Additional Guarantor, the form and
jurisdiction of organization of each of the Subsidiaries, and
WDOP's, Walden's and the other Subsidiaries of Walden's ownership
interest therein.
(c) Partners. Walden is the sole general partner of
Additional Guarantor and owns a one percent (1%) partnership
interest in Additional Guarantor. WDN Properties, Inc. is a
limited partner of Additional Guarantor and owns a ninety-nine
percent (99%) partnership interest in Additional Guarantor;
provided, however, that after the consummation of a pending
transaction involving Drever Partners, Inc., such partnership
interests shall be reduced to not less than forty percent (40%).
(d) Authorization. The execution, delivery and
performance of this Amendment and the Additional Guaranty and the
transactions contemplated hereby and thereby (i) are within the
authority of Borrower and Guarantors, (ii) have been duly
authorized by all necessary proceedings on the part of such
Persons, (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 any of such Persons is subject or any judgment,
order, writ, injunction, license or permit applicable to such
Persons, (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 partnership agreement or
certificate, certificate of formation, operating agreement,
articles of incorporation or other charter documents or bylaws of,
or any mortgage, indenture, agreement, contract or other instrument
binding upon, any of such Persons or any of its properties or to
which any of such Persons is subject, 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 fights of such
Persons.
(e) Enforceability. The execution and delivery of this
Amendment and the Additional Guaranty are valid and legally binding
obligations of Borrower and Guarantors 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.
(f) Approvals. The execution, delivery and performance
of this Amendment and the Additional Guaranty and the transactions
contemplated hereby and thereby do not require the approval or
consent of any Person or the authorization, consent, approval of or
any license or permit issued by, or any filing or registration
with, or the giving of any notice to, any court, department, board,
commission or other governmental agency or authority other than
those already obtained.
(g) No Fraudulent Intent. Neither the execution and
delivery of this Amendment nor the Additional Guaranty nor the
performance of any actions required hereunder or any of the Loan
Documents (including without limitation the Additional Guaranty) is
being undertaken by the Borrower or any Guarantor with or as a
result of any actual intent by any of such Persons to hinder, delay
or defraud any entity to which any of such Persons is now or will
hereafter become indebted.
(h) Transaction in Best Interests of Borrower;
Consideration. The transaction evidenced by this Amendment is in
the best interests of the Borrower and the Guarantors and the
creditors of such Persons, the direct and indirect benefits to
inure to the Borrower and the Guarantors pursuant to this Amendment
and the other Loan Documents (including without limitation the
Additional Guaranty) constitute substantially more than "reasonably
equivalent value" (as such term is used in Section 548 of the
Bankruptcy Code) and "valuable consideration," "fair value," and
"fair consideration," (as such terms are used in any applicable
state fraudulent conveyance law), in exchange for the benefits to
be provided by the Borrower and the Guarantors pursuant to this
Amendment and the other Loan Documents (including without
limitation the Additional Guaranty), and but for the willingness of
the Guarantors to guaranty the Loan, Borrower would be unable to
obtain the approval of the Banks of this Amendment and Additional
Guarantor would be unable to obtain separate financing which
separate financing will enable Walden and its Subsidiaries
(including the Guarantors) to have available financing to conduct
and expand their business.
7. No Default. By execution hereof, the Borrower and
Guarantors certify that the Borrower and Guarantors are and will be
in compliance with all covenants under the Loan Documents after the
execution and delivery of this Amendment and the Additional
Guaranty, and that no Default or Event of Default has occurred and
is continuing.
8. Waiver of Claims. Borrower and Guarantors acknowledge,
represent and agree that Borrower and Guarantors have no defenses,
setoffs, claims, counterclaims or causes of action of any kind or
nature whatsoever with respect to the Loan Documents, the
administration or funding of the Loans or with respect to any acts
or omissions of Agent or any of the Banks, or any past or present
officers, agents or employees of Agent or any of the Banks, and
each of Borrower and Guarantors does hereby expressly waive,
release and relinquish any and all such defenses, setoffs, claims,
counterclaims and causes of action, if any.
9. Conditions to Effectiveness of Amendment. The
effectiveness of this Amendment shall be conditioned upon the
receipt by the Agent of the Additional Guaranty duly executed by
Additional Guarantor, a contribution agreement among Borrower and
the Guarantors in form and substance satisfactory to the Agent and
each and every other document, certification, opinion or other item
set forth in Section 10 of the Credit Agreement applicable to Guarantors,
general partners of Guarantors, or Loan Documents executed by
Guarantors.
10. Ratification. Except as hereinabove set forth, all
terms, covenants and provisions of the Credit Agreement remain
unaltered and in full force and effect, and the parties hereto do
hereby expressly ratify and confirm the Credit Agreement as
modified and amended herein. Nothing in this Amendment shall be
deemed or construed to constitute, and there has not otherwise
occurred, a novation, cancellation, satisfaction, release,
extinguishment or substitution of the indebtedness evidenced by the
Notes or the other obligations of Borrower and Guarantors under the
Loan Documents.
11. Amendment as Loan Document. This Amendment shall
constitute a Loan Document.
12. Counterparts. This Amendment may be executed in any
number of counterparts which shall together constitute but one and
the same agreement.
13. Miscellaneous. This Amendment shall be construed and
enforced in accordance with the laws of the Commonwealth of
Massachusetts. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
permitted successors, successors-in-title and assigns as provided
in the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have hereto set their
hands and affixed their seals as of the day and year first above
written.
BORROWER:
WDN PROPERTIES, LTD., a Texas
limited
partnership, by it sole general
partner
By: Walden Residential Properties, Inc.,
a Maryland corporation
By:
Name:
Title:
[CORPORATE SEAL]
INITIAL GUARANTORS:
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By:
Name:
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:
Name:
Title:
[CORPORATE SEAL]
WDN PROPERTIES, INC., a New York
corporation
By:
Name:
Title:
[CORPORATE SEAL]
ADDITIONAL GUARANTOR:
WALDEN/DREVER OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: Walden Residential Properties, Inc.,
a Maryland corporation,
its sole general partner
By:
Name:
Title:
[CORPORATE SEAL]
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston),
individually and as Agent
By:
Name:
Title:
[BANK SEAL]
BANK OF MONTREAL, CHICAGO BRANCH
By:
Name:
Title:
CORESTATES BANK, N.A.
By:
Name:
Title:
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN BRANCHES
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By:
Name:
Title:
SIGNET BANK
By:
Name:
Title:
SCHEDULE 1
SUBSIDIARIES OF WDOP
I:\FINANCE\SECFIL~1\10-K-97\EX-10-11.WPD
1 RKM:mvm:lg 11/11/97
Schedule 1A
PARTNERSHIPS
Name
General
Partners(s)
Project
Apartment Opportunity Fund, L.P.
AOF Newgen, L.P.
Villas at Indian Trails, Atlanta, GA
Audubon Square, Austin, TX
Lakes of Renaissance, Austin, TX
Oakridge, Austin, TX
Arbor Creek, Dallas, TX
Brittany Park, Dallas, TX
Casa Valley, Dallas, TX
Trinity Oakes, Dallas, TX
Ashton Woods, Houston, TX
Briarcrest, Houston, TX
Cimarron Parkway, Houston, TX
Harbor Pointe, Houston, TX
Hidden Lake, Houston, TX
Pathway, Houston, TX
Pine Creek, Houston, TX
Wimbledon, Houston, TX
Woodborough, Houston, TX
Woodchase, Houston, TX
Crestwood, Phoenix, AZ
Fairways, Phoenix, AZ
Garden Place, Phoenix, AZ
Apartment Opportunity Fund II, L.P.
AOF II, Inc.
Saratoga Springs, Atlanta, GA
Shannon Chase, Atlanta, GA
Shadow Creek, Austin, TX
The Rafters, Corpus Christi, TX
Willowick, Corpus Christi, TX
Bent Creek, Dallas, TX
Canyon Ridge, Dallas, TX
Creekwood Village, Dallas, TX
Montfort Oaks, Dallas, TX
Shadowridge Village, Dallas, TX
Trinity Mills, Dallas, TX
Bayou Oaks, Houston, TX
Cimarron Park, Houston, TX
Holiday on Hayes, Houston, TX
Northwoods, Houston, TX
Silverado, Houston, TX
Felicita Creek, San Diego, CA
Park Bonita, San Diego, CA
Sun Ridge, San Diego, CA
DMH 90 Properties
Drever Partners, Inc.
Polo Club, Austin, TX
Arbor Point, Houston, TX
Bar Harbor, Houston, TX
Central Park Condos, Houston, TX
The Charleston, Houston, TX
Harpers Mill, Houston, TX
Polo Club I, Houston, TX
Polo Club II, Houston, TX
Richmond Green, Houston, TX
Woodedge, Houston, TX
Houston Portfolio Joint Venture
Drever Partners, Inc.
The Huntley, Houston, TX
Woodlake, Houston, TX
One Cypress Landing, Houston, TX
Live Oak, Houston, TX
Village Portfolio Joint Venture
Drever Partners, Inc.
The Huntley, Houston, TX
Woodlake, Houston, TX
One Cypress Landing, Houston, TX
Fullerton Portfolio Joint Venture
Drever Partners, Inc.
The Huntley, Houston, TX
Woodlake, Houston, TX
Carriage Hill, Houston, TX
The Enclave, Houston, TX
Georgetown, Houston, TX
Houston Portfolio Joint Venture II
Drever Partners, Inc.
Carriage Hill, Houston, TX
The Enclave, Houston, TX
Georgetown, Houston, TX
Brandon Oaks, Houston, TX
Central Park Regency, Houston, TX
Colony Oaks, Houston, TX
Georgetown II, Houston, TX
Meadows on Memorial, Houston, TX
Mill Creek, Houston, TX
Stony Creek, Houston, TX
Tassajara Partners
Drever Partners, Inc.
One Cypress Landing, Houston, TX
Drever/Monticello Investors, L.P.
Drever Partners, Inc.
Monticello, Houston, TX
Cornerstone Associates, L.P.
Drever Partners, Inc.
Aston Brook, Houston, TX
Dallas/La Prada Investors, L.P.
Drever Partners, Inc.
La Prada, Dallas, TX
Lake Tranquility Investors, L.P.
Drever Partners, Inc.
Tranquility Lake, Houston, TX
Camden Oaks Joint Venture
Drever Partners, Inc.
Camden Court, Houston, TX
One Willow Park, Houston, TX
Texas Portfolio Joint Venture
Drever Partners, Inc.
Arbors of Wells Branch, Austin, TX
Westfield Partners, L.P.
Drever Partners, Inc.
One Westfield Lake, Houston, TX
Colorado Club Partners, L.P.
Drever Partners, Inc.
Colorado Club, Houston, TX
Houston Portfolio Joint Venture B
Drever Partners, Inc.
Willow Chase, Houston, TX
AGREEMENT TO SELL REAL ESTATE
This AGREEMENT TO SELL REAL ESTATE ("Agreement") is made
between the parties hereafter named this 16th day of September,
1997.
1. PARTIES
1.1 MIG-OAK RAMBLE ASSOCIATES LIMITED PARTNERSHIP, a
Michigan limited partnership, with offices c/o Acquest Realty
Advisors, Inc., 10 W. Long Lake Road, Suite 10, Bloomfield Hills,
Michigan 48304 ("Seller").
1.2 WALDEN RESIDENTIAL PROPERTIES, INC., a Maryland
corporation, whose address is One Lincoln Centre, 5400 LBJ Freeway,
Suite 100, Dallas, Texas 76240 ("Purchaser").
2. RECITALS
2.1 Seller is the owner of certain real property located
in Hillsborough County, Florida, improved by a two hundred fifty-six (256)
apartment complex and other amenities containing
approximately two hundred twenty nine thousand three hundred eighty
net rentable square feet (229,380), located at 14627 Grenadine
Drive, Tampa, Florida 33613, legally described in Exhibit 2.1
attached to this Agreement (the "Premises"). The Premises,
together with certain personal property located thereon owned by
Seller and used or useful in connection with the Premises is
referred to collectively herein as the "Property". Where
separately referred to, the personal property is hereafter referred
to as the "Personal Property".
2.2 Purchaser desires to purchase the Property from
Seller, and Seller is willing to sell the same subject to the terms
and conditions hereof.
NOW, THEREFORE, it is agreed by and between the parties as
follows:
3. AGREEMENTS
3.1 Sale. Purchaser agrees to purchase the Property
from Seller, and Seller agrees to sell the Property to Purchaser,
under the terms set forth in this Agreement.
3.2 Binding Upon Purchaser. By execution of this
Agreement, Seller and Purchaser shall be bound by the terms and
conditions hereof, subject, however, to the contingencies provided
herein.
3.3 Purchase Price. The purchase price for the Property
is Ten Million Dollars ($10,000,000) (the "Purchase Price"),
payable in cash or federal funds by wire transfer to Seller upon
closing of the Property sale.
3.4 Earnest Money Deposit. Simultaneously with the
execution of this Agreement, Purchaser will deliver to the Title
Company (as hereinafter defined) an earnest money deposit in the
amount of One Hundred Thousand Dollars ($100,000) (the "Deposit").
The Deposit shall be: (a) applied to the Purchase Price if the
transaction described in this Agreement is consummated; or (b)
returned to Purchaser if Purchaser cancels this Agreement pursuant
to Purchaser's cancellation rights hereunder; or (c) be paid over
and retained by Seller as liquidated damages as Seller's sole
remedy in the event Purchaser defaults hereunder, as provided in
Paragraph 3.16. The Deposit shall be returned to Purchaser in the
event Purchaser cancels this Agreement pursuant to Paragraph 3.7.
3.5 Purchaser's Due Diligence. Purchaser shall have
thirty (30) days from the date hereof to conduct such due diligence
as Purchaser deems necessary with respect to the Property (the "Due
Diligence Period"). During the Due Diligence Period, Seller will
permit Purchaser access to the Property on reasonable notice by
Purchaser, during normal business hours, and will make available to
Purchaser for review and copying at Purchaser's expense, such
written information concerning the Property as Seller has in its
possession or under its control including, to the extent in
existence and within the files of Seller or the property manager,
those items set forth in Schedule I attached hereto. Purchaser
agrees to indemnify, protect, defend and save Seller harmless from
any and all claims, actions, liabilities, damages, costs or causes
of action of any kind, nature or description, including attorneys'
fees, as arise because of or as are related to Purchaser's
activities during the Due Diligence Period. Notwithstanding
anything to the contrary contained in this Paragraph 3.5, Purchaser
acknowledges and agrees that it shall not make or perform any
physical tests or procedures on, about or to the Property
including, but not limited to, soil sampling, soil boring, material
sampling, excavations, and the like without Seller's prior written
consent, which consent may be granted or withheld by Seller in its
sole and absolute discretion. Seller shall notify Purchaser of its
decision to grant or to withhold its consent within five (5)
business days following Seller's receipt of Purchaser's request for
permission to perform any physical test or procedure. In the event
Seller withholds Its consent to Purchaser performing any physical
test or procedure, Purchaser shall have the right to cancel this
Agreement. Provided Seller has granted its consent to Purchaser
performing any physical test or procedure, if Purchaser's agents go
on the Premises and perform labor thereon such as soil boring or
environmental inspections, Purchaser shall provide Seller with
evidence of workman's compensation and liability insurance
satisfactory to Seller to protect Seller from any liability
concerning such activities. The results of all tests or procedures
shall be confidential and shall not be disclosed by Purchaser to
any third party without Seller's prior written consent.
3.6 Title Insurance and Survey.
3.6.1 Simultaneously herewith Seller has
provided Purchaser with a copy of the Evans Land Survey, dated May
22, 1986 (the "Survey"). Within fourteen (14) days after the date
hereof, Seller at its sole expense shall furnish Purchaser with a
current update of the Survey. The updated Survey shall show the
location of the Premises and of all improvements thereon, all
recorded easements and, if necessary for an understanding thereof
by description, all roads, rights-of-way and applicable flood plain
information, including the designation of any applicable flood
plain map. The updated Survey shall contain a legal description of
the boundaries of the Premises. The description of the land
contained in the updated Survey and in the title policy shall be
used for the purpose of the description to be contained in Seller's
special warranty deed described subsequently herein.
3.6.2 Within fourteen (14) days after the date
hereof, Seller shall deliver to Purchaser a commitment for an
owner's title insurance policy ("Title Commitment") issued by
Safeco Land Title of Dallas, an agent for Chicago Title Insurance
Company, 1201 Elm Street, Suits 5220, Dallas, Texas 75270,
Attention: L. Lamar Tims ("Title Company") and copies of selected
instruments pertaining thereto. Seller agrees to pay the premium
for the owner's title policy to be issued in the amount of the
Purchase Price. To the extent that Purchaser desires endorsements
to the title policy or ALTA extended coverage, and such
endorsements or coverage are available without any further action
or cost to Seller, such endorsements or coverage shall be provided
and all increases in the premium as a result thereof shall be borne
by Purchaser.
3.6.3 Purchaser shall have through and including
the expiration of the Due Diligence Period in which to give written
notice to Seller specifying Purchaser's objection to the status of
title to the Premises. At the and of the Due Diligence Period,
Purchaser shall have no further right to object to the status of
Seller's title to the Premises.
3.6.4 If Purchaser notifies Seller in writing of
title objections within the Objection Period then, prior to the
closing, Seller at its sole option and in its sole discretion,
shall have the right, but not the obligation, to satisfy any such
objections at Seller's sole cost and expense. Within five (5) days
of the receipt by Seller of Purchaser's title objections, Seller
shall notify Purchaser in writing of its decision as to whether or
not to satisfy any such objections. If Seller satisfies the
objections, closing shall take place as scheduled. If Seller
elects not to satisfy, or for any reason fails to satisfy all of
Purchaser's objections, Purchaser shall have the option to either:
(a) waive all unsatisfied objections and close the transaction,
without deduction or credit on the Purchase Price; or (b) terminate
this Agreement, in which latter event the parties shall have no
further or other obligation to or with one another hereunder. Only
those matters approved or waived by Purchaser during the Due
Diligence Period shall be deemed to be permitted title exceptions
(the "Permitted Title Exceptions").
3.7 Purchaser's Right to Cancel. During the Due
Diligence Period, Purchaser has the right to cancel this Agreement
by giving to Seller notice as provided in Paragraph 3.16. If
notice is not delivered within the Due Diligence Period,
Purchaser's right to cancel this Agreement shall terminate as of
the end of such period, except nothing in this paragraph shall
Terminate the right of the Purchaser to cancel this Agreement
pursuant to Paragraph 3.6.4 or if any of the matters set forth in
Paragraph 3.9 occur.
3.8 Allocation of Purchase Price. Within the Due
Diligence Period, Purchaser and Seller shall agree in writing as to
the allocation of the Purchase Price between the Premises and
Personal Property. If Purchaser and Seller fail to agree within
such period, the entire Purchaser Price shall be allocated to the
Premises.
3.9 Closing of Transaction. Closing of the Property
sale shall take place on the fifteenth (15th) day following the
termination of the Due Diligence Period or on such prior date as
the parties hereto agree in writing (the "Closing Date") provided,
however, that Purchaser shall have no obligation to consummate this
transaction if:
3.9.1 There shall have been a material adverse
change in the physical condition of the Property through damage by
fire or other casualty. If the cost of restoration is fully
covered by insurance proceeds in amounts satisfactory to Purchaser,
and Purchaser shall have a right to such proceeds or to terminate
this Agreement and receive an immediate return of the Deposit;
3.9.2 There is a material change in condition of
the Premises title from the condition approved by Purchaser during
the Due Diligence Period.
3.9.3 There is pending or threatened any legal
action against Seller or the Premises which, if adversely
determined, could have a material adverse effect upon the Premises,
the use thereof, or performance of this Agreement.
3.10 Seller's Representations and Warranties. Following
the Due Diligence Period, Purchaser agrees to accept the Property
in an "as is" condition. ANY WARRANTIES OF OR WITH RESPECT TO
FITNESS FOR A PARTICULAR PURPOSE OR OF MERCHANTABILITY,
HABITABILITY, PROFITABILITY, OR MARKETABILITY ARE SPECIFICALLY
DISCLAIMED. FURTHER, SELLER DOES NOT MAKE, NOR WILL SELLER MAKE,
ANY OTHER REPRESENTATION OR WARRANTY OR COVENANT, EXPRESSED OR
IMPLIED, WITH RESPECT TO THE PROPERTY OR ANY MATTER SET FORTH IN
THIS AGREEMENT, EXCEPT:
3.10.1 Seller's deed to the Premises shall be a
special warranty deed in the form of Exhibit 3.10.1, and the bill
of sale for the Personal Property shall be in the form of Exhibit
3.10.1(a).
3.10.2 Seller has no knowledge of the existence
of any fact or circumstance which at the date of execution of this
Agreement and as of the Closing Date, would constitute a breach by
Seller of any term or condition of this Agreement.
3.10.3 There are no service contracts relating to
the Property except as disclosed on Exhibit 3.10.3. To the extent
that the Purchaser requests that Seller terminate any service
agreement which by its terms is terminable, Purchaser shall, prior
to the Closing Date, terminate such service agreements.
3.10.4 The existing first mortgage in favor of
Comerica Investment Fund G shall be terminated and released at the
closing of the sale of the Property.
3.10.5 Seller is, and at Closing will be, the
sole person holding good, indefeasible and marketable fee simple
title to the Property, free and clear of all liens and encumbrances
except the Permitted Title Exceptions.
3.10.6 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 Purchaser at Closing will be duly
authorized and executed by Seller and will be a legal, valid and
binding obligation of, and will be enforceable in accordance with
their terms against, Seller.
3.10.7 To the best of Seller's knowledge: (A) the
Property and the operation thereof (including the handling of
tenant security and other deposits) currently in substantial
compliance with the requirements of all governmental agencies; (B)
the zoning classification of the Property permits the operation of
Improvements thereon as a use by right; and (C) Seller knows of no
commitments or agreements with any of the governmental agencies
affecting the Property which have not been fully disclosed to
Purchaser in writing. For purposes of this Agreement, "to the best
of Seller's knowledge" means the current actual conscious knowledge
without investigation of David Ong, President of Acquest Realty
Advisors, Inc., the general partner of Seller.
3.10.8 To the best of Seller's knowledge, Seller
has received no notices and is unaware of any facts or conditions
which, with notice or lapse of time, might constitute uncured
violations at the Property of any applicable statute, ordinance or
regulation, relating to the Property, its construction, or any
occupancy thereof, nor, to the best of Seller's knowledge, are
there presently pending or threatened against Seller or against the
Property or, to the best of Seller's knowledge, against anyone, any
judgments, judicial proceedings or administrative actions relating
to any of the above matters of a material nature.
3.10.9 To the best of Seller's knowledge, no
Hazardous Materials are located on or about the Property. To the
best of Seller's knowledge, the Property does not contain any
underground tanks for the storage or disposal of Hazardous
Materials. Further, to the best of Seller's knowledge, (A) the
Property previously has not been used for the storage, manufacture
or disposal of Hazardous Material, (B) no complaint, order,
citation or notice with regard to air emissions, water discharges,
noise emissions and Hazardous Materials, if any, or any other
Applicable Environmental Laws from any person, government or entity
has been issued to Seller, and (C) Seller has complied with all
Applicable Environmental Laws. For the purposes of this
representation, "Applicable Environmental Laws" means any and all
applicable laws pertaining to health or the environment, including,
without limitation, the Superfund Reauthorization and Amendments
Act of 1988 ("SARA"), the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as well as any and
all other laws, ordinances, rules and/or regulations created or
imposed by any governmental authority having jurisdiction with
respect to the Property, whether local, state or federal,
pertaining to environmental regulation, contamination, clean-up or
disclosure, as now existing and/or as hereafter amended, and
"Hazardous Materials" means any toxic materials, hazardous, waste
or hazardous substance (as these terms are defined in the
Applicable Environmental Laws) and including, without limitation,
any asbestos or asbestos-related products or materials and any
oils, petroleum-derived compounds or pesticides.
3.10.10 To the best of Seller's knowledge, no
action has been taken with respect to work performed or delivery of
material which would give rise to a lien on the Property. To the
best of Seller's knowledge, at closing, there will be no claim in
favor of any person or entity which is or could become a lien on
the Land, the improvements, or the Personal Property, arising out
of the furnishing of labor or materials to the Property 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) for any unpaid commissions or fees for leasing
of the Property.
3.10.11 Seller will not renew, amend, or reduce
the coverage under, or cancel, any existing policy or procure any
new policy other than in the ordinary course of business without
Purchaser's prior, written consent, which shall not be unreasonably
withheld, conditioned or delayed. Purchaser, at Closing, shall
obtain its own insurance coverage.
3.10.12 Seller, at its expense, will maintain the
Property in its current condition until closing excepting only
ordinary wear and tear and damage or loss thereto covered by
insurance.
3.10.13 Seller shall continue the operation of the
Property in the normal and usual manner, will not remove any
fixtures, furnishings, equipment or personal property subject to
this Agreement, except for repair or replacement, and the Property
will be managed, operated, maintained, repaired and redecorated in
the ordinary course of business consistent with past practices.
3.10.14 At closing, no contract of any kind,
including contracts for servicing, operating or managing the
Property, will be effective and binding upon the Property or
Purchaser, except as disclosed on Exhibit 3.10.3. Seller will not
enter into any other service, operating or management contracts
relative to the Property that cannot be canceled on thirty (30)
days notice without the prior, written consent of Purchaser, nor
will Seller make, or agree to, prior to closing, any change or
modification to the contracts set forth in Exhibit 3.10.3, other
than in the ordinary course of business, without the prior, written
consent of Purchaser. If an agreement concerning the management of
the Property currently is in effect and is not set forth at Exhibit
3.10.3, it shall be terminated effective on the Closing Date.
3.10.15 Seller agrees that benefits or
compensation 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.
3.10.16 Seller will not borrow any money or do, or
fail to do, any other act or thing which would cause the Property
or any Personal Property to become pledged or otherwise utilized as
collateral or in any way stand as security for any indebtedness or
obligation.
3.10.17 To the knowledge of Seller, the
consummation of the transaction contemplated herein will not result
in the breach of any provision in any lease or other agreement
affecting the Property.
3.10.18 Seller is not a "foreign person" within
the meaning of Sections 1445 and 7701 of the Internal Revenue Code
of 1954, as amended; Seller is not a non-resident alien, foreign
corporation, foreign partnership, foreign trust, or foreign estate
(as those terms are defined in the Internal Revenue Code of 1986,
as now existing or hereafter amended).
3.10.19 All ad valorem taxes and personal property
taxes which are due and payable on or prior to the Closing Date
will have been paid in full.
3.10.20 None of the representations contained in
Paragraph 3.10 shall survive the closing.
3.11 Environmental Matters. Except as provided in
Paragraph 3.10.9, Seller makes no representations or warranties of
any kind with respect to the existence or absence of any hazardous
or regulated substances on or about the Premises or of any
contamination thereof, Purchaser acknowledges and agrees that as of
the Closing Date, it has been given full and adequate opportunity
to inspect the Property, and that Purchaser is fully satisfied with
said reports and the results of Its own investigation. Purchaser,
as of the Closing Date, agrees to release Seller from any and all
claims, harm, damages and liability as Purchaser now has or will
ever have against Seller resulting from the existence of hazardous
substances or contamination on the Premises.
3.12 Closing Adjustments. At closing of the sale of the
Property, taxes, expenses and other items shall be adjusted, as of
the Closing Date, as follows:
3.12.1 Operating Expenses. Operating expenses of
the Property accrued through and including the Closing Date shall
be paid by Seller, and Seller shall indemnify and hold Purchaser
harmless from all liability, loss, cost and expense by reason
thereof. Purchaser shall pay all operating expenses incurred after
the Closing Date and shall indemnify Seller and hold Seller
harmless from all liability, loss, cost and expense by reason
thereof. Operating expenses include all normal expenses
attributable to the Property, including any management fees.
3.12.2 Taxes. Seller shall pay all general real
property taxes, installments and special assessments, if any, which
are a lien upon the Property and are due as of or before the
Closing Date, except that current general real property taxes shall
be prorated as of the Closing Date and special assessments payable
in installments shall be payable by Seller only for installments
due before the Closing Date and shall be prorated as to any
installment due after the Closing Date for the period through the
Closing Date. The proration of current general real property taxes
shall be allocated on the basis of due dates of the respective
taxing authorities. Any refund received as a result of any
existing tax appeal commenced by Seller and relative to Seller's
period of ownership shall be the property of Seller.
3.12.3 Rents. All rents collected by the Seller
under any leases up to and including the Closing Date which are
applicable to the period subsequent to the Closing Date, and all
other revenues arising from the Property collected by Seller which
are allocable to the period subsequent to the Closing Date shall be
taken as a credit by Purchaser against the Purchase Price. To the
extent that Purchaser subsequently collects any rentals or revenues
allocable to the period prior to the Closing Date, the Purchaser
shall remit the same to Seller forthwith, it being understood,
however, that rents collected after the Closing Date shall first be
applied to current rents due and payable and thereafter to
delinquent rents. For purposes of this paragraph, only actual
rents collected shall be prorated. There shall be no proration of
uncollected rents. Purchaser shall be entitled to a credit against
the Purchase Price in the amount of all tenant security deposits in
the actual possession of Seller. Purchaser shall use its best
efforts to collect such revenues and to the extent Purchaser
collects such revenues allocable to the period prior to the Closing
Date, Purchaser shall remit the same to Seller forthwith.
3.12.4 Utilities. Utility charges shall not be
prorated but, rather, instructions shall be given to the utility
companies by Seller (with a duplicate copy of such instruction
being provided concurrently to Purchaser) to read the meters on the
Closing Date and to issue separate statements thereafter. If
applicable, utility deposits will be credited to Seller and
assigned to Purchaser at closing. In the event that any provider
of utilities shall refuse to issue separate statements in the
manner aforesaid, applicable utility charges shall be adjusted in
the manner of rents.
3.13 Expenses of Sale. Seller shall be required to pay
only the cost of recording the special warranty dead, the cost of
the owner's title insurance policy (except for endorsements and
coverage obtained at the request of Purchaser which shall be
Purchaser's sole obligation), the brokerage commissions of LePaul
Partners, its own attorneys' fees and the cost of the updated
Survey and, except as set forth in this Paragraph 3.13, no other
costs or expenses.
3.14 Closing Matters. Upon the Closing Date: (a) Seller
shall deliver to Purchaser the special warranty dead, bill of sale
and an assignment of all leases and service contracts, if any,
affecting the Property which shall be assumed by Purchaser and
Seller's rights under the terms of the Settlement Agreement in the
lawsuit known as COX v. Shell Oil Company, et al, Civil Action No.
18844 filed in the Chancery Court for Oblon County, Tennessee, as
such Agreement was approved by the Court; (b) the Purchaser shall
deliver to Seller the Purchase Price less the Deposit; (c) the
adjustments specified herein shall take place; (d) to the extent
that Seller has any books or records pertaining to the Premises
same shall be delivered to Purchaser at closing or as soon as
possible thereafter; (e) shall deliver, or arrange at the closing
for the delivery of, an owner's title insurance policy issued by
the Title Company; and (f) possession of the Premises shall be
delivered to Purchaser subject to the rights of any tenants of the
Property.
3.15 Default. If Seller shall perform or tender
performance of Seller's obligation under this Agreement and
Purchaser shall fail to perform its obligations hereunder, Seller
may terminate this Agreement by notice to Purchaser, in which
latter event the Deposit shall be retained by Seller as liquidated
damages and neither party shall have any other or further liability
to the other except that if Purchaser shall challenge Seller's said
right to retain the Deposit and Seller shall prevail against said
challenge, Purchaser shall pay all of Seller's costs and legal
expenses, including reasonable attorney fees. If Purchaser shall
perform or tender performance of Purchaser's obligations under this
Agreement and Seller shall fail to perform, then Purchaser shall be
entitled to terminate this Agreement and receive an immediate
return of the Deposit or seek specific performance, in which event
this Agreement shall be terminated, deemed void and of no further
effect, and the parties shall have no further obligations to one
another.
3.16 Notice. All notices given hereunder shall be in
writing or by telecommunication device capable of creating a
written record, including without limitation, telefax or telecopy
and shall be deemed to have been received when delivered by hand,
courier, telefax or telecopy, or if mailed, then three (3) days
after deposit of the same in the United States Mail, provided the
notice is sent with all postage fully prepaid thereon, and
addressed as follows:
If to Seller: Mig-Oak Ramble Associates Limited Partnership
c/o Acquest Realty Advisors, Inc.
10 W. Long Lake Road
Suite 10
Bloomfield Hills, Michigan 48304
Fax Mail: (248) 645-2565
With a Miro Weiner & Kramer
copy to: 500 North Woodward Avenue
Suite 100
Bloomfield Hills, Michigan 48304
Attention: Kenneth H. Gold, Esq.
Fax Mail. (248) 646-2465
If to: Walden Residential Properties
One Lincoln Centre,
5400 LBJ Freeway,
Suite 100
Dallas, Texas 75240
Attention: Eric A. Calub
Fax Mail: (972) 788-1550
With a Munsch Hardt Kopf Harr & Dinan
copy to: 4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
Attention: Robin Minick
Fax Mail: (214) 855-7584
or to such person or other address as the party receiving such
notice shall have requested in writing in accordance with the
provisions of this Paragraph 3.17.
3.17 Brokers. Other than LaPaul Partners, who was
retained by and the payment of whose commission shall be the sole
responsibility of Seller, each party represents and warrants to the
other that it has not retained any broker in connection with this
transaction, and each party agrees to indemnify the other from any
liability, cost and expense by reason of any claim by any broker
retained by such party.
3.18 Time of the Essence. It is expressly agreed by the
parties that time is of the essence with respect to this Agreement.
3.19 Assignment. This Agreement is non-assignable and
Purchaser shall have no right to assign its rights under this
Agreement to any other person or entity other than an affiliate of
Purchaser without the prior written consent of Seller, which
consent shall be in Seller's sole and absolute discretion.
3.20 Attorney's Fees. If either party hereto employs an
attorney to enforce or defend its rights under this Agreement, the
prevailing party shall be entitled to recover its reasonable
attorney fees from the other party.
3.21 Return of Documents. If this Agreement is
terminated and Purchaser is entitled to a return of the Deposit,
Purchaser shall promptly deliver to Seller all documents received
from Seller or its agents or representatives in connection with
this matter, and all studies and reports received by Purchaser.
Seller may request, and if requested Purchaser shall provide Seller
with, a termination certificate wherein the parties acknowledge
that all documents have been returned and that Purchaser has not
and will not disclose any information with respect to the Property
to any other person or entity.
3.22 Complete Agreement. This Agreement constitutes the
entire agreement between Seller and Purchaser with respect to the
Property, and there are no other agreements in existence, written
or oral, express or implied, as of the date hereof. Any amendments
to this Agreement shall be valid only if the same is in writing and
executed by the parties hereto.
3.23 Applicable Law. This Agreement and the construction
and enforcement hereof shall be governed by the laws of the State
of Florida.
3.24 Liability of Officers of Purchaser. 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 Purchaser 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.
3.25 Liability of Partners of Seller. 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 of the general partner of Seller
and not individually, and the partners, general or limited, of
Seller shall not be bound in their individual capacity or have any
personal liability hereunder or thereunder. Purchaser shall look
solely to the assets of Seller for satisfaction of any liability of
the Seller 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 partners,
general or limited, of Seller or any of their or its 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.
3.26 Confidentiality. The parties hereto hereby agree
that they will use all commercial efforts to maintain the
confidentiality of the terms of the transaction contemplated
hereby, the contents of this Agreement and related documents, if
any, except that Purchaser may disclose material terms which are
required to be disclosed by applicable securities laws or as
required by any national securities exchange on which Purchaser's
common stock may be listed and Purchaser may include a copy of this
Agreement in its filings with the Securities and exchange
Commission. The foregoing shall in no way prohibit Seller from
disclosing the transaction to its agents and employees who may be
affected by the transaction.
3.27 Removal from Market. Seller will remove the
Property from the market and cease all discussion with other
prospective purchasers upon completion of the Due Diligence Period,
and shall not solicit, accept, negotiate or entertain any offers
(whether or not binding) regarding the Property during the term of
the Agreement, except that prior to the completion of the Due
Diligence Period, it may solicit, accept, negotiate or entertain
offers regarding the Property that are subordinate to this
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Seller and Purchaser have caused this
Agreement to be executed by their duly authorized representatives
on the day and year first above written.
WITNESSES: PURCHASER
WALDEN RESIDENTIAL PROPERTIES, INC.
a Maryland corporation
By:
Eric A. Calub
Its: Vice President
SELLER
MIG-OAK RAMBLE ASSOCIATES LIMITED
PARTNERSHIP
By: Acquest Realty Advisors, Inc.
Its: General Partner
By:
David Ong
Its: President
I:\FINANCE\SECFIL~1\10-K-97\EX-10-12.WPD
9/10/97
EXHIBIT 2.1
Real property situated in Hillsborough County, Florida described
as:
Commence at the Southeast corner of the Northeast 1/4 of
the Northwest 1/4 of Section 4, Township 28 South, Range
19 East, Hillsborough County, Florida; thence run
N.00 degrees 53'28"W. along the East line of said Northeast 1/4
of the Northwest 1/4 a distance of 30.00 feet from the
point of beginning; thence run S.89 degrees 47'45"W. parallel
with the South line of said Northeast 1/4 of the
Northwest 1/4 872.90 feet; thence run N.01 degrees 26'34"W. a
distance of 681.72 feet; thence run N.88 degrees 33'26"E. a
distance of 138.12 feet to an intersection with a point
on a curve; thence along a curve to the right having a
radius of 185 feet, with a central angle of 24 degrees 05'59",
through an arc distance of 77.81 feet to point; thence
N.41 degrees 43'31"E. along a non-tangent line a distance of
570.36 feet; thence N.00 degrees 28'29"E. a distance of 208.12
feet; thence S.89 degrees 31'31"E. a distance of 285.96 feet;
thence S.00 degrees 53'28"E. a distance of 1357.32 feet to the
point of beginning.
TOGETHER WITH:
All of Seller's right, title and interest in and to that
certain Entrance Road Easement Agreement dated June 27,
1986, and recorded in Official Records Book 4850, Page
1647, as amended by Amendment to Entrance Road Easement
Agreement dated November 30, 1988, and recorded in
Official Records Book 5573, Page 1497, all of the Public
Records of Hillsborough County, Florida.
SCHEDULE 1
1. Seller's most current owner's title insurance policy and
a copy of all title reports and documents in Seller's possession.
2. A list and a copy of all Service Contracts, all documents
pertaining to any leased Personal Property, and all warranties,
guaranties and bonds relating to the Property, or any part thereof.
3. A complete, itemized and detailed inventory of the
Personal Property to be conveyed by Seller to Purchaser at the
closing,
4. A copy of (i) all income and expense statements for the
Property, for the year-to-date and for the most recently completed
prior year (prepared on a monthly basis), and annual operating
statements for the two (2) most recent fiscal years, (ii) operating
budgets for the Property for the current calendar year and the
upcoming calendar year, (iii) a capital expenditure budget for the
Property for the current calendar year and the upcoming calendar
year, and (iv) such other information 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, 1996, and year-to-date 1997.
5. A copy of all ad valorem and other property tax
statements (including personal property tax statements) relating to
the Property for the current tax year and the immediately preceding
two (2) tax years, including copies of any assessments or
statements for the current or forthcoming year, including a summary
of any contested tax assessments relating to the Property for the
preceding two (2) years, and the results thereof.
6. A copy of (i) a resident rent roll for the Property,
showing actual occupancies, rentals, delinquencies, defaults,
security deposits, assigned parking spaces (if any), free rent,
rent concessions, resident incentives, lease terms, unit numbers,
unit types, and unit amenities; (ii) a current schedule of rental
rates for each type of unit within the improvements; and (iii) such
other pertinent information regarding the resident leases and
rental units, including, without limitation a schedule of the
appliances and amenities included in each type of rental unit.
7. A copy of all site plans, surveys, soil and substrate
reports and studies, engineering plans and studies, environmental
reports or studies, architectural renderings, plans and
specifications, construction contracts (with all applicable change
orders), floor plans, landscape plans, utility schemes and other
similar plans, diagrams of studies, if any, relating to the
Property.
8. A copy of the architect's certificate rendered at or
after the completion of construction of the improvements stating
that the improvements were constructed substantially in accordance
with the plans and specifications delivered to Purchaser hereunder.
9. A copy of all reports made by engineers, architects or
others, if any, relating to any structural problems or other
defects with respect to any part of the Property.
10. A copy of all certificates occupancy for the Property.
11. A copy of all swimming pool permits, boiler permits and
other licenses and permits for the Property required by law and
issued by any governmental authority having jurisdiction over the
Property or Seller.
12. A list of all employees currently employed in the
operation of the Property, setting forth his/her name, address,
telephone number, position, salary, benefits, bonuses, leasing
commissions, other incentives, apartment allowance (if applicable)
and tenure with the Property.
13. A schedule outlining, and invoices, contracts and/or work
orders pertaining to, any (i) carpet replacement, window
replacement, and appliance replacement over the past two (2) years
relating to the improvements, (ii) any other capital expenditures
over the past two (2) years at the Property, showing the nature of
the work, expense, date and unit or common area where the work was
done, and (iii) regular maintenance and repair at the Property
over the past twelve (12) months.
14. A copy of the standard form of resident lease, leasing
application, security and pet deposit documents, rules and
regulations, leasing brochures, occupancy checklist, current
marketing/leasing plans and business plans for the Property, other
standard forms and documents currently used in connection with the
leasing and marketing of the Property, and a profile of existing
resident base, including data on age, income, sex, household
structure, occupation, etc., to the extent such information is
available to Seller.
15. A list of all utility deposits or bonds for the Property
and a copy of all utility bills for the Property for the previous
twelve (12) months, excluding individually metered resident utility
bills.
16. Copies of and/or access throughout the Due Diligence
Period to all resident files.
17. Copies of any pertinent litigation of safety related
issues with respect to the Property.
PURCHASE AND SALE AGREEMENT
And JOINT ESCROW INSTRUCTIONS
by and between
PACIFIC LIFE INSURANCE COMPANY
as
"Seller"
and
WALDEN RESIDENTIAL PROPERTIES, INC.
as
"Buyer"
dated November 10, 1997
PURCHASE AND SALE AGREEMENT
And JOINT ESCROW INSTRUCTIONS
By and Between
PACIFIC LIFE INSURANCE COMPANY
and
WALDEN RESIDENTIAL PROPERTIES, INC.
TABLE OF CONTENTS
ARTICLE I. Definitions. . . . . . . . . . . . . . . . .1
ARTICLE II. Agreement of Purchase and Sale . . . . . . .3
ARTICLE III. Execution of Agreement; Conditions Prior to
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE IV. Representations, Warranties and Covenants of Seller
and Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V. Action on the Closing Date . . . . . . . . 19
ARTICLE VI. Termination . . . . . . . . . . . . . . . . . . 21
ARTICLE VII. Costs and Commissions . . . . . . . . . . . . . 22
ARTICLE VIII. Post-Closing Cooperation. . . . . . . . . . . . 23
ARTICLE IX. Default by Buyer. . . . . . . . . . . . . . . . 23
ARTICLE X. Default by Seller. . . . . . . . . . . . . 24
ARTICLE XI. Miscellaneous . . . . . . . . . . . . . . . . . 25
EXHIBITS
"A" Legal Description
"B" Form of Audit Letter
"C" Rent Roll
"D" Special Warranty Deed
"E" [Reserved]
"E-1" [Reserved]
"F" Assignment of Rights, Warranties and Permits
"G" [Reserved]
"H" Assignment and Assumption of Lease
"I" Bill of Sale
"J" Transferor's Certificate of Non-Foreign Status
PURCHASE AND SALE AGREEMENT
And JOINT ESCROW INSTRUCTIONS
This Agreement ("Agreement") is made as of this 10th day of
November, 1997, between PACIFIC LIFE INSURANCE COMPANY, a
California corporation ("Seller"), and WALDEN RESIDENTIAL
PROPERTIES, INC., a Maryland corporation ("Buyer").
ARTICLE I.
Definitions
The terms set forth below shall have the following meanings:
1.1 Closing: Payment of Seller's proceeds, and delivery of
the Deed in favor of Buyer, in accordance with the terms of this
Agreement.
1.2 Closing Date: On or before December 19, 1997 [which date,
for purposes of this draft only, shall be ten (10) days following
the Review Contingency Date].
1.3 Earnest Money Deposit (to be credited to Purchase Price):
$100,000.
1.4 Escrow Agent: Chicago Title Insurance Company (Dallas
Direct)
350 N. St. Paul Street, Suite 250
Dallas, Texas 75201
Attn: Nancy Colaluca
Phone No.: (214) 720-4000
Fax No.: (214) 720-1047
1.5 Improvements: The improvements consist of a multi-residential
(apartment) complex containing 328 rentable units in
two phases, consisting of 24 buildings, a clubhouse containing
approximately 2,383 square feet, two pools, two spas and all
related improvements.
1.6 Leases: All leases, subleases, amendments, extensions and
assignments affecting the occupancy of the Property.
1.7 Permitted Exceptions: (i) Nondelinquent real property
taxes and special assessments, if any; (ii) utility easements to
service the Property which do not materially interfere with its
existing use; and (iii) such title matters as Buyer shall have
approved in accordance with Section 3.6 below, and such other
matters as may appear as exceptions to title in accordance with
Section 3.6 below.
1.8 Personal Property: All equipment, appliances, tools,
machinery, supplies and other personal property owned by Seller and
located at and used in connection with the operation of the
Property, which have not or will not become trade fixtures under
the terms of the Leases, as may be more particularly described in
the Bill of Sale attached hereto as Exhibit "I."
1.9 Property: The Property shall collectively include the
Real Property, the Improvements, the Personal Property, if any, and
all of Seller's interest in the Leases, the Service Contracts and
the rights, warranties and permits described in Exhibit "F"
attached hereto (collectively, the "Permits").
1.10 Purchase Price: $10,000,000.
1.11 Real Property: That certain tract or parcel of land
described in Exhibit "A" attached hereto and by this reference made
a part hereof, consisting of 15.790 acres, more or less, together
with all easements of access or use benefiting said land, located
at 2500 Meadow Park Circle, Bedford, Texas 76021, in the City of
Bedford, County of Tarrant, State of Texas and commonly known as
"The Woods of Bedford Apartments."
1.12 Review Contingency Date: December 10, 1997 [which date,
for purposes of this draft only, shall be thirty (30) days
following the date of this Agreement].
1.13 Service Contracts: All service contracts, management
agreements, listing agreements, operating contracts and other
agreements affecting the operation or use of the Property (other
than Title Matters) if any.
1.14 Title Company: Chicago Title Insurance Company (Dallas
Direct)
350 N. St. Paul Street, Suite 250
Dallas, Texas 75201
Attn: Brian A. Ficke
Phone No. (214) 720-4000
Fax No.: (214) 720-1047
1.15 The following terms are defined in the Article or Section
set forth opposite such terms:
Term Article or Section
Advisors 3.1(c)
Amended Title Commitment 3.2
Buyer's Broker 12.1
Buyer's Counsel 12.1
Buyer's Title Notice 3.6(a)
Deed 5.2(a)
Documents and Materials 3.1(a)
Due Diligence Information 3.1(c)
Earnest Money Deposit 2.1
ERISA 4.1 (d)
New Lease Obligations 4.2
Term Article or Section
Opening of Escrow 3.1(a)
Owner's Title Policy 5.2(d)
Permits 1.9
Property Manager 3.1(b)
Rent Roll 3.1(a)(i)
Seller's Title Notice 3.6(b)
Survey 3.2
Tenant Notification Letters 5.2(h)
Title Commitment 3.2
Title Matters 3.6
ARTICLE II.
Agreement of Purchase and Sale
2.1 Subject to the terms and conditions of this Agreement,
Seller agrees to sell the Property to Buyer, and Buyer agrees to
purchase the Property from Seller and to pay the Purchase Price
therefor. Upon full execution of this Agreement, but in no event
later than two (2) business days following such execution, Buyer
shall deposit with Escrow Agent, in the form of a wire transfer of
funds, the sum of $100,000 (the "Earnest Money Deposit"), together
with a fully executed copy of this Agreement. Any deposit made by
Buyer to Seller or Seller's representative prior to the Opening of
Escrow shall be deemed to constitute part of the Earnest Money
Deposit and shall be delivered to Escrow Agent by Seller or its
representative promptly upon the Opening of Escrow, as defined
herein. Upon the Review Contingency Date, in the event Buyer has
not elected to terminate this transaction in accordance with the
terms of Article III of this Agreement, the Earnest Money Deposit
shall thereupon be non-refundable to Buyer as set forth herein,
unless refunded to Buyer as otherwise expressly provided in this
Agreement. Buyer shall be solely responsible for delivering, at
Buyer's option, written instructions to the Escrow Agent concerning
the investment of the Earnest Money Deposit or any portion thereof
which is held by Escrow Agent, in accordance with the customs and
practices of Escrow Agent. At the close of this transaction, the
Earnest Money Deposit shall be credited against the Purchase Price
and disbursed to Seller along with the balance of the Purchase
Price.
2.2 On the day of Closing, and in no event later than
required to permit the timely Closing of this Agreement and receipt
of the Purchase Price by Seller's New York bank (following such
prorations and adjustments as are set forth herein) by the close of
business on the Closing Date, Buyer shall cause such balance of the
Purchase Price to be delivered directly to the Escrow Agent for the
account of Seller, by wire transfer in immediately available funds,
less any credits due to Buyer, plus all sums necessary to pay
Buyer's prorations in connection with this transaction. On or
before Closing, Seller shall provide Escrow Agent with written
wiring instructions identifying the financial institution and the
name and number of the account to which Seller's proceeds shall be
transferred and credited prior to the close of business of such
financial institution on the Closing Date.
2.3 The Closing shall be held at 9:00 a.m., local time, on
the Closing Date at the office of Escrow Agent, or at such other
time or such other place as may be mutually agreed upon in writing
by the parties.
ARTICLE III.
Execution of Agreement; Conditions Prior to Closing Date
3.1 (a) Upon full execution of this Agreement by Seller and
Buyer, the party last executing same shall date this Agreement in
the space provided on the facing page and on page 1 herein, and
shall deliver three (3) fully executed originals of this Agreement
to the Escrow Agent and a facsimile copy of the signature page(s)
to the other party. Escrow Agent shall thereupon promptly execute
all three originals of this Agreement and immediately deliver one
fully executed original to Seller, and one fully executed original
to Buyer. The date of transmittal by Escrow Agent to Buyer and
Seller of this Agreement (or a facsimile copy of the signature page
hereof), as fully executed by Seller, Buyer and Escrow Agent, shall
hereinafter be referred to as the "Opening of Escrow."
To the extent not already furnished or made available to
Buyer prior to the Opening of Escrow, Seller shall furnish to
Buyer, within five (5) days of the Opening of Escrow, copies of the
following documents and materials ("Documents and Materials"):
(i) A rent roll for the Property (the "Rent Roll"), setting
forth for each tenant the tenant's name, unit number, monthly rent,
lease expiration date (if any), and security deposits actually held
by Seller or Property Manager at such time, if any. In addition,
under separate cover, Seller shall furnish to Buyer the amount of
any prepaid rents and the period for which same have been paid and
the amount of any delinquent rents and/or any other arrearages;
(ii) [Reserved]
(iii) Copies of the most recent property tax bills
received by Seller or Property manager;
(iv) Copies of the Leases affecting the Property, along with
a copy of Seller's standard lease form(s) for the Property; and
(v) Seller's customary monthly management, revenue and
expense reports, prepared by Seller and based upon data furnished
to Seller by the Property Manager (including operating statements),
for that portion of 1995 and 1996 (or from the date Seller acquired
ownership of the Property, whichever is later) and for year-to-date
1997, followed by periodic updates of such items customarily
prepared by Seller or Property Manager following the Opening of
Escrow.
In addition, Seller shall furnish to Buyer or make
available to Buyer, to the extent not already furnished or made
available to Buyer prior to the Opening of Escrow, the following
items, all of which shall be deemed to the "Documents and
Materials" within the meaning of this Agreement, to the extent such
Documents and Materials are in the actual possession of Seller or
Seller's Property Manager:
(vi) A site plan for the Property;
(vii) A list of the Personal Property, if any, maintained
at the Property and necessary for the continued operation thereof,
to be transferred to Buyer at Closing pursuant to the Bill of Sale
attached hereto as Exhibit "I";
(viii) Copies of the certificate(s) of occupancy for the
Property, along with any certifications from architect(s) or
governmental agencies in connection with the operation of the
Improvements;
(ix) Maintenance reports for 1996 (or from the date Seller
acquired ownership of the Property, whichever is later) and year-to-date
1997 and records of any capital improvements made to the
Property during the same period of time; and
(x) (a) Copies of the most recent existing soils,
environmental and structural reports relating to the Property or
the Improvements including, without limitation, the most recent
Phase I environmental study or report relating to the Property, if
any, (and Phase II report, if any) provided such matters have been
based upon tests and/or studies performed during Seller's period of
ownership; provided, Buyer acknowledges that any such items shall
be delivered or made available without any representation or
warranty regarding the accuracy, completeness or any other aspect
of such matters.
(b) Buyer shall have the right to review such records
and documents relating to the ownership and operation of the
Property as Buyer may reasonably deem appropriate in connection
with its due diligence efforts. Seller shall assist and cooperate
with Buyer as may be reasonably necessary to facilitate Buyer's
investigation, due diligence and review pursuant to this Section
3.1, including access to the files and documents containing
information pertaining to the Property which are maintained at the
office of Seller's Property Manager(s), ConAm Management
Corporation ("Property Manager") and which have been prepared
during Seller's period of ownership; provided, Buyer shall not be
entitled to examine records and documents at Seller's home office.
(c) All Documents and Materials supplied to or made
available to Buyer or Buyer's agents by Seller as provided in this
Section 3.1 are confidential in nature and shall not be released or
disclosed by Buyer to any other parties except as set forth in the
further provisions of this Section 3.1. All Documents and Materials
shall be delivered to Buyer without representation or warranty of
any kind from Seller. In the event the Closing of this transaction
does not occur for any reason, then Buyer shall return promptly to
Seller all of such Documents and Materials, along with copies of
any reports, studies, analyses, test results or other environmental
documents which are: (i) prepared by or on behalf of Buyer or its
agents in the course of Buyer's due diligence investigation; or
(ii) furnished or made available by Seller to Buyer pursuant to
this Section 3.1 or other applicable section of this Agreement
(collectively, the "Due Diligence Information"). Buyer's
obligation to return Due Diligence Information to Seller shall
apply regardless of any covenants to the contrary in any contracts
or agreements with Buyer's consultant(s). In consideration of the
Documents and Materials being made available to Buyer, it is
understood and agreed that Buyer shall treat all Due Diligence
Information confidentially, in accordance with the provisions of
this paragraph. Seller's Documents and Materials are to be used
solely for purposes of the performance of Buyer's due diligence
hereunder and no Due Diligence Information shall be disclosed or
delivered by Buyer to any person or entity other than Buyer's
attorneys, directors, officers, employees, agents, representatives
and consultants, who must be advised of such matters for the
purpose of evaluating Buyer's acquisition of the Property
(collectively the "Advisors"). The Advisors shall be informed by
Buyer of the confidential nature of the Due Diligence Information,
shall be directed by Buyer to treat the Due Diligence Information
confidentially, and shall agree to disclose the Due Diligence
Information only to the persons and/or entities to whom Buyer is
authorized to disclose such matters pursuant to the provisions of
this Subsection. Buyer shall not, and shall ensure that the
Advisors do not, disclose the fact that this Agreement has been
executed, or the status of any matter under this Agreement, without
Seller's prior written consent to such disclosure and approval of
the form thereof. It is also understood and agreed by the parties
that all press releases or other public announcements on or before
the Closing Date (including, without limitation, announcements to
tenants) relating to Buyer's purchase of the Property (other than
any disclosures compelled by law, an order of a court of competent
jurisdiction or a valid subpoena, or in connection with a filing
with the United States Securities and Exchange Commission) shall be
subject to the prior written approval of the other party hereto,
which approval may be granted or withheld in the sole discretion of
such other party. Buyer shall defend, indemnify and hold harmless
Seller from and against all claims, demands, causes of action,
liabilities, losses, damages or expenses asserted against or
incurred by Seller by reason of any unauthorized disclosure of such
information in violation of this Section 3.1.
3.2 Seller shall deliver or cause to be delivered to Buyer,
within five (5) business days of the Opening of Escrow: (i) a Title
Commitment for a 1992 Form ALTA Standard Form Owner's Policy of
Title Insurance or equivalent thereof (hereinafter the "Title
Commitment") issued by the Title Company, in the form customarily
used by the Title Company in the State of Texas, showing title to
the Property vested in Seller and committing to issue a 1992 Form
ALTA Standard Form Owner's Policy of Title Insurance (or equivalent
thereof, subject to variations in conformance with local custom and
practice), showing title thereto (including all easement parcels
which may be appurtenant to the fee interest) vested in Buyer, with
coverage in the amount of the Purchase Price, specifying all
easements, liens, encumbrances, restrictions, conditions or
covenants of record with respect to the Property and including
legible copies of all documents referred to as exceptions to title
in the Title Commitment which are available to the Title Company,
along with copies of all documents noted therein as specifically
recorded exception to title; and (ii) the most recent available
survey of the Property, if any (the "Survey"), for the purpose of
causing the Title Company to remove and/or modify the standard
general exception(s) (including the general survey exception) from
the Owner's Title Policy described in Section 5.2(d) herein and
substituting therefor any modified general exception(s) and
specific survey exceptions disclosed by the Survey. Within twenty
(20) days of the Opening of Escrow, Seller shall deliver or cause
to be delivered to Buyer a new or updated Survey and an updated
Title Commitment ("Amended Title Commitment") setting forth any new
or additional exceptions to title shown or disclosed by the Survey
or updated survey (if any) and deleting the customary general
exception for survey matters and other matters disclosed by an
inspection of the Property. Notwithstanding the foregoing,
Seller's failure to cause such item(s) to be delivered to Buyer
within the time period set forth herein, despite Seller's and
Buyer's reasonable good faith efforts, shall not be deemed to be a
default by Seller hereunder. The Survey shall be an as-built
survey, prepared by a surveyor registered in the State of Texas.
3.3 Buyer shall have until the Review Contingency Date in
which to approve the items listed in Section 3.1. Failure to
disapprove any item listed in Section 3.1, by delivery of written
objection to Seller within the time period specified therein, shall
be deemed to constitute approval of any or all such items by Buyer.
3.4 (a) Buyer shall have until the Review Contingency Date
to complete, at its own expense, an inspection of the physical
condition of the Property, including verification of current zoning
of the Property, and such structural or soils tests or
environmental reports as Buyer may contract for. Buyer shall
notify Seller in writing, no later than the close of business
(Pacific Time) on the Review Contingency Date, of its decision to
terminate this Agreement, for any reason whatsoever, in Buyer's
sole discretion, as a result of such inspections, whereupon this
Agreement shall terminate in accordance with Section 3.8 herein.
Failure to provide Seller with such written decision to terminate
under this Section 3.4 on or before the close of business (Pacific
Time) on the Review Contingency Date shall be deemed to constitute
approval by Buyer of the Property.
(b) Seller shall permit Buyer and its representatives
full access during normal business hours to make such inspections
and tests as Buyer deems necessary to complete its physical review
of the Property. Such inspection shall take place upon not less
than 48 hours notice to Seller and shall take place only with a
representative of Seller present at all times and shall be subject
to the rights of tenants and/or other occupants of the Property.
Buyer shall have the right to contact such persons or entities as
Buyer may reasonably deem appropriate in connection with its due
diligence efforts and Seller shall cooperate with Buyer in
arranging interviews and meetings for Buyer with any such persons;
provided, neither Buyer nor its agents, consultants or
representatives shall contact any tenant(s) of the Property without
the prior written consent of Seller, which Seller may withhold in
its sole and absolute discretion.
(c) Buyer shall be responsible for obtaining copies of
any additional documentation or information concerning the Property
as Buyer may deem appropriate in connection with Buyer's due
diligence, which shall be coordinated with and obtained through the
Property Manager, with the cooperation of Seller.
(d) Seller shall assist and cooperate with Buyer as may
be reasonably necessary to facilitate Buyer's investigation, due
diligence and review pursuant to this Section 3.4, including
Buyer's physical inspection of the Property in order to conduct
engineering studies, soil tests and any other inspection and/or
tests that Buyer may deem necessary or advisable; provided, Buyer
shall not be entitled to perform any tests of any kind which
involve drilling, boring, excavation, groundwater testing or
similar intrusive or invasive action on or under the surface of the
Property without Seller's prior written consent following not less
than three (3) business days' written notice setting forth in
reasonable detail the nature, extent and location of such tests and
the name and contact person of the contractor selected to perform
such tests, which consent may be withheld by Seller in its sole and
absolute discretion. Failure of Seller to affirmatively consent to
such tests or other matters within the time period set forth herein
shall constitute Seller's refusal to consent to the performance of
such tests or other matters, whereupon Buyer shall have the right
to terminate this Agreement on or before the Review Contingency
Date, in accordance with Article VI herein. Buyer shall treat the
results of all such tests consented to by Seller as confidential
and shall not disseminate the results of such tests, in any form,
written or verbal, to any third party and shall cause its
consultants to agree in writing to do the same. Buyer shall
deliver to Seller copies of all such reports, analyses and test
results promptly upon Buyer's receipt of same, without warranty or
representation from Buyer of any kind.
(e) Buyer shall indemnify, defend, protect and hold
harmless Seller from and against any and all claims, demands,
causes of action, liabilities, damages, losses or expenses
(including, without limitation, Seller's attorneys' fees) asserted
against or incurred by Seller and resulting from any act or
omission of Buyer or Buyer's agents, employees, representatives or
consultants relating to Buyer's inspection and testing pursuant to
this Section 3.4.
3.5 If Buyer: (i) transmits its disapproval pursuant to
Section 3.3 (with the exception of Title Matters, which shall be
resolved pursuant to Section 3.6) within the time provided therein;
or (ii) disapproves the physical condition of the Property pursuant
to Section 3.4, within the time period provided therein, this
Agreement shall terminate in accordance with Section 3.8 herein.
Without limiting the application of any other provision of this
Article III, upon such disapproval, Buyer shall promptly return to
Seller hereunder all copies of the Due Diligence Information within
the time period provided in Article VI herein including, without
limitation, any other materials and/or documents furnished or made
available to Buyer in connection with its review of the Property
and a copy of any environmental reports, studies or analyses (along
with all backup data) performed in connection with Buyer's due
diligence activities hereunder.
3.6 (a) Buyer shall have until the earlier of: (i) the
Review Contingency Date; or (ii) the date which is five (5) days
following its receipt of the Amended Title Commitment in which to
give Seller and Escrow Agent written notice ("Buyer's Title
Notice") of Buyer's disapproval or conditional approval of the
legal description or any matters shown in the Survey, the updated
Survey, the Amended Title Commitment, all documents referred to in
the Amended Title Commitment and all matters disclosed therein
(collectively the "Title Matters"). For purposes of this Section
3.6, recertification of the Survey, written notations of matters
shown thereon, updates necessary to date the Survey within ninety
(90) days of the Closing (or such other period as the Title Company
may require) or addition of similar ministerial matters shall not
delay the time period for delivery of Buyer's Title Notice, or the
scheduled Closing Date. In the event the updated Survey (if any,
in accordance with Section 3.2) and Amended Title Commitment are
not received by Buyer within the time periods set forth in Section
3.2 herein, such failure shall not be deemed to be a default by
Seller hereunder; provided, however, in the event Seller is unable
to cause such item(s) to be timely delivered to Buyer for any
reason, the date for delivery of Buyer's Title Notice, as provided
in this Section 3.6, shall be extended on a day-to-day basis until
delivery of such item(s) to Buyer, to a date which is five (5) days
following Buyer's receipt of same; provided, any such extension
shall not extend the Review Contingency Date hereunder for any
other purpose in connection with Buyer's due diligence
investigation. The failure of Buyer to timely give Buyer's Title
Notice shall be deemed to constitute Buyer's approval of the legal
description and all Title Matters.
(b) If Buyer timely disapproves or conditionally
approves any Title Matters, Seller may, within five (5) days after
receipt of Buyer's Title Notice, elect to eliminate some or all of
the disapproved or conditionally approved Title Matters. In such
event, Seller shall give Buyer written notice ("Seller's Title
Notice") of those disapproved or conditionally approved Title
Matters, if any, which Seller shall attempt to cause the Title
Company to eliminate from the Owner's Title Policy as exceptions to
title to the Property.
(c) If Buyer approves of Seller's Title Notice within
three (3) days of receipt thereof, Seller covenants and agrees to
use reasonable efforts to cause the Title Company to eliminate from
the Owner's Title Policy, as exceptions to title to the Property,
those disapproved Title Matters set forth in Seller's Title Notice.
Failure of Buyer to deliver to Seller written disapproval of
Seller's Title Notice within such three (3) day period following
its receipt thereof shall be deemed to constitute Buyer's approval
of Seller's Title Notice.
(d) If: (a) Seller does not elect to eliminate any
disapproved or conditionally approved Title Matters (which election
may be based, in whole or in part, upon the cost to eliminate such
Title Matter(s), regardless of the party obligated herein to pay
such cost or the party which may otherwise agree to pay for such
cost); (b) Seller is unable, despite its reasonable efforts, to
cause the Title Company to agree to eliminate as exceptions to
title any such Title Matters which Seller shall have elected, in
Seller's Title Notice, to attempt to cause to be eliminated by the
Title Company as exceptions to title in the Owner's Title Policy
and/or Lender's Title Policy, or; (c) Buyer disapproves of Seller's
Title Notice by written notice to Seller within three (3) days of
Buyer's receipt thereof, then this condition shall be deemed to
have failed, and Buyer may, by written notice to Seller on or
before the later of: (i) the time period for delivery to Seller of
Buyer's disapproval of Seller's Title Notice, pursuant to
subsection (c) above; or (ii) the Review Contingency Date, either:
(A) terminate this Agreement in accordance with Section 3.8 herein;
or (B) accept title in its then existing condition, which shall
constitute a waiver by Buyer of any such disapproved and uncured
Title Matters, and proceed to Closing as otherwise provided herein.
(e) Notwithstanding the foregoing, Seller shall either
satisfy, bond off or otherwise remove any lien evidencing a
monetary encumbrance at or before Closing (other than liens for
non-delinquent property taxes and assessments), subject to
agreement with the Title Company, in Seller's sole discretion,
regarding the requirements for removal of such item(s) as
exception(s) to title in the Owner's Title Policy.
3.7 (a) Seller shall notify Buyer of any damage or
destruction to the Property as soon as practicable after Seller
receives notice of such occurrence. If, prior to Closing, all or
a material part of the Property is destroyed by fire or other
casualty or is threatened to be taken or is taken by eminent
domain, either Buyer or Seller may terminate this Agreement in
accordance with Article VI herein by written notice to the other
party within five (5) business days of the date of such occurrence.
If neither Buyer nor Seller terminates this Agreement within the
time provided, Buyer shall be deemed to have waived the destruction
or taking, and this transaction shall be completed as provided in
this Agreement, without reduction in the Purchase Price (except to
the extent of the deductible under Seller's casualty policy and any
non-insured portion of the loss but only in the event Seller does
not elect, in its discretion, to repair such damage), and Buyer
shall be entitled to receive all insurance proceeds, if any, and
eminent domain awards, if any, applicable to the destruction,
damage or taking, other than proceeds and awards constituting
reimbursement to Seller for repair or restoration work to the
Property resulting from such destruction, damage or taking, and
performed prior to Closing.
(b) Seller shall, at Closing and thereafter, execute and
deliver to Buyer all required proofs of loss, and assignments of
claims and awards. The term "material part" as used in this
Section 3.7 shall be deemed damaged or destroyed within the meaning
of this Section if: (i) the cost of restoring same to its condition
prior to the fire or other casualty causing loss, in Seller's good
faith business judgment, will exceed the sum of $100,000; or (ii)
a part of the Property shall be taken or threatened to be taken by
eminent domain (which threatened taking shall be in the form of a
formal written notice from the appropriate governmental authority),
and such taking or threatened taking shall result in the
unavailability for leasing or occupancy, at market rates and on
market terms, more than five percent (5%) of the then current
rental receipts from the Property as of the date of such damage,
destruction or taking.
(c) Without limiting the application of the foregoing
provisions of this Section 3.7, in the event Seller elects to
terminate this Agreement in accordance herewith, following the
Review Contingency Date and prior to the Closing Date, Seller shall
reimburse Buyer for the actual amount of Buyer's out-of-pocket
costs (excluding Seller's overhead) in performing its due diligence
activities pursuant to Article III herein (including, without
limitation, Buyer's attorneys' fees incurred or paid to outside
counsel); provided, however, in no event shall Seller be obligated
to reimburse Buyer in an amount greater than $25,000. Buyer shall
provide Seller with reasonably detailed written evidence of the
nature, amount and payee of each amount (other than nominal
amounts) incurred and/or paid by Seller, along with the aggregate
amount, and Seller shall remit such amount to Buyer, by check drawn
on the account of Seller, within thirty (30) days of receipt of
Buyer's statement of costs and backup information as described
herein. All payments hereunder shall be made by Seller directly to
Buyer and not to any agent, representative or Advisor of Buyer, or
to any other third party.
3.8 Should a termination occur under this Article III: (i)
Escrow Agent shall refund to Buyer the Earnest Money Deposit (or
portion thereof), and any accrued interest thereon which was earned
while in the possession of Escrow Agent, then held by Escrow Agent;
subject to the termination provisions of Article VI herein; (ii)
Buyer and Seller shall have no further liability to each other
under this Agreement, except for any liability accruing under
Buyer's indemnification and/or confidentiality obligations to
Seller under Sections 3.1, 3.4, 4.2 and/or 7.2, which liability
shall survive the termination of this Agreement; and (iii) Buyer
shall have no right or claim to or against the Property or any
portion thereof. Upon any such termination, the provisions of
Article VI shall apply.
ARTICLE IV.
Representations, Warranties and Covenants of Seller and Buyer
4.1 Seller covenants and agrees with Buyer that, between the
date hereof and the Closing Date:
(a) Seller shall: (i) use reasonable efforts to cause
the Property to be maintained in accordance with all applicable
laws; (ii) maintain and operate the Property in the same manner as
is consistent with the operation and maintenance of the Property
during the period of Seller's ownership of the Property; (iii) keep
all insurance policies pertaining to the Property in full force and
effect; and (iv) advise Buyer of any litigation, arbitration or
administrative hearing which concerns the Property and may affect
Seller's ability to consummate the transaction contemplated hereby,
of which Seller has actual knowledge. Without limiting the
foregoing provisions of this Subsection (a), Seller shall have no
obligation to perform any capital improvements on the Property
unless agreed upon in writing between the parties prior to the
Closing Date, in the sole discretion of each party.
(b) If Seller acquires knowledge of any material defect,
error or omission in any of Seller's Documents and Materials,
Seller shall promptly give Buyer notice with detailed information
of such defect, error or omission, and Buyer shall have the later
of: (i) five (5) business days from receipt of such notice; or
(ii) five (5) business days prior to the Review Contingency Date,
to submit to Seller written objections thereto or to terminate this
Agreement in writing in accordance with the provisions of Article
VI herein. Buyer's failure to deliver written objection to Seller
within said period shall be deemed to constitute Buyer's waiver of
the information contained in said notice and the effect thereof
upon the Property and this transaction.
(c) Seller shall not enter into any binding contract to
sell or convey the Property (or any portion thereof), or any right,
title or interest therein (except for: (i) New Lease Obligations,
as defined in Section 4.2 herein; or (ii) any such contract or
agreement which shall terminate prior to the Closing) nor shall
Seller enter into any letter of intent for such sale, whether
binding or non-binding, with a third party; provided, however,
nothing herein shall prohibit Seller from accepting one or more
backup offer(s) for the sale of the Property during the time period
set forth herein. Upon termination of this Agreement in accordance
with the terms hereof, the provisions of this Subsection (c) shall
be null and void and of no further force and effect.
(d) There are not, as of the date of this Agreement, and
shall not be as of the Closing, any unfunded, vested liability or
employer withdrawal liability under the Employee Retirement Income
Security Act of 1974 or the Multi-Employer Pension Plan Amendment
Act of 1980 ("ERISA") with respect to any union contracts, pension
plans, profit sharing plans and/or employee benefit plans related
to Seller and the Property.
4.2 Prior to the Review Contingency Date, Seller shall keep
Buyer informed of any new Leases or amendments thereto, or
termination of existing Leases, promptly upon the occurrence of
same and shall, at Buyer's request, provide Buyer with a copy of
any such new Lease or amendment. From and after the Review
Contingency Date, Seller shall not enter into any new Leases at the
Property except: (i) on current market terms for such unit type
and size or on terms substantially similar to the terms of Leases
or modifications of Leases for such unit type and size, as
disclosed on the Rent Roll, which have been entered into within the
six (6) month period preceding the Opening of Escrow, on Seller's
current Lease form (subject to appropriate modification) in
Seller's reasonable and good faith business judgment); or (ii) on
such other terms as may have been approved by Buyer, which approval
may not be unreasonably withheld by Buyer; provided, however, in
the event Buyer does not disapprove of any such matter within three
(3) business days following Buyer's receipt from Seller of the
proposed material terms of any such new Lease or amendment thereto,
Buyer shall be deemed to have approved such new Lease or amendment
thereto and Seller shall thereupon be free to enter into any such
new Lease or amendment. Except as set forth herein, from and after
the Review Contingency Date, Seller shall not take any action or
execute any document which would create a new interest in the
Property. In addition, Seller shall not, following the Opening of
Escrow, enter into any Service Contract having a material impact on
the Property or its operations which shall survive the Closing or
which cannot be canceled upon thirty (30) days notice (except in
the event of an emergency and/or the inability of any service
provider to continue to discharge its duties under an existing
Service Contract), without the prior written approval of Buyer,
which shall not be unreasonably withheld. Failure of Buyer to
respond to Seller's request for any approval under this paragraph
within three (3) business days from receipt of such request shall
be deemed to constitute Buyer's approval of same and Seller shall
be free to enter into such new Lease, or amendment to Lease or new
Service Contract during the pendency of this Agreement. Any such
new Lease or amendment thereto entered into after the date of this
Agreement shall be deemed to be a New Lease Obligation, as defined
in the further provisions of this Section 4.2.
Any lease transaction described herein entered into by
Seller after the date of this Agreement and prior to Closing in
accordance with this Section 4.2 shall be referred to herein as a
New Lease Obligation. Upon Closing, Buyer shall: assume express
liability for completion of any New Lease Obligations then
outstanding. Buyer and Seller shall each indemnify, defend,
protect and hold harmless the other from and against any and all
claims, demands, causes of action, liabilities, losses and/or
damages asserted against and/or incurred by the indemnified party
in connection with the failure by the indemnifying party to perform
its obligations pursuant to this Section 4.2. The indemnification
obligations hereunder shall survive the Closing Date or earlier
termination of this Agreement pursuant to Article IX or Article X
in the event of a default by Buyer or Seller, respectively.
4.3 Seller shall terminate its existing management, leasing
and listing agreements and other Service Contracts affecting the
Property, and Seller shall pay all expenses of such termination.
As to any such Service Contract(s) which is terminated by Seller,
Seller agrees to indemnify, defend, protect and hold harmless Buyer
from any and all claims, demands, causes of action, liabilities,
losses and/or damages asserted against or incurred by Buyer arising
out of such termination or any events or occurrences arising
thereunder prior to the Closing Date.
4.4 Seller represents and warrants on its own behalf, now and
as of the Closing Date, that:
(a) Seller has the full right, power and authority to
sell the Property to Buyer as provided herein and to carry out
Seller's obligations hereunder, and the individuals executing this
Agreement on behalf of Seller are fully authorized to do so.
(b) To Seller's knowledge, there are no pending claims,
suits, actions, arbitrations or regulatory, legal, or other
proceedings or investigations affecting the Property or Seller's
rights and obligations under this Agreement, other than as may be
disclosed to or discovered by Buyer prior to the Review Contingency
Date, pursuant to Section 3.1 or otherwise. To Seller's knowledge,
there is no pending condemnation of the Property, or any part of
it.
(c) There are no tenant Leases currently in force or
effect for the Property and no security deposits or other sums due
tenants which are actually held by Seller or Property Manager
except as specified on the Rent Roll attached hereto as Exhibit "C"
(and as may be updated prior to the Closing to account (in part)
for the use or application of any such security deposit(s) by
Seller in accordance with the Leases) and, to Seller's knowledge,
Exhibit "C" lists all Leases and tenancies, if any, with respect to
the Property or any part thereof, as of the date hereof.
(d) Except as expressly set forth to the contrary in the
Rent Roll: (i) all of the information contained on the Rent Roll,
and shall be as of the delivery of the last updated Rent Roll (if
any), true, correct and complete; (ii) no tenant has any right of
first refusal or option with respect to the leasing of any portion
of the Property; (iii) to Seller's knowledge, all Leases are in
full force and effect and constitute valid and binding agreements
enforceable in accordance with their terms, subject to any
termination proceedings brought by Seller due to default by a
tenant(s), Leases which have expired or are scheduled to expire
prior to Closing in accordance with their terms, and/or applicable
laws and regulations relating to bankruptcy or insolvency; (iv) to
Seller's knowledge, and except as set forth in the Rent Roll, there
are no uncured monetary defaults on the part of any tenant under
the Leases, as of the date of preparation of the last Rent Roll (or
updated Rent Roll, if any) delivered to Buyer prior to Closing; and
(v) none of the rentals due or to become due prior to Closing under
the Leases have been assigned, encumbered or are subject to any
liens, other than the Permitted Exceptions.
(e) There have been no material adverse changes in the
gross rental income from the Property from that set forth in the
most recent monthly management, revenue and expense reports
furnished to Buyer in accordance with Section 3.1(a)(v) herein, to
the date of this Agreement. Notwithstanding any contrary
provisions in this Section 4.4, the representations and warranty
contained in this Subsection shall apply only to the period of time
ending on the later of: (i) the date of this Agreement; or (ii) the
date of delivery to Buyer of the last updated monthly management,
revenue and expense report, if any, pursuant to Section 3.1(a)(v).
(f) To Seller's knowledge: (i) the Property and the
operation thereof is in sufficient compliance with the requirements
of all governmental agencies to permit the continued lawful
operation thereof; and (ii) Seller is not party to any agreement or
understandings with any governmental agencies affecting the
Property, other than as may be disclosed in the Title Matters or
otherwise disclosed in writing to Buyer.
(g) Seller has received no written notice of any uncured
violations at the Property of any applicable statute, ordinance or
regulation relating to the Property or its operation which would
have a material and adverse effect upon the Property, nor are there
presently pending against Seller or Property any judicial
proceedings, administrative or actions (including outstanding
judgments), which, if resolved adversely to Seller, would have a
material and adverse effect upon the operation of the property.
(h) To Seller's knowledge, during the period of Seller's
ownership of the Property, no Hazardous Materials have been used,
disposed of or generated at the Property (which use, disposal or
generation would reach actionable levels under applicable laws and
regulations), except in accordance with a validly issued permit or
in accordance with the requirements of applicable laws and
regulations, except as may otherwise be disclosed to Buyer in
writing and/or disclosed in the Documents and Materials furnished
or made available to Buyer pursuant to Article III herein. For
purposes of this Subsection (h), "Hazardous Materials" shall
include, without limitation, substances defined as "hazardous
substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 et seq.; the Hazardous Materials Transportation Act,
1949 U.S.C. Section 1801 et seq.; the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6902 et seq.; and those substances
defined in such terms in applicable laws of the State of Texas
and/or regulations adopted in the publications promulgated pursuant
to such laws.
(i) Seller has received no written notice of the termination
or restriction of: (i) the current access from the Property to any
currently open and public highways and/or roadways adjoining the
Property; (ii) any sewer or other utility service adjoining or
otherwise serving the Property.
(ii) All of Seller's representations and warranties set forth
in this Section 4.4 shall be true and correct in all material
respects as of the Closing Date.
As used in this Section 4.4 herein, Seller's "knowledge" means
the actual knowledge of John Mulvihill as the Vice President and
David Honerkamp as the Director of Asset Management of Seller,
respectively, responsible for the monitoring and limited
supervision of the Property Manager for the Property, without duty
to personally inspect the Property or to personally make any
independent investigation, subject to the further provisions of
this paragraph; provided, it is contemplated that such individuals
have reasonably discharged such monitoring and limited supervision
of the Property Manager in accordance with Seller's customary
practices concerning properties acquired for similar purposes, and
will continue to do so until the Closing Date; and, provided
further, the parties acknowledge and agree that David Honerkamp
(but not John Mulvihill) has telephone contact concerning the
operation of the Property with the Property Manager on a weekly
basis (approximately) and receives written reports from the
Property Manager on a monthly basis (approximately).
Notwithstanding anything to the contrary contained in this
Agreement, if Buyer has actual knowledge that any representation or
warranty of Seller is not true and correct as of the Closing Date
and shall elect to acquire the Property notwithstanding such fact,
Buyer shall be deemed to have waived such specific breach of
representation and warranty and to have released Seller from all
liability or responsibility in connection therewith, and neither
Buyer nor Buyer's permitted assignees or successors shall be
entitled to commence any action or to recover damages from Seller
based upon such specific breach of a representation and warranty.
4.5 Seller hereby specifically disclaims any warranty,
guaranty or representation, oral or written, past, present or
future, of, as to, or concerning the following matters regarding
the Property:
(i) the nature and condition of the Property, including, but
not limited to the water, soil and geology, and the suitability
thereof and of the Property for any and all activities and uses
which Buyer may elect to conduct thereon;
(ii) the nature and extent of any right-of-way, possession,
lien, encumbrance, license, reservation, condition or otherwise;
(iii) the compliance of the Property or its operation with
any laws, ordinances or regulations of any government or other
body;
(iv) the quality, nature, adequacy and physical condition of
the Property, including, but not limited to, the structural
elements, foundation, appurtenances, access, landscaping, parking
facilities and the electrical, mechanical, HVAC, plumbing, sewage
and utility systems, facilities and appliances;
(v) the existence, quality, nature, adequacy and physical
condition of utilities serving the Property;
(vi) the zoning or other legal status of the Property or any
other public or private restrictions on the use of the Property;
(vii) the presence of any hazardous substances on, under
or about the Property or the adjoining or neighboring property;
(viii) the quality of any labor and materials used in any
Improvements on the Real Property;
(ix) the possible right of any third party(ies) to use any
common area of the Property for community services, performances,
public interest information, school activities and similar matters,
if applicable; and
(x) the economics of the operation of the Property.
In consideration of Buyer's receiving access to the Property
as set forth in Article III herein so that Buyer may conduct such
studies, costs, investigations, inspections and analyses with
respect to the Property as Buyer might desire, Buyer acknowledges
and confirms that unless Buyer elects to terminate this Agreement
as provided herein, Buyer shall accept Seller's conveyance of the
Property to Buyer in as "AS-IS" and "WHERE-IS" condition, free of
any warranty by Seller, except as otherwise expressly provided in
this Agreement, and free of any obligation by Seller to perform any
repairs or other improvement work with respect to the Property.
Buyer expressly acknowledges that, in consideration of the
agreements of Seller herein, except as otherwise specified here,
SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR
ARISING BY OPERATION OF LAW, CONCERNING THE PROPERTY, INCLUDING,
BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IMPLIED IN THIS AGREEMENT,
SELLER AFFIRMS, ACKNOWLEDGES AND AGREES THAT THE FOREGOING
LIMITATIONS AND DISCLAIMERS IN THIS AGREEMENT ARE NOT INTENDED TO
ABROGATE, NULLIFY OR OVERRIDE THE EXPRESS COVENANTS, WARRANTIES AND
REPRESENTATIONS OF SELLER SET FORTH IN SECTIONS 4.1, 4.2, 4.3, AND
4.4 HEREIN AND, TO THE EXTENT THE FOREGOING DISCLAIMERS ARE DEEMED
TO BE IN CONFLICT WITH THE PROVISIONS OF EITHER OF SAID SECTIONS
4,1, 4.2, 4.3 AND 4.4, THE PROVISIONS OF SUCH SECTIONS SHALL
CONTROL.
4.6 Buyer represents and warrants now and as of the date of
Closing that:
(a) If Buyer (or any permitted assignee of Buyer under
Section 1 2.2 herein) is a partnership or corporation (including,
without limitation, a limited liability company), it is duly
organized, validly existing and in good standing under the laws of
the state of its formation.
(b) Buyer has the full right, power and authority to
purchase the Property from Seller as provided herein and to carry
out Buyer's obligations hereunder, and the person or persons
executing this Agreement on behalf of Buyer is/are fully authorized
to do so.
(c) Buyer's purchase of the Property at Closing shall
constitute its certification that Buyer: (i) has inspected and is
familiar with the Property; (ii) has had the opportunity to have
prepared for Buyer's review such soils, engineering, environmental
or hazardous substance reports or such other reports or inspections
of any nature relating to the Property as Buyer deemed appropriate;
(iii) has purchased the Property on an "AS IS" and "WHERE-IS"
basis, relying solely on Buyer's own examination and inspection of
the Property, and the express representations contained herein.
(d) All of Buyer's representations and warranties under
this Section 4.6 shall be true and correct in all material respects
as of the Closing Date.
4.7 All representations and warranties of Seller and Buyer
under this Article IV shall survive the Closing; provided, however,
that any claim, action, suit or proceeding with respect to the
truth, accuracy or completeness of such representations and
warranties must be commenced, if at all, on or before six (6)
months from the Closing Date.
4.8 On or before the Closing, Seller shall deliver or cause
to be delivered to Buyer or to Buyer's auditor an audit letter in
a form agreed upon between Seller, Buyer and Buyer's auditor, as
set forth in Exhibit "B" attached hereto, which shall be based upon
the Documents and Materials (and other information, if any)
furnished or made available to Buyer or Buyer's Advisors pursuant
to Article III herein. The parties agree that Seller shall have no
independent obligation to provide documentation, information or
financial data, or to make available additional records or
information, to Buyer's auditor in connection with such audit
letter.
4.9 This Agreement and all documents, agreements,
understandings and arrangement relating to this transaction have
been executed by the undersigned in his/her capacity as an officer
or director of Buyer, which has been formed as a Maryland
corporation pursuant to the Articles of Incorporation of Buyer, 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 Buyer for satisfaction of
any liability of Buyer with respect to 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 Buyer 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 and arrangements and/or
transactions between the parties hereto.
4.10 (a) Seller hereby agrees to indemnify, defend and hold
harmless Buyer from and against any and all claims, demands, causes
of action, liabilities, losses and/or damages asserted against or
incurred by Buyer and arising out of the operation of the Property
prior to the Closing (and following Seller's acquisition of title
to the Property) including, without limitation, any injury to
persons or damage to property, but excluding any such matter
described herein arising out of or resulting from any act or
omission of Buyer, its agents, employees or Advisors prior to the
Closing. For purposes of this Subsection (a), the acts and/or
omissions of any independent contractors or agents of Seller prior
to the Closing shall in no way be attributable to Buyer, and the
acts and/or omissions of any agents, employees, Advisors or
consultants of Buyer prior to the Closing shall in no way be
attributable to Seller.
(b) Buyer hereby agrees to indemnify, defend and hold
harmless Seller from and against any and all claims, demands,
causes of action, liabilities, losses and/or damages asserted
against or incurred by Seller and arising out of the operation of
the Property following the Closing including, without limitation,
any injury to persons or damage to property, but excluding any such
matter described herein arising out of or resulting from any act or
omission of Seller, its agents, employees or Advisors prior to the
Closing. For purposes of this Subsection (b), the acts and/or
omissions of Buyer, its agents, employees or Advisors following the
Closing shall in no way be attributable to Seller, and the acts
and/or omissions of any independent contractors or agents of Seller
following the Closing shall in no way be attributable to Buyer.
(c) Notwithstanding any foregoing provisions of
Subsection (a) or (b) above to the contrary, the obligations of
Seller and Buyer set forth herein shall not limit, impair, negate,
modify, expand or in any way affect any indemnification obligation
of either party expressly set forth in this Agreement or in an
Exhibit to this Agreement (which Exhibit is executed and delivered
by the parties at the Closing, in substantially the same form as
attached hereto), regardless of the time period with respect to
which such obligation applies, nor shall the foregoing provisions
of Subsections (a) and (b) above limit, impair, negate, modify,
expand or in any way affect any exculpatory provision in favor of
either party, or any provision in the nature of a disclaimer,
limitation of liability, and/or "as-is" or "where-is" proviso,
which is expressly set forth in this Agreement, including, without
limitation, the provisions of Section 4.5 or in an Exhibit to this
Agreement (which Exhibit is executed and delivered by the parties
at the Closing, in substantially the same form as attached hereto).
ARTICLE V.
Action on the Closing Date
5.1 Buyer shall take the following actions on or before the
Closing Date, each of which shall be deemed to be a condition
precedent to Seller's Closing obligations hereunder:
(a) Seller shall have received, on the date of Closing,
the Purchase Price (adjusted for credits or debits for all
prorations under Section 5.3) by wire transfer to the account of
Seller at the financial institution designated by Seller in its
instructions to Escrow Agent prior to Closing, in sufficient time
for investment at such institution's customary rate paid to Seller;
(b) Seller shall be provided on the date of Closing with
an executed duplicate original of the documents listed under
subsections (e), (f), and (g) of Section 5.2 below.
5.2 Seller shall provide or cause to be provided to Buyer the
following items, on or before the Closing Date, the provision of
which shall be deemed to be a condition precedent to Buyer's
Closing obligations hereunder:
(a) An executed and acknowledged special warranty deed
(or similar form of deed limiting Grantor's warranties to the acts
of Grantor, and none other) ("Deed") in the form of Exhibit "D";
(b) Originals (or copies if such originals are not
available) of all executed Leases, if any, in accordance with
Section 4.2 herein;
(c) All keys for the Property in the possession or
control of Seller (properly labeled);
(d) A 1992 ALTA Standard Form Owner's Policy of Title
Insurance, or equivalent thereof, in the form customarily used in
the State of Texas (subject to variations in conformance with local
custom and practice), issued by the Title Company and dated as of
the Closing Date, with extended coverage (including survey
coverage) in the amount of the Purchase Price, setting forth the
legal description of the Property and showing title vested in
Buyer, subject only to the Permitted Exceptions, together with such
endorsements as Buyer may request (and the Title Company may agree
to issue) (the "Owner's Title Policy"). The Owner's Title Policy
shall contain "extended coverage" in accordance with the statutes,
regulations, customs and/or practices of the State of Texas. The
premium for the Owner's Title Policy and any endorsements thereto
shall be paid by the parties in accordance with Section 7.1 herein.
(e) An executed duplicate original of the Assignment and
Assumption of Rights, Warranties and Permits in the form of Exhibit
"F";
(f) [Reserved]
(g) An executed duplicate original of the Assignment and
Assumption of Leases in the form of Exhibit "H."
(h) Letters executed by Seller, in form reasonably
satisfactory to Buyer, notifying each of the tenants at the
Property of the change of ownership of the Property, and directing
such tenants to make all payments following the Closing Date which
are due under the Leases to such party and at such address as Buyer
may designate ("Tenant Notification Letters"). Buyer shall be
responsible for delivery of all such Tenant Notification Letters
outside of Escrow, not sooner than the recordation of the Deed and
receipt by Seller of the Purchase Price, and Escrow Agent shall
have no responsibility therefor;
(i) An original executed Bill of Sale for the Personal
Property identified in Exhibit "1" attached hereto, reciting that
such transfer is on an "AS-IS" and "WHERE-IS" basis; provided,
Exhibit "1" to the Bill of Sale may, at Seller's election, list
only the Personal Property excluded from the transfer or,
alternatively, Exhibit "1" may be eliminated in the event all
Personal Property (if any) located at the Property is included in
the transfer;
(j) An updated Rent Roll, dated as of the end of the
last full calendar month prior to the Closing Date, certified by
Seller as true and correct in all material respects; and
(k) A certification duly executed by Seller under
penalty of perjury in the form of, and upon the terms set forth in
Exhibit "J", setting forth Seller's address and federal tax
identification number and certifying that Seller is not a foreign
entity in accordance with and/or for the purpose of the provisions
of Section 1445 (as may be amended) of the Internal Revenue Code of
1954, as amended, and any regulations promulgated thereunder;
5.3 The following items will be prorated as of the Closing
Date on a per diem basis: rents (including any adjustments and
other charges, if any, payable by the tenants under the Leases as
pass-through items) and; the current year's real estate taxes and
assessments (calculated on the most recent available tax bill and
reprorated after Closing in accordance with the further provisions
of this Section 5.3); provided, however, rent and all other sums
which are due and payable to Seller by any tenant but uncollected
and delinquent as of Closing shall not be adjusted, but Buyer shall
cause such sums for the period prior to Closing to be remitted to
Seller if, as and when collected pursuant to Article VIII of this
Agreement. Notwithstanding the foregoing, utilities not separately
metered and charged to the tenants or allocated among the tenants
shall be prorated only to the extent Seller is unable, despite its
best efforts, to cause the providers of utilities services to the
Property to read the meters and, in cooperation with Buyer, to
cause such providers to change the name of the responsible party
for payment of such utilities from Seller to Buyer, effective as of
the Closing Date.
In addition to any other matters set forth herein, the
parties hereby agree to reprorate, on a post-closing basis: (i)
real property taxes, based upon the actual tax bill for the tax
year in which the Closing occurred, and again reprorated, if
necessary, due to any change in the assessed value or tax rate of
the Property following a pending assessment appeal by Seller or
Buyer or a separate reassessment due to the change in ownership of
the Property pursuant to this transaction; and (ii) personal
property taxes allocable to any Personal Property transferred to
Buyer pursuant to the Bill of Sale.
The account of Seller or Buyer shall be debited or
credited, as the case may be, on the closing settlement statement
to reflect these prorations, and the Purchase Price to be paid to
Seller shall be similarly adjusted. Security deposit(s) as set
forth in the Leases shall be credited to Buyer at the Closing. The
Leases shall be determinative of the amount of all security
deposits, without regard to any other documentation reflecting
possible claims by one or more tenants for refund of security
deposit(s) following the Closing. Buyer and Seller agree to use
reasonable efforts to prepare and deliver to Escrow Agent a
schedule of tentative rental adjustments (including a credit to
Buyer for security deposits actually held by Seller) three (3)
business days prior to the Closing. Any such adjustments not
determinable or not agreed upon as of the Closing shall be paid by
Buyer to Seller, or by Seller to Buyer, as the case may be, in cash
or by wire transfer of funds as soon as practicable following the
Closing of this Agreement. Facsimile copies of executed
counterparts of the schedule of adjustments as agreed upon by Buyer
and Seller shall be delivered to Escrow Agent as soon as
practicable prior to the Closing. For purposes of this Section
5.3, Buyer shall be deemed to be the owner of the Property as of
12:01 A.M. on the Closing Date, regardless of the actual hour on
which Closing occurs or recordation of the Deed takes place;
provided, however, in the event the Closing occurs on December 29,
30 or 31, 1997, Seller shall, for purposes of this Section 5.3
only, be deemed to be the owner of the Property until 12:00 p.m.,
December 31, 1997. This transaction shall in no event close later
than the Closing Date, as defined in Section 1.2 hereof.
5.4 Any property and liability insurance on the Property
maintained by Seller shall terminate on the Closing Date.
5.5 Seller shall deliver possession of the Property to Buyer
on the Closing Date.
ARTICLE VI.
Termination
Should this transaction not close on or before 5:00 p.m.,
local time, on the Closing Date, for reasons other than a default
by Buyer (in which case Article IX herein shall govern) or a
default by Seller (in which case Article X herein shall govern)
either party may, by delivery of written notice to the other and to
the Escrow Agent, terminate this Agreement, whereupon each party
shall pay one-half (1/2) of Escrow Agent's normal cancellation
charges. Such exercise of the right of termination by either party
shall constitute a waiver of any rights, claims, causes of action
or demands either party may have against the other or the Property,
or any portion thereof, due to such failure of this transaction to
close on or before the Closing Date, except for any liability
accruing under Buyer's indemnification and/or confidentiality
obligations to Seller (or Seller's indemnification obligations to
Buyer, as the case may be) pursuant to Sections 3.1, 3.4, 4.2
and/or 7.2 herein, which liability shall survive the termination of
this Agreement. Upon such termination, pursuant to this Article
VI, Buyer shall return to Seller, within five (5) days following
such termination, all of Seller's Documents and Materials provided
or made available to Buyer by Seller hereunder, along with copies
of Buyer's Due Diligence Information compiled in accordance with
Article III herein, as set forth in Section 3.1 (a) herein, and
Buyer shall be entitled to the prompt return of the Earnest Money
Deposit deposited with Escrow Agent, together with any accrued
interest thereon which was earned while in the possession of Escrow
Agent, whether or not previously released to Seller in accordance
with the terms of this Agreement. The provisions of this Article
shall not limit or affect the provisions of Section 3.8 herein.
ARTICLE VII.
Costs and Commissions
7.1 Seller shall pay the portion of the premium for the
Owner's Title Policy allocable to standard coverage, the cost of
the Survey and all updates thereto, and its own legal fees and any
transfer taxes customarily payable by the Seller including, without
limitation, any city, county or other local transfer fees or taxes
or fees imposed by any city, county or other local governmental
entity, quasi-governmental entity or agency for the area in which
the Property is located. Buyer shall pay any additional title
premium attributable to extended (survey) coverage (unless custom
and practice in the State of Texas and/or Tarrant County calls for
Seller to pay same) and any endorsements to the Owner's Title
Policy requested by Buyer and agreed to by the Title Company, the
entire cost of the Lender's Title Policy, if any, and any
endorsements thereto, its own legal fees, all fees and expenses
relating to its inspection and testing of the Property or its
review of the books and records relating to the Property, the cost
of recording the Deed and any transfer fees or taxes customarily
payable by the Buyer including, without limitation, any city,
county or other local transfer taxes or fees imposed by any city,
county or other local governmental entity, quasi-governmental
entity or agency for the area in which the Property is located.
Seller and Buyer will share equally all other closing fees and
closing costs (to the extent consistent with local custom and
practice), including, without limitation, Escrow Agent's fees and
expenses, subject to the provisions of Article VI herein.
7.2 Buyer and Seller each represent to the other that they
have not entered into any agreement or incurred any other
obligation which might result in the obligation to pay a real
estate sales or brokerage commission or finder's fee with respect
to this transaction. Buyer and Seller each agree to indemnify,
protect, defend and hold the other harmless from and against any
and all claims, demands, causes of action, liabilities, costs
and/or expenses (including attorney's fees and costs) asserted
against or incurred by the other party as a result of any claim or
assertion made by any person to a right to a real estate sales or
brokerage commission, finder's fee or other compensation in
connection with this transaction, to the extent such claim or
assertion is based on the actual or alleged acts or omissions of
the indemnifying party, its broker or representative (including,
without limitation, any party which is or claims to be an actual or
alleged cooperating broker in the subject transaction, in
accordance with local custom and practice). The obligations of
Buyer and Seller under this Section 7.2 shall survive the Closing
Date or the earlier termination of this Agreement pursuant to its
terms.
ARTICLE VIII.
Post-Closing Cooperation
If, as of Closing Date, there is any accrued and delinquent
rent due from any tenant then in occupancy, and Seller advises
Buyer of that fact on or before the Closing Date by means of the
Rent Roll or otherwise, Buyer shall use its reasonable efforts to
collect such delinquent rent following Closing. The reasonable
efforts required of Buyer shall not be deemed to include the
institution of any litigation. All rent collected by Buyer from
such delinquent tenant(s) shall be applied by Buyer first, to rent
and other charges for the period from and after the Closing Date
and second, to rent and other charges due to Seller as of the
Closing Date. Seller shall retain the right to pursue, at Seller's
sole cost, any and all actions or proceedings against any former
tenants of the Property, who are not subject to existing Leases at
the Property or who are in breach of their Leases by reason (in
part) of their abandonment of the leased premises prior to the end
of the term of their Lease, for delinquent rents and/or other
cause(s) of action, and any amounts collected by Seller pursuant to
such actions or proceedings shall be the sole property of Seller.
Buyer hereby assigns any cause(s) of action or claim(s) it may have
against such persons to Seller, and Buyer shall have no
responsibility in connection with the prosecution of said actions
or proceedings.
ARTICLE IX.
Default by Buyer
IF THE CLOSING OF THIS TRANSACTION FAILS TO OCCUR ON OR BEFORE
THE CLOSING DATE AS A RESULT OF BUYER'S BREACH OF THIS AGREEMENT,
THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS AGREEMENT IN
THE SPACE PROVIDED BELOW THAT:
(I) THE EARNEST MONEY DEPOSIT BEARS A REASONABLE RELATIONSHIP
TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER
AS THE RESULT OF BUYER'S DEFAULT IN THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT, WHICH DAMAGES WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX, THAT THE EARNEST MONEY
DEPOSIT CONSTITUTES A REASONABLE ESTIMATE OF SELLER'S DAMAGES IN
SUCH EVENT, AND THAT THE REMEDY PROVIDED FOR HEREIN IS NOT A
PENALTY OR FORFEITURE AND IS A REASONABLE LIMITATION ON BUYER'S
POTENTIAL LIABILITY AS A RESULT OF SUCH DEFAULT; AND
(II) AS A RESULT OF BUYER'S BREACH OF THIS AGREEMENT AND
FAILURE OF THE CLOSING TO OCCUR ON OR BEFORE THE CLOSING DATE,
SELLER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AND THE
ESCROW BY WRITTEN NOTICE TO ESCROW AGENT, WHEREUPON SELLER AND
ESCROW AGENT SHALL THEREUPON BE RELEASED FROM THEIR RESPECTIVE
OBLIGATIONS THEREUNDER TO SELL AND/OR PURCHASE THE PROPERTY, AND
SELLER SHALL RETAIN THE EARNEST MONEY DEPOSIT (OR ESCROW AGENT
SHALL RELEASE THE EARNEST MONEY DEPOSIT AND ALL ACCRUED INTEREST
THEREON TO SELLER, TO THE EXTENT NOT ALREADY SO RELEASED) AS
LIQUIDATED DAMAGES, WHICH DAMAGES SHALL BE SELLER'S SOLE AND
EXCLUSIVE REMEDY HEREUNDER IN THE EVENT OF SUCH BREACH, EXCEPT FOR
SELLER'S RIGHTS AND REMEDIES FOR A SEPARATE BREACH, IF ANY, OF THE
CONFIDENTIALITY AND/OR INDEMNIFICATION PROVISIONS OF THIS
AGREEMENT.
(III) IN THE EVENT OF BUYER'S DEFAULT HEREUNDER AND
SELLER'S ELECTION TO TERMINATE THIS AGREEMENT AND THE ESCROW AS
PROVIDED HEREIN, BUYER SHALL BE SOLELY RESPONSIBLE FOR PAYMENT OF
THE FULL AMOUNT OF ESCROW AGENT'S CANCELLATION CHARGES AND ANY
OTHER COSTS OR CHARGES IMPOSED BY THE TITLE COMPANY IN CONNECTION
WITH THE PREPARATION OF THE TITLE COMMITMENT OR UPDATES THEREOF.
Initials of Seller Initials of Buyer
ARTICLE X.
Default by Seller
In the event of a default by Seller under the terms of this
Agreement, Buyer shall have the right either: (i) to purchase the
Property notwithstanding such default, whereupon such default shall
be deemed waived; or (ii) to terminate this Agreement by notice
furnished to Seller and to Escrow Agent, whereupon Buyer will be
entitled to a refund of the Earnest Money Deposit and all interest
accrued thereon, if any, held by Escrow Agent, and Buyer shall be
entitled to pursue an action against Seller at law for damages or
in equity for specific performance of this Agreement. In the event
of Seller's default hereunder and Buyer's election to terminate
this Agreement and the Escrow as provided in Clause (ii) above,
Seller shall be solely responsible for payment of the full amount
of Escrow Agent's cancellation charges and any other costs or
charges imposed by the Title Company in connection with the Title
Commitment or any updates thereof.
ARTICLE XI.
Miscellaneous
11.1 All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and
delivered personally, by certified mail, return receipt requested,
postage prepaid, by telecopy or other facsimile transmission, or by
overnight courier (such as Federal Express), addressed as follows:
Seller: Pacific Life Insurance Company
700 Newport Center Drive,
Newport Beach, California 92660
Attention: John C. Mulvihill, Vice-President
Sales and Acquisitions
David Honerkamp, Director of Asset
Management
Fax No: (714)760-9680
Copy to: Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Attn: Joseph E. McKeever, Esq.
Fax No: (714) 640-3706
Buyer: Walden Residential Properties, Inc.
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
Attn: Eric A. Calub, Vice-President
Phone No: (972) 788-0510
Fax No: (972) 788-1550
Copy to: Munsch, Hardt, Kopf, Harr & Dinan
1445 Ross Avenue, Suite 4000
Dallas, Texas 75202
Attn: Robin K. Minick, Esq.
Phone No: (214) 855-7542
Fax No: (214) 855-7584
["Buyer's Counsel"]
All Notices in accordance with the terms hereof shall be
deemed given upon actual receipt thereof whether delivered by
first-class mail, postage prepaid, personally, or by courier or
messenger service, or facsimile transmission to the numbers given
above, provided electronic confirmation of such facsimile
transmission is received by the noticing party. Either party
hereto may change the address or facsimile number for receiving
notices, requests, demands or other communication by notice sent in
accordance with the terms of this Section 11.1.
11.2 Buyer may not assign this Agreement or its rights and
obligations hereunder, except to an affiliate of Buyer, without the
prior written consent of Seller, which Seller may withhold in its
sole and absolute discretion. Any assignment hereunder will be
subject to the terms and provisions of this Agreement; provided,
however, that upon such assignment such Assignee shall succeed to
all of the rights and obligations of Buyer hereunder, and agrees to
execute all documents and perform all obligations pursuant to this
Agreement. Notwithstanding any assignment of this Agreement, the
Assignor shall not be relieved of its obligations to complete this
transaction and pay the Purchase Price to Seller as provided for
herein. For purposes of this Section 11.2, the term "affiliate"
shall mean a person or entity in which Buyer has an ownership
interest or which is controlled by (or under common control with)
Buyer.
11.3 Each party agrees to execute any additional documents or
supplemental escrow instructions as may be reasonably necessary to
comply with the terms of this Agreement, provided that such
instructions are not in conflict with the terms hereof and that if
a conflict exists, the provisions of this Agreement shall prevail.
11.4 This is the entire agreement between Seller and Buyer
pertaining to the sale of the Property and supersedes any prior
written or oral understandings. Any amendment to this Agreement
must be in writing. This Agreement will be governed by the laws of
the state in which the Property is located.
11.5 The prevailing party in any litigation, including any
appeal, arising out of this Agreement will be entitled to its
reasonable attorney's fees, costs and expenses incurred in
connection with the prosecution or defense of such action.
11.6 All Exhibits referred to are attached to this Agreement
and are incorporated herein by reference.
11.7 In the event this Agreement is terminated by the default
of Buyer or Seller, any escrow termination fee or charges of Escrow
Agent will be borne by the defaulting party.
11.8 This Agreement may be executed in separate counterparts,
each of which will be deemed an original, and all of which together
will constitute one instrument.
11.9 Time is of the essence of this Agreement.
11.10 The heading, captions and titles used in this
Agreement are for convenience only and shall not be deemed in any
way to limit or amplify the terms and provisions of this Agreement.
11.11 If any date of significance hereunder falls upon a
Saturday, Sunday, or legal holiday such date will be deemed moved
forward to the next day which is not a Saturday, Sunday, or legal
holiday. The terms "working day" or "business day" shall mean days
elapsed exclusive of Saturdays, Sunday, or legal holidays.
11.12 This Agreement is not intended to confer any benefit
upon, or create any contractual right in, any person or entity
other than the parties hereto.
11.13 In the event this Agreement is not fully executed by
Buyer and Seller on or before November 11, 1997, this Agreement
shall be null and void and neither party shall have any liability
to the other hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SELLER: BUYER:
PACIFIC LIFE INSURANCE COMPANY, WALDEN RESIDENTIAL PROPERTIES,
a INC., a California corporation INC., a Maryland
corporation
By: By:
Print Name: Print Name:
Title: Title:
By: By:
Print Name: Print Name:
Title: Title:
Dated: November , 1997 Dated: November , 1997
Escrow Agent acknowledges receipt of a fully executed copy of this
Agreement, and by its signature hereby accepts and agrees that the
provisions of this Agreement, and any amendment thereto as may be
executed by Buyer and Seller, shall constitute instructions and
control the deposit and disposition of funds by the Escrow Agent
hereunder.
ESCROW AGENT:
CHICAGO TITLE INSURANCE COMPANY
By:
Title:
Date:
EXHIBIT "A"
Legal Description
(To be supplied by the Title Company)
EXHIBIT "B"
FORM OF AUDIT LETTER
December , 1997
Deloitte & Touche LLP
2200 Ross Avenue, Suite 1600
Dallas, Texas 75201
Re: The Woods of Bedford Apartments, Bedford, Texas
Dear Sirs:
This letter is given in connection with your audit of the
financial statements (including revenues and expenses) of The Woods
of Bedford Apartments (the "Property") for the year ended December
31, 1996 (the "Statement") and for the purpose of your expressing
an opinion as to whether such financial statements present fairly,
in all material respects, the revenues and certain expenses of the
Property in conformity with generally accepted accounting
principles. The undersigned acknowledges that such statement has
been prepared, in part, using the financial data made available to
Walden Residential Properties, Inc., as "Buyer" of the Property,
from and by Pacific Life Insurance Company, as "Seller", pursuant
to that certain Purchase and Sale Agreement and Joint Escrow
Instructions dated November -, 1997 ("Purchase Agreement");
provided, however, such statement is not based on any financial
information or other information independently provided to you by
Seller, except as may be expressly set forth herein. The
responsibility for the fair presentation of the statement in
conformity with generally accepted accounting principles rests with
Walden Residential Properties, Inc.; provided, Seller acknowledges
its responsibility to fairly present the financial information
described in Section 3.1 of the Purchase Agreement and provided to
Buyer in accordance therewith, in Seller's capacity as owner of the
Property. In connection therewith, Seller hereby confirms, to
Seller's current, actual knowledge (as defined below), the
following:
1. The financial statements provided to Buyer have been
prepared on a cash basis, in accordance with Seller's normal and
customary practice, except to the extent any such information
expressly states that it has been prepared on an accrual basis.
2. Seller understands that Buyer has made available to you
all financial statements and other financial information and data
relating to the Property which has been furnished to Buyer pursuant
to the Purchase Agreement.
3. Seller has owned the Property since the termination of
foreclosure proceedings in December, 1992 and has continued to own
the Property since such time.
4. To Seller's current, actual knowledge, the financial
statements and data furnished or made available to Buyer pursuant
to the Purchase Agreement contain no errors or irregularities which
would have a material and adverse effect upon the Property or its
operation.
5. Seller has not received (nor, to Seller's current, actual
knowledge, has Seller's Property Manager received) written notice,
within the two (2) years preceding the date of the Purchase
Agreement, that the Property is in violation of any laws or
regulations which would result in a material adverse change in the
financial statements famished to Buyer pursuant to the Purchase
Agreement.
6. To Seller's current, actual knowledge, there are no
material transactions relating to revenues and expenses furnished
to Buyer under the Purchase Agreement which have not been properly
recorded in the accounting records of the Property, in accordance
with Seller's normal and customary practice, and which, if not
recorded, would have a material and adverse effect on the Property.
7. To Seller's current, actual knowledge, Seller is not in
default under any contracts or agreements affecting the Property
which (in the event of material noncompliance with such agreements
or contracts) would have a material and adverse effect on the
financial data which have been furnished to Buyer pursuant to the
Purchase Agreement.
8. Subsequent to December 31, 1996, Seller's books and
records pertaining to the Property have been prepared in accordance
with the normal and customary practice of Seller including, without
limitation, any adjustments to the financial data for the calendar
year 1996, if any, to the extent such adjustments are consistent
with the normal and customary practice of Seller.
As used herein, the term "Seller's knowledge" or
"knowledge", as applied to Seller, shall have the same meaning as
set forth in Section 4.4 of the Purchase Agreement, the provisions
of which are incorporated herein by reference.
SELLER:
PACIFIC LIFE INSURANCE COMPANY,
a California corporation
By:
Print Name:
Its:
By:
Print Name:
Its:
EXHIBIT "C"
FORM OF RENT ROLL
[To be supplied by Seller]
EXHIBIT "D"
Special Warranty Deed
(Form to be furnished by Title Company)
EXHIBIT "E"
[RESERVED]
EXHIBIT "E-1"
[RESERVED]
EXHIBIT "F"
ASSIGNMENT OF RIGHTS, WARRANTIES AND PERMITS
THIS ASSIGNMENT OF RIGHTS, WARRANTIES AND PERMITS
("Assignment") is dated for identification purposes , 1997
and made by PACIFIC LIFE INSURANCE COMPANY, a
California corporation ("Assignor") to WALDEN RESIDENTIAL
PROPERTIES, INC., a Maryland corporation ("Assignee").
1. Pursuant to Section 5.2(e) of that certain Purchase and
Sale Agreement and Joint Escrow Instructions dated November _, 1997
between Assignor, as Seller, and Assignee, as Buyer, as may have
been amended from time to time thereafter (the "Purchase
Agreement"), Assignor hereby assigns and delegates to Assignee all
of the items, if any, which Assignor may own which relate to the
construction. occupancy, operation, management and/or ownership of
the Property located at 2500 Meadow Park Circle, Bedford, Texas and
more particularly described in attached Exhibit "A" attached to the
Purchase Agreement. All defined terms used herein shall have the
same meaning as set forth in the Purchase Agreement, unless the
context clearly indicates otherwise.
2. Assignor further assigns to Assignee all of its rights,
and interest, if any, in all construction, equipment and material
warranties and guarantees affecting the Property. This assignment
of warranties and guarantees is effective to the extent such
matters are legally subject to assignment, assigned by Assignor,
whether such limitations or prohibition is imposed or created by
contract, statute, ordinance, regulation or otherwise.
3. Assignor further assigns all of its rights, obligations
and interest, if any, in all trademarks, styles, logos, signs and
other advertising symbols relating to the trade name "The Woods of
Bedford Apartments" and to the Property, to the extent whether such
limitation or prohibition is imposed or created by contract,
statute, ordinance, regulation or otherwise.
4. This Assignment is made as an incident of the concurrent
sale of the Property by Assignor to Assignee and will be effective
upon the Closing Date, as defined in Section 1.2 of the Purchase
Agreement.
5. Assignor agrees to execute any further documents
reasonably necessary to perfect the transfer to any item described
in this Assignment, provided Assignor shall incur no out-of-pocket
costs in connection therewith.
6. This Assignment shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives, heirs
and legatees of all of the respective parties hereto, subject to
the assignment provisions of the Purchase Agreement.
7. This Assignment shall be governed by, interpreted under
and construed and enforced in accordance with the laws of the State
of Texas.
8. This Assignment is made without any warranty or
representation whatsoever as to the existence, validity or
enforceability of any right, warranty or permit herein assigned,
provided, however, Assignor does warrant that it has no actual
knowledge, as of the date hereof, of any adverse claim or interest
in or to any of the rights, warranties or permits assigned
hereunder. To the extent any claim of any kind is brought by
Assignee pursuant to this Assignment, such claim, action, suit or
proceeding must be commenced, if at all, on or before six (6)
months from the date of this Assignment.
9. This Assignment is intended to supplement the terms and
provisions of the Purchase Agreement and shall be construed as
consistent therewith to the greatest extent possible. This
Assignment shall not be deemed to modify or amend the Purchase
Agreement. In the event of an irreconcilable conflict between the
provisions of the Purchase Agreement and this Assignment, the
provisions of the Purchase Agreement shall prevail.
IN WITNESS WHEREOF, the parties have executed this Assignment
as of the date first above written.
ASSIGNOR: ASSIGNEE:
PACIFIC LIFE INSURANCE COMPANY, a WALDEN RESIDENTIAL PROPERTIES
California corporation INC., a Maryland
corporation
By: By:
Name: Name:
Title: Title:
By: By:
Name: Name:
Title: Title:
EXHIBIT "1" TO
LIST OF ITEMS ASSIGNED
EXHIBIT "H"
ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES ("Assignment") is
dated for identification purposes , 1997 and made
by and between PACIFIC LIFE INSURANCE COMPANY, a California
corporation ("Assignor") and WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation ("Assignee").
1. Pursuant to Section 5.2(g) of that certain Purchase and
Sale Agreement and Joint Escrow Instructions dated November, 1997
between Assignor, as Seller, and Assignee, as Buyer, as may have
been amended from time to time thereafter (the "Purchase
Agreement"), for good and valuable consideration, Assignor hereby
conveys, grants, transfers, assigns and delegates to Assignee all
of its rights, title, interests and obligations as landlord under
the Leases listed on the attached Exhibit "1", including all rents,
issues, profits and benefits under such leases (the "Leases"). The
Leases relate to the Property located at 2500 Meadow Park Circle,
Bedford, Texas, described in Exhibit "A" attached to the Purchase
Agreement. The assigned Leases include any amendments, extensions,
guarantees and previous assignments thereto or thereof The
effective date of this Assignment is the "Closing Date", as defined
in Section 1.2 of the Purchase Agreement. All defined terms used
herein shall have the same meaning as set forth in the Purchase
Agreement, unless the context clearly indicates otherwise.
2. Concurrent with the assignment of the Leases, Assignor
assigns to Assignee any prepaid rents being held by the landlord
under the Leases listed in Exhibit "1" attached hereto.
3. Assignee accepts this Assignment, assumes the liabilities
of landlord under the Leases arising on and subsequent to the
effective date of this Assignment and will hold Assignor harmless
from any claims, damages, liabilities, losses and expenses asserted
against or incurred by Assignor which occur on and after the
effective date of this Assignment and arise out of a breach by
Assignee of its duties as landlord under the Leases.
4. Assignor shall hold Assignee harmless from any
obligations, damages, claims or liabilities as landlord arising
before the effective date of this Assignment. To the extent any
claim of any kind is brought by Assignee pursuant to this
Assignment, such claim, action, suit or proceeding must be
commenced, if at all, on or before six (6) months from the date of
this Assignment.
5. Assignor represents that the Leases are in effect, that
there are no modifications or amendments thereto except as
delivered to Assignee, and Assignor makes no representations and/or
warranties with respect to the I-eases except as expressly set
forth in the Purchase Agreement itself.
6. This Assignment shall be binding upon and inure to the
benefit of the successors, assignees, personal representatives,
heirs and legatees of all of the respective parties hereto, subject
to the assignment provisions of the Purchase Agreement.
7. This Assignment shall be governed by, interpreted under
and construed and enforced in accordance with the laws of the State
of Texas.
8. This Assignment is intended to supplement the terms and
provisions of the Purchase Agreement and shall be construed as
consistent therewith to the greatest extent possible. This
Assignment shall not be deemed to modify or amend the Purchase
Agreement. In the event of an irreconcilable conflict between the
provisions of the Purchase Agreement and this Assignment, the
provisions of the Purchase Agreement shall prevail.
ASSIGNOR: ASSIGNEE:
PACIFIC LIFE INSURANCE COMPANY, a WALDEN RESIDENTIAL PROPERTIES
California corporation INC., a Maryland
corporation
By: By:
Name: Name:
Title: Title:
By: By:
Name: Name:
Title: Title:
EXHIBIT "1"
LIST OF LEASES
EXHIBIT "I"
BILL OF SALE
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, PACIFIC LIFE
INSURANCE COMPANY, a California corporation ("Assignor"), does
hereby assign and convey to WALDEN RESIDENTIAL PROPERTIES, INC., a
Maryland corporation ("Assignee"), without representation or
warranty and on an "AS IS" and "WHERE-IS" basis (except as may be
otherwise provided in that certain Purchase and Sale Agreement and
Joint Escrow Instructions dated November 1997 between
Assignor. as Seller, and Assignee as Buyer, as amended thereafter
from time to time (the "Purchase Agreement"), all of Assignor's
right, title and interest, if any, in and to any and all furniture,
fixtures, equipment, appliances, tools, machinery, supplies,
building materials and other personal property of every kind and
character owned by Assignor, attached to, appurtenant to, and
located at and used in connection with the operation of the
improvements situated on the real property described in Exhibit "A"
attached to the Purchase Agreement, as may be more particularly
described in Exhibit "1" attached hereto and incorporated herein by
reference ("Personal Property"). The parties agree that in the
event no Exhibit "1" is attached hereto, title to possession of all
of the Personal Property located at the Property shall be deemed to
pass to Buyer at the Closing.
Assignor hereby covenants that it shall, at any time and from
time to time upon written request therefore, provided Assignor
incurs no out-of-pocket cost in connection therewith, execute and
deliver to Assignee, its permitted successors, nominees or assigns,
such documents as it or they may reasonably request in order to
fully assign and transfer to and vest in Assignee or its permitted
successors, nominees and assigns, and protect its or their right,
title and interest in and to all of the Personal Property and the
rights of Assignor intended to be transferred and assigned hereby,
or to enable Assignee, its permitted successors, nominees and
assigns to realize upon or otherwise enjoy such rights and
property.
This Bill of Sale shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives, heirs
and legatees of Assignee and Assignor, subject to the assignment
provisions of the Purchase Agreement.
This Bill of Sale is intended to supplement the terms and
provisions of the Purchase Agreement and shall be construed as
consistent therewith to the greatest extent possible. This Bill of
Sale shall not be deemed to modify or amend the Purchase Agreement.
In the event of an irreconcilable conflict between the provisions
of the Purchase Agreement and this Bill of Sale, the provisions of
the Purchase Agreement shall prevail. THE TRANSFER OF PERSONAL
PROPERTY EVIDENCED BY THIS BILL OF SALE IS MADE WITHOUT ANY
WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
This Bill of Sale shall be governed by and constructed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, Assignor has executed this Bill of Sale
this day of , 1997.
ASSIGNOR: ASSIGNEE:
PACIFIC LIFE INSURANCE COMPANY, a WALDEN RESIDENTIAL PROPERTIES
California corporation INC., a Maryland
corporation
By: By:
Name: Name:
Title: Title:
By: By:
Name: Name:
Title: Title:
EXHIBIT "1" TO BILL OF SALE
LIST OF PERSONAL PROPERTY
[if Applicable]
EXHIBIT "J"
FORM OF NON-FOREIGN CERTIFICATION
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform WALDEN RESIDENTIAL PROPERTIES, INC., a Maryland
corporation (the "Transferee"), that withholding of tax under
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), will not be required upon the transfer of certain real
property to the Transferee by PACIFIC LIFE INSURANCE COMPANY, a
California corporation (the "Transferor"), the undersigned hereby
certifies the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign
partnership, foreign trust or foreign trust or foreign estate (as
those terms are defined in the Code and Income Tax Regulations
promulgated thereunder);
2. Transferor's U.S. employer identification number is 95-1079000; and
3. Transferor's office address is 700 Newport Center Drive,
Newport Beach, California 92660.
Transferor understands that this Certification may be disclosed
to the Internal Revenue Service by Transferee and that any false
statement contained herein could be punished by fine, imprisonment,
or both.
Under penalty of perjury, I declare that I have examined this
Certification and that, to the best of my knowledge and belief, it
is true, correct and complete, and I further declare that I have
authority to sign this document on behalf of the Transferor.
Dated: , 1997.
TRANSFEROR:
PACIFIC LIFE INSURANCE COMPANY,
a California corporation
By:
Name:
Title:
By:
Name:
Title:
I:\FINANCE\SECFIL~1\10-K-97\EX-10-13.WPD
1 RKM:lg 11/14/97
SECOND AMENDMENT TO PURCHASE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS
THIS SECOND AMENDMENT TO PURCHASE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS ("First Amendment") dated this 15th day of December,
1997, is entered into by and between PACIFIC LIFE INSURANCE
COMPANY, a California corporation ("Seller") and WALDEN RESIDENTIAL
PROPERTIES, INC., a Maryland corporation ("Buyer") on the terms and
provisions set forth herein and under the following circumstances:
R E C I T A L S
A. Seller and Buyer are parties to that certain Purchase
Agreement and Joint Escrow Instructions dated November 10, 1997 (as
previously amended, the "Purchase Agreement") for the purchase and
sale of certain improved and multi-residential located in the City
of Bedford, County of Tarrant, State of Texas, commonly known as
"The Woods of Bedford Apartments", as more particularly described
therein ("Property"). All capitalized terms used but not defined
herein shall have the same meaning given such terms in the Purchase
Agreement.
B. Seller and Buyer now desire to reflect certain additional
agreements with respect to the Purchase Price.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties
hereto agree as follows:
AGREEMENT
1. Form of Audit Letter. Seller and Buyer acknowledge that
the form of Audit Letter attached as Exhibit "B" to the Purchase
Agreement had not yet been agreed upon by the parties at the time
of execution of the Purchase Agreement, notwithstanding its
attachment hereto. Therefore, the parties agree to use their
commercially reasonable and good faith efforts to arrive at a form
of Audit Letter acceptable to the parties not later than three (3)
business days prior to the Review Contingency Date. The failure of
the parties to so agreement shall not be deemed to be a default by
either party under the Purchase Agreement. In the event Seller and
Buyer agree on an acceptable form of Audit Letter on or prior to
such date, each party shall insert the text of such form of Audit
Letter agreeable to the parties as Exhibit "B" to the Purchase
Agreement, in place of the Exhibit "B" attached to the Purchase
Agreement at the time of execution. In the event the parties are
unable to agree on an acceptable form of Audit Letter on or before
such date, the approval or disapproval of the terms of Exhibit "B",
as attached to the Purchase Agreement, or such other form of Audit
Letter as the parties may subsequently agree most closely
represents the parties' commercially reasonable and good faith
efforts to arrive at an acceptable form, shall be an item subject
to Buyer's disapproval, on or before the Review Contingency Date,
pursuant to Section 3.3 of the Purchase Agreement. Such
disapproval (or deemed approval) shall occur in the same fashion as
any of the other Documents and Materials described in Section 3.1
(pursuant to Section 3.3).
2. Legal Description. The legal description attached to
this First Amendment as Exhibit "A" is hereby agreed to be the
legal description of the Property, furnished by the Title Company,
and each party shall insert a copy of such legal description in
place of the blank Exhibit "A" attached to the executed Purchase
Agreement.
3. Defined Terms. All defined terms as used herein shall
have the same meaning as set forth in the Purchase Agreement,
unless the context clearly calls for a new or different meaning.
4. No Modification. Except as expressly modified herein,
the terms and provisions of the Purchase Agreement shall remain
unmodified and in full force and effect.
5. Protocol. This First Amendment is executed and delivered
pursuant to the provisions of Section 11.4 of the Purchase
Agreement.
IN WITNESS WHEREOF, the parties have executed this First
Amendment as of the date first above written.
SELLER:
PACIFIC LIFE INSURANCE COMPANY,
a California corporation
By:
Name:
Title:
By:
Name:
Title:
Dated: November ____, 1997<PAGE>
BUYER:
WALDEN RESIDENTIAL, INC.,
a Maryland corporation
By:
Name:
Title:
By:
Name:
Title:
Dated: November ___, 1997<PAGE>
<PAGE>
Exhibit "A"
Legal Description
PARCEL ONE
Situated in Tarrant County, Texas, and BEING a tract of land
situated in the M.A. BARNES SURVEY, Abstract No. 94, City of
Bedford, Tarrant County, Texas and being the replat of Tract "D",
BEDFORD MEADOWS ADDITION, an addition to the City of Bedford, as
recorded in Volume 388-183, Page 16 of the Plat Records of Tarrant
County, Texas, and being more particularly described as follows:
COMMENCING at an intersection of the East line of Central Drive (90
foot Right-of-Way), and the North line of Meadow Park Circle (60
foot Right-of-Way), said point being the Southwest corner of Tract
"E-1" of the BEDFORD MEADOWS ADDITION - Phase III, an addition to
the City of Bedford, Tarrant County, Texas as recorded in Volume
388-131, Page 95 of the Plat Records of Tarrant County, Texas;
THENCE, along said North line of Meadow Park Circle (60 foot Right-of-Way),
an arc distance of 252.97 feet along a curve to the left
having a central angle of 34 degrees 56'18", a radius of 414.85 feet and a
tangent of 130.56 feet to it's point of tangency;
THENCE, N 87 degrees 51'51" E, along said North line of Meadow Park Circle
a distance of 206.14 feet to a point, said point being the
beginning of a curve to the right having a central angle of
05 degrees 57'34", a radius of 280.00 feet and a tangent of 14.59 feet;
THENCE, along said curve, an arc distance of 29.15 feet to a point,
said point being the most Westerly corner of Tract "E" of the
BEDFORD MEADOWS ADDITION - Phase III, as recorded in Volume 388-155,
Page 3 of the Plat Records of Tarrant County, Texas, and
continuing along said curve to the right having a central angle of
101 degrees 55'16", a radius of 280.00 feet and a tangent of 345.28 feet;
THENCE, along the Northeasterly line of Meadow Park Circle, said
line also being the most Southwesterly line of Tract "E" an arc
distance of 498.08 to the POINT OF BEGINNING;
THENCE, South 74 degrees 15'28" East, along the South line of Tract "E" a
distance of 316.00 feet to a point for a corner;
THENCE, North 15 degrees 44'32" East, a distance of 64.22 feet to a point
for a corner;
THENCE, South 53 degrees 45'17" East, a distance of 42.21 feet to a point
for a corner;
THENCE, North 88 degrees 18'11" East, a distance of 140.05 feet to a point
for a corner;
THENCE, South 18 degrees 28'41" East, a distance of 122.76 feet to a point
for a corner;
PARCEL ONE (CONT.)
THENCE, South 71 degrees 04'49" East, a distance of 134.37 feet to a point
for a corner;
THENCE, South 48 degrees 26'31" West, a distance of 92.03 feet to a point
for a corner;
THENCE, South 52 degrees 09'42" East, a distance of 113.52 feet to a point
for a corner;
THENCE, South 09 degrees 06'55" West, a distance of 71.62 feet to a point
for a corner;
THENCE, South 72 degrees 29'11" West, a distance of 334.75 feet to a point
for a corner;
THENCE, South 15 degrees 40'03" West, a distance of 76.55 feet to a point
for a corner;
THENCE, South 86 degrees 30'41" West, a distance of 309.08 feet to a point
for a corner;
THENCE, North 31 degrees 12'06" West, a distance of 449.01 feet to a point
for a corner, said point being on the East line of Meadow Park
Circle (60 foot right-of-way);
THENCE, North 58 degrees 47'54" East, a distance of 100.00 feet to the
beginning of a curve to the left having a central angle of
43 degrees 03'22", a radius of 280.00 feet and a tangent of 110.45 feet;
THENCE, along said curve, an arc distance of 210.41 feet to the
POINT OF BEGINNING and CONTAINING 349,090 Square Feet or 8.0140
Acres of Land, more or less.
PARCEL TWO
Situated in Tarrant County, Texas, and BEING a tract of land
situated in the M.A. BARNES SURVEY, Abstract No. 94, and being the
replat of Tract "E", BEDFORD MEADOWS ADDITION, an Addition to the
City of Bedford, as recorded in Volume 388-155, Page 3 of the Plat
Records of Tarrant County, Texas, and being more particularly
described as follows:
COMMENCING at the intersection of the East line of Central Drive
(90 foot right-of-way), and the North line of Meadow Park Circle
(60 foot right-of-way), said point being the Southwest corner of
Tract "E-1" of the BEDFORD MEADOWS ADDITION, Phase III, an Addition
to the City of Bedford, Tarrant County, Texas as recorded in Volume
388-131, Page 95 of the Plat Records of Tarrant County, Texas;
THENCE, along said North line of Meadow Park Circle (60 foot right-of-way),
an arc distance of 252.97 feet along a curve to the left,
having a central angle of 34 degrees 56'18", a radius of 414.85 feet and a
tangent of 130.56 feet to its point of tangency;
THENCE, North 87 degrees 51'51" East, along said North line of Meadow Park
Circle a distance of 206.14 feet to a point, said point being the
beginning of a curve to the right, having a central angle of
05 degrees 57'34", a radius of 280.00 feet and a tangent of 14.59 feet;
THENCE, along said curve, an arc distance of 29.15 to the POINT OF
BEGINNING;
THENCE, North 21 degrees 56'00" East, a distance of 423.61 feet to a point
for a corner;
THENCE, South 63 degrees 14'00" East, a distance of 338.59 feet to a point
for a corner;
THENCE, South 49 degrees 40'11" East, a distance of 115.67 feet to a point
for a corner;
THENCE, South 45 degrees 34'47" East, a distance of 252.83 feet to a point
for a corner;
THENCE, South 07 degrees 41'11" East, a distance of 218.02 feet to a point
for a corner;
THENCE, South 77 degrees 15'07" West, a distance of 158.79 feet to a point
for a corner;
THENCE, North 28 degrees 18'45" West, a distance of 49.65 feet to a point
for a corner;
THENCE, South 50 degrees 27'45" West, a distance of 63.52 feet to a point
for a corner;
THENCE, South 18 degrees 58'45" East, a distance of 127.00 feet to a point
for a corner;
THENCE, South 15 degrees 44'32" West, a distance of 64.22 feet to a point
for a corner;
PARCEL TWO (CONT.)
THENCE, North 74 degrees 15'28" West, a distance of 316.00 feet to a point,
said point being on the East line of Meadow Park Circle (60 foot
right-of-way) and being the beginning of a curve to the left having
a central angle of 101 degrees 55'16", a radius of 280.00 feet and a
tangent of 345.28 feet;
THENCE, along said curve, an arc distance of 498.08 feet to the
POINT OF BEGINNING and CONTAINING 338,735 Square Feet or 7.776
Acres of Land, more or less.
I:\FINANCE\SECFIL~1\10-K-97\EX-10-14.WPD
1 RM:bt 3/26/98
CONTRACT OF SALE
CONTRACT dated November , 1997 between MGI PROPERTIES
(formerly known as Mortgage Growth Investors), One Winthrop Square,
Boston, Massachusetts 02110 ("Seller") and WALDEN RESIDENTIAL
OPERATING PARTNERSHIP, L.P., One Lincoln Center, 5400 LBJ Freeway,
Dallas, Texas 75240 ("Purchaser").
Seller and Purchaser hereby covenant and agree as follows:
Section 1. Sale of Premises and Acceptable Title
Section 1.1. Seller shall sell to Purchaser, and Purchaser shall
purchase from Seller, at the price and upon the terms and
conditions set forth in this contract: (a) the parcels of land as
particularly described in Exhibit A attached hereto ("Land"); (b)
all buildings, improvements and fixtures situated on the Land
(collectively, "Building"); (c) all right, title and interest of
Seller, if any, in and to the land lying in the bed of any street
or highway in front of or adjoining the Land to the center line
thereof and to any unpaid award for any taking by condemnation or
any damage to the Land by reason of a change of grade of any street
or highway; (d) the appurtenances and all the estate and rights of
Seller in and to the Land and Building; (e) all right, title and
interest of Seller in and to any and all leases and any guaranties
and security deposits with respect thereto; (f) all plans and
specifications in Seller's possession, if any, all licenses,
permits and warranties in Seller's possession, if any, with respect
to the Property, and all agreements that will survive the Closing;
and (g) all right, title and interest of Seller, if any, in and to
the fixtures, equipment and other personal property attached or
appurtenant to or located at the Building (the items set forth in
(a), (b), (c), (d) and (e) above are hereinafter referred to,
collectively, as the "Premises"). The Premises are located at or
known as:
St. James Crossing Apartments
5520 Gunn Highway
Tampa, Florida 33614
-and-
South Pointe Apartments
5000 Himes Avenue
Tampa, Florida 33611
Section 1.2. Seller shall convey and Purchaser shall accept fee
simple title to the Premises in accordance with the terms of this
contract, subject only to the matters accepted by Purchaser
pursuant to the terms of Section 14.1 hereof.
Section 2. Purchase Price, Acceptable Funds, and Escrow of
Down Payment
Section 2.1. The purchase price ("Purchase Price") to be paid by
Purchaser to Seller for the Premises is $15,800,000 payable as
follows.
(a) $150,000 upon the execution of this contract, by
check subject to collection or wire transfer payable to Chicago
Title Insurance Company ("Escrowee") to be held in escrow and
disposed of as set forth hereinbelow and in Exhibit B, which amount
shall be applied to the Purchase Price at Closing. The deposit
shall be deposited by Escrowee in an interest bearing account with
the interest paid to the party receiving the deposit;
(b) Approximately $10,863,000 by Purchaser's assumption
of the existing mortgages encumbering the Premises as described on
Exhibit E.
(c) $4,787,000 or such greater amount as would be
necessary to cause the sum of the Escrow plus the outstanding
balances of the mortgages at Closing plus the payment due at
Closing to equal $15,800,000 by wire transfer.
Section 2.2. All monies payable under this contract, unless
otherwise specified in this contract, shall be paid by wire
transfer.
Section 2.3.
(a) The deposit paid under subparagraph (a) of Section
2.1 or any other sums paid on account of the Purchase Price prior
to the Closing (collectively, "Down Payment") are to be delivered
to Escrowee and held in accordance with Exhibit B hereto.
Section 2.4.
(b) Escrow shall be deemed open on the date when two
executed originals of this Contract and the Down Payment have been
delivered to the Escrowee and the Escrowee has executed the
Escrowee receipt ("Opening Date").
Section 3. Due Diligence Period/Purchaser's Inspection Period
Section 3.1. Purchaser shall have thirty (30) days from the
Opening Date ("Due Diligence Period") to review any and all leases,
statements, reports, contracts, plans, specifications and other
materials and documents relating to the Premises and such other
information, materials and documents as Purchaser shall desire, to
the extent they are in Seller's possession, and to conduct an
inspection of the Premises. Seller shall make available to
Purchaser or agree to deliver all of the items requested, to the
extent currently in Seller's possession, immediately upon the
execution of this Contract (the "Documents"):
a) A Phase I Environmental Report, at Purchaser's expense;
b) An acceptable A.L.T.A. survey of the Property by licensed
surveyor (the "Survey") - to be obtained by Purchaser at Seller's
cost and expense;
c) A copy of all soils and hazardous materials reports,
termite reports, engineering studies, topographical maps in
Seller's possession, or reasonably available to Seller with respect
to the Property;
d) Satisfactory evidence from appropriate governmental
authorities confirming the zoning, building and platting status of
the Property;
e) A description of existing and proposed local improvements
affecting the Property, including assessment levels;
f) A copy of current property tax statements and assessed
value notices, current insurance policies pertaining to the
properties, all approvals, permits and licenses in Seller's
possession from each governmental authority having jurisdiction
over the property as are necessary to permit full construction use
and occupancy of the Property;
g) A copy of all plans and construction drawings for all
buildings on the Property in Seller's possession; and
h) A copy of all Tenant Leases and proposed Tenant Leases.
i) Those items listed in Schedule I attached hereto, which
items Purchaser hereby requests be delivered to Purchaser.
If Purchaser is not satisfied with the results of its review
or inspection, Purchaser may terminate this Contract upon notice to
Seller within two business days of the expiration of the Due
Diligence Period whereupon Escrowee shall refund the Down Payment
and any interest thereon to Purchaser, and the parties shall have
no further right or obligation hereunder.
Section 4. The Closing
Section 4.1. Except as otherwise provided in this contract, the
closing of title pursuant to this contract ("Closing") shall take
place within thirty (30) days following the expiration of the Due
Diligence Period at 10:00 o'clock A.M. (the actual date of the
Closing being herein referred to as "Closing Date") at the offices
of Purchaser's title company. Seller shall pay the transfer taxes
imposed on the transfer, the cost of the survey, and standard
owners title insurance policy and any escrow costs. Purchaser
shall pay for any endorsements to lender policies and recording
fees. Each party shall pay its own attorney's fees.
Section 5. Representations and Warranties of Seller
Seller represents and warrants to Purchaser as follows:
Section 5.1. Seller is the sole owner of the Premises.
Section 5.2. The Premises are occupied pursuant to the leases
described on the attached Exhibit C (the "Leases") and there are no
other leases or tenancies of any space in the Premises.
Section 5.3. Seller is a duly-organized and validly existing
business trust under the laws of Massachusetts. Seller has full
right, authority and capacity to enter into this Agreement, and the
execution and delivery of this Agreement and the transactions
contemplated hereby have been duly authorized by Seller.
Section 5.4. Additional Representations, Warranties and Operating
Covenants of Seller. To the best of Seller's actual knowledge and
without inquiry:
(a) Legal and Beneficial Title. Seller is, and at
Closing will be, the sole person holding good, indefeasible and
marketable fee simple title to the Property, free and clear of all
liens and encumbrances except the Permitted Title Exceptions.
(b) Due Authorization and Execution and Validity,
Binding Effect and Enforceability. This Agreement has been duly
authorized and executed by Seller. The documents delivered to
Purchaser at Closing will be duly authorized and executed by
Seller.
(c) Representations as to Rent Roll. Except as
expressly set forth in the Rent Roll:
i) All of the information contained on the Rent
Rolls 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 one (1) month.
iii) No tenant has any right of first refusal or
option with respect to the leasing of any
portion of the Property.
iv) 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, except as set forth in a Rent
Roll.
v) To the best of Seller's knowledge, the Leases
have been duly executed by all parties
thereto, and, to the best of Seller's
knowledge are in full force and effect.
vi) The Tenant Leases will not be amended in any
way after the date hereof, other than in the
ordinary course of business, without the prior
written consent of Purchaser, which consent
shall not be unreasonably withheld,
conditioned and delayed. Purchaser, unless it
otherwise shall advise Seller in writing
within ten (10) days following Seller's
request for such consent, shall be deemed to
have consented to any such amendment.
vii) To the best of Seller's knowledge and except
as stated in a Rent Roll, there are no uncured
material defaults on the part of any party to
any of the Tenant Leases, and Seller is in
full compliance with all of lessor's material
obligations thereunder.
viii) 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
Title Exceptions and except as to
existing mortgage holders.
(d) Compliance with Applicable Regulations.
i) To the best of Seller's knowledge, it has
received no written notice that (A) the
Property and the operation thereof (including
the handling of tenant security and other
deposits) currently is not in substantial
compliance with the requirements of all
Agencies; (B) the zoning classification of the
Land does not permit the operation of
Improvements thereon as a use by right.
ii) To the best of Seller's knowledge, it has
received no notices of uncured violations at
the Property, nor, to the best of Seller's
knowledge, are there presently pending against
Seller or against the Property or, to Seller's
knowledge, any judgments, judicial proceedings
or administrative actions relating to any of
the above matters of a material nature.
iii) Except as set forth in environmental reports
of Dames & Moore dated March 29, 1993 as to
South Pointed and R.J. Prossen, Inc. dated
April 22, 1991. Seller has received no
written notice of any violation of any
environmental laws.
(e) Liens on Property. At Closing, there will be no
claim in favor of any person or entity which is or could become a
lien on the Land, the Improvements, or the Included Personal
property, arising out of the furnishing of labor or materials to
the Property 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.
(f) Insurance. Seller will not renew, amend, or reduce
the coverage under, or cancel, any existing policy or procure any
new policy other than in the ordinary course of business.
Purchaser, at Closing, shall obtain its own insurance coverage.
(g) Maintenance of Property Until Closing.
i) Seller, at its expense, will maintain the
Property in its current condition until
Closing excepting only ordinary wear and tear
and damage or loss thereto covered by
insurance.
ii) Until Closing, Seller shall continue the
operation of the Property in the normal and
usual manner, will not remove any fixtures,
furnishings, equipment or personalty subject
to this Agreement, except for repair or
replacement, and the Property will be managed,
operated, maintained, repaired and redecorated
in the ordinary course of business and in such
manner as to maintain the Property completed
in all material respects as of the date hereof
in no less satisfactory condition than the
same exists as of such date, reasonable wear
and tear excepted.
(h) Service Contracts.
i) At Closing, no contract of any kind, including
contracts for servicing, operating or managing
the Property, will be effective and binding
upon the Property or Purchaser, except as
disclosed on Exhibit D. Seller will not enter
into any other service, operating or
management contracts relative to the Property
that cannot be canceled on thirty (30) days'
notice without the prior written consent of
Purchaser, nor will Seller make, or agree to,
prior to Closing any change or modification to
the contracts set forth in Exhibit D, other
than in the ordinary course of business,
without the prior written consent of
Purchaser. If an agreement concerning the
management of the Property currently is in
effect and is not set forth at Exhibit D, it
shall be terminated effective on the date of
Closing.
ii) Seller agrees that benefits or compensation
accrued prior to the 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.
(i) Restrictions on Additional Indebtedness. Seller
will not borrow any money or do, or fail to do, any other act or
thing which would cause the Land, the Improvements or any Included
Personal Property to become pledged or otherwise utilized as
collateral or in any way stand as security for any indebtedness or
obligation unless removed at Closing.
(j) Seller's Non-foreign Status. Seller is not a
"foreign person" within the meaning of Sections 1445 and 7701 of
the Internal Revenue Code of 1954, as amended; that is, Seller is
not a non-resident alien, foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code of 1986, as now existing or hereafter
amended). Seller shall deliver to Purchaser an affidavit to that
effect.
(k) Taxes and Assessments. 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 improved by any governmental authority with respect to
the Property, have been paid currently.
(l) Bonds. Until Closing Seller shall continue the
operation of the Property in full compliance with any applicable
regulatory agreements.
(m) Delivery by Seller of Documents and Supplies.
Seller, at Closing, shall assign and deliver to Purchaser all
original leases (to the extent in Seller's possession), refundable
deposits (as reflected in the Rent Roll delivered at Closing),
supplies, contracts, and other items as to which proration is to be
made. Seller also shall deliver to Purchaser all Plans and
Specifications (including cost breakdowns) (to the extent in
Seller's possession) relating to the Property and all such other
documents, books, records, and keys which relate to the operation,
maintenance or management of the Property. Seller also shall
deliver to Purchaser its current supply of printed leasing
brochures, floor plans and other advertising literature with
respect to the Property.
(n) Seller's Affidavit at Closing. 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 5 or elsewhere) (i) shall
be true and correct in all material respects and not in default at
the time of Closing, and Seller shall deliver to Purchaser, at
Closing, an Affidavit to that effect (with appropriate
modifications to reflect any changes therein or identifying any
representation or warranty which is not or no longer is, true and
correct, and (ii) in the event of a breach of such representations,
warranties or covenants prior to or at Closing, Purchaser shall
have the right to make a claim hereunder against Seller for a
period of thirty (30) days after the date as of which such
Affidavit was delivered to Purchaser. After such thirty-day
period, such representations and warranties shall expire and
Purchaser shall no longer have any right to make a claim with
respect thereto.
Section 6. Acknowledgments of Purchaser
Purchaser acknowledges that:
Section 6.1. Subject to the provisions of Sections 3.1 and 9.1
and Seller's compliance with the terms and provisions of this
Agreement (including, without limitation, those contained in
Article 10) Purchaser shall accept the Premises "as is" and in
their condition on the Closing Date. There can be no change in
condition of title, property or financing from that approved during
the Due Diligence Period.
Section 6.2. Subject to the limitations of Section 10.3, during
the Due Diligence Period, Purchaser may make such examination of
the Premises, the operation, income and expenses thereof and all
other matters affecting or relating to this transaction as
Purchaser deems necessary including without limitation the physical
and environmental surface and subsurface condition of the Premises.
In entering into this contract, Purchaser has not been induced by
and has not relied upon any representation, warranties or
statements, whether express or implied, made by Seller or by any
agent, employee or other representative of Seller or by any broker
or any other person representing or purporting to represent Seller,
which are not expressly set forth in this contract, whether or not
any such representations, warranties or statements were made in
writing or orally.
Section 7. Seller's Obligations as to Leases
Section 7.1. Between the date of this contract and the Closing,
Seller shall not, without Purchaser's prior written consent, which
consent shall not be unreasonably withheld or delayed: (a) amend,
renew or extend any lease in any material respect, unless required
by law; (b) terminate any lease.
Section 8. Notice of Liens
Section 8.1. Seller shall, upon written request by Purchaser,
furnish to Purchaser written authorization to make any necessary
searches for the purposes of determining whether notes or notices
of violations have been noted or issued with respect to the
Premises or liens have attached thereto.
Section 9. Destruction, Damage or Condemnation
Section 9.1. Material Damage.
(a) Procedure. If, prior to Closing, the Property shall
be destroyed or sustain Material Damage as a result of fire or
other casualty, then, at Purchaser's option exercised in the manner
provided hereunder, the following shall occur:
i) This Agreement shall become null and void and
the Earnest Money Deposit shall be returned to
Purchaser, provided that Purchaser gives
notice of such election within ten (10) days
following receipt by Purchaser of notice of
the occurrence of any such event; or
ii) If all other conditions precedent to
Purchaser's obligation to close have been
satisfied, the purchase and sale transaction
shall close with a reduction in the cash
portion of the purchase price equal to the
amount of the applicable insurance deductible,
and concurrently with such closing, Seller and
any other named insured 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 Deposit, and neither party shall have
any further obligations to the other.
(b) Damage Other Than Material Change. In the event of
any damage to the Property other than Material Damage, the purchase
and sale transaction shall close in accordance with and subject to
the conditions of Subparagraph 10(a)(ii). If the cost to restore
the Property to its condition before the casualty, as mutually
agreed by Seller and Purchaser is not more than $50,000 and is
uninsured, the cash portion of the purchase price shall be reduced
by the cost to restore thus determined.
Section 9.2. Condemnation. If, prior to Closing, any
governmental or similar authority shall institute eminent domain or
similar proceeding or take any steps preliminary thereto (including
the giving of any direct or indirect notice of intent to institute
any such proceeding) with respect to a material portion of the
Property, Purchaser shall be entitled to terminate this Agreement
upon written notice to Seller prior to Closing and to a return of
the Earnest Money Deposit.
Section 10. Covenants of Seller
Seller covenants that between the date of this contract and
the Closing:
Section 10.1. Seller shall not modify or amend any service
contract or enter into any new service contract unless the same is
terminable without penalty by the then owner of the Premises upon
not more than 30 days' notice or shall terminate same as requested
by Purchaser during the Due Diligence Period if at no cost to
Seller. Seller shall also terminate its existing management
agreements.
Section 10.2. Seller shall not withdraw, settle or otherwise
compromise any protest or reduction proceeding affecting real
estate taxes assessed against the Premises for any fiscal period in
which the Closing is to occur or any subsequent fiscal period
without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld or delayed. Real estate tax refunds
and credits received after the Closing Date which are attributable
to the fiscal tax year during which the Closing Date occurs shall
be apportioned between Seller and Purchaser in the same manner as
the proration of taxes for current tax year, after deducting
expenses of collection thereof, which obligation shall survive the
Closing.
Section 10.3. Subject to the tenant's rights under the Lease,
Seller shall allow Purchaser or Purchaser's representatives access
to the Premises, the leases and other documents required to be
delivered under this contract upon reasonable prior notice at
reasonable times. Before entering the Premises, Purchaser shall
deliver to Seller a certificate of insurance naming Seller as an
additional insured which shall certify that Purchaser has general
liability insurance of not less than $1,000,000. Purchaser shall
not be entitled to demolish, drill, bore, scrape or otherwise
physically disturb any part of the Premises without Seller's prior
written consent (not to be unreasonably withheld).
Section 10.4. Seller shall maintain the Premises in its present
condition, ordinary wear and tear accepted.
Section 10.5. Seller shall maintain all casualty, liability and
hazard insurance currently in force with respect to the Premises.
Section 10.6. Seller shall, subject to the provisions of Sections
7 and 10 hereof, operate, manage and enter into contracts with
respect to the Premises, in the same manner done by Seller prior to
the date hereof, maintaining present services and sufficient
supplies and equipment for the operation and maintenance of the
Premises in the same manner as prior to the date hereof, provided,
however, that Seller shall not enter into any new service contract
that cannot be terminated within thirty (30) days.
Section 11. Seller's Closing Obligations
At the Closing, Seller shall deliver the following to
Purchaser:
Section 11.1. A special warranty deed properly executed in proper
form for recording so as to convey the title required by this
contract.
Section 11.2. The Leases.
Section 11.3. The Rent Roll certified by Seller as true and
correct.
Section 11.4. All service contracts in Seller's possession which
are in effect on the Closing Date and which are assignable by
Seller.
Section 11.5. An assignment to Purchaser, without recourse or
warranty, of the Leases and all deposits made by tenants
thereunder, and of all of the interest of Seller in those service
contracts, insurance policies, certificates, permits and other
documents to be delivered to Purchaser at the Closing which are
then in effect and are assignable by Seller (other than any
management agreement with respect to the Property which Seller
agrees shall be terminated and of no force and effect as of the
Closing Date).
Section 11.6. A Bill of Sale for the property referred to in
Section 1.1(e) hereof.
Section 11.7. To the extent they are then in Seller's possession
and not posted at the Premises, certificates, licenses, permits,
authorizations and approvals issued for or with respect to the
Premises by governmental and quasi-governmental authorities having
jurisdiction.
Section 11.8. Such affidavits as Purchaser's title company shall
reasonably require in order to omit from its title insurance policy
all exceptions for mechanics liens, judgments, bankruptcies or
other returns against persons or entities whose names are the same
as or similar to Seller's name.
Section 11.9. Seller shall deliver all tenant files and other
records regarding the tenants or the Property available to
Purchaser.
Section 11.10. An original letter, executed by Seller or by its
agent, advising the tenants of the sale of the Premises to
Purchaser and directing that rents and other payments thereafter be
sent to Purchaser or as Purchaser may direct.
Section 11.11. A resolution of Seller's board of trustees
authorizing the sale and delivery of the deed and a certificate
executed by the secretary or assistant secretary of Seller
certifying as to the adoption of such resolution.
Section 11.12. An owner's policy of title insurance with extended
ALTA coverage and any such endorsements as Purchaser or the
existing lenders may require.
Section 11.13. Such documents as the existing lenders may require.
Section 11.14. Any other documents required by this contract to be
delivered by Seller.
Section 12. Purchaser's Closing Obligations
At the Closing, Purchaser shall:
Section 12.1. Deliver to Seller payment of the portion of the
Purchase Price payable at the Closing, as adjusted for
apportionments under Section 13.
Section 12.2. Deliver to Seller an agreement indemnifying and
agreeing to defend Seller against any claims made by tenants with
respect to tenants' security deposits to the extent paid, credited
or assigned to Purchaser in accordance with the Rent Roll and
receive from Seller a reciprocal indemnification agreement.
Section 12.3. Cause the deed to be recorded, duly complete all
required real property transfer tax returns and cause all such
returns and checks in payment of such taxes to be delivered to the
appropriate officers promptly after the Closing.
Section 12.4. To the extent granted by the existing lenders,
deliver to Seller releases of Seller of all obligations under the
mortgages described on Exhibit E as more particularly set forth in
said Exhibit E.
Section 12.5. Deliver any other documents required by this
contract to be delivered by Purchaser.
Section 13. Apportionments at the Closing
Section 13.1. The following apportionments shall be made between
the parties at the Closing as of the close of business on the day
prior to the Closing Date:
(a) prepaid rents and Additional Rents (as defined
in Section 13.3) collected;
(b) real estate and other taxes and assessments,
water charges, sewer rents and vault charges, if any, on the basis
of the fiscal period for which assessed, except that if there is a
water meter on the Premises, apportionment at the Closing shall be
based on the last available reading, subject to adjustment after
the Closing when the next reading is available;
If the Closing shall occur before a new tax rate is
fixed, the apportionment of taxes at the Closing shall be upon the
basis of the old tax rate for the preceding period applied to
latest assessed valuation. Promptly after the new tax rate is
fixed, the apportionment of taxes shall be recomputed. Any
discrepancy resulting from such recomputation and any errors or
omissions in computing apportionments at Closing shall be promptly
corrected, which obligations shall survive the Closing.
Section 13.2. If any tenant is in arrears in the payment of rent
on the Closing Date, rents received from such tenant after the
Closing shall be applied first to current, then to delinquent
rents. If rents or any portion thereof received by Seller or
Purchaser after the Closing are payable to the other party by
reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees, costs and
expenses of collection thereof, shall be promptly paid to the other
party, which obligation shall survive the Closing.
Section 13.3. If any tenants are required to pay escalation
charges for real estate taxes, operating expenses, cost-of-living
adjustments or other charges of a similar nature ("Additional
Rents") and any Additional Rents are collected by Purchaser after
the Closing which are attributable in whole or in part to any
period prior to the Closing, then Purchaser shall promptly pay to
Seller Seller's proportionate share thereof, less a proportionate
share of any reasonable attorneys' fees, costs and expenses of
collection thereof, if and when the tenant paying the same has made
all payments of rent and Additional Rent then due to Purchaser
pursuant to the tenant's leases, which obligation shall survive the
Closing. Nothing herein, however, shall require Purchaser to
collect the same.
Section 14. Conditions to the Close of Escrow/Title
Commitment/Delivery
Section 14.1. Purchaser shall promptly order an examination of
title from Chicago Title Insurance Company and cause a copy of the
title report to be forwarded to Seller's attorney upon receipt and
shall obtain a survey of the Premises. As soon as practical,
Purchaser shall obtain copies of all title exceptions identified
therein (collectively, the "Title Reports"). Prior to the
expiration of the Due Diligence Period, Purchaser may notify
Escrowee and Seller in writing of Purchaser's disapproval of the
condition of title, outlining in detail any title items objected to
and specifying Purchaser's desired cure. Seller shall have ten
(10) business days after receipt of Purchaser's notice to advise
Purchaser and Escrowee, in writing, as to whether Seller shall
effectuate a cure of said objections prior to Closing. In the
event Seller does not adequately cure Purchaser's objections,
Purchaser may: (1) cancel the Contract by written notice to Seller
and Escrowee and, upon such cancellation, any and all rights and
obligations of Purchaser and Seller under the Contract shall be
terminated, and Purchaser shall promptly receive the Downpayment
deposited with Escrowee and the earnings thereon; or (2) Purchaser
may waive its objections and proceed to close the transaction. In
the event that Purchaser opts to proceed to Closing, Seller shall
provide to Purchaser at Closing an ALTA extended coverage owner's
policy of title insurance together with such endorsements as
Purchaser and/or the exiting Lender may require.
Section 14.2. If Seller shall be unable to convey title to the
Premises at the Closing in accordance with the provisions of this
contract or if Purchaser shall have any other grounds under this
contract for refusing to consummate the purchase provided for
herein, Purchaser, nevertheless, may elect to accept such title as
Seller may be able to convey without a credit against the monies
payable at the Closing or liability on the part of Seller. If
Purchaser shall not so elect, Purchaser may terminate this contract
and the sole liability of Seller shall be to refund the Downpayment
with interest to Purchaser. Upon such refund and reimbursement,
this contract shall be null and void and the parties hereto shall
be relieved of all further obligations and liability other than any
arising under Section 15. Seller shall not be required to bring
any action or proceeding or to incur any expense to cure any title
defect. If Seller shall default in the performance of its
obligations hereunder, Purchaser may terminate this contract or
exercise any other right or remedy available to Purchaser at law or
in equity.
Section 14.3. Any unpaid taxes, assessments, water charges and
sewer rents, together with the interest and penalties thereon to
the Closing Date, and any other liens and encumbrances which Seller
is obligated to pay and discharge or which are against
corporations, estates or other persons in the chain of title,
together with the cost of recording or filing any instruments
necessary to discharge such liens and encumbrances of record, may
be paid by Seller in amounts provided in this Contract out of the
proceeds of the monies payable at the Closing if Seller delivers to
Purchaser on the Closing Date official bills for such taxes,
assessments, water charges, sewer rents, interest and penalties and
instruments in recordable form sufficient to discharge any other
liens and encumbrances of record. Upon request made a reasonable
time before the Closing, Purchaser shall provide at the Closing
separate checks for the foregoing payable to the order of the order
of the holder of any such lien, charge or encumbrance and otherwise
complying with Section 2.2. If Purchaser's title insurance company is
willing to insure Purchaser that such charges, liens and
encumbrances will not be collected out of or enforced against the
Premises, Seller shall have the right in lieu of payment and
discharge to deposit with the title insurance company such funds or
assurance or to pay such special or additional premiums as the
title insurance company may require in order to so insure. In such
case the charges, liens and encumbrances with respect to which the
title insurance company has agreed so to insure shall not be
considered objections to title.
Section 14.4. If Purchaser shall default in the performance of its
obligation under this contract to purchase the Premises, the sole
remedy of Seller, at law or in equity, shall be to retain the
Downpayment with interest as liquidated damages for all loss,
damage and expense suffered by Seller, including without limitation
the loss of its bargain.
Section 15. Broker
Section 15.1. Seller and Purchaser mutually represent and warrant
that PEREGRINE ADVISORS is the only broker with whom they have
dealt in connection with this contract and that neither Seller nor
Purchaser knows of any other broker who has claimed or may have the
right to claim a commission in connection with this transaction.
The commission of such brokers shall be paid by Purchaser only if
and when the Closing occurs and pursuant to separate agreement.
Seller and Purchaser shall indemnify and defend each other against
any costs, claims or expenses, including attorneys' fees, arising
out of the breach on their respective parts of any representations,
warranties or agreements contained in this paragraph. The
representations and obligations under this paragraph shall survive
the Closing or, if the Closing does not occur, the termination of
this contract.
Section 16. Notices
Section 16.1. All notices under this contract shall be in writing
and shall be delivered personally or shall be sent by fax,
overnight courier or prepaid registered or certified mail,
addressed as follows: if to Purchaser, WALDEN RESIDENTIAL
PROPERTIES, INC., One Lincoln Center, 5400 LBJ Freeway, Dallas,
Texas 75240, fax number (972) 788-1550, with a copy to Munsch Hardt
Kopf Harr & Dinan, P.C., 1445 Ross Avenue, Suite 4000, Dallas,
Texas 75202, Attention: Robin K. Minick, fax number (214) 855-7584;
if to Seller, at MGI Properties, One Winthrop Square, Boston,
Massachusetts 02110, attn: Robert Ware, with a copy to Olshan
Grundman Frome & Rosenzweig LLP, 505 Park Avenue, New York, New
York 10022, attn: Neil Grundman, Esq., or as Seller or Purchaser
shall otherwise have given notice as herein provided.
Section 17. Limitations on Survival of Representations,
Warranties, Covenants and other
Obligations
Section 17.1. The representations, warranties, covenants and other
obligations of Seller set forth in this contract shall survive the
Closing for a period of thirty (30) days following the Closing
Date.
Section 17.2. The delivery of the deed by Seller, and the
acceptance thereof by Purchaser, shall be deemed the full
performance and discharge of every obligation on the part of Seller
to be performed hereunder, except those obligations of Seller which
are expressly stated in this contract to survive the Closing.
Section 18. Seller's Like-Kind Exchange
Notwithstanding any other provision hereof, this contract
shall be deemed a contract of exchange to enable Seller to
effectuate a "like-kind" exchange in accordance with the provisions
of Section 1031 of the Internal Revenue Code, if Seller so elects
after Purchaser has acquired the Premises. At Seller's election by
notice to be given prior to or at closing, Seller shall instruct
Purchaser to pay the purchase price due thereunder to Chicago Title
Insurance Company, as trustee (the "Trustee") to be held for the
purpose of paying for such property as Seller may designate, as
provided herein. The Trustee shall act as escrowee only, and shall
not be acting as agent for either of the parties.
Seller shall, within forty-five (45) days after closing, by
written notice to Purchaser and Trustee designate the replacement
property to be purchased in exchange for the Premises and conveyed
to Seller within the sooner of (a) 179 days after the closing or
(b) the due date (determined with regard to extension) for the
seller's federal income tax return for the taxable year in which
the conveyance of seller's property occurs, the payment thereof to
be made out of the fund held by the Trustee. Upon receipt of such
notice, Purchaser shall execute a contract of sale to purchase such
replacement property which contract shall thereafter be assigned by
Purchaser to Seller and Purchaser shall otherwise cooperate with
Seller to effectuate the acquisition provided that: (1) Purchaser
shall not incur any unreimbursed out-of-pocket expenses in
connection therewith; and (2) Purchaser shall not incur any
personal liability in connection with the execution of any
agreement other than on a liquidated damages basis (for which
Seller or Trustee shall have advanced the funds necessary) or
assume any indebtedness and Seller and MGI Properties shall
indemnify and hold Purchaser harmless from any liability as a
result thereof; and (3) the effectuation of the exchange does not
prejudice or otherwise impair the closing of the Premises described
herein.
On or following the acquisition of all replacement real estate
in consummation of the exchange, any remaining balance less
reasonable out-of-pocket expenses incurred by Purchaser or Trustee
in connection with the exchange shall be disbursed to Seller. If
Seller shall fail to designate the exchange property within the
applicable periods, the Trustee shall disburse the funds to Seller.
Section 19. Miscellaneous Provisions
Section 19.1. Neither Purchaser nor Seller shall assign any of its
rights under this contract except with respect to the "like-kind"
exchange referred to in Section 18 hereof. Notwithstanding the
foregoing, Purchaser may designate a wholly-owned subsidiary or
affiliate to take title to Premises at Closing.
Section 19.2. This contract embodies and constitutes the entire
understanding between the parties with respect to the transaction
contemplated herein, and all prior agreements, understandings,
representations and statements, oral or written, are merged into
this contract. Neither this contract nor any provision hereof may
be waived, modified, amended, discharged or terminated except by an
instrument signed by the party against whom the enforcement of such
waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such instrument.
Section 19.3. This contract shall be governed by, and construed in
accordance with, the law of the State of Florida.
Section 19.4. The captions in this contract are inserted for
convenience of reference only and in no way define, describe or
limit the scope or intent of this contract or any of the provisions
hereof.
Section 19.5. This contract shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs or
successors and permitted assigns.
Section 19.6. This contract shall not be binding or effective
until properly executed and delivered by Seller and Purchaser.
Section 19.7. As used in this contract, the masculine shall
include the feminine and neuter, the singular shall include the
plural and the plural shall include the singular, as the context
may require.
Section 19.8. If the provisions of any schedule or rider to this
contract are inconsistent with the provisions of this contract, the
provisions of such schedule or rider shall prevail.
Section 19.9. 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 Purchaser 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.
Section 19.10. Assumption of Indebtedness. Seller will cooperate
fully and on a timely basis with Purchaser in connection with the
assumption by Purchaser and release of Seller of all obligations
under the existing mortgages encumbering the Premises. Seller and
Purchaser shall timely provide such documents and information as
the holders of such existing mortgages may request in connection
with such assumption. The approval of the holders of the existing
indebtedness of such assumption by Purchaser and release of Seller
shall be a condition precedent to Purchaser's and Seller's
obligations under this Contract. In the event that Purchaser is
unable to obtain such approval, Purchaser shall have the option to
terminate this Contract and receive an immediate refund of the
Downpayment and any other sums so deposited. Purchaser to pay all
fees an costs.
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the date first above written.
Seller:
MGI PROPERTIES (Formerly Mortgage
Growth Investors)
By
Purchaser:
Receipt by Escrowee WALDEN RESIDENTIAL PROPERTIES, INC.
The undersigned Escrowee
hereby acknowledges receipt By
of $150,000 by check
subject to collection, to
be held in escrow pursuant
to Exhibit B.
By:
I:\FINANCE\SECFIL~1\10-K-97\EX-10-15.WPD
1 RM:ng/lg 11/5/97
EXHIBIT "A"
South Pointe
PARCEL I: All of Lots 8, 9, 10, 11 and 12 in Block 2 and that part
of Lot 7, Block 2, together with the closed alley abutting the
aforedescribed Lots on the South; more particularly described as
beginning at the Northwest corner of Lot 12 in Block 2 of GANDY
BOULEVARD PARK SUBDIVISION as per map or plat thereof recorded in
Plat Book 21 on Page 22 of the public records of Hillsborough
County, Florida; run thence East along the North boundary of said
Block 2 a distance of 285 feet; run thence South a distance of 65
feet; thence run West a distance of 6 feet; thence run South a
distance of 35 feet; thence run East a distance of 6 feet; thence
South to a point on the North line of Lot 18 of said Block 2, run
thence West along the North boundaries of Lots 18, 17, 16, 15, 14
and 13 to the Northwest corner of Lot 13 of said Block 2; run
thence North to the Northwest corner of Lot 12 of Block 2 and the
Point of Beginning, GANDY BOULEVARD PARK SUBDIVISION, as per map of
plat thereof recorded in Plat Book 21 on Page 22 of the public
records of Hillsborough County, Florida.
AND
PARCEL II: Beginning at the Northwest corner of GANDY BOULEVARD
PARK SUBDIVISION, run Southerly along the West boundary of said
subdivision a distance of 148 feet to a Point of Beginning; from
said Point of Beginning run Easterly, parallel to the North
boundary of said subdivision, a distance of 283.9 feet; run thence
Southerly parallel to the West boundary of said subdivision a
distance of 571.76 feet; run thence Westerly, parallel to the North
boundary of said subdivision a distance of 283.9 feet to a point on
the West boundary of said subdivision run thence Northerly along
the West boundary of said subdivision a distance of 571.76 feet to
the Point of Beginning. All of the above lying within GANDY
BOULEVARD PARK SUBDIVISION, Plat Book 21 on Page 22 of the public
records of Hillsborough County, Florida.
St. James
That portion of the South 1/2 of Section 7, Township 28 South, Range
18 East, Hillsborough County, Florida; lying South of Gunn Highway
(S.R. 587), (66.0 foot right-of-way), being further described as
follows:
Commence at the Southeast corner of said Section 7; said point
lying on the boundary of Country Run Unit I as recorded in Plat
Book 52, page 60, of the public records of said County; thence
along said boundary the following: North 00 degrees 26'13" East, 1019.07
feet; thence North 61 degrees 45'02" West, 1596.84 feet to the most
Northerly corner of said Country Run Unit I and the Point of
Beginning; said point lying on the South right-of-way line of Gunn
Highway (66.0 foot right-of-way); thence continue along the
boundary of said Country Run Unit I, the following: South
28 degrees 14'58" West, 33.0 feet to a non-tangent curve concave Westerly
and having a radius of 25.00 feet, thence Southerly along said
curve 38.36 feet through a central angle of 87 degrees 54'58" (Chord South
17 degrees 47'33" East, 34.71 feet); thence South 26 degrees 09',56" West,
186.36 feet; thence South 23 degrees 18'11" West, 120.15 feet; thence South
26 degrees 09'56" West, 100.00 feet to a curve concave Northwesterly and
having a radius of 520.00 feet; thence Southwesterly along said
curve 21.01 feet through a central angle of 02 degrees 18'54" (Chord South
27 degrees 19'23" West, 21.01 feet); thence, non-tangent from said curve,
North 61 degrees 31"10" West, 254.12 feet; thence South 43 degrees 44'58" West,
439.14 feet to the most Northeasterly corner of Lot 3, Block 2,
Country Run Unit II, as recorded in Plat Book 54, page 43, of the
public records of said County; thence along the boundary of said
Country Run Unit II the following: North 87 degrees 16'27"West, 254.10
feet; thence South 47 degrees 06'26" West, 642.71 feet; thence leaving said
boundary North 74 degrees 36'19" West, 244.45 feet to a curve concave
Northeasterly and having a radius of 25.00 feet; thence
Northwesterly along said curve, 39.22 feet through a central angle
of 89 degrees 53'49", (Chord North 29 degrees 39'24" West, 35.32 feet) to the
Easterly right-of-way line of Anderson Road (110.00 foot right-of-way); thence
along said right-of-way line North 15 degrees 17'30" East,
861.35 feet; thence leaving said right-of-way line, South 74 degrees 42'30"
East, 560.00 feet; thence North 60 degrees 17'30" East, 162.64 feet; thence
North 15 degrees 17'30" East, 526.03 feet to the aforesaid South right-of-way
line of Gunn Highway being a non-tangent curve concave
Southwesterly, having a radius of 3791.44 feet, thence
Southeasterly along said right-of-way line 577.88 feet through a
central angle of 08 degrees 43'58", (Chord South 66 degrees 07'01" East, 577.32
feet); thence South 61 degrees 45'02" East 134.09 feet to the Point of
Beginning.
LESS AND EXCEPT that portion in Order of Taking recorded in
Official Records Book 5626, page 1662, of the public records of
Hillsborough County, Florida.
EXHIBIT B
ESCROW PROVISIONS
(a) Escrowee shall hold the proceeds thereof in
escrow in a special bank account (or as otherwise agreed in writing
by Seller, Purchaser and Escrowee) until the Closing or sooner
termination of this contract and shall pay over or apply such
proceeds in accordance with the terms of this section. Escrowee
shall hold such proceeds in an interest-bearing account, and any
interest earned thereon shall be paid to Purchaser at Closing, and
the party receiving such interest shall pay any income taxes
thereon. The tax identification numbers of the parties shall be
furnished to Escrowee upon request. If for any reason the Closing
does not occur and either party makes a written demand upon
Escrowee for payment of such amount, Escrowee shall give written
notice to the other party of such demand. If Escrowee does not
receive a written objection from the other party to the proposed
payment within 10 business days after the giving of such notice,
Escrowee is hereby authorized to make such payment. If Escrowee
does receive such written objection within such 10 day period or if
for any other reason Escrowee in good faith shall elect not to make
such payment, Escrowee shall continue to hold such amount until
otherwise directed by written instructions from the parties to this
contract or a final judgment of a court. However, Escrowee shall
have the right at any time to deposit the escrowed proceeds and
interest thereon, if any, with the clerk of the Court of the county
in which the Land is located. Escrowee shall give written notice
of such deposit to Seller and Purchaser. Upon such deposit
Escrowee shall be relieved and discharged of all further
obligations and responsibilities hereunder.
(b) The parties acknowledge that Escrowee is acting
solely as a stakeholder at their request and for their convenience,
that Escrowee shall not be deemed to be the agent of either of the
parties, and that Escrowee shall not be liable to either of the
parties for any act or omission on its part unless taken or
suffered in bad faith, in willful disregard of this contract or
involving gross negligence. Seller and Purchaser shall jointly and
severally indemnify and hold Escrowee harmless from and against all
costs, claims and expenses, including reasonable attorneys' fees,
incurred in connection with the performance of Escrowee's duties
hereunder, except with respect to actions or omissions taken or
suffered by Escrowee in bad faith, in willful disregard of this
contract or involving gross negligence on the part of Escrowee.
(c) Escrowee has acknowledged agreement to these
provisions by signing in the place indicated on the signature page
of this contract.
(d) Escrowee may represent Seller if there is a
dispute over the disposition of the Downpayment.
EXHIBIT C
Rent Roll
EXHIBIT D
SOUTH POINTE
Service Contract Listing
Terminix Monthly Pest Control Service No signed
contract
Terminix Termite Bond for Sub-Termites Expires
3/31/98
Danks Copier Maintenance Contract Renewed 7/97
Commercial Laundry Laundry Room Washer/Dryers Expires 5/98
McKendree Greens Landscape Contract Expires 1/98
ADT Fire Alarm Service Expires
12/99
Evergreen Fragrances 30 day
notice
Network Multi Family Alarm Monitoring 30 day
notice
Phillips Pool Service Pool Service No
signed contract
4 weeks notice
American Ecosystems Lake Services No contract
Protect Security Guard Services No contract
30 day notice
EXHIBIT D
St. James
Vendor: Phillips Pool Service
Service: Full Service including the following:
Tiles cleaned, surface skimmed/debris removed
Pool floor vacuumed
Wall & floor brushed as necessary
Water chemistry maintained
Filter & strainer baskets cleaned
Dates: 4/1/97-3/31/98
Termination: May be canceled by either party four weeks before
any regular service call
Vendor: McKendree Greens, Corp.
Service: Forty-one (41) mowings annually
Edging of streets and sidewalks
Planter bed care/mulch
Pruning and trimming
Planting of annuals four (4) times per year
Irrigation/fertilization and pest control
Dates: 12/1/96-12/1/97
Termination: May be canceled during the months of March through
September with a thirty (30) days written notice.
During the months of October through February with
a ninety (90) day written notice.
Vendor: Commercial Laundries of West Florida, Inc.
Service: The installation, maintenance, and operation of two (2)
laundry facilities
Dates: 6/1/91-5/30/97
Termination: Six (6) year contract
Vendor: Lea's Pest Control
Service: Monthly pest control for all apartments, office
buildings and recreation rooms
Dates: 1/1/97-12/31/97
Termination: Thirty (30) days written notice
Vendor: Terminix International
Service: Necessary service to protect St. James Crossing against
the attack of subterranean termites
Dates: 3/1/97-2/28/97
Termination: May be canceled at any time
EXHIBIT E
Mortgages
1. Amended and Restated Mortgage and Security Agreement dated
August _____, 1995 by MGI Properties to Nationwide Life
Insurance Company securing a Consolidation and Renewal Note in
the amount of $10,400,000.
2. Florida Housing Financing Agency multifamily Housing Revenue
Bonds $5,750,000 1985 Series NN remarketed November 1, 1997.
Purchaser shall pay all costs and charges incurred in
connection with the assumption by Purchaser of the
aforementioned obligations.
SCHEDULE 1
ITEMS TO BE DELIVERED OR MADE AVAILABLE TO PURCHASER
TO THE EXTENT THEY ARE IN SELLER'S POSSESSION OR POSSESSION
OF SELLER'S MANAGING AGENT
1. Seller's most current owner's title insurance policy and a
copy of all title reports and documents in Seller's
possession.
2. A list and a copy of all Service Contracts, all documents
pertaining to any leased Personalty, and all warranties,
guaranties and bonds relating to the Property, or any part
thereof.
3. A complete, itemized and detailed inventory of the Personalty
to be conveyed by Seller to Purchaser at the Closing.
4. A copy of (i) all income and expense statements for the
Property, for the year-to-date and for the most recently
completed prior year (prepared on a monthly basis), and annual
operating statements for the two (2) most recent fiscal years,
(ii) operating budgets for the Property for the current
calendar year and the upcoming calendar year, and (iii) a
capital expenditure budget for the Property for the current
calendar year and the upcoming calendar year, and (iv) such
other information as may be required by Purchaser's
accountants to perform all complete audit of the Property for
the twelve (12) month period ended December 31, 1996, and
year-to-date 1997.
5. A copy of all ad valorem and other property tax statements
(including personal property tax statements) relating to the
Property for the current tax year and the immediately
preceding two (2) tax years, including copies of any
assessments or statements for the current or forthcoming year,
including a summary of any contested tax assessments relating
to the Property for the preceding two (2) years, and the
results thereof.
6. A copy of (i) a resident rent roll for the improvements,
showing actual occupancies, rentals, delinquencies, defaults,
security deposits, assigned parking spaces (if any), free
rent, rent concessions, resident incentives, lease terms, unit
numbers, unit types, and unit amenities, (ii) a current
schedule of rental rates for each type of unit within the
Improvements, and (iii) such other pertinent information
regarding the resident leases and rental units as is,
including, without limitation a schedule of the appliances and
amenities included in each type of rental unit.
7. A copy of all site plans, survey, soil and substrata reports
and studies, engineering plans and studies, environmental
reports or studies, architectural renderings, plans and
specifications, construction contracts (with all applicable
change orders), floor plans, landscape plans, utility schemes
and other similar plans, diagrams of studies, if any, relating
to the Property.
8. If available, a copy of the architect's certificate rendered
at or after the completion of construction of the improvements
stating that the improvements were constructed substantially
in accordance with the plans and specifications delivered to
Purchaser hereunder.
9. A copy of all certificates of occupancy for the Improvements.
10. A copy of all swimming pool permits, boiler permits and other
licenses and permits for the Property.
11. A list of all employees currently employed in the operation of
the Property, setting forth his/her name, address, telephone
number, position, salary, benefits, bonuses, leasing
commissions, other incentives, apartment allowance (if
applicable) and tenure with the Property.
12. A copy of the standard form of resident lease, leasing
application, security and pet deposit documents, rules and
regulations, leasing brochures, occupancy checklist, other
standard forms and documents currently used in connection with
the leasing and marketing of the Property, and a profile of
existing resident base, including data on age, income, sex,
household structure, occupation, etc., to the extent such
information is available to Seller.
13. A list of all utility deposits or bonds for the Property and
a copy of all utility bills for the Property for the previous
twelve (12) months, excluding individually metered resident
utility bills.
14. Copies of any documents related to any loans affecting the
Property including promissory notes, deeds of trust, guarantee
agreements, appraisals and other such documents pertaining to
any such loans.
15. Copies of and/or access throughout the Feasibility period to
all resident files.
16. Copies of any pertinent pending litigation of safety related
issues with respect to the Property.
17. Such other books, records, leasing files, contracts,
agreements and information relating to the Property that are
in Seller's possession 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, 1996,
including, but not limited to a letter of representations and
warranties addressed to Purchaser's accountants and in form
and content acceptable to Seller, Purchaser and Purchaser's
accountants.
AGREEMENT OF SALE AND PURCHASE
between
Windsor at Ashton Park Limited Partnership
Seller
and
Walden Residential Properties, Inc.
Purchaser
Date: As of November 14, 1997
Property:
Windsor at Ashton Park
2020 Bearss Avenue
Tampa, Florida
TABLE OF CONTENTS
Page
1. Property to Be Conveyed.. . . . . . . . . . . . . . . . . .2
2. Purchase Price. . . . . . . . . . . . . . . . . . . . . . .4
3. No Recording. . . . . . . . . . . . . . . . . . . . . . . .5
4. Inability to Fulfill the Contract.. . . . . . . . . . . . .5
5. Notices.. . . . . . . . . . . . . . . . . . . . . . . . . .7
6. Real Estate Brokers.. . . . . . . . . . . . . . . . . . . .8
7. Fees and Disbursements of Counsel, Etc. . . . . . . . . . .9
8. Closing of Title. . . . . . . . . . . . . . . . . . . . . .9
9. Apportionments. . . . . . . . . . . . . . . . . . . . . . .9
10. Condition of Property; No Representations by Seller.. . . 12
11. Tenancies and Leases. . . . . . . . . . . . . . . . . . . 13
12. Fire, Casualty and Condemnation.. . . . . . . . . . . . . 13
13. Title.. . . . . . . . . . . . . . . . . . . . . . . . . . 15
14. Nonassignable Contract. . . . . . . . . . . . . . . . . . 16
15. Purchaser's Representations and Warranties. . . . . . . . 16
16. Seller's Representations and Warranties.. . . . . . . . . 17
17. Access to Property. . . . . . . . . . . . . . . . . . . . 20
18. Discharge of Seller's Obligations Hereunder.. . . . . . . 20
19. Signage . . . . . . . . . . . . . . . . . . . . . . . . . 21
20. Conditions Precedent to Purchaser's Obligations.. . . . . 21
21. Conditions Precedent to Seller's Obligations. . . . . . . 22
22. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 22
EXHIBITS
Exhibit A - Description of Land
Exhibit B - Personalty
Exhibit C - Documents To Be Delivered; Obligations Of Purchaser And Seller
Exhibit D - Wiring Instructions - Commonwealth Land Title Insurance Company
Exhibit D-1 - Wiring Instructions - BankBoston, N.A. - Windsor Realty
Fund-I L.P.
Exhibit E - Commonwealth Insurance Commitment
Exhibit F - Service Contracts
Exhibit G - Rent Roll
Exhibit H - Permitted Exceptions
Exhibit I - Survey Standards
Exhibit J - Standards For Title To Land And Improvements
Exhibit K - Special Warranty Deed
Exhibit L - Bill of Sale
Schedule M - Assignment Agreement Regarding Leases
Exhibit N - Assignment Agreement Regarding Security Deposits
Exhibit O - Assignment Agreement Regarding Service Contracts
Exhibit P - Certificate Regarding Foreign Investment in Real Property Tax Act
Exhibit Q - Debt Financing Documents
This AGREEMENT OF SALE AND PURCHASE (hereinafter referred to
as this "Agreement"), entered into as of this 14th day of November,
1997 (the "Contract Date"), by and between Windsor at Ashton Park
Limited Partnership, a Delaware limited partnership, having its
principal place of business at 600 Atlantic Avenue, Suite 2000,
Boston, MA 02210 (hereinafter referred to as "Seller) and Walden
Residential Properties, Inc., a Maryland Corporation having its
principal place of business at One Lincoln Centre, 5400 LBJ
Freeway, Suite 400, Dallas, Texas 75940 ( hereinafter referred to
as Purchaser"). Seller and Purchaser are hereinafter sometimes
respectively referred to individually as "Party" and collectively
as "Parties".
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Property (as hereinafter
defined), which is located in the City of Tampa, County of
Hillsborough, State of Florida, the improved portions of which are
known as street address 2020 Bearss Avenue; and
WHEREAS, Seller is desirous of selling the Property to
Purchaser and Purchaser is desirous of buying the Property from
Seller; and
WHEREAS, Seller and Purchaser desire to set forth their mutual
understandings and agreements with respect to the sale and purchase
of the Property.
NOW THEREFORE, in consideration of these premises and the
mutual promises and covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties do hereby agree as follows:
1. PROPERTY TO BE CONVEYED.
Upon and subject to the following terms, agreements, covenants
and conditions, Seller agrees to sell and convey to Purchaser and
Purchaser agrees to purchase from Seller that certain parcel of
land more particularly described in Exhibit A annexed hereto and
made a part hereof (hereinafter referred to as the "Land"),
TOGETHER WITH all of the following:
(a) All buildings, structures and other improvements
(hereinafter collectively referred to as the "Improvements")
located, placed, erected or constructed upon the Land.
(b) All of Seller's estate, right, title and interest, if,
any, in and to any and all streets, roads, alleys, strips or gores
adjoining the Land, all easements, rights of way, air rights,
privileges, licenses, hereditaments, and any appurtenances and
other rights and benefits belonging, or in any way related, to the
Land, including, without limitation, any and all development rights
appurtenant and related solely to the Land; and all right, title
and interest of Seller, if any, in and to any award made or to be
made in lieu thereof and in and to any award for damage to the Land
or the Improvements by reason of any change of grade in, or partial
or total discontinuance of any street or road.
(c) Seller's right, title, and interest, if any, to those
items of personal property listed on Exhibit B annexed hereto and
made a part hereof.
(d) All of Seller's right, title and interest, to the leases
and license agreements, as amended, shown on Exhibit G annexed
hereto, a current rent roll, as said Exhibit G may be modified
between the date of this Agreement and the Closing Date as
contemplated by Section 11 (hereinafter referred to as the
"Leases").
(e) Seller's right, title and interest, if any, in the
intangible personal property, being all intangible personal
property related to the Land and Improvements, including, without
limitation; all trade names and trade marks associated with the
Land and the Improvements, including Seller's rights and interests
in the name of the Property, but excluding the right to use the
name "Windsor" or any materials containing that name;(all of the
items enumerated under clauses (c) and (e) being collectively
referred to herein as the "Personalty"). Purchaser agrees to pay,
and Purchaser hereby agrees to indemnify and hold Seller and
Seller's successors and assigns harmless from and against, any and
all sales taxes, if any, which may at any time be assessed in
connection with the sale of Seller's interest, if any, in the
Personalty. The provisions of this Section shall survive the
Closing and the delivery of the Deed.
(f) All of Seller's estate, right, title and interest, if
any, in the Service Contracts set forth on Exhibit F annexed
hereto, the plans and specifications and other architectural and
engineering drawings for the Improvements, if any; warranties if
still in effect; contract rights related to the construction,
operation, ownership or management of the property (but only to the
extent Seller's obligations thereunder are expressly assumed by
Purchaser pursuant to this Agreement and specifically excluding the
current management agreement between Seller and Windsor Investment
Company, Inc. which shall be terminated effective as at the Closing
Date as hereinafter defined); governmental permits, approvals and
licenses (to the extent assignable); tenant list and
correspondence; telephone exchange numbers (to the extent
assignable) and all promotional materials relating to the Property
but, again, specifically excluding the right to use the name
"Windsor" or any materials containing that name. Notwithstanding
the foregoing Seller agrees that Purchaser may use the "Windsor"
name on materials containing that name for a transition period
ending sixty (60) days after the Closing Date.
The Land and those items enumerated under the foregoing
clauses (a), (b), (c) (d), (e) and (f), together with Seller's
right, title and interest in and to any and all other property,
which under the provisions of Exhibit C hereto and made a part
hereof are to be transferred, assigned or set over unto Purchaser,
are herein collectively referred to as the "Property".
2. PURCHASE PRICE.
The purchase price (hereinafter referred to as the "Purchase
Price") payable by Purchaser to Seller for the Property is Seven
Million Dollars ($7,000,000). The Purchase Price shall be payable
by Purchaser as follows:
(i) simultaneously with the execution of this Agreement, the
sum of Seventy Thousand Dollars ($70,000) in the form of a wire
transfer of immediately available Federal Funds to the account of
Commonwealth Land Title Insurance Company (Florida or Boston
office, but not yet determined which one)(hereinafter referred to
as the "Title Company") (in accordance with the wiring instructions
set forth on Exhibit D hereto), shall be paid to the Title Company
as escrow agent as a deposit hereunder (hereinafter being referred
to as the "Contract Deposit"). The Title Company shall hold the
Contract Deposit in escrow in an interest-bearing bank account.
Any and all interest earned on the Contract Deposit shall become
and be deemed to be a part of the Contract Deposit. If the
transaction contemplated hereby does not close because of a default
by Purchaser, then the Contract Deposit shall be paid to the Seller
pursuant to, and in accordance with, the provisions of Section 4.C.
hereof. In the event the transaction contemplated hereby does not
close because of the inability or failure of Seller to fulfill
Seller's obligations under this Agreement, the Contract Deposit
shall be returned to Purchaser pursuant to, and in accordance with,
the provisions of Section 4.A. hereof, unless Purchaser invokes the
rights afforded Purchaser by virtue of Section 4.B. hereof.
Notwithstanding the above, Purchaser may choose in its sole and
absolute discretion by giving written notice to Seller, to
terminate this Agreement for any reason until 5:00 p.m. EST on
Monday, November 24, 1997, the end of the Purchaser's Review Period
(as defined in Section 13B); whereupon the Contract Deposit shall be
returned to the Purchaser and the parties shall have no further
obligations to one another;
(ii) At the Closing (as hereinafter defined in Section 8
hereof), the Purchase Price shall be paid by Purchaser's assumption
of the existing debt financing encumbering the Property. The
documents comprising the debt financing are an Amended and Restated
Promissory Note, Amended and Restated Mortgage and Security
Agreement (hereinafter referred to as the "Mortgage"), an Amended
and Restated Assignment in Lessor's Interest in Leases, an
Unsecured Indemnity Agreement and miscellaneous documents, all
dated January 10, 1997, and set forth on Exhibit Q hereto
(hereinafter referred to as "Debt Financing Documents"), including
the payment obligations under the Mortgage, which, as of September
30, 1997 is in the principal amount of Three Million Nine Hundred
Fifty-Two Thousand, Three Hundred Thirty-One Dollars
($3,952,331.00) (hereinafter referred to as the "Current Principal
Balance"). Purchaser additionally shall pay the difference between
the Current Principal Balance and the outstanding principal balance
of the Mortgage on the Closing Date, adjusted to reflect real
estate tax escrows and any other reserves and escrows which remain
in the possession of the Mortgagee after the Closing Date.
3. NO RECORDING.
Purchaser and Seller each agree that it will not record this
Agreement nor any memorandum or notice thereof without the prior
written consent of the other Party. Any recording in violation of
this provision shall be void ab initio and shall be a material
breach hereof and hereunder, and the Party who records this
Agreement shall be liable for all fees and costs incurred in order
to clear said recorded instrument from the records, including,
without limitation, attorneys' fees and disbursements. The
provisions of this Section 3 shall survive the Closing and the
delivery of the Deed (as defined in Paragraph 1 of Exhibit C
annexed hereto and made a part hereof), or the earlier termination
of this Agreement.
4. INABILITY TO FULFILL THE CONTRACT.
A. If, at the Closing, Seller is unable to convey to
Purchaser title to the Property in accordance with the provisions
of this Agreement, or if Seller is otherwise unable to fulfill
Seller's obligations pursuant to this Agreement due to a
circumstance beyond Seller's control, Seller shall be entitled,
upon written notice delivered to Purchaser at or prior to the
Closing Date, to reasonable adjournments of the Closing Date one or
more times, for a period or periods not to exceed, in the
aggregate, thirty (30) days, to enable Seller to convey such title
or to fulfill such obligations Seller agrees not to place any
voluntary liens on the Property between the Contract Date and the
Closing Date. If Seller does not so elect to adjourn the Closing,
or if at the adjourned date Seller is still unable to convey title
to the Property or is still unable to fulfill Seller's obligations
pursuant to this Agreement, Purchaser shall have the option to
either: (i) accept such title as Seller can convey, without
reduction in, or abatement of, the Purchase Price and without
receipt of any credit or allowance on account thereof, and without
any claim against Seller; or (ii) terminate this Agreement by
written notice to Seller delivered as provided in Section 5 hereof
(in which event Purchaser's sole remedy shall be the refund the
Contract Deposit to Purchaser, and upon such refund being made to
Purchaser, then this Agreement shall automatically become void and
of no further force or effect, and neither Party shall have any
obligations of any nature to the other hereunder or by reason
hereof, except obligations which, pursuant to the provisions of
this Agreement or the Exhibits annexed hereto, expressly state that
such provisions survive the termination of this Agreement). If
Seller elects to adjourn the Closing as provided above, this
Agreement shall remain in effect for the period or periods of
adjournments, in accordance with its terms. Nothing contained in
this Agreement shall be deemed to require Seller to bring any
action or proceeding or to take any other steps to remove any
defect in, or exception or objection to, title or to fulfill any
condition, or to expend any moneys therefor, nor shall Purchaser
have any right of action against Seller, at law and/or in equity,
for damages or for specific performance in connection therewith.
B. Seller agrees not to place any voluntary liens on the
Property between the Contract Date and the Closing Date. If Seller
is unable to close as of the Closing Date due to the existence of
a voluntary lien on the Property, Seller shall remove such lien.
If Seller fails to so remove and close, Purchaser shall be entitled
to institute an action for specific performance as described below.
If Title does not close due to the foregoing or any other
intentional default of Seller, Purchaser shall have the right to
maintain an action of specific performance provided Purchaser
commences such action within thirty (30) days of the Closing Date
as the same may be extended and/or adjourned pursuant to and in
accordance with the terms hereof. Purchaser acknowledges and
agrees, for purposes hereof, that an intentional default by Seller
shall not include the Seller's inability to convey to Purchaser
title to the Property in accordance with the provisions of this
Agreement. The Parties agree, in the event that Purchaser
commences an action of specific performance, as aforesaid, that the
prevailing Party in any such action shall be entitled to recover
attorneys' fees and disbursements from the other Party.
C. The Parties agree that in the event Purchaser shall
default in the performance of Purchaser's obligations under this
Agreement, the actual damages sustained by the Seller as a result
would be mathematically difficult to calculate, and in regard
thereto, Purchaser agrees that a good faith estimate of the damages
which would reasonably compensate Seller is equal to the Contract
Deposit. Accordingly, immediately upon default by either Purchaser
or Seller, the non-defaulting party shall have the right to the
Contract Deposit, as liquidated damages, to recompense the non-defaulting
party for time spent and the loss of its bargain.
Seller and Purchaser agree that: (i) the nondefaulting party shall
furnish the defaulting party and the Title Company with written
notice of the non-defaulting party's intention to seek the return
of the Contract Deposit from the Title Company as aforesaid; and
(ii) the defaulting party shall have a period equal to seven (7)
days following the giving of such notice by the non-defaulting
party within which to cure the default. If, at the end of such
seven (7) day period, the defaulting party is still in default in
the performance of its obligations under this Agreement, the Title
Company shall release the Contract Deposit to the non-defaulting
party, as liquidated damages, as aforesaid, with no additional
notices or cure periods having to be furnished or provided.
Seller's sole remedy for Purchaser's default under this Agreement
shall be to retain the Contract Deposit and, upon such retention of
the Contract Deposit by Seller, as aforesaid, this Agreement shall
terminate and Purchaser and Seller shall be relieved of any further
liability hereunder, at law and/or in equity, relating to
Purchaser's default in the performance of Purchaser's obligations
under this Agreement except with respect to any obligations and/or
liabilities which pursuant to the terms, provisions, covenants and
conditions of this Agreement (or the Exhibits annexed hereto)
expressly state that such provisions survive the termination of
this Agreement. Nothing in this Section 4.C. shall be deemed or
construed to limit Seller's rights, remedies or recourse, or to
limit Purchaser's obligations or liabilities, with respect to any
breach or default by Purchaser under the provisions of Section 10,
Section 19, Exhibit C, and any other provision of this Agreement,
pursuant to which such obligation or liability survives the Closing
and delivery of the Deed, or the earlier termination of this
Agreement. The provisions of the immediately preceding sentence
shall survive the Closing and the delivery of the Deed, or the
earlier termination of this Agreement.
Purchaser's remedies for a default by the Seller under the
terms of this Agreement are either return of the Contract Deposit,
or an action for damages and/or specific performance.
D. The Parties agree, in the event that Purchaser commences
an action against Seller alleging and/or claiming that Seller has
retained the Contract Deposit in contravention of the terms,
provisions, covenants and conditions of Section 4.C. of this
Agreement, that the prevailing Party in any such action shall be
entitled to recover attorneys' fees and disbursements from the
other Party.
5. NOTICES.
All notices, demands, requests, consents, approvals and other
communications (all of the foregoing, for the purposes of this
Section, being herein collectively referred to as "Notices")
required or permitted to be given under the terms of this
Agreement, shall be in writing, and shall be sent by registered,
certified or express mail, return receipt requested, postage
prepaid, by a nationally recognized overnight delivery service,
fully prepaid, or by facsimile (followed by hard copy), and
addressed and sent to the Parties as follows:
To Seller: Windsor at Ashton Park Limited Partnership
600 Atlantic Avenue
Suite 2000
Boston, MA 02210
Attention: Sean P. Henry, Vice President
Telephone Number: (617) 973-9680
Facsimile Number: (617) 973-9679
with a copy thereof sent concurrently in the same manner to:
Windsor at Ashton Park Limited Partnership
600 Atlantic Avenue
Suite 2000
Boston, MA 02210
Attention: Catherine F. Shortsleeve, Vice President,
Associate General Counsel
Telephone Number: (617) 973-9680
Facsimile Number: (617) 367-3417
To Buyer:
Walden Residential Properties, Inc.
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75940
Attention: Eric A. Calub, Vice President, Acquisitions
Telephone Number: (972) 788-0510
Facsimile Number: (972) 788-1550
with a copy thereof sent concurrently in the same manner to-
Munsch, Hardt, Kopf, Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
Attention: Robin Minick, Esq.
Telephone Number: (214) 855-7542
Facsimile Number: (214) 855-7584
All Notices shall be effective, as applicable, upon being
deposited in the United States mail, being deposited with said
overnight mail service, or being sent by facsimile. However, the
time period in which a response to any such Notice must be given
shall commence to run from: (i) the date of receipt noted on the
return receipt of the Notice by the addressee thereof; (ii) in the
case of said overnight mail service, the date upon which the same
is actually received; or (iii) in the case of said facsimile, on
the date upon which a hard-copy of said facsimile sent by
nationally-recognized overnight delivery service is actually
received. Rejection or other refusal to accept or the inability to
deliver because of changed address for which no notice was given
pursuant to the provisions of this Section shall be deemed to be
receipt of the notice as of the date of such rejection, refusal or
inability to deliver. Either Party may, from time to time, by
notice in writing served upon the other Party in the same manner as
prescribed in this Section designate a different mailing address or
a different or additional person to which all such Notices are
thereafter to be addressed.
6. REAL ESTATE BROKERS.
Each Party represents to the other that it has not dealt with
any party in connection with this transaction who might be entitled
to a commission or compensation on account of introducing the
Parties, the preparation or submission of this Agreement or the
closing of the transactions contemplated hereby, except The
Apartment Group, Inc., 3340 Peachtree Road, N.E., Suite 2180,
Atlanta, Georgia 30326(hereinafter referred to as the "Broker").
Each Party hereby agrees to indemnify and hold harmless the other,
and the other's successors and assigns, from and against any and
all losses, claims, liabilities, expenses, costs and/or damages
(including, without limitation, attorneys' fees and disbursements)
arising out of, or in connection with, any claim by any party with
whom the indemnifying party has dealt, other than the Broker, for
a commission or other compensation by reason of, or arising out of,
the transaction contemplated hereby or herein. Seller agrees to
pay the commission due to the Broker pursuant to a separate written
agreement between Seller and the Broker.
The arrangements for the payment of brokerage commissions and
fees set forth in the preceding paragraph of this Section are
intended solely for the benefit of the Parties hereto. Nothing
contained in this Section is intended, nor shall the same be deemed
or construed, to grant or confer any right, title, interest or
other benefit in favor of any party not a party hereto, including,
without limitation, any broker, agent, person or entity claiming
any brokerage commissions, compensation or similar fees in
connection with the transaction described in this Agreement.
The provisions of this Section shall survive the Closing and
the delivery of the Deed, or the earlier termination of this
Agreement.
7. FEES AND DISBURSEMENTS OF COUNSEL, ETC.
Each of the Parties shall bear and pay the fees and
disbursements of its own counsel, accountants, consultants,
engineers, architects and other advisors in connection with the
negotiation and preparation of this Agreement, the transaction
contemplated hereby and the Closing. The provisions of this
Section shall survive the Closing and the delivery of the Deed, or
the earlier termination of this Agreement.
8. CLOSING OF TITLE.
Closing of title (herein referred to as the "Closing") shall
take place at the office of the Title Company on December 11, 1997
(herein referred to as the "Closing Date") at 10:00 a.m., or such
earlier date as the Purchaser shall notify the Seller, such notice
to be in writing and received by the Seller at least seven (7)
business days prior to the Closing Date, at which time Seller and
Purchaser will deliver to each other the items set forth in Exhibit
C annexed hereto and made a part hereof. Upon delivery of the Deed
to Purchaser, Purchaser shall immediately be charged with
constructive possession of the entire Property.
9. APPORTIONMENTS.
The following are to be apportioned as of 11:59 P.M. of the
day (hereinafter referred to as the "Adjustment Date") --
immediately preceding the Closing Date:
A. Rents under the Leases, as and when collected, subject to
the following:
In the event that there are any past due rentals (hereinafter
referred to as the "Past Due Rentals") for any month preceding the
month of Closing and/or for the month of Closing owing by tenants
under the Leases at the Closing Date it being agreed that: (i)
Seller is entitled hereunder to all past due rentals (net of
collection costs) accrued up to 11:59 P.M. of the Adjustment Date,
regardless of the period of delinquency, and Purchaser is entitled
hereunder to all rentals accruing thereafter, (ii) rents received
after Closing shall be applied to the current month's rent than to
delinquent rents; (iii) Purchaser will cooperate (exclusive of
litigation) with Seller in collection of such arrears; and (iv) any
rental arrears still outstanding ninety (90) days after the Closing
Date shall, at that time and upon request of Seller, be reassigned
to Seller who may commence litigation, in the nature of a debt
collection action, and not a tenant eviction action, to collect
same; Purchaser agrees that any of the Past Due Rentals received by
Purchaser subsequent to the Closing Date from the tenant(s) shall,
provided that such tenant(s) are not delinquent in their rental to
Purchaser under the respective Leases, be received by Purchaser as
trustee for Seller on account of, or in payment for, the Past Due
Rentals and Purchaser agrees to remit forthwith to Seller the
amount of the Past Due Rentals so collected to which Seller is
entitled, without claim of setoff, abatement or deduction other
than actual collection costs. Seller shall retain all rights to
rents and damages against the tenant(s) accruing prior to the
Closing Date, including, without limitation, any claims for damages
due to any such tenant's default.
If any rents relating to a period of time subsequent to the
Closing Date have been collected by Seller prior to the Closing
Date, then on the Closing Date, Seller shall allow to Purchaser a
credit against the Purchase Price in an amount equal to the portion
of such rent relating to the period of time subsequent to the
Closing Date, as mutually agreed to by Seller and Purchaser. Any
rents relating to a period of time subsequent to the Closing Date,
which are received by Seller shall be received as trustee for
Purchaser, and Seller agrees to remit forthwith to Purchaser the
amount so received by Seller.
When the rents have been finally determined, a final
adjustment shall be made in a post-closing adjustment.
B. Taxes, fixed annual sewer rents, and assessments, if any,
on the basis of the fiscal year or period for which assessed,
except that if the Closing Date shall occur before any applicable
tax rate, fixed annual sewer rent or assessment is fixed, then the
apportionment of taxes, fixed annual sewer rents or assessments
shall be upon the basis of the tax rate, fixed annual sewer rent,
or assessments for the next preceding year applied to the latest
assessed valuation available at the time of Closing, with a
reapportionment to be made when the next tax, fixed annual sewer
rent, or assessment is fixed.
C. If there are water meters on the Property, Seller, to the
extent that the same is obtainable, shall furnish a reading to a
date prior, and as close as possible to, the Closing Date, and the
unfixed charges for water and usage-based sewer charges as
reflected on the water meter, if any, based thereon for the
intervening period shall be apportioned on the basis of such last
reading, subject however to readjustment, as hereinafter provided.
The reading taken subsequent to, and as soon as possible following
the Closing Date will then be apportioned on a per diem basis from
the date of such reading immediately prior thereto and Seller shall
either pay the undercharge to Purchaser, or be reimbursed the
overcharge by Purchaser, based upon a comparison of the readings
taken prior and subsequent to the Closing Date. Unpaid water meter
charges, sewer rents and other utility charges for direct service
to tenants, if any, and for which such tenants are responsible for
payment under the terms of their respective Leases, or otherwise,
shall not be objections to title by Purchaser.
D. Seller will pay all public utilities (other than fixed
annual sewer rents, water and usage-based charges addressed above
in Section 9.B and Section 9.C, and those billed directly to any
tenant(s) and fuel oil, if any, based upon an actual reading taken
by the fuel oil supplier, up to the Closing Date, and if such
charges are not determined until after the Closing Date, they will,
based upon rates in effect prior to the Closing Date, be prorated
on a per diem basis. If there are transferable security deposits
for utilities and/or fuel oil, Purchaser shall pay to Seller on the
Closing Date an amount equal to such security deposits not returned
to Seller and Seller shall assign its right, title and interest in
such deposits to Purchaser.
E. All charges and fees for transferable licenses,
franchises, and permits, if any, and to the extent they are legally
transferable, on the basis of the periods of such licenses,
franchises and permits.
F. Unused service and supplies based upon Seller's cost for
the same, including sales tax.
G. Payments and charges relating to the maintenance,
operating and other service contracts (herein, the "Service
Contracts") set forth on Exhibit F annexed hereto and made a part
hereof.
H. Tenants' security deposits pursuant to Section 11.B of
this agreement.
I. Locater fees, if any.
J. Recording fees. Seller shall pay all fees for releasing
liens and encumbrances. Purchaser shall pay the fee for recording
the Deed and any financing documents.
K. Purchaser and Seller shall share equally all sales, gross
receipts [documentary], excise [transfer, deed excise] or similar
taxes and fees, imposed in connection with this transaction under
applicable state or local law.
L. Seller shall pay the cost of the Title Policy. Purchaser
shall pay the cost of any endorsements to the Title Policy.
M. Seller shall pay the cost of the survey.
N. Seller and Purchaser shall share equally the cost of the
Title Company escrow and closing fees.
The provisions of this Section 9 shall survive the Closing and
the delivery of the Deed for a period of six (6) months from the
Closing Date and any errors in any calculations and/or
apportionments made hereunder shall be corrected or adjusted within
such six (6) month period.
10. CONDITION OF PROPERTY; NO REPRESENTATIONS BY SELLER.
A. Except as expressly set forth in Section 16 of this
Agreement, Purchaser acknowledges that Seller, and the term
"Seller" as used in this Section 10 shall include any partner of
the Seller and any partner of any partner of the Seller, has made
no representations or warranties with respect to the Property or
the Personalty, including, without limitation, the value, quality
or character of the Property and/or the physical and environmental
condition thereof. Purchaser acknowledges that, except as
expressly set forth in this Agreement, neither Seller nor any
officer, employee, consultant or other person representing or
purportedly representing Seller has made, and Seller is not liable
for or bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements, or representations
pertaining to the physical and/or environmental condition or state
of repair of the Property, or any part thereof, the state of title
thereof, the income, collectability or legality of rents, expenses
and operation thereof, the uses which can be made of the same or
any other matter or thing with respect thereto. Without limiting
the foregoing, Purchaser acknowledges and agrees that, except as
expressly set forth in this Agreement, Seller is not liable or
bound by (and Purchaser has not relied upon) any verbal or written
statements, representations or any other information concerning the
Property, furnished by Seller or any past or present officer,
employee, consultant or other person representing or purportedly
representing Seller. Purchaser agrees, further, that Seller shall
not be responsible for any statements or representations of any
kind furnished to Purchaser by any real estate broker (including,
but not limited to, the Broker) or any other person or entity,
except as specifically set forth herein. Purchaser acknowledges
that it has received from Seller a photocopy of the report, dated
November 15, 1996, entitled Phase I Environmental Site Assessment,
Ashton Park Apartments, Tampa, Florida for MetLife Real Estate,
Atlanta, Georgia, Clayton Project No. 20-97079.00-002.
("Environmental Site Assessment), prepared by Clayton Environmental
Consultants, 400 Chastain Center Boulevard, NW, Suite 490,
Kennesaw, Georgia 30144 regarding certain aspects of the
environmental condition of the Property, and Purchaser further
acknowledges that: (i) it is purchasing the Property subject to the
matters reflected in said report, (ii) prior to the Closing it will
treat as confidential all matters reflected in said report, and
(iii) has not made any representation, warranty or covenant of any
nature whatsoever with respect to said report, including but not
limited to, the completeness or accuracy of said report, and Seller
shall have no liability whatsoever with respect to said report.
B. Purchaser represents that it has inspected, examined and
made an independent investigation of the physical and environmental
condition and value of the Property, that it knows the condition
and uses thereof, and agrees Purchaser is purchasing, and is
willing to accept the conveyance of the same on an "AS IS" "WHERE
IS" basis (i.e., in the condition existing on the Contract Date and
again on the Closing Date).
C. Nothing in this Agreement shall require Seller to incur
any expense of any kind whatsoever to repair, restore, or otherwise
cure any condition or state of facts with respect to the Property
or the Personalty.
E. Seller shall have no obligation under this Agreement to
cure any violations of laws, ordinances, regulations and orders
relating to the Property, including, without limitation, those
relating to zoning, building design, environmental protection,
hazardous substances, occupational safety and health and
architectural access (hereinafter collectively referred to as
"Laws"), nor shall such cure by Seller constitute a condition
precedent to Purchaser's obligations hereunder.
The provisions of this Section 10, shall survive the Closing
and the delivery of the Deed, or the earlier termination of this
Agreement.
11. TENANCIES AND LEASES.
A. The Property is to be conveyed subject to and with the
benefit of the Leases. Purchaser acknowledges that it has fully
reviewed and examined the Leases and finds the Leases to be
satisfactory.
B. At Closing, Seller shall transfer or credit to Purchaser
all security deposits not previously applied to tenant obligations
under the Leases (and interest thereon if required by law or
contract to be earned thereon) (hereinafter referred to as the
"Security Deposits"). Purchaser shall, and hereby agrees to,
indemnify and hold harmless Seller and its successors and assigns
from all claims, losses, liabilities, costs and expenses,
including, without limitation, attorneys' fees and disbursements,
with respect to the Security Deposits, together with any accrued
interest and interest to accrue thereon and the future application
thereof. The provisions of this Section shall survive the Closing
and the delivery of the Deed.
12. FIRE, CASUALTY AND CONDEMNATION.
A. The risk of loss, damage or destruction to the Property
by fire or other casualty until the Closing is retained by Seller,
but without any obligation or liability by Seller to repair or
restore the Property. Seller shall maintain in effect through the
Closing Date, policies of fire and casualty insurance in an amount
equal to the Purchase Price, less a deductible (hereinafter
referred to as the "Deductible" in the amount of not more than
Fifty Thousand ($50,000), with a replacement cost endorsement.
B. If at any time prior to Closing, any portion of the
Property is destroyed or damaged as a result of (a) fire or any
other casualty (hereinafter collectively referred to as
"Casualty"), or (b) a taking in eminent domain (hereinafter
referred to as "Taking"), Seller shall promptly give written notice
thereof (hereinafter referred to as the "Damage Notice") to
Purchaser, including a statement by Seller of its insurance
company's estimate (hereinafter referred to as the "Estimate"),
acting reasonably, of the cost of fully repairing and restoring the
Property, or in the case of a Taking, the remaining portion of the
Property, (to the extent practicable) to the condition which
existed prior to the Casualty or Taking, as the case may be. The
Estimate shall be conclusive and binding upon Purchaser and Seller.
Any damage to or destruction of the Property as a result of a
Casualty or Taking shall be deemed to be immaterial for purposes of
this Agreement if the Estimate is Two Hundred Thousand Dollars
($200,000.00) or less. If such damage or destruction is deemed to
be immaterial (as aforesaid), neither Party shall have the right to
terminate this Agreement and there shall be no abatement in the
Purchase Price, and in lieu of any such abatement, Seller shall:
(i) execute, acknowledge and deliver to Purchaser at the Closing,
in counterparts, an assignment, expressly made without
representation or warranty by Seller and without recourse to
Seller, of Seller's interest in any net insurance or condemnation
proceeds (that is, after the reasonable expenses of collection)
which may be payable to Seller as a result of such Casualty or
Taking, subject, however to Seller's right to receive reimbursement
therefrom of any amounts paid or incurred by Seller for or on
account of repairs and/or restoration of the Property prior to the
Closing; and (ii) allow Purchaser a credit against the Purchase
Price in an amount equal to the Deductible.
C. If there shall be material (i.e., the Estimate is more
than Two Hundred Thousand Dollars ($200,000.00)) damage to, or
destruction of, the Property as a result of a Casualty or Taking
prior to the Closing, Purchaser shall have the right to terminate
this Agreement by providing written notice to the Seller within ten
(10) days after Purchaser's receipt of the Damage Notice from
Seller. Upon such termination, Seller shall return to Purchaser
the Contract Deposit shall be returned to the Purchaser, together
with any and all interest earned thereon, and upon such return of
the Contract Deposit, together with any and all interest earned
thereon, all claims and obligations of the Parties, except as
otherwise expressly provided herein, shall be immediately released
and discharged. Notwithstanding any of the foregoing, the
provisions of this Agreement and the Exhibits thereto which
expressly state that the same survive the termination of this
Agreement shall survive such termination. If Purchaser elects not
to terminate this Agreement in accordance with the foregoing terms
of this Section, there shall be no abatement in the Purchase Price,
and in lieu of any such abatement, Seller shall: (i) execute,
acknowledge and deliver to Purchaser at the Closing, in
counterparts, an assignment, expressly made without representation
or warranty by Seller and without recourse to Seller, of Seller's
interest in any net insurance or condemnation proceeds (that is,
after the reasonable expenses of collection) which may be payable
to Seller as a result of such casualty or taking, subject, however,
to Seller's right to receive reimbursement therefrom of any amounts
paid or incurred by Seller for or on account of repairs and/or
restoration to the Property prior to the Closing; and (ii) allow
Purchaser a credit against the Purchase Price in an amount equal to
the Deductible.
13. TITLE.
A. Purchaser acknowledges that Purchaser has prior to the
Contract Date: (i) been provided with a photocopy of the existing
Title Insurance Policy for the Property ; and (ii) has been
provided a report of title or title commitment (hereinafter
referred to as the "Commonwealth Title Commitment") from the Title
Company a copy of which is annexed hereto as Exhibit E.
B. Seller's obligations under this Agreement in connection
with the transfer to Purchaser of fee simple title (hereinafter
referred to as "Title") to the Land and the Improvements (i.e.,
that portion of the Property which constitutes real property) shall
be to transfer Title to the Land and Improvements in recordable
form, subject to no liens, claims, encumbrances, rights-of-way,
easements, restrictions, reservations, covenants, conditions,
claims, liabilities, charges, reversions or other agreements or any
other matter affecting title, except for the exceptions approved by
Purchaser during the Review Period described in the Letter of
Intent executed by the Parties on October 14, 1997. The Review
Period began on October 24, 1997 and ends on November 24, 1997.
After the Review Period has passed, Seller's obligations in
connection with Title shall be to transfer subject to the
exceptions listed on Exhibit H annexed hereto and made a part
hereof (hereinafter referred to as the "Permitted Exceptions"),
which shall include (but not be limited to) any state of facts a
survey thereof would show, as well as any additional or later state
of facts which an accurate re-date or re-survey or survey
inspection would show. Seller may approve or disapprove the survey
for any reason during the Review Period. After the Review Period
has passed, Seller's obligations in connection with survey shall be
to provide a survey which satisfies the standards set forth on
Exhibit J.
C. Purchaser's obligation under this Agreement in connection
with the transfer by Seller of Title to the Land and Improvements
shall be to accept such Title to the extent the same is in full and
complete satisfaction of the standards for the Survey and the
standards for Title as set forth more specifically in Exhibits I
and J, Section 20.B and Section 20.C of this Agreement, unless any
of such standards, as aforesaid, have been waived in writing by
Purchaser at or prior to the Closing. Notwithstanding the
foregoing, Purchaser acknowledges that the aforementioned standards
for the Survey and the standards for Title shall not impose any
obligations under this Agreement upon Seller, and that Seller's
obligations under this Agreement in connection with the transfer of
Title to Purchaser are set forth in Section 13.B hereof.
D. If, at the Closing, there shall be any liens,
encumbrances or charges affecting title which are not permitted
pursuant to this Agreement, then Seller may, upon request from
Seller to Purchaser, require Purchaser to apply such portion of the
balance of the Purchase Price as shall be necessary to discharge
such liens, encumbrances and charges and pay the recording fees,
and in such event Seller shall deliver to Purchaser instruments in
recordable form sufficient to discharge the same of record. If
request is made by Seller within a reasonable time prior to the
Closing Date, Purchaser shall provide at the Closing, separate
certified checks as requested to facilitate the satisfaction of
such liens, encumbrances and charges. The existence of such liens,
encumbrances and charges shall not be objections to title if Seller
complies with the provisions of this paragraph. Seller shall be
conclusively deemed to have fulfilled the requirements of this
Agreement as to title if the Title Company (or any other reputable
title insurance company) will insure such title at regular rates in
accordance with the provisions of this Agreement, subject to the
exceptions permitted pursuant to this Agreement and the matters
referred to in Exhibit H (Permitted Exceptions) hereto.
E. From the contract Date through the Closing Date, Seller
agrees that Seller shall not mortgage or further encumber the
Property, without first obtaining Purchaser's written consent.
14. NONASSIGNABLE CONTRACT.
Purchaser shall not have the right, without Seller's prior
written consent, which consent may be withheld in Seller's sole
discretion, to assign or transfer any of Purchaser's rights,
obligations and interests under this Agreement, and Purchaser shall
indemnify and hold harmless Seller and Seller's successors and
assigns, from and against any and all claims, damages, losses,
costs, expenses and liabilities, including, without limitation,
attorneys' fees and disbursements, arising out of Purchaser's
failure to comply with its obligations under this Section 14.
Notwithstanding anything to the contrary set forth in this
Agreement, Purchaser may assign Purchaser's rights, obligations and
interests under this Agreement, without Seller's prior written
consent to an affiliate, the majority of the interests in which are
owned by the Purchaser. If such assignment is made, the sale
contemplated by this Agreement shall be consummated in the name and
by and through the authorized officials of any such assignee.
Any assignment or transfer of this Agreement made without
Seller's prior written consent shall be void and a material breach
of this Agreement and such assignee or transferee shall acquire no
rights hereunder. The provisions of this Section shall survive the
Closing and the delivery of the Deed or the earlier termination of
this Agreement.
15. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
As a material inducement to Seller to execute this Agreement
and consummate this transaction, Purchaser covenants, represents
and warrants to Seller as follows:
A. Purchaser is duly organized, validly existing and in good
standing under the laws of the State of Maryland and shall be
qualified to do business in the state where the Property is
located.
B. Purchaser has all requisite and necessary power and
authority to execute and deliver this Agreement and to perform
Purchaser's obligations hereunder or contemplated hereby.
C. The execution, delivery and performance by Purchaser of
its obligations under this Agreement will not result in a breach of
any of the terms or provisions of, or constitute a default (or a
condition which, upon notice or lapse of time or both, would
constitute a default) under any agreement, instrument or obligation
to which Purchaser is a party or by which Purchaser is bound and
will not constitute a violation of any law, regulation, order,
judgment, writ, injunction or decree applicable to Purchaser of any
court of other governmental authority having jurisdiction over
Purchaser.
D. There are no judgments, actions, suits or proceedings
existing or pending (or, to the knowledge of Purchaser's officers,
threatened) against Purchaser, at law or in equity, before or by
any governmental authority having jurisdiction over Purchaser,
which could have a material and adverse effect upon its performance
of this Agreement.
E. This Agreement is the legal and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms.
16. SELLER'S REPRESENTATIONS AND WARRANTIES.
As a material inducement to Purchaser to execute this
Agreement and consummate this transaction, Seller represents and
warrants to Purchaser as follows:
A. Seller is duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified
to do business in the state in which the Property is located.
B. Seller has all requisite and necessary power and
authority to execute and deliver this Agreement and to perform
Seller's obligations hereunder or contemplated hereby.
C. The execution, delivery and performance by Seller of its
obligations under this Agreement will not result in a breach of any
of the terms or provisions of, or constitute a default (or a
condition which, upon notice or lapse of time or both, would
constitute a default) under any agreement, instrument or obligation
to which Seller is a party or by which Seller is bound and will not
constitute a violation of any law, regulation, order, judgment,
writ, injunction or decree applicable to Seller of any court of
other governmental authority having jurisdiction over Seller.
D. There are no judgments, actions, suits or proceedings
existing or pending (or, to the best of Seller's knowledge
threatened) against Seller, at law or in equity, before or by any
governmental authority having jurisdiction over Seller, which could
have a material and adverse effect upon its performance of this
Agreement.
E. This Agreement is the legal and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
F. To the best of Seller's knowledge, the list of the
Service Contracts set forth on Exhibit F annexed hereto, and the
Rent Roll set forth on Exhibit G are true and complete in all
material respects and there are no oral agreements with anyone,
including Tenants, with respect to the Property or any portion
thereof.
G. To the best of Seller's knowledge, there are no
condemnation proceedings pending affecting the Property, nor has
Seller received any written notices of any litigation or violations
of laws affecting the Property.
H. All of the present Leases are in writing, on a standard
form and, 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.
I. The Leases will not be amended in any way after the date
hereof, other than in the ordinary course of business without the
prior, written consent of Purchaser, which consent shall not be
unreasonably withheld, conditioned and delayed. Purchaser, unless
it otherwise shall advise Seller in writing within three (3) days
following Seller's request for such consent, shall be deemed to
have consented to any such amendment.
J. To the best of Seller's knowledge and except as stated in
the Rent Roll, there are no uncured defaults on the part of any
party to any of the Leases, and Seller is in full compliance with
all of lessor's obligations thereunder.
K. None of the rentals due or to become due under the Leases
will be assigned, encumbered, or subject to any liens at the
Closing other than the Permitted Exceptions.
L. To the best of Seller's knowledge the operating
statements provided to the Purchaser are accurate in all material
respects.
M. Compliance with Applicable Regulations. To Seller's
knowledge: (a) the Property and the operation thereof currently are
in substantial compliance with the requirements of all applicable
statutes, ordinances or regulations applicable to the Property, and
(b) there are no written commitments or agreements with any of the
governmental agencies having jurisdiction over the Property which
have not been fully disclosed to Purchaser in writing.
N. Proceedings; Environmental. To Seller's knowledge, are
there no pending or threatened judgments, judicial proceedings or
administrative actions of a material nature relating to the
Property or to the Seller. To Seller's knowledge and other than as
set forth in the Environmental Site Assessment, regarding which
Seller makes no representations or warranties whatever, Seller
knows of no facts which change or alter the facts and
recommendations contained in the Environmental Site Assessment.
O. Insurance. Seller will not renew, amend, or reduce the
coverage under or cancel, any existing policy or procure any new
policy other than in the ordinary course of business without
Purchaser's prior, written consent, which shall not be unreasonably
withheld, conditioned or delayed. Purchaser, at Closing, shall
obtain its own insurance coverage. Seller has received no notices
from any insurer of the requesting any improvements, alterations,
additions, correction or other work in, on or about the
Improvements, whether related to the Property or to the operation
of any occupant thereof, which have not been cured or satisfied.
P. Maintenance of Property Until Closing. Seller, at its
expense, will maintain the Property in the ordinary course of
business until Closing excepting only ordinary wear and tear and
damage or loss thereto covered by insurance. In the event of any
material breakdown, malfunction or other similar event (other than
of a type covered, and to the extent covered, by insurance)
occurring prior to the Closing, whether or not the same is covered
by any service warranty or contract, the parties hereto will
cooperate so as mutually to determine the cost of repairing or
restoring the same, and Seller will cause the same to be repaired
and restored at no cost to Purchaser either prior to Closing or
within a reasonable time after Closing. Until Closing, Seller
shall continue the operation of the Property in the normal and
usual manner, will not remove any fixtures, furnishings, equipment
or personalty subject to this Agreement, except for repair or
replacement.
Q. Service Contracts. At Closing, no contract of any kind,
including contracts for servicing, operating or managing the
Property, will be effective and binding upon the Property or
Purchaser, except as disclosed on Exhibit F. Seller will not enter
into any other service, operating or management contracts relative
to the Property that cannot be canceled on thirty (30) days' notice
without the prior, written consent of Purchaser, nor will Seller
make, or agree to, prior to Closing, any change or modification to
the contracts set forth in Exhibit F, other than in the ordinary
course of business, without the prior, written consent of
Purchaser. The management agreement relating to the Property is
not set forth at Exhibit F, and shall be terminated effective on
the date of Closing. Seller agrees that benefits or compensation
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.
R. Closing Not Constituting Breach. The consummation of the
transaction contemplated herein will not result in the breach of
any provision in any lease or other agreement affecting the
Property.
S. Access to Property. Seller to its knowledge has received
no written notices of the existence of any fact or condition which
would result in the termination or restriction of the current
access from the Property to any presently existing highways and
roadways adjoining, situated on or otherwise serving the Property
or to any sewer or other utility adjoining, situated or otherwise
serving the Property.
T. Seller's Non-foreign Status. Seller is not a "foreign
person" within the meaning of Sections 1445 and 7701 of the
Internal Revenue Code of 1954, as amended; that is, Seller is not
a non-resident alien, foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code of 1986, as now existing or hereafter
amended). Seller shall delivery to Purchaser an affidavit to that
effect.
For purposes of the foregoing, the phrases "To Seller's
knowledge" or "to the best of Seller's knowledge" means the actual
knowledge of Sean P. Henry, Vice President of Seller, without
having undertaken any independent investigation. The
representations and warranties set forth in the foregoing Sections
15 and 16 are made as of the date of this Agreement and are remade
as of the Closing Date and shall survive the Closing and delivery
of the Deed for a period of six (6) months ("Survival Period"). At
the Closing, Seller shall deliver to Purchaser a certificate
certifying that as of the Closing Date, the representations and
warranties in this Section 16 are true and correct. Seller and
Purchaser shall have the right to bring a claim thereon only if
Seller or Purchaser, as the case may be, has given the other Party
written notice of such claim within the Survival Period. Each
Party agrees to defend and indemnify the other against any claim,
liability, damage or expense asserted against or suffered by such
other Party during the Survival Period arising out of (1) the
breach or inaccuracy of any such representation or warranty. The
Parties agree, in the event that either Party commences an action
against the other alleging or claiming a failure of representation
or warranty, the prevailing Party in any such action shall be
entitled to recover attorneys' fees and disburse monies from the
other Party.
17. ACCESS TO PROPERTY.
Between the Contract Date and the Closing Date, Purchaser and
Purchaser's representatives shall be afforded, upon notice to
Seller and at reasonable times and in a reasonable manner, access
to the Property for the purposes of inspecting the same in order to
determine whether the conditions set forth in Section 20 hereof
have been satisfied.
18. DISCHARGE OF SELLER'S OBLIGATIONS HEREUNDER.
The delivery of the Deed by Seller, and the acceptance thereby
by Purchaser, shall be deemed the full performance and discharge of
every obligation on the part of Seller to be performed hereunder
(except for any obligations of Seller specifically stated to
survive the Closing and the delivery of the Deed), and an
acknowledgment by Seller and Purchaser that the conditions
precedent to Purchaser's and Seller's obligations under this
Agreement, as set forth more specifically in Section 20 and Section
21, respectively, of this Agreement, have been fully and completely
satisfied.
19. SIGNAGE
Purchaser agrees that:
A. Purchaser shall within sixty (60) days of the closing,
and at the sole cost and expense of the Purchaser, remove and signs
or other symbols (herein collectively referred to as the "signs")
located on or about the Property and/or the Improvements and which
contain or refer to the name of the Seller, and that subsequent to
the Closing, Purchaser shall not use the name "Windsor" in
referring, identifying or otherwise naming the Property.
B. In the event that Purchaser fails to remove the signs as
required herein, Seller shall have the right and Purchaser hereby
grants Seller an irrevocable license, for a six (6) month period
following the Closing Date, to enter upon the Property, at
reasonable times and in a reasonable manner in order to remove the
signs, at the cost and expense of the Purchaser.
The provisions of this Section 19 shall survive the Closing
and delivery of the Deed.
20. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.
The obligations of Purchaser to purchase the Property and to
perform under this Agreement at the Closing shall be subject to,
among the other terms, provisions, covenants and conditions of this
Agreement that are required to be complied with by Seller, the
satisfaction, as of the Closing Date, of the following conditions:
A. The representations and warranties made by Seller in
Section 16 of this Agreement, and the information contained in any
written materials relating to the Property furnished to Purchaser
by Seller, shall be true in all material respects as of the Closing
Date, and Seller shall have delivered to Purchaser those items set
forth in Exhibit C annexed hereto required to be delivered by
Seller.
B. The Survey complies with the standards described on
Exhibit I annexed hereto and made a part hereof (provided that
Purchaser acknowledges and agrees that: (i) any failure of the
Survey to meet such standards to the extent that any such failure
does not involve illegality or non-compliance with applicable Laws
shall be waived by Purchaser if such failure is the subject of
affirmative title insurance coverage satisfactory to Purchaser
insuring over such failure; and (ii) the standards for the Survey
as so set forth on Exhibit I hereto shall only relate to
Purchaser's obligation to purchase the Property and to perform
under this Agreement at the Closing, and shall not be deemed to
create or impose any obligations upon Seller under this Agreement
with respect thereto).
C. Title to the Land and the Improvements complies with the
standards described on Exhibit J annexed hereto and made a part
hereof (it being understood and agreed that the standards for Title
to the Land and Improvements as so set forth on Exhibit J hereto
shall only relate to Purchaser's obligation to purchase the
Property and to perform under this Agreement at the Closing, and
shall not be deemed to create or impose any obligations upon Seller
under this Agreement with respect to title to the Land and
Improvements, which obligations of Seller are instead set forth in
Section 13B of this Agreement).
D. The Representations and Warranties made by Seller in
Section 16 of this Agreement shall be true in all material respects
as of the Closing Date and Seller shall have delivered to Purchaser
or into escrow with the Title Company those items set forth in
Exhibit C annexed hereto required to be delivered by Seller.
21. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
The obligations of Seller to sell the Property and to perform
under this Agreement at the Closing shall be subject to, among the
other terms, provisions, covenants and conditions of this Agreement
that are required to be complied with by Purchaser, the
satisfaction of the following conditions:
A. The full payment of the Purchase Price in the manner set
forth in Section 2.
B. The representations and warranties made by Purchaser in
Section 15 of this Agreement shall be true in all material respects
as of the Closing Date, and Purchaser shall have delivered to
Seller those items set forth in Exhibit C annexed hereto required
to be delivered by Purchaser.
C. On or prior to the Closing Date, the Seller and the
Seller's affiliates shall have been released from all obligations
under the Debt Financing Documents in accordance with the terms of
the Debt Financing Documents,
22. MISCELLANEOUS
A. Possession: As of the Closing Date, Seller agrees to
deliver possession of the Property to Purchaser, subject to the
Leases and the exceptions to title permitted pursuant to this
Agreement and the matters referred to on Exhibit H annexed hereto
and made a part hereof.
B. Counterparts: Captions and Headings: This Agreement may
be executed in counterparts, each of which shall be deemed an
original. Captions and headings used herein are for reference only
and shall in no way be deemed to define, limit, explain, or amplify
any provision hereof.
C. No Oral Change: This Agreement may not be changed or
canceled orally but only by a written agreement executed by the
Parties.
D. Prior Understanding: This Agreement and the Exhibits
attached hereto constitute the entire agreement between the Parties
with respect to the subject matter hereof, and all understandings
and agreements heretofore or simultaneously had between the Parties
are merged in and are contained in this Agreement.
E. Waivers; Extensions: This Agreement may not be waived,
changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom any waiver, change,
modification or discharge is sought. No waiver of any breach of
any agreement or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof or of any
other agreement or provision herein contained. No extension of
time for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or
acts. The Parties do not intend to confer any right or benefit
under or pursuant to this Agreement on any person or entity other
than the Parties.
F. Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the state in which the
Property is located.
G. Pronouns: All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties may require.
H. Calculation of Time Periods: With respect to any time
periods set forth herein which commenced from the date of this
Agreement, it is understood and agreed that such time period
commences from the date of final execution of this Agreement by the
Parties, including execution of any riders or amendments hereto, if
any, and the initialing of changes, if required, and the date of
this Agreement shall be the date the last signatory executes,
initials, and dates this Agreement and any such riders or
amendments.
I. Waiver of Jury Trial: Seller and Purchaser do hereby
waive trial by jury in any action, proceeding or counterclaim
brought by either Party hereto against the other on any matter
whatsoever relating to or arising out of this Agreement or the
transaction contemplated hereby. The terms of the immediately
preceding sentence shall survive the Closing and delivery of the
Deed and the termination of this Agreement.
J. Binding Effect: This Agreement shall be binding upon and
inure to the benefit of the Parties, and their respective legal
representatives, heirs, executors, administrators, successors, and
assigns.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed or caused this
Agreement to be executed by their respective duly authorized
representatives as of the day and year first above written.
WITNESS SELLER:
Windsor at Ashton Park Limited Partnership
By: Windsor at Ashton Park
Investors Corporation
By:
Sean P. Henry, Vice President
WITNESS PURCHASER:
Walden Residential Properties, Inc.
By:
I:\FINANCE\SECFIL~1\10-K-97\EX-10-16.WPD
2 RKM:ng 11/21/97
AGREEMENT OF SALE AND PURCHASE
between
Windsor at Parkway Station Limited Partnership
Seller
and
Walden Residential Properties, Inc.
Purchaser
Date: As of November 14, 1997
Property:
Windsor at Parkway Station
3555 Austell Road
Marietta, Georgia
TABLE OF CONTENTS
1. Property To Be Conveyed. . . . . . . . . . . . . . . .1
2. Purchase Price.. . . . . . . . . . . . . . . . . . . .3
3. No Recording.. . . . . . . . . . . . . . . . . . . . .3
4. Inability To Fulfill The Contract. . . . . . . . . . .4
5. Notices. . . . . . . . . . . . . . . . . . . . . . . .6
6. Real Estate Brokers. . . . . . . . . . . . . . . . . .7
7. Fees And Disbursements Of Counsel, Etc.. . . . . . . .8
8. Closing Of Title.. . . . . . . . . . . . . . . . . . .8
9. Apportionments.. . . . . . . . . . . . . . . . . . . .8
10. Condition Of Property; No Representations
By Seller. . . . . . . . . . . . . . . . . . . . . . 10
11. Tenancies And Leases.. . . . . . . . . . . . . . . . 12
12. Fire, Casualty And Condemnation. . . . . . . . . . . 12
13. Title. . . . . . . . . . . . . . . . . . . . . . . . 13
14. Nonassignable Contract.. . . . . . . . . . . . . . . 15
15. Purchaser's Representations And Warranties.. . . . . 15
16. Seller's Representations And Warranties. . . . . . . 16
17. Access To Property.. . . . . . . . . . . . . . . . . 19
18. Discharge Of Seller's Obligations Hereunder. . . . . 19
19. Signage. . . . . . . . . . . . . . . . . . . . . . . 19
20. Conditions Precedent To Purchaser's Obligations. . . 20
21. Conditions Precedent To Seller's Obligations.. . . . 21
22. Miscellaneous. . . . . . . . . . . . . . . . . . . . 21
EXHIBITS:
Exhibit A - Description Of Land
Exhibit B - Personalty
Exhibit C - Documents To Be Delivered; Obligations Of
Purchaser And Seller
Exhibit D - Wiring Instructions - Commonwealth Land Title
Insurance Company
Exhibit D-1 - Wiring Instructions - BankBoston, N.A. - Windsor
Realty Fund-I L.P.
Exhibit E - Commonwealth Insurance Commitment
Exhibit F - Service Contracts
Exhibit G - Rent Roll
Exhibit H - Permitted Exceptions
Exhibit I - Survey Standards
Exhibit J - Standards For Title To Land And Improvements
Exhibit K - Special Warranty Deed
Exhibit L - Bill Of Sale
Schedule M - Assignment Agreement Regarding Leases
Exhibit N - Assignment Agreement Regarding Security Deposits
Exhibit O - Assignment Agreement Regarding Service Contracts
Exhibit P - Certificate Regarding Foreign Investment in Real
Property Tax Act
This AGREEMENT OF SALE AND PURCHASE (hereinafter referred to
as this "Agreement"), entered into as of this 14 day of November,
1997 (the "Contract Date"), by and between Windsor at Parkway
Station Limited Partnership, a Delaware limited partnership, having
its principal place of business at 600 Atlantic Avenue, Suite 2000,
Boston, MA 02210 (hereinafter referred to as "Seller") and Walden
Residential Properties, Inc., a Maryland corporation having its
principal place of business at One Lincoln Centre, 5400 LBJ
Freeway, Suite 400, Dallas, Texas 75940 (hereinafter referred to as
"Purchaser"). Seller and Purchaser are hereinafter sometimes
respectively referred to individually as "Party" and collectively
as "Parties".
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Property (as hereinafter
defined), which is located in the City of Marietta, County of Cobb,
State of Georgia, the improved portions of which are known as
street address 3555 Austell Road; and
WHEREAS, Seller is desirous of selling the Property to
Purchaser and Purchaser is desirous of buying the Property from
Seller; and
WHEREAS, Seller and Purchaser desire to set forth their mutual
understandings and agreements with respect to the sale and purchase
of the Property.
NOW THEREFORE, in consideration of these premises and the
mutual promises and covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties do hereby agree as follows:
1. PROPERTY TO BE CONVEYED.
Upon and subject to the following terms, agreements, covenants
and conditions, Seller agrees to sell and convey to Purchaser and
Purchaser agrees to purchase from Seller that certain parcel of
land more particularly described in Exhibit A annexed hereto and
made a part hereof (hereinafter referred to as the "Land"),
TOGETHER WITH all of the following:
(a) All buildings, structures and other improvements
(hereinafter collectively referred to as the "Improvements")
located, placed, erected or constructed upon the Land.
(b) All of Seller's estate, right, title and interest, if,
any, in and to any and all streets, roads, alleys, strips or gores
adjoining the Land, all easements, rights of way, air rights,
privileges, licenses, hereditaments, and any appurtenances and
other rights and benefits belonging, or in any way related, to the
Land, including, without limitation, any and all development rights
appurtenant and related solely to the Land; and all right, title
and interest of Seller, if any, in and to any award made or to be
made in lieu thereof and in and to any award for damage to the Land
or the Improvements by reason of any change of grade in, or partial
or total discontinuance of any street or road.
(c) Seller's right, title, and interest, if any, to those
items of personal property listed on Exhibit B annexed hereto and
made a part hereof.
(d) All of Seller's right, title and interest, to the leases
and license agreements, as amended, shown on Exhibit G annexed
hereto, a current rent roll, as said Exhibit G may be modified
between the date of this Agreement and the Closing Date as
contemplated by Section 11 (hereinafter referred to as the
"Leases").
(e) Seller's right, title and interest, if any, in the
intangible personal property, being all intangible personal
property related to the Land and Improvements, including, without
limitation; all trade names and trade marks associated with the
Land and the Improvements, including Seller's rights and interests
in the name of the Property, but excluding the right to use the
name "Windsor" or any materials containing that name; (all of the
items enumerated under clauses (c) and (e) being collectively
referred to herein as the "Personalty"). Purchaser agrees to pay,
and Purchaser hereby agrees to indemnify and hold Seller and
Seller's successors and assigns harmless from and against, any and
all sales taxes, if any, which may at any time be assessed in
connection with the sale of Seller's interest, if any, in the
Personalty. The provisions of this Section shall survive the
Closing and the delivery of the Deed.
(f) All of Seller's estate, right, title and interest, if
any, in the Service Contracts set forth on Exhibit F annexed
hereto, the plans and specifications and other architectural and
engineering drawings for the Improvements, if any; warranties if
still in effect; contract rights related to the construction,
operation, ownership or management of the property (but only to the
extent Seller's obligations thereunder are expressly assumed by
Purchaser pursuant to this Agreement and specifically excluding the
current management agreement between Seller and Windsor Investment
Company, Inc. which shall be terminated effective as at the Closing
Date as hereinafter defined); governmental permits, approvals and
licenses (to the extent assignable); tenant list and
correspondence; telephone exchange numbers (to the extent
assignable) and all promotional materials relating to the Property
but, again, specifically excluding the right to use the name
"Windsor" or any materials containing that name. Notwithstanding
the foregoing Seller agrees that Purchaser may use the "Windsor"
name on materials containing that name for a transition period
ending sixty (60) days after the Closing Date.
The Land and those items enumerated under the foregoing
clauses (a), (b), (c) (d), (e) and (f), together with Seller's
right, title and interest in and to any and all other property,
which under the provisions of Exhibit C hereto and made a part
hereof are to be transferred, assigned or set over unto Purchaser,
are herein collectively referred to as the "Property".
2. PURCHASE PRICE.
The purchase price (hereinafter referred to as the "Purchase
Price") payable by Purchaser to Seller for the Property is Eighteen
Million, Four Hundred Thousand Dollars ($18,400,000). The Purchase
Price shall be payable by Purchaser as follows:
(i) simultaneously with the execution of this Agreement,
the sum of One Hundred and Eighty Thousand Dollars ($180,000) in
the form of a wire transfer of immediately available Federal Funds
to the account of Commonwealth Land Title Insurance Company
(Georgia or Boston office, but not yet determined which
one)(hereinafter referred to as the "Title Company") (in accordance
with the wiring instructions set forth on Exhibit D hereto), shall
be paid to the Title Company as escrow agent as a deposit hereunder
(hereinafter being referred to as the "Contract Deposit"). The
Title Company shall hold the Contract Deposit in escrow in an
interest-bearing bank account. Any and all interest earned on the
Contract Deposit shall become and be deemed to be a part of the
Contract Deposit. If the transaction contemplated hereby does not
close because of a default by Purchaser, then the Contract Deposit
shall be paid to the Seller pursuant to, and in accordance with,
the provisions of Section 4.C. hereof. In the event the
transaction contemplated hereby does not close because of the
inability or failure of Seller to fulfill Seller's obligations
under this Agreement, the Contract Deposit shall be returned to
Purchaser pursuant to, and in accordance with, the provisions of
Section 4.A. hereof, unless Purchaser invokes the rights afforded
Purchaser by virtue of Section 4.B. hereof; Notwithstanding the
above, Purchaser may choose in its sole and absolute discretion, by
giving written notice to Seller, to terminate this Agreement for
any reason until 5:00 p.m. EST on Monday, November 24, 1997, the
end of the Purchaser's Review Period (as defined in Section 13B),
whereupon the Contract Deposit shall be returned to the Purchaser
and the parties shall have no further obligations to one another;
(ii) At the Closing (as hereinafter defined in Section 8
hereof), the sum of Eighteen Million, Two Hundred and Twenty
Thousand Dollars ($18,220,000) shall be paid to the Seller (which
sum shall be adjusted to reflect all credits and adjustments
required pursuant to this Agreement) by wire transfer of
immediately available Federal Funds to the account designated on
Exhibit D-1 annexed hereto and made a part hereof (or to such other
account or in such other manner as may otherwise be directed by
Seller by written notice received by Purchaser prior to Closing.
3. NO RECORDING.
Purchaser and Seller each agree that it will not record this
Agreement nor any memorandum or notice thereof without the prior
written consent of the other Party. Any recording in violation of
this provision shall be void ab initio and shall be a material
breach hereof and hereunder, and the Party who records this
Agreement shall be liable for all fees and costs incurred in order
to clear said recorded instrument from the records, including,
without limitation, attorneys' fees and disbursements. The
provisions of this Section 3 shall survive the Closing and the
delivery of the Deed (as defined in Paragraph 1 of Exhibit C
annexed hereto and made a part hereof), or the earlier termination
of this Agreement.
4. INABILITY TO FULFILL THE CONTRACT.
A. If, at the Closing, Seller is unable to convey to
Purchaser title to the Property
in accordance with the provisions of this Agreement, or if Seller
is otherwise unable to fulfill Seller's obligations pursuant to
this Agreement due to a circumstance beyond Seller's control,
Seller shall be entitled, upon written notice delivered to
Purchaser at or prior to the Closing Date, to reasonable
adjournments of the Closing Date one or more times, for a period or
periods not to exceed, in the aggregate, thirty (30) days, to
enable Seller to convey such title or to fulfill such obligations.
Seller agrees not to place any voluntary liens on the Property
between the Contract Date and the Closing Date. If Seller does not
so elect to adjourn the Closing, or if at the adjourned date Seller
is still unable to convey title to the Property or is still unable
to fulfill Seller's obligations pursuant to this Agreement,
Purchaser shall have the option to either: (i) accept such title as
Seller can convey, without reduction in, or abatement of, the
Purchase Price and without receipt of any credit or allowance on
account thereof, and without any claim against Seller; or (ii)
terminate this Agreement by written notice to Seller delivered as
provided in Section 5 hereof (in which event Purchaser's sole
remedy shall be the refund the Contract Deposit to Purchaser, and
upon such refund being made to Purchaser, then this Agreement shall
automatically become void and of no further force or effect, and
neither Party shall have any obligations of any nature to the other
hereunder or by reason hereof, except obligations which, pursuant
to the provisions of this Agreement or the Exhibits annexed hereto,
expressly state that such provisions survive the termination of
this Agreement). If Seller elects to adjourn the Closing as
provided above, this Agreement shall remain in effect for the
period or periods of adjournments, in accordance with its terms.
Nothing contained in this Agreement shall be deemed to require
Seller to bring any action or proceeding or to take any other steps
to remove any defect in, or exception or objection to, title or to
fulfill any condition, or to expend any moneys therefor, nor shall
Purchaser have any right of action against Seller, at law and/or in
equity, for damages or for specific performance in connection
therewith.
B. Seller agrees not to place any voluntary liens on the
Property between the Contract Date and the Closing Date. If Seller
is unable to close as of the Closing Date due to the existence of
a voluntary lien on the Property, Seller shall remove such lien.
If Seller fails to so remove and close, Purchaser shall be entitled
to institute an action for specific performance as described below.
If title does not close due to the foregoing or any other
intentional default of Seller, Purchaser shall have the right to
maintain an action of specific performance provided Purchaser
commences such action within thirty (30) days of the Closing Date
as the same may be extended and/or adjourned pursuant to and in
accordance with the terms hereof. Purchaser acknowledges and
agrees, for purposes hereof, that an intentional default by Seller
shall not include the Seller's inability to convey to Purchaser
title to the Property in accordance with the provisions of this
Agreement. The Parties agree, in the event that Purchaser
commences an action of specific performance, as aforesaid, that the
prevailing Party in any such action shall be entitled to recover
attorneys' fees and disbursements from the other Party.
C. The Parties agree that in the event Purchaser shall
default in the performance of Purchaser's obligations under this
Agreement, the actual damages sustained by the Seller as a result
would be mathematically difficult to calculate, and in regard
thereto, Purchaser agrees that a good faith estimate of the damages
which would reasonably compensate Seller is equal to the Contract
Deposit. Accordingly, immediately upon default by either Purchaser
or Seller, the non-defaulting party shall have the right to the
Contract Deposit, as liquidated damages, to recompense the non-defaulting
party for time spent and the loss of its bargain.
Seller and purchaser agree that: (i) the nondefaulting party shall
furnish the defaulting party and the Title Company with written
notice of the non-defaulting party's intention to seek the return
of the Contract Deposit from the Title Company as aforesaid; and
(ii) the defaulting party shall have a period equal to seven (7)
days following the giving of such notice by the non-defaulting
party within which to cure the default. If, at the end of such
seven (7) day period, the non-defaulting party is still in default
in the performance of its obligations under this Agreement, the
Title Company shall release the Contract Deposit to the non-defaulting party,
as liquidated damages, as aforesaid, with no
additional notices or cure periods having to be furnished or
provided. Seller's sole remedy for Purchaser's default under this
Agreement shall be to retain the Contract Deposit and, upon such
retention of the Contract Deposit by Seller, as aforesaid, this
Agreement shall terminate and Purchaser and Seller shall be
relieved of any further liability hereunder, at law and/or in
equity, relating to Purchaser's default in the performance of
Purchaser's obligations under this Agreement except with respect to
any obligations and/or liabilities which pursuant to the terms,
provisions, covenants and conditions of this Agreement (or the
Exhibits annexed hereto) expressly state that such provisions
survive the termination of this Agreement. Nothing in this Section
4.C. shall be deemed or construed to limit Seller's rights,
remedies or recourse, or to limit Purchaser's obligations or
liabilities, with respect to any breach or default by Purchaser
under the provisions of Section 10, Section 19, Exhibit C, and any
other provision of this Agreement, pursuant to which such
obligation or liability survives the Closing and delivery of the
Deed, or the earlier termination of this Agreement. The provisions
of the immediately preceding sentence shall survive the Closing and
the delivery of the Deed, or the earlier termination of this
Agreement.
Purchaser's remedies for a default by the Seller under the
terms of this Agreement are either return of the Contract Deposit,
or an action for damages and/or specific performance.
D. The Parties agree, in the event that Purchaser commences
an action against Seller alleging and/or claiming that Seller has
retained the Contract Deposit in contravention of the terms,
provisions, covenants and conditions of Section 4.C. of this
Agreement, that the prevailing Party in any such action shall be
entitled to recover attorneys' fees and disbursements from the
other Party.
5. NOTICES.
All notices, demands, requests, consents, approvals and other
communications (all of the foregoing, for the purposes of this
Section, being herein collectively referred to as "Notices")
required or permitted to be given under the terms of this
Agreement, shall be in writing, and shall be sent by registered,
certified or express mail, return receipt requested, postage
prepaid, by a nationally recognized overnight delivery service,
fully prepaid, or by facsimile (followed by hard copy), and
addressed and sent to the Parties as follows:
To Seller: Windsor at Parkway Station Limited Partnership
600 Atlantic Avenue
Suite 2000
Boston, MA 02210
Attention: Sean P. Henry, Vice President
Telephone Number: (617) 973-9680
Facsimile Number: (617) 973-9679
with a copy thereof sent concurrently in the same manner to:
Windsor at Parkway Station Limited Partnership
600 Atlantic Avenue
Suite 2000
Boston, MA 02210
Attention: Catherine F. Shortsleeve, Vice
President,
Associate General Counsel
Telephone Number: (617) 973-9680
Facsimile Number: (617) 367-3417
To Buyer:
Walden Residential Properties, Inc.
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75940
Attention: Eric A. Calub, Vice President,
Acquisitions
Telephone Number: (972) 788-0510
Facsimile Number: (972) 788-1550
with a copy thereof sent concurrently in the same manner to:
Munsch, Hardt, Kopf, Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
Attention: Ms. Robin Minick, Esq.
Telephone Number: (214) 855-7542
Facsimile Number: (214) 855-7584
All Notices shall be effective, as applicable, upon being
deposited in the United States mail, being deposited with said
overnight mail service, or being sent by facsimile. However, the
time period in which a response to any such Notice must be given
shall commence to run from: (i) the date of receipt noted on the
return receipt of the Notice by the addressee thereof; (ii) in the
case of said overnight mail service, the date upon which the same
is actually received; or (iii) in the case of said facsimile, on
the date upon which a hard-copy of said facsimile sent by
nationally-recognized overnight delivery service is actually
received. Rejection or other refusal to accept or the inability to
deliver because of changed address for which no notice was given
pursuant to the provisions of this Section shall be deemed to be
receipt of the notice as of the date of such rejection, refusal or
inability to deliver. Either Party may, from time to time, by
notice in writing served upon the other Party in the same manner as
prescribed in this Section designate a different mailing address or
a different or additional person to which all such Notices are
thereafter to be addressed.
6. REAL ESTATE BROKERS.
Each Party represents to the other that it has not dealt with
any party in connection with this transaction who might be entitled
to a commission or compensation on account of introducing the
Parties, the preparation or submission of this Agreement or the
closing of the transactions contemplated hereby, except The
Apartment Group, Inc., 3340 Peachtree Road, N.E., Suite 2180,
Atlanta, Georgia 30326 (hereinafter referred to as the "Broker").
Each Party hereby agrees to indemnify and hold harmless the other,
and the other's successors and assigns, from and against any and
all losses, claims, liabilities, expenses, costs and/or damages
(including, without limitation, attorneys' fees and disbursements)
arising out of, or in connection with, any claim by any party with
whom the indemnifying party has dealt, other than the Broker, for
a commission or other compensation by reason of, or arising out of,
the transaction contemplated hereby or herein. Seller agrees to
pay the commission due to the Broker pursuant to a separate written
agreement between Seller and the Broker.
The arrangements for the payment of brokerage commissions and
fees set forth in the preceding paragraph of this Section are
intended solely for the benefit of the Parties hereto. Nothing
contained in this Section is intended, nor shall the same be deemed
or construed, to grant or confer any right, title, interest or
other benefit in favor of any party not a party hereto, including,
without limitation, any broker, agent, person or entity claiming
any brokerage commissions, compensation or similar fees in
connection with the transaction described in this Agreement.
The provisions of this Section shall survive the Closing and
the delivery of the Deed, or the earlier termination of this
Agreement.
7. FEES AND DISBURSEMENTS OF COUNSEL, ETC.
Each of the Parties shall bear and pay the fees and
disbursements of its own counsel, accountants, consultants,
engineers, architects and other advisors in connection with the
negotiation and preparation of this Agreement, the transaction
contemplated hereby and the Closing. The provisions of this
Section shall survive the Closing and the delivery of the Deed, or
the earlier termination of this Agreement.
8. CLOSING OF TITLE.
Closing of title (herein referred to as the "Closing") shall
take place at the office of the Title Company on December 11, 1997
(herein referred to as the "Closing Date") at 10:00 a.m., or such
earlier date as the Purchaser shall notify the Seller, such notice
to be in writing and received by the Seller at least seven (7)
business days prior to the Closing Date, at which time Seller and
Purchaser will deliver to each other the items set forth in Exhibit
C annexed hereto and made a part hereof. Upon delivery of the Deed
to Purchaser, Purchaser shall immediately be charged with
constructive possession of the entire Property.
9. APPORTIONMENTS.
The following are to be apportioned as of 11:59 P.M. of the
day (hereinafter referred to as the "Adjustment Date") --
immediately preceding the Closing Date:
A. Rents under the Leases, as and when collected, subject to
the following:
In the event that there are any past due rentals (hereinafter
referred to as the "Past Due Rentals") for any month preceding the
month of Closing and/or for the month of Closing owing by tenants
under the Leases at the Closing Date it being agreed that: (i)
Seller is entitled hereunder to all past due rentals (net of
collection costs) accrued up to 11:59 P.M. of the Adjustment Date,
regardless of the period of delinquency, and Purchaser is entitled
hereunder to all rentals accruing thereafter; (ii) rents received
after Closing shall be applied to the current month's rent than to
delinquent rents; (iii) Purchaser will cooperate (exclusive of
litigation) with Seller in collection of such arrears; and (iv) any
rental arrears still outstanding ninety (90) days after the Closing
Date shall, at that time and upon request of Seller, be reassigned
to Seller who may commence litigation, in the nature of a debt
collection action, and not a tenant eviction action, to collect
same; Purchaser agrees that any of the Past Due Rentals received by
Purchaser subsequent to the Closing Date from the tenant(s) shall,
provided that such tenant(s) are not delinquent in their rental to
Purchaser under the respective Leases, be received by Purchaser as
trustee for Seller on account of, or in payment for, the Past Due
Rentals and Purchaser agrees to remit forthwith to Seller the
amount of the Past Due Rentals so collected to which Seller is
entitled, without claim of setoff, abatement or deduction other
than actual collection costs. Seller shall retain all rights to
rents and damages against the tenant(s) accruing prior to the
Closing Date, including, without limitation, any claims for damages
due to any such tenant's default.
If any rents relating to a period of time subsequent to the
Closing Date have been collected by Seller prior to the Closing
Date, then on the Closing Date, Seller shall allow to Purchaser a
credit against the Purchase Price in an amount equal to the portion
of such rent relating to the period of time subsequent to the
Closing Date, as mutually agreed to by Seller and Purchaser. Any
rents relating to a period of time subsequent to the Closing Date,
which are received by Seller shall be received as trustee for
Purchaser, and Seller agrees to remit forthwith to Purchaser the
amount so received by Seller.
When the rents have been finally determined, a final
adjustment shall be made in a post-closing adjustment.
B. Taxes, fixed annual sewer rents, and assessments, if any,
on the basis of the fiscal year or period for which assessed,
except that if the Closing Date shall occur before any applicable
tax rate, fixed annual sewer rent or assessment is fixed, then the
apportionment of taxes, fixed annual sewer rents or assessments
shall be upon the basis of the tax rate, fixed annual sewer rent,
or assessments for the next preceding year applied to the latest
assessed valuation available at the time of Closing, with a
reapportionment to be made when the next tax, fixed annual sewer
rent, or assessment is fixed.
C. If there are water meters on the Property, Seller, to the
extent that the same is obtainable, shall furnish a reading to a
date prior, and as close as possible to, the Closing Date, and the
unfixed charges for water and usage-based sewer charges as
reflected on the water meter, if any, based thereon for the
intervening period shall be apportioned on the basis of such last
reading, subject however to readjustment, as hereinafter provided.
The reading taken subsequent to, and as soon as possible following
the Closing Date will then be apportioned on a per diem basis from
the date of such reading immediately prior thereto and Seller shall
either pay the undercharge to Purchaser, or be reimbursed the
overcharge by Purchaser, based upon a comparison of the readings
taken prior and subsequent to the Closing Date. Unpaid water meter
charges, sewer rents and other utility charges for direct service
to tenants, if any, and for which such tenants are responsible for
payment under the terms of their respective Leases, or otherwise,
shall not be objections to title by Purchaser.
D. Seller will pay all public utilities (other than fixed
annual sewer rents, water and usage-based charges addressed above
in Section 9.B and Section 9.C, and those billed directly to any
tenant(s) and fuel oil, if any, based upon an actual reading taken
by the fuel oil supplier, up to the Closing Date, and if such
charges are not determined until after the Closing Date, they will,
based upon rates in effect prior to the Closing Date, be prorated
on a per diem basis. If there are transferable security deposits
for utilities and/or fuel oil, Purchaser shall pay to Seller on the
Closing Date an amount equal to such security deposits not returned
to Seller and Seller shall assign its right, title and interest in
such deposits to Purchaser.
E. All charges and fees for transferable licenses,
franchises, and permits, if any, and to the extent they are legally
transferable, on the basis of the periods of such licenses,
franchises and permits.
F. Unused service and supplies based upon Seller's cost for
the same, including sales tax.
G. Payments and charges relating to the maintenance,
operating and other service contracts (herein, the "Service
Contracts") set forth on Exhibit F annexed hereto and made a part
hereof.
H. Tenants' security deposits pursuant to Section 11.B of
this agreement.
I. Locator fees, if any.
J. Recording fees. Seller shall pay all fees for releasing
liens and encumbrances. Purchaser shall pay the fee for recording
the Deed and any financing documents.
K. Seller shall pay all sales, gross receipts [documentary],
excise [transfer, deed excise] or similar taxes and fees, imposed
in connection with this transaction under applicable state or local
law.
L. Seller shall pay the cost of the Title Policy. Purchaser
shall pay the cost of any endorsements to the Title Policy.
M. Seller shall pay the cost of the survey.
N. Seller and Purchaser shall share equally the cost of the
Title Company escrow and closing fees.
The provisions of this Section 9 shall survive the Closing and
the delivery of the Deed for a period of six (6) months from the
Closing Date and any errors in any calculations and/or
apportionments made hereunder shall be corrected or adjusted within
such six (6) month period.
10. CONDITION OF PROPERTY; NO REPRESENTATIONS BY SELLER.
A. Except as expressly set forth in Section 16 of this
Agreement, Purchaser acknowledges that Seller, and the term
"Seller" as used in this Section 10 shall include any partner of
the Seller and any partner of any partner of the Seller, has made
no representations or warranties with respect to the Property or
the Personalty, including, without limitation, the value, quality
or character of the Property and/or the physical and environmental
condition thereof. Purchaser acknowledges that, except as
expressly set forth in this Agreement, neither Seller nor any
officer, employee, consultant or other person representing or
purportedly representing Seller has made, and Seller is not liable
for or bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements, or representations
pertaining to the physical and/or environmental condition or state
of repair of the Property, or any part thereof, the state of title
thereof, the income, collectability or legality of rents, expenses
and operation thereof, the uses which can be made of the same or
any other matter or thing with respect thereto. Without limiting
the foregoing, Purchaser acknowledges and agrees that, except as
expressly set forth in this Agreement, Seller is not liable or
bound by (and Purchaser has not relied upon) any verbal or written
statements, representations or any other information concerning the
Property, furnished by Seller or any past or present officer,
employee, consultant or other person representing or purportedly
representing Seller. Purchaser agrees, further, that Seller shall
not be responsible for any statements or representations of any
kind furnished to Purchaser by any real estate broker (including,
but not limited to, the Broker) or any other person or entity,
except as specifically set forth herein. Purchaser acknowledges
that it has received from Seller a photocopy of the report, dated
November 9, 1993 and November 17, 1993, entitled "Phase I
Environmental Assessment Update/Revision, Parkway Station Apartment
Community, 3555 Austell Road, Marietta, Cobb County, Georgia" Job
No. 12,685, Report No. 83680, and, "Additional County Government
Inquiries, Parkway Station Apartment Community", Job No. 12685,
Report No. 84822. ("Environmental Site Assessment"), prepared by
Atlanta Testing and Engineering, 11420 Johns Creek Parkway, Duluth,
Georgia 30130 regarding certain aspects of the environmental
condition of the Property, and Purchaser further acknowledges that:
(i) it is purchasing the Property subject to the matters reflected
in said report, (ii) prior to the Closing it will treat as
confidential all matters reflected in said report, and (iii) has
not made any representation, warranty or covenant of any nature
whatsoever with respect to said report, including but not limited
to, the completeness or accuracy of said report, and Seller shall
have no liability whatsoever with respect to said report.
B. Purchaser represents that it has inspected, examined and
made an independent investigation of the physical and environmental
condition and value of the Property, that it knows the condition
and uses thereof, and agrees Purchaser is purchasing, and is
willing to accept the conveyance of the same on an "AS IS" "WHERE
IS" basis (i.e., in the condition existing on the Contract Date and
again on the Closing Date).
C. Nothing in this Agreement shall require Seller to incur
any expense of any kind whatsoever to repair, restore, or otherwise
cure any condition or state of facts with respect to the Property
or the Personalty.
D. Seller shall nave no obligation under this Agreement to
cure any violations of laws, ordinances, regulations and orders
relating to the Property, including, without limitation, those
relating to zoning, building design, environmental protection,
hazardous substances, occupational safety and health and
architectural access hereinafter collectively referred to as
"Laws"), nor shall such cure by Seller constitute a condition
precedent to Purchaser's obligations hereunder.
The provisions of this Section 10, shall survive the Closing
and the delivery of the Deed, or the earlier termination of this
Agreement.
11. TENANCIES AND LEASES.
A. The Property is to be conveyed subject to and with the
benefit of the Leases. Purchaser acknowledges that it has fully
reviewed and examined the Leases and finds the
Leases to be satisfactory.
B. At Closing, Seller shall transfer or credit to Purchaser
all security deposits not previously applied to tenant obligations
under the Leases (and interest thereon if required by law or
contract to be earned thereon) (hereinafter referred to as the
"Security Deposits"). Purchaser shall, and hereby agrees to,
indemnify and hold harmless Seller and its successors and assigns
from all claims, losses, liabilities, costs and expenses,
including, without limitation, attorneys' fees and disbursements,
with respect to the Security Deposits, together with any accrued
interest and interest to accrue thereon and the future application
thereof. The provisions of this Section shall survive the Closing
and the delivery of the Deed.
12. FIRE, CASUALTY AND CONDEMNATION.
A. The risk of loss, damage or destruction to the Property
by fire or other casualty until the Closing is retained by Seller,
but without any obligation or liability by Seller to repair or
restore the Property. Seller shall maintain in effect through the
Closing Date, policies of fire and casualty insurance in an amount
equal to the Purchase Price, less a deductible (hereinafter
referred to as the "Deductible" in the amount of not more than
Fifty Thousand ($50,000), with a replacement cost endorsement.
B. If at any time prior to Closing, any portion of the
Property is destroyed or damaged as a result of (a) fire or any
other casualty (hereinafter collectively referred to as
"Casualty"), or (b) a taking in eminent domain (hereinafter
referred to as "Talking"), Seller shall promptly give written
notice thereof (hereinafter referred to as the "Damage Notice") to
Purchaser, including a statement by Seller of its insurance
company's estimate (hereinafter referred to as the "Estimate"),
acting reasonably, of the cost of fully repairing and restoring the
Property, or in the case of a Taking, the remaining portion of the
Property, (to the extent practicable) to the condition which
existed prior to the Casualty or Taking, as the case may be. The
Estimate shall be conclusive and binding upon Purchaser and Seller.
Any damage to or destruction of the Property as a result of a
Casualty or Taking shall be deemed to be immaterial for purposes of
this Agreement if the Estimate is Two Hundred Thousand Dollars
($200,000.00) or less. If such damage or destruction is deemed to
be immaterial (as aforesaid), neither Party shall have the right to
terminate this Agreement and there shall be no abatement in the
Purchase Price, and in lieu of any such abatement, Seller shall:
(i) execute, acknowledge and deliver to Purchaser at the Closing,
in counterparts, an assignment, expressly made without
representation or warranty by Seller and without recourse to
Seller, of Seller's interest in any net insurance or condemnation
proceeds (that is, after the reasonable expenses of collection)
which may be payable to Seller as a result of such Casualty or
Taking, subject, however to Seller's right to receive reimbursement
therefrom of any amounts paid or incurred by Seller for or on
account of repairs and/or restoration of the Property prior to the
Closing; and (ii) allow Purchaser a credit against the Purchase
Price in an amount equal to the Deductible.
C. If there shall be material (i.e., the Estimate is more
than Two Hundred Thousand Dollars ($200,000.00)) damage to, or
destruction of, the Property as a result of a Casualty or Taking
prior to the Closing, Purchaser shall have the right to terminate
this Agreement by providing written notice to the Seller within ten
(10) days after Purchaser's receipt of the Damage Notice from
Seller. Upon such termination, the Contract Deposit shall be
returned to the Purchaser, together with any and all interest
earned thereon, and upon such return of the Contract Deposit,
together with any and all interest earned thereon, all claims and
obligations of the Parties, except as otherwise expressly provided
herein, shall be immediately released and discharged.
Notwithstanding any of the foregoing, the provisions of this
Agreement and the Exhibits thereto which expressly state that the
same survive the termination of this Agreement shall survive such
termination. If Purchaser elects not to terminate this Agreement
in accordance with the foregoing terms of this Section, there shall
be no abatement in the Purchase Price, and in lieu of any such
abatement, Seller shall: (i) execute, acknowledge and deliver to
Purchaser at the Closing, in counterparts, an assignment, expressly
made without representation or warranty by Seller and without
recourse to Seller, of Seller's interest in any net insurance or
condemnation proceeds (that is, after the reasonable expenses of
collection) which may be payable to Seller as a result of such
casualty or taking, subject, however, to Seller's right to receive
reimbursement therefrom of any amounts paid or incurred by Seller
for or on account of repairs and/or restoration to the Property
prior to the Closing; and (ii) allow Purchaser a credit against the
Purchase Price in an amount equal to the Deductible.
13. TITLE.
A. Purchaser acknowledges that Purchaser has prior to the
Contract Date: (i)
been provided with a photocopy of the existing Title Insurance
Policy for the Property; and
(ii) has been provided a report of title or title commitment
(hereinafter referred to as the "Commonwealth Title Commitment")
from the Title Company a copy of which is annexed hereto as Exhibit
E.
B. Seller's obligations under this Agreement in connection
with the transfer to Purchaser of fee simple title (hereinafter
referred to as "Title") to the Land and the Improvements (i.e.,
that portion of the Property which constitutes real property) shall
be to transfer Title to the Land and Improvements in recordable
form, subject to no liens, claims, encumbrances, rights-of-way,
easements, restrictions, reservations, covenants, conditions,
claims, liabilities, charges, reversions or other agreements or any
other matter affecting title, except for the exceptions approved by
Purchaser during the Review Period described in the Letter of
Intent executed by the Parties on October 14, 1997. The Review
Period began on October 24, 1997 and ends on November 24, 1997.
After the Review Period has passed, Seller's obligations in
connection with Title shall be to transfer subject to the
exceptions listed on Exhibit H annexed hereto and made a part
hereof (hereinafter referred to as the "Permitted Exceptions"),
which shall include (but not be limited to) any state of facts a
survey thereof would show, as well as any additional or later state
of facts which an accurate re-date or re-survey or survey
inspection would show. Seller may approve or disapprove the survey
for any reason during the Review Period. After the Review Period
has passed, Seller's obligations in connection with survey shall be
to provide a survey which satisfies the standards set forth on
Exhibit J.
C. Purchaser's obligation under this Agreement in connection
with the transfer by Seller of Title to the Land and Improvements
shall be to accept such Title to the extent the same is in full and
complete satisfaction of the standards for the Survey and the
standards for Title as set forth more specifically in Exhibits I
and J, Section 20.B and Section 20.C of this Agreement, unless any
of such standards, as aforesaid, have been waived in writing by
Purchaser at or prior to the Closing. Notwithstanding the
foregoing, Purchaser acknowledges that the aforementioned standards
for the Survey and the standards for Title shall not impose any
obligations under this Agreement upon Seller, and that Seller's
obligations under this Agreement in connection with the transfer of
Title to Purchaser are set forth in Section 13.B hereof.
D. If, at the Closing, there shall be any liens,
encumbrances or charges affecting title which are not permitted
pursuant to this Agreement, then Seller may, upon request from
Seller to Purchaser, require Purchaser to apply such portion of the
balance of the Purchase Price as shall be necessary to discharge
such liens, encumbrances and charges and pay the recording fees,
and in such event Seller shall deliver to Purchaser instruments in
recordable form sufficient to discharge the same of record. If
request is made by Seller within a reasonable time prior to the
Closing Date, Purchaser shall provide at the Closing, separate
certified checks as requested to facilitate the satisfaction of
such liens, encumbrances and charges. The existence of such liens,
encumbrances and charges shall not be objections to title if Seller
complies with the provisions of this paragraph. Seller shall be
conclusively deemed to have fulfilled the requirements of this
Agreement as to title if the Title Company (or any other reputable
title insurance company) will insure such title at regular rates in
accordance with the provisions of this Agreement, subject to the
exceptions permitted pursuant to this Agreement and the matters
referred to in Exhibit H (Permitted Exceptions) hereto.
E. From the contract Date through the Closing Date, Seller
agrees that Seller shall not mortgage or further encumber the
Property, without first obtaining Purchaser's
written consent.
14. NONASSIGNABLE CONTRACT.
Purchaser shall not have the right, without Seller's prior
written consent, which consent may be withheld in Seller's sole
discretion, to assign or transfer any of Purchaser's rights,
obligations and interests under this Agreement, and Purchaser shall
indemnify and hold harmless Seller and Seller's successors and
assigns, from and against any and all claims, damages, losses,
costs, expenses and liabilities, including, without limitation,
attorneys' fees and disbursements, arising out of Purchaser's
failure to comply with its obligations under this Section 14.
Notwithstanding anything to the contrary set forth in this
Agreement, Purchaser may assign Purchaser's rights, obligations and
interests under this Agreement, without Seller's prior written
consent to an affiliate, the majority of the interests in which are
owned by the Purchaser. If such assignment is made, the sale
contemplated by this Agreement shall be consummated in the name and
by and through the authorized officials of any such assignee.
Any assignment or transfer of this Agreement made without
Seller's prior written consent shall be void and a material breach
of this Agreement and such assignee or transferee shall acquire no
rights hereunder. The provisions of this Section shall survive the
Closing and the delivery of the Deed or the earlier termination of
this Agreement.
15. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
As a material inducement to Seller to execute this Agreement
and consummate this transaction, Purchaser covenants, represents
and warrants to Seller as follows:
A. Purchaser is duly organized, validly existing and in good
standing under the laws of the State of Maryland and shall be
qualified to do business in the state where the Property is
located.
B. Purchaser has all requisite and necessary power and
authority to execute and deliver this Agreement and to perform
Purchaser's obligations hereunder or contemplated hereby.
C. The execution, delivery and performance by Purchaser of
its obligations under this Agreement will not result in a breach of
any of the terms or provisions of, or constitute a default (or a
condition which, upon notice or lapse of time or both, would
constitute a default) under any agreement, instrument or obligation
to which Purchaser is a party or by which Purchaser is bound and
will not constitute a violation of any law, regulation, order,
judgment, writ, injunction or decree applicable to Purchaser of any
court of other governmental authority having jurisdiction over
Purchaser.
D. There are no judgments, actions, suits or proceedings
existing or pending (or, to the knowledge of Purchaser's officers,
threatened) against Purchaser, at law or in equity, before or by
any governmental authority having jurisdiction over Purchaser,
which could have a material and adverse effect upon its performance
of this Agreement.
E. This Agreement is the legal and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms.
16. SELLER'S REPRESENTATIONS AND WARRANTIES.
As a material inducement to Purchaser to execute this
Agreement and consummate this transaction, Seller represents and
warrants to Purchaser as follows:
A. Seller is duly organized, validly existing and in good
standing under the laws
of the State of Delaware and is qualified to do business in the
state in which the Property
is located.
B. Seller has all requisite and necessary power and
authority to execute and deliver this Agreement and to perform
Seller's obligations hereunder or contemplated hereby.
C. The execution, delivery and performance by Seller of its
obligations under this Agreement will not result in a breach of any
of the terms or provisions of, or constitute a default (or a
condition which, upon notice or lapse of time or both, would
constitute a default) under any agreement, instrument or obligation
to which Seller is a party or by which Seller is bound and will not
constitute a violation of any law, regulation, order, judgment,
writ, injunction or decree applicable to Seller of any court of
other governmental authority having jurisdiction over Seller.
D. There are no judgments, actions, suits or proceedings
existing or pending (or, to the best of Seller's knowledge
threatened) against Seller, at law or in equity, before or by any
governmental authority having jurisdiction over Seller, which could
have a material and adverse effect upon its performance of this
Agreement.
E. This Agreement is the legal and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
F. To the best of Seller's knowledge, the list of the
Service Contracts set forth on Exhibit F annexed hereto, and the
Rent Roll set forth on Exhibit G are true and complete in all
material respects and there are no oral agreements with anyone,
including Tenants, with respect to the Property or any portion
thereof.
G. To the best of Seller's knowledge, there are no
condemnation proceedings pending affecting the Property, nor has
Seller received any written notices of any litigation or violations
of laws affecting the Property.
H. All of the present Leases are in writing, on a standard
form and, 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.
I. The Leases will not be amended in any way after the date
hereof, other than in the ordinary course of business without the
prior, written consent of Purchaser, which consent shall not be
unreasonably withheld, conditioned and delayed. Purchaser, unless
it otherwise shall advise Seller in writing within three (3) days
following Seller's request for such consent, shall be deemed to
have consented to any such amendment.
J. To the best of Seller's knowledge and except as stated in
the Rent Roll, there are no uncured defaults on the part of any
party to any of the Leases, and Seller is in full compliance with
all of lessor's obligations thereunder.
K. None of the rentals due or to become due under the Leases
will be assigned, encumbered, or subject to any liens at the
Closing other than the Permitted Exceptions.
L. To the best of Seller's knowledge the operating
statements provided to the Purchaser are accurate in all material
respects.
M. Compliance with Applicable Regulations. To Seller's
knowledge: (a) the Property and the operation thereof currently are
in substantial compliance with the requirements of all applicable
statutes, ordinances or regulations applicable to the Property, and
(b) there are no written commitments or agreements with any of the
governmental agencies having jurisdiction over the Property which
have not been fully disclosed to Purchaser in writing.
N. Proceedings: Environmental. To Seller's knowledge, are
there no pending or threatened judgments, judicial proceedings or
administrative actions of a material nature relating to the
Property or to the Seller. To Seller's knowledge and other than as
set forth in the Environmental Site Assessment, regarding which
Seller makes no representations or warranties whatever, Seller
knows of no facts which change or alter the facts and
recommendations contained in the Environmental Site Assessment.
O. Insurance. Seller will not renew, amend, or reduce the
coverage under or cancel, any existing policy or procure any new
policy other than in the ordinary course of business without
Purchaser's prior, written consent, which shall not be unreasonably
withheld, conditioned or delayed. Purchaser, at Closing, shall
obtain its own insurance coverage. Seller has received no notices
from any insurer of the requesting any improvements, alterations,
additions, correction or other work in, on or about the
Improvements, whether related to the Property or to the operation
of any occupant thereof, which have not been cured or satisfied.
P. Maintenance of Property Until Closing. Seller, at its
expense, will maintain the Property in the ordinary course of
business until Closing excepting only ordinary wear and tear and
damage or loss thereto covered by insurance. In the event of any
material breakdown, malfunction or other similar event (other than
of a type covered, and to the extent covered, by insurance)
occurring prior to the Closing, whether or not the same is covered
by any service warranty or contract, the parties hereto will
cooperate so as mutually to determine the cost of repairing or
restoring the same, and Seller will cause the same to be repaired
and restored at no cost to Purchaser either prior to Closing or
within a reasonable time after Closing. Until Closing, Seller
shall continue the operation of the Property in the normal and
usual manner, will not remove any fixtures, furnishings, equipment
or personalty subject to this Agreement, except for repair or
replacement.
Q. Service Contracts. At Closing, no contract of any kind,
including contracts for servicing, operating or managing the
Property, will be effective and binding upon the Property or
Purchaser, except as disclosed on Exhibit F. Seller will not enter
into any other service, operating or management contracts relative
to the Property that cannot be canceled on thirty (30) days' notice
without the prior, written consent of Purchaser, nor will Seller
make, or agree to, prior to Closing, any change or modification to
the contracts set forth in Exhibit F, other than in the ordinary
course of business, without the prior, written consent of
Purchaser. The management agreement relating to the Property is
not set forth at Exhibit F, and shall be terminated effective on
the date of Closing. Seller agrees that benefits or compensation
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.
R. Closing Not Constituting Breach. The consummation of the
transaction contemplated herein will not result in the breach of
any provision in any lease or other agreement affecting the
Property.
S. Access to Property. Seller to its knowledge has received
no written notices of the existence of any fact or condition which
would result in the termination or restriction of the current
access from the Property to any presently existing highways and
roadways adjoining, situated on or otherwise serving the Property
or to any sewer or other utility adjoining, situated or otherwise
serving the Property.
T. Seller's Non-foreign Status. Seller is not a "foreign
person" within the meaning of Sections 1445 and 7701 of the
Internal Revenue Code of 1954, as amended; that is, Seller is not
a non-resident alien, foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code of 1986, as now existing or hereafter
amended). Seller shall delivery to Purchaser an affidavit to that
effect.
For purposes of the foregoing, the phrases "To Seller's
knowledge" or "to the best of Seller's knowledge" means the actual
knowledge of Sean P. Henry, Vice President of Seller, without
having undertaken any independent investigation. The
representations and warranties set forth in the foregoing Sections
15 and 16 are made as of the date of this Agreement and are remade
as of the Closing Date and shall survive the Closing and delivery
of the Deed for a period of six (6) months ("Survival Period"). At
the Closing, Seller shall deliver to Purchaser a certificate
certifying that as of the Closing Date, the representations and
warranties in this Section 16 are true and correct. Seller and
Purchaser shall have the right to bring a claim thereon only if
Seller or Purchaser, as the case may be, has given the other Party
written notice of such claim within the Survival Period. Each
Party agrees to defend and indemnify the other against any claim,
liability, damage or expense asserted against or suffered by such
other Party during the Survival Period arising out of (I) the
breach or inaccuracy of any such representation or warranty. The
Parties agree, in the event that either Party commences an action
against the other alleging or claiming a failure of representation
or warranty, the prevailing Party in any such action shall be
entitled to recover attorneys' fees and disburse monies from the
other Party.
17. ACCESS TO PROPERTY.
Between the Contract Date and the Closing Date, Purchaser and
Purchaser's representatives shall be afforded, upon notice to
Seller and at reasonable times and in a reasonable manner, access
to the Property for the purposes of inspecting the same in order to
determine whether the conditions set forth in Section 20 hereof
have been satisfied.
18. DISCHARGE OF SELLER'S OBLIGATIONS HEREUNDER.
The delivery of the Deed by Seller, and the acceptance thereby
by Purchaser, shall be deemed the full performance and discharge of
every obligation on the part of Seller to be performed hereunder
(except for any obligations of Seller specifically stated to
survive the Closing and the delivery of the Deed), and an
acknowledgment by Seller and Purchaser that the conditions
precedent to Purchaser's and Seller's obligations under this
Agreement, as set forth more specifically in Section 20 and Section
21, respectively, of this Agreement, have been fully and completely
satisfied.
19. SIGNAGE.
Purchaser agrees that:
A. Purchaser shall within sixty (60) days of the closing,
and at the sole cost and expense of the Purchaser, remove and signs
or other symbols (herein collectively referred to as the "signs")
located on or about the Property and/or the Improvements and which
contain or refer to the name of the Seller, and that subsequent to
the Closing, Purchaser shall not use the name "Windsor" in
referring, identifying or otherwise naming the Property.
B. In the event that Purchaser fails to remove the signs as
required herein, Seller shall have the right and Purchaser hereby
grants Seller an irrevocable license, for a six (6) month period
following the Closing Date, to enter upon the Property, at
reasonable times and in a reasonable manner in order to remove the
signs, at the cost and expense of the Purchaser.
The provisions of this Section 19 shall survive the Closing
and delivery of the Deed.
20. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.
The obligations of Purchaser to purchase the Property and to
perform under this Agreement at the Closing shall be subject to,
among the other terms, provisions, covenants and conditions of this
Agreement that are required to be complied with by Seller, the
satisfaction, as of the Closing Date, of the following conditions:
A. The representations and warranties made by Seller in
Section 16 of this Agreement, and the information contained in any
written materials relating to the Property furnished to Purchaser
by Seller, shall be true in all material respects as of the Closing
Date, and Seller shall have delivered to Purchaser those items set
forth in Exhibit C annexed hereto required to be delivered by
Seller.
B. The Survey complies with the standards described on
Exhibit I annexed hereto and made a part hereof (provided that
Purchaser acknowledges and agrees that: (I) any failure of the
Survey to meet such standards to the extent that any such failure
does not involve illegality or non-compliance with applicable Laws
shall be waived by Purchaser if such failure is the subject of
affirmative title insurance coverage satisfactory to Purchaser
insuring over such failure; and (ii) the standards for the Survey
as so set forth on Exhibit I hereto shall only relate to
Purchaser's obligation to purchase the Property and to perform
under this Agreement at the Closing, and shall not be deemed to
create or impose any obligations upon Seller under this Agreement
with respect thereto).
C. Title to the Land and the Improvements complies with the
standards described on Exhibit J annexed hereto and made a part
hereof (it being understood and agreed that the standards for Title
to the Land and Improvements as so set forth on Exhibit J hereto
shall only relate to Purchaser's obligation to purchase the
Property and to perform under this Agreement at the Closing, and
shall not be deemed to create or impose any obligations upon Seller
under this Agreement with respect to title to the Land and
Improvements, which obligations of Seller are instead set forth in
Section 13B of this Agreement).
D. The Representations and Warranties made by Seller in
Section 16 of this Agreement shall be true in all material respects
as of the Closing Date and Seller shall have delivered to Purchaser
or into escrow with the Title Company those items set forth in
Exhibit C annexed hereto required to be delivered by Seller.
21. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
The obligations of Seller to sell the Property and to perform
under this Agreement at the Closing shall be subject to, among the
other terms, provisions, covenants and conditions of this Agreement
that are required to be complied with by Purchaser, the
satisfaction of the following conditions:
A. The full payment of the Purchase Price in the manner set
forth in Section 2.
B. The representations and warranties made by Purchaser in
Section 15 of this Agreement shall be true in all material respects
as of the Closing Date, and Purchaser shall have delivered to
Seller those items set forth in Exhibit C annexed hereto required
to be delivered by Purchaser.
22. MISCELLANEOUS.
A. Possession: As of the Closing Date, Seller agrees to
deliver possession of the Property to Purchaser, subject to the
Leases and the exceptions to title permitted pursuant to this
Agreement and the matters referred to on Exhibit H annexed hereto
and made a part hereof.
B. Counterparts; Captions and Headings: This Agreement may
be executed in counterparts, each of which shall be deemed an
original. Captions and headings used herein are for reference only
and shall in no way be deemed to define, limit, explain, or amplify
any provision hereof.
C. No Oral Change: This Agreement may not be changed or
canceled orally but only by a written agreement executed by the
Parties.
D. Prior Understanding: This Agreement and the Exhibits
attached hereto constitute the entire agreement between the Parties
with respect to the subject matter hereof, and all understandings
and agreements heretofore or simultaneously had between the Parties
are merged in and are contained in this Agreement.
E. Waivers; Extensions: This Agreement may not be waived,
changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom any waiver, change,
modification or discharge is sought. No waiver of any breach of
any agreement or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof or of any
other agreement or provision herein contained. No extension of
time for performance of any obligations or acts shall be deemed an
extension of the time for performance of any other obligations or
acts. The Parties do not intend to confer any right or benefit
under or pursuant to this Agreement on any person or entity other
than the Parties.
F. Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the state in which the
Property is located.
G. Pronouns: All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the parties may require.
H. Calculation of Time Periods: With respect to any time
periods set forth herein which commenced from the date of this
Agreement, it is understood and agreed that such time period
commences from the date of final execution of this Agreement by the
Parties, including execution of any riders or amendments hereto, if
any, and the initialing of changes, if required, and the date of
this Agreement shall be the date the last signatory executes,
initials, and dates this Agreement and any such riders or
amendments.
I. Waiver of July Trial: Seller and Purchaser do hereby
waive trial by jury in any action, proceeding or counterclaim
brought by either Party hereto against the other on any matter
whatsoever relating to or arising out of this Agreement or the
transaction contemplated hereby. The terms of the immediately
preceding sentence shall survive the Closing and delivery of the
Deed and the termination of this Agreement.
J. Binding Effect: This Agreement shall be binding upon and
inure to the benefit of the Parties, and their respective legal,
representatives, heirs, executors, administrators, successors, and
assigns.
IN WITNESS WHEREOF, the Parties have executed or caused this
Agreement to be executed by their respective duly authorized
representative(s) as of the day and year first above written.
WITNESS SELLER:
Windsor at Parkway Station Limited
Partnership
By: Windsor at Parkway Station
Investors Corporation
By:
Sean P. Henry, Vice President
WITNESS PURCHASER:
Walden Residential Properties, Inc.
By:
Title:
I:\FINANCE\SECFIL~1\10-K-97\EX-10-17.WPD
2 RKM:mvm 3/26/98
REVOLVING CREDIT AGREEMENT
DATED DECEMBER 15, 1997
among
WALDEN RESIDENTIAL PROPERTIES, INC.,
WALDEN/DREVER OPERATING PARTNERSHIP, L.P.
and
BANKBOSTON, N.A.,
THE OTHER BANKS WHICH
ARE A PARTY TO THIS AGREEMENT,
and
THE OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.,
AS AGENT
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made the 15th day of
December, 1997, by and among 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 75240 ("Walden"), WALDEN/DREVER OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership having its principal place
of business at One Lincoln Center, 5400 LBJ Freeway, Suite 400,
LB45, Dallas, Texas 75240 ("WDOP"; Walden and WDOP are
hereinafter referred to collectively as the "Borrowers"),
BANKBOSTON, N.A., and the other lending institutions which may
become parties hereto pursuant to Section 18 (the "Banks"), and
BANKBOSTON, N.A., as Managing Agent for the Banks (the "Agent").
RECITALS.
WHEREAS, Borrowers have requested that the Banks provide a
revolving credit facility to Borrowers; and
WHEREAS, Agent and the Banks are willing to provide such
facility to Borrowers 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 amend
and restate the Original Credit Agreement in its entirety 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:
Agent. BankBoston, N.A. acting as managing 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 Borrowers and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such
other counsel as may be approved by the Agent.
Agreement. This First Amended and Restated Revolving Credit
Agreement, including the Schedules and Exhibits hereto.
Agreement Regarding Fees. The Agreement Regarding Fees
dated of even date herewith between the Borrowers and BKB.
Applicable Margin. On any date that the lower of the
Implied Ratings issued from time to time by either of the Rating
Agencies for Walden is an Investment Grade Rating, the applicable
margin set forth below based on the lower of the Implied Ratings
issued by either of the Rating Agencies and the type of the Loan:
Rating Base Rate Loans LIBOR
Rate Loans
BBB+/Baa1 or better 0% 1.00%
BBB/Baa2 0.125% 1.125%
BBB-/Baa3 0.25% 1.25%
provided, however, that on any date that the lower of the Implied
Ratings for Walden is not an Investment Grade Rating or Walden
has not obtained a rating from either of the Rating Agencies, the
Applicable Margin for Base Rate Loans shall be 0.50% and the
Applicable Margin for LIBOR Rate Loans shall be 1.375%. In the
event of any change in an Implied Rating of Walden by either of
the Rating Agencies or if Walden's Implied Rating shall cease at
any time to be an Investment Grade Rating by either of the Rating
Agencies (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. It is the intention of the parties that
if Walden shall only obtain an Investment Grade Rating from one
of the Rating Agencies without seeking an Investment Grade Rating
from the other of the Rating Agencies, the Borrowers shall be
entitled to the benefit of the rate reductions described above;
provided that if Walden shall have obtained an Investment Grade
Rating from both of the Rating Agencies, the lower of the two
ratings (or the loss of the Investment Grade Rating from one of
the Rating Agencies thereafter), shall control.
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, 1997.
Banks. BKB, 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.
Borrowers. As defined in the preamble hereto.
BKB. BankBoston, N.A.
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 Borrowers,
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 Borrowers to the
Agent of their election to convert or continue a Loan in
accordance with Section 4.1.
Debt Offering. The issuance and sale by any Borrower of any
debt securities of such Borrower.
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 Borrowers 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 any Borrower of
any equity securities of such Borrower.
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.
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 Partner. Walden, as the general partner of WDOP.
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. Individually, any Person that becomes a
guarantor of the Obligations, and collectively all of such
Persons.
Guaranty. Collectively, each Unconditional Guaranty of
Payment and Performance made by a 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 Agencies 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
Agencies 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 Borrowers 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 Borrowers shall fail to give notice as
provided in Section 4.1, the Borrowers 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 Standard & Poor's Corporation (or in the
case of a rating issued by Moody's Investors Service, Inc., a
rating of Baa3). 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 either of the Rating Agencies within the
previous 365 days, or (b) the rating system of either of the
Rating Agencies (as opposed to the rating of a Person) shall
change, or (c) either of the Rating Agencies shall no longer
perform the functions of a securities rating agency, then the
Borrowers 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 Borrowers or the
Guarantors 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 Borrowers
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 Borrowers 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, 1996 and
filed with the SEC.
Rating Agencies. Standard & Poor's Corporation and Moody's
Investors Service, Inc.
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 a Rating Agency of
its Implied Rating, sends notice to the Borrowers 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, WDOP 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 interests), 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. BKB, 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. Without limiting the
foregoing, WDOP is a Subsidiary of Walden.
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 Borrowers 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 Borrowers' 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.
Certain of the initial Unencumbered Operating Properties are
owned by Walden. After the date of this Agreement all new or
replacement Unencumbered Operating Properties shall be owned by
WDOP.
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. As defined in the preamble hereto.
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.
WDN Properties, Ltd.,. WDN Properties, Ltd., a Texas
limited partnership having its principal place of business at One
Lincoln Center, 5400 LBJ Freeway, Suite 400, LB45, Dallas, Texas
75240.
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 Borrowers, and the Borrowers may
borrow (and repay and reborrow) from time to time between the
Closing Date and the Maturity Date upon notice by the Borrowers
to the Agent given in accordance with Section 2.6, such sums as are
requested by the Borrowers 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 Borrowers 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
Borrowers in the maximum aggregate principal amount outstanding
of more than the principal face amount of its Note.
Section 2.2. Facility Fee. The Borrowers agree 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
Borrowers 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 Borrowers 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 Borrowers 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 Borrowers 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 Borrowers irrevocably authorize 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 Borrowers 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 Borrowers' funding
deadlines, Swing Loan Bank agrees to lend to the Borrowers (the
"Swing Loans"), and the Borrowers 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 Borrowers to the Swing Loan Bank given in
accordance with this Section 2.4A, such sums as are requested by the
Borrowers 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 Borrowers
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 Borrowers 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 Borrowers irrevocably
authorize 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 Borrowers
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. Borrowers 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
Borrowers and shall obligate the Borrowers 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 Borrowers fail to specify whether they have
selected a Base Rate Loan or a LIBOR Rate Loan, the Borrowers
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
Borrowers 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 Borrowers at the Agent's Head Office by
crediting the account of the Borrowers 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. Borrowers hereby irrevocably
authorize and direct the Swing Loan Bank to so act on its behalf,
and agree 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 Borrowers, 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 Borrowers or Guarantors may have against
the Swing Loan Bank, the Borrowers 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 Borrowers or Guarantors
or any of their respective Subsidiaries; (iv) any breach of this
Agreement or any of the other Loan Documents by the Borrowers 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 Borrowers promise to pay interest on each Loan
in arrears on each Interest Payment Date with respect thereto.
(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 Borrowers
(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 WDOP and the
chief financial or chief accounting officer of Walden that the
Borrowers 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 Borrowers and shall obligate the Borrowers to accept the Loan
requested from the Banks on the proposed Drawdown Date, provided
that, in addition to the Borrowers' other remedies against any
Bank which fails to advance its proportionate share of a
requested Loan, such Loan Request may be revoked by the Borrowers
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 Borrowers 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 Borrowers' election to revoke such Loan Request. Nothing
herein shall prevent the Borrowers from seeking recourse against
any Bank that fails to advance its proportionate share of a
requested Loan as required by this Agreement. The Borrowers 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 Borrowers the aggregate amount
of such Loans made available to the Agent by the Banks by
crediting such amount to the account of the Borrowers 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 Borrowers 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 Borrowers' 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 Borrowers, 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 Borrowers 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 Borrowers for extension of the Maturity Date shall
constitute a representation and warranty by the Borrowers 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 either or both of
the Rating Agencies, 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 Borrowers
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 Borrowers or the
Guarantors in the Loan Documents or otherwise made by or on
behalf of the Borrowers, 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 Borrowers, the Guarantors or any of
their respective Subsidiaries.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrowers promise 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 Borrowers 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 Borrowers' interest in the gross
proceeds of each and every sale or refinancing of real estate
assets of the Borrowers and their respective 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 Borrowers 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 Borrowers shall have the
right, at their 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
Borrowers 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 Borrowers, 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. Unless
otherwise approved by the Majority Banks, the Borrowers 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 Borrowers 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 Borrowers 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
Borrowers 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 Borrowers 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 Borrowers.
(b) Any Loan may be continued as such Type upon the
expiration of an Interest Period with respect thereto by
compliance by the Borrowers 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 Borrowers do not notify the
Agent of their 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. The Borrowers agree to pay to BKB
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
BKB as provided in the Agreement Regarding Fees.
Section 4.3. Agent's Fee. The Borrowers 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 Borrowers with BKB, 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 Borrowers 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 Borrowers are compelled by law to make such
deduction or withholding. If any such obligation is imposed upon
the Borrowers with respect to any amount payable by it hereunder
or under any of the other Loan Documents, the Borrowers 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
Borrowers. The Borrowers 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 Borrowers 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 Borrowers and the Banks) to the Borrowers 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 Borrowers 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 Borrowers 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 Borrowers
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 Borrowers hereunder,
then, and in each such case, the Borrowers 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 Borrowers
thereof. The Borrowers agree 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 Borrowers. The Borrowers agree 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 Borrowers 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 Borrowers in making a borrowing
or conversion after the Borrowers have given (or are 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 Borrowers 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 Borrowers, 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
Borrowers 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 Borrowers. 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 Borrowers and
the Banks and the Agent.
Section 5. SECURITY.
The Banks have agreed to make the Loans to the Borrowers 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 Borrowers represent and warrant to the Agent and the
Banks as follows:
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. WDOP is a Delaware
limited partnership duly organized pursuant to a limited
partnership agreement dated August 12, 1997 and is validly
existing and in good standing under the laws of Delaware. 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 Borrowers, 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 WDOP and Walden and Walden Operating, Inc. (as general
partners of WDOP 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.
(b) Subsidiaries. Each of the Subsidiaries of the
Borrowers (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 such Borrower or such
Subsidiary.
(c) Authorization. The execution, delivery and
performance of this Agreement and the other Loan Documents to
which any of the Borrowers, the General Partner or the Guarantors
is or is 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
Borrowers, the General Partner or the Guarantors is or is 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 Borrowers, the General Partner 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 Borrowers have furnished
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, 1997
satisfactory in form to the Majority Banks and certified by the
chief financial or accounting officer of Walden, for Walden and
as the sole general partner of WDOP, as fairly presenting the
operating income for such parcels for such periods, and
(c) certain other financial information relating to the Borrowers
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
Borrowers and their respective Subsidiaries as of such dates and
the results of the operations of the Borrowers and their
respective Subsidiaries for such periods. There are no
liabilities, contingent or otherwise, of the Borrowers 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 Borrowers and their respective
Subsidiaries taken as a whole as shown on or reflected in the
consolidated balance sheet of the Borrowers, 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 Borrowers,
the General Partner, 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 Borrowers, the Guarantors, the
General Partner 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 Borrowers 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
Borrowers, the General Partner, 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 Borrowers, the General
Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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
Borrowers or their respective 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 Borrowers, the General Partner or the
Guarantors or any of their respective Subsidiaries is a party to
any transaction with either or both of the Borrowers or any of
their respective 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 Borrowers, 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 Borrowers have 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 Borrowers' knowledge with
respect to any other Real Estate, except as set forth in
Schedule 6.17, none of the Borrowers 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
Borrowers or any of their respective Subsidiaries. Although not
a violation of any Environmental Law, Borrowers have 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 Borrowers 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 Borrowers 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 Borrowers' 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 Borrowers 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 Borrowers' knowledge,
on, upon, into or from the other properties of the Borrowers 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 Borrowers' 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 Borrowers' 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 Borrowers, 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 WDOP and Walden. The form and jurisdiction of
organization of each of the Subsidiaries, and WDOP'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 Borrowers 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 none of the
Borrowers 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 Borrowers', 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
Borrowers further have 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 Borrowers', the
Guarantors' or such Subsidiaries' purchase thereof or the date
upon which such property was last security for Indebtedness of
such Borrower, such Guarantor 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 any Borrower, any Guarantor 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 Borrowers, the Guarantors or
their respective Subsidiaries or any part thereof, and, to the
knowledge of the Borrowers, 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 Borrowers or
the Guarantors. None of the property of Borrowers, 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 Borrowers or the
Guarantors. The Real Estate owned by Walden, WDOP and their
respective Subsidiaries is set forth on Schedule 6.20 hereto.
Section 6.21. Brokers. None of the Borrowers nor any of their
respective 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 Borrowers, the General
Partner, 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. None of the Borrowers is 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 such
Borrower. The Borrowers have provided to the Agent copies of all
agreements, mortgages, deeds of trust, financing agreements or
other material agreements binding upon Borrowers, the General
Partner, 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. Schedule 6.22 hereto
sets forth all of the Indebtedness of the type described in
Section 8.1(g) and (h) of the Borrowers and their respective
Subsidiaries as of the date hereof.
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 Borrowers 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,
each Borrower and each Guarantor is able to pay its debts as they
become due, and each Borrower and each Guarantor has sufficient
capital to carry on its business.
Section 6.24. Partners. Walden is the sole general partner of
WDOP and owns a 1% partnership interest in WDOP. 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 WDOP and WROP and owns an approximately 58%
partnership interest in WDOP and a 77.3784% partnership interest
in WROP. WROP is a limited partner of WDOP and owns an
approximately 11% partnership interest in WDOP. Walden owns one
hundred percent (100%) of the issued and outstanding shares of
stock of WDN Properties, Inc. and Walden Operating, Inc.
Section 6.25. No Fraudulent Intent. Neither the execution and
delivery of this Agreement or any of the other Loan Documents nor
the performance of any actions required hereunder or thereunder
is being undertaken by any Borrower or any Guarantor with or as a
result of any actual intent by any of such Persons to hinder,
delay or defraud any entity to which any of such Persons is now
or will hereafter become indebted.
Section 6.26. Transaction in best interests of Borrowers;
Consideration. The transaction evidenced by this Agreement and
the other Loan Documents is in the best interests of the
Borrowers and the creditors of such Persons. The direct and
indirect benefits to inure to the Borrowers pursuant to this
Agreement and the other Loan Documents constitute substantially
more than "reasonably equivalent value" (as such term is used in
Section 548 of the Bankruptcy Code) and "valuable consideration,"
"fair value," and "fair consideration" (as such terms are used in
any applicable state fraudulent conveyance law), in exchange for
the benefits to be provided by the Borrowers pursuant to this
Agreement and the other Loan Documents, and but for the
willingness of the Borrowers to be jointly and severally liable
as co-borrowers for the Loan, Borrowers would be unable to obtain
the financing contemplated hereunder which financing will enable
the Borrowers and their respective Subsidiaries to have available
financing to conduct and expand their business.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree 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 Borrowers 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 Borrowers will maintain
their chief executive offices 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
Borrowers shall designate upon prior written notice to the Agent
and the Banks, where notices, presentations and demands to or
upon the Borrowers in respect of the Loan Documents may be given
or made.
Section 7.3. Records and Accounts. The Borrowers 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
of the Borrowers 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 Borrowers 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 and
WDOP, the audited consolidated balance sheet of Walden and its
Subsidiaries and of WDOP 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 and WDOP
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 and WDOP and its Subsidiaries,
together with a written statement from such accountants to the
effect that they have read a copy of this Agreement, 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 and WDOP, copies of the unaudited consolidated
balance sheet of Walden and its Subsidiaries and of WDOP and its
Subsidiaries, respectively 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 Walden's
and WDOP'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 and WDOP for such period provided pursuant to
subsection (c) below), together with a certification by the
principal financial or accounting officer of Walden, for Walden
and as the general partner of WDOP, that the information
contained in such financial statements fairly presents the
financial position of Walden and its Subsidiaries and WDOP 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 and WDOP in each year, copies of Form 10-Q
filed with the SEC (unless the SEC has approved an extension in
which event Walden and WDOP 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 WDOP
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 Walden, for
Walden and as the general partner of WDOP, 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
WDOP;
(h) as soon as practicable but in any event not later
than 45 days after the end of each fiscal quarter of the
Borrowers (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 Borrowers;
(j) not later than five (5) Business Days after Walden
receives notice of the same from either Rating Agency or
otherwise learns of the same, notice of the issuance of any
change in the rating by either 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
either 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 either Rating Agency
(collectively a "Rating Notice");
(k) not later than forty-five (45) days after the end
of each fiscal quarter of the Borrowers (including the fourth
fiscal quarter in each year), a list setting forth the following
information with respect to each new Subsidiary of WDOP: (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 Borrowers 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 Borrowers 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 Borrowers, the General
Partner, 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 Borrowers, the General Partner or the Guarantors or the
existence of which claimed default might become an Event of
Default under Section 12.1(g), the Borrowers 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 Borrowers will promptly
give notice to the Agent (i) upon the Borrowers 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
either 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 Borrowers
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
either Borrower, the General Partner, 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 either Borrower or any Guarantor and stating
the nature and status of such litigation or proceedings. The
Borrowers 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 a Borrower, the General Partner, a
Guarantor or 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 Borrowers 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 Borrowers, 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 Borrowers 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
Borrowers shall promptly give notice to the Agent of such
transaction, which notice shall be accompanied by a certification
of the chief financial officer of Walden for itself and as the
sole general partner of WDOP 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 Borrowers will do or cause to be done all
things necessary to preserve and keep in full force and effect
its existence as a Delaware limited partnership or Maryland
corporation, as applicable. The Borrowers 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 legal existence. Each 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. Each
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, each 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 such Borrower
and its Subsidiaries.
Section 7.7. Insurance. The Borrowers will, at their expense,
procure and maintain or cause to be procured and maintained
insurance covering the Borrowers, their respective 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 Borrowers and their respective
Subsidiaries 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 each of
them 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 such
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, each
Borrower and each Subsidiary of the Borrowers 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 Borrowers 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 Borrowers
shall permit the Banks, through the Agent or any representative
designated by the Agent, at the Borrowers' expense to visit and
inspect any of the properties of the Borrowers or any of their
respective Subsidiaries, to examine the books of account of the
Borrowers and their respective Subsidiaries (and to make copies
thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of the Borrowers and their respective
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 Borrowers'
normal business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. Each 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 Borrowers may fulfill any of their
obligations hereunder, the Borrowers 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 Borrowers will use the
proceeds of the Loans solely to provide short-term financing (a)
for the acquisition of fee interests by WDOP in Real Estate which
is utilized principally for multifamily housing (including
reasonable transaction costs related thereto) (provided that no
more than $20,000,000.00 in the aggregate for the term of the
Loans may be used by WDOP for the acquisition of fee interests in
such Real Estate by wholly-owned Subsidiaries of WDOP as provided
in Section 7.16), (b) for working capital purposes of WDOP and Walden,
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 Borrowers 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 Borrowers 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
Borrowers 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 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 Agreement.
Section 7.14. Unencumbered Operating Properties.
(a) The Borrowers shall 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 Borrowers 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); provided that no more than forty percent
(40%) of the Asset Value of the Unencumbered Operating
Properties may be located in Houston, Texas until October,
1998, and thereafter such Asset Values shall not exceed
thirty percent (30%) as provided above.
(b) The Borrowers 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 Walden, for itself and as the sole general partner of WDOP 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 Walden, for itself and
as the sole general partner of WDOP, and (iv) that the
Unencumbered Operating Properties comply with the terms of 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 such Borrower's or any Guarantor's
ability to pledge to Agent the Unencumbered Operating Properties,
Real Estate which is owned by the Borrowers or such Guarantors
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
Borrowers or such Guarantor as security for the Loans. Borrowers
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 Borrowers 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
Borrowers, the Guarantors or any of their respective
Subsidiaries.
(b) Borrowers 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 a 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 such
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 Borrowers, the General
Partner, the Guarantors or their respective Subsidiaries in
income-producing real estate assets acquired after the Closing
Date shall be owned directly by WDOP. Notwithstanding the
foregoing, Walden, WROP and WDOP may acquire income-producing
real estate assets after the Closing Date (a) as provided in
Section 8.11, and (b) in a like-kind exchange of Real Estate owned by
such Person as of the Closing Date. In addition, WDOP may
subject to the terms of this Agreement acquire through a wholly-owned
Subsidiary of WDOP Real Estate that is encumbered by
Indebtedness that is to be assumed by such Subsidiary in
connection with the acquisition thereof and which acquisition is
financed in part with proceeds of the Loans as provided in
Section 7.11(a).
Section 7.17. Distributions of Income to the Borrowers. Each
Borrower shall cause all of its Subsidiaries to promptly
distribute to such Borrower (but not less frequently than once
each fiscal quarter of such 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 any 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 either Borrower, any Guarantor or their
respective Subsidiaries than those set forth herein or in any of
the other Loan Documents or which provide for a guaranty of the
obligations thereunder by a Person that is not liable for the
Obligations, the Borrowers shall promptly notify the Agent and,
if requested by the Majority Banks, the Borrowers, 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 or provide for a guaranty of the
Obligations by such Person as determined by the Majority Banks in
their sole discretion.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree 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 Borrowers will
not, and will not permit 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 Borrowers 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 the applicable 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 8.1(h)(i) and Section 9,
secured 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 the Borrowers, provided that
(i) the aggregate outstanding principal amount of such
Indebtedness (excluding the Obligations) and the portion of the
Indebtedness described in Section 8.1(g) that is recourse to Walden and
its Subsidiaries shall not exceed five percent (5%) of Walden's
Consolidated Total Assets (provided, however, that with respect
to senior unsecured recourse Indebtedness of the Borrowers only,
the aggregate outstanding amount of such Indebtedness (excluding
the Obligations, but including any of such Indebtedness permitted
within the five percent (5%) threshold described above) shall not
exceed fifty percent (50%) 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 Borrowers 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
the Borrowers or their respective Subsidiaries in connection with
such Indebtedness shall not individually or in the aggregate be
more restrictive against the Borrowers and their respective
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
Borrowers 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 Agencies
have 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 Agencies;
(i) subject to the provisions of Section 9, Indebtedness in
an aggregate outstanding principal amount not exceeding
$200,000,000.00 at any time of Borrowers pursuant to that certain
Term Loan Agreement dated December 15, 1997, among Borrowers,
BKB, the other banks which are a party thereto and which may
become a party thereto and BKB, as Agent; and
(j) unsecured Indebtedness between Walden and WDOP
provided that the terms of such Indebtedness are satisfactory to
the Majority Banks and the repayment of such Indebtedness shall
be subordinate at all times to repayment of the Obligations
pursuant to a subordination and standstill agreement in form and
substance satisfactory to the Majority Banks.
Section 8.2. Restrictions on Liens, Etc. The Borrowers will not,
and will not permit 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 Borrowers or such Subsidiaries which prohibits the creation
or maintenance of any lien securing the Obligations (collectively
"Liens"); provided that the Borrowers and any of their respective
Subsidiaries 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 the Borrowers 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 the Borrowers or their respective Subsidiaries,
which defects do not individually or in the aggregate have a
materially adverse effect on the business of such Borrower
individually or of such Person and its Subsidiaries on a
consolidated basis;
(iv) liens on Real Estate (other than Real Estate of
WDOP) 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 Borrowers will not,
and will not permit 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 such 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) Subject to the terms of this Agreement,
Investments in Subsidiaries of such Borrower existing as of the
date hereof, and Investments in new Subsidiaries of WDOP created
after the date of this Agreement; provided that in no event shall
the aggregate of such Investments in new Subsidiaries created
after the date of this Agreement exceed ten percent (10%) of
Walden's Consolidated Total Assets, and provided further that in
no event shall such Investments in the form of note receivables
from all Subsidiaries whenever created (including the principal
amount payable pursuant to such notes) exceed ten percent (10%)
of Walden's Consolidated Total Assets. For the purposes hereof,
notes receivable from Subsidiaries shall be valued at face value
subject to impairment; 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. Each of the Borrowers 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 a Borrower with and into such Borrower and
(ii) the merger or consolidation of two or more Subsidiaries of a
Borrower; provided that in no event shall WDOP be merged,
consolidated or combined with Walden without the prior written
consent of the Majority Banks.
Section 8.5. Sale and Leaseback. Each of the Borrowers will not,
and will not permit any of its Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby a Borrower 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. Each of the
Borrowers will not, and will not permit any of its 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 Borrowers 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 Borrowers) 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
Borrowers 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 Borrowers 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 Borrowers' 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 Borrowers.
Section 8.7. Distributions. The Borrowers shall not make any
Distributions which would cause it to violate any of the
following covenants:
(a) 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;
(b) In the event that an Event of Default shall have
occurred and be continuing, WDOP 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
(c) 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;
(d) 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 Borrower shall make any Distributions whatsoever,
directly or indirectly.
Section 8.8. Asset Sales. Neither 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 Borrowers 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 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 Borrowers acknowledge
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 such Borrower or such
Subsidiary has the resources and expertise necessary to complete
such project. Nothing herein shall prohibit the Borrowers 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. Neither
Borrower shall 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 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, WROP 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 8.12. Restrictions on Transfer. Walden will not, directly
or indirectly, make or permit to be made, by voluntary or
involuntary means, (a) any sale, assignment, transfer,
disposition, mortgage, pledge, hypothecation or encumbrance of
its interest in WDOP, WDN Properties, Inc., WDN Properties,
Ltd., WROP, or WDN Operating, Inc., or any dilution of its
interest in WDOP, WDN Properties, Inc., WDN Properties, Ltd.,
WROP, or WDN Operating, Inc., (b) 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, (c) any sale,
assignment, transfer, disposition, mortgage, pledge,
hypothecation or encumbrance of the interest of WDOP in any of
its direct or indirect Subsidiaries; (d) any sale, assignment,
transfer, disposition, mortgage, pledge, hypothecation or
encumbrance of the interest of WDN Properties, Inc. in WDOP, WDN
Properties, Ltd. or WROP, or any dilution of its interest in
WDOP, WDN Properties, Ltd., or WROP; or (e) any sale, assignment,
transfer, disposition, mortgage, pledge, hypothecation, or
encumbrance of the interest of WROP in WDOP, or any dilution of
its interest in WDOP. Walden is and shall remain the sole
general partner of WDOP and shall not in any manner transfer,
assign, diminish or otherwise restrict its Voting Interests in
WDOP.
Section 9. FINANCIAL COVENANTS OF THE BORROWERS
Section 9.1. Borrowing Base Covenant of the Borrowers. The
Borrowers covenant and agree that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans, the
Borrowers 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 9.2. Covenants of Walden. The Borrowers covenant and
agree that, so long as any Loan or Note is outstanding or any
Bank has any obligations to make any Loans, Walden will 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") minus
(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 sum of
(i) Consolidated Operating Cash Flow of Walden and its
Subsidiaries for the Test Period plus (ii) Preferred
Distributions of Walden, WDOP and their respective Subsidiaries
for the Test Period to be less than 1.25 times the sum of (x) the
Debt Service of Walden and its Subsidiaries plus (y) the Capital
Improvement Reserve plus (z) Preferred Distributions of Walden,
WDOP and their respective 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.
(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) $500,000,000.00 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 15, 1997;
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 Borrowers a copy, certified as
of a recent date by the appropriate officer of each State in
which the Borrowers and the General Partner, as applicable, is
organized or 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 Borrowers and the General
Partner, 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
Borrowers and the General Partner, 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 Partner a true copy of its bylaws and the resolutions
adopted by its board of directors authorizing the transactions
described herein, 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 Partner an incumbency
certificate, dated as of the Closing Date, signed by a duly
authorized 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 Borrowers a
certificate, dated as of the Closing Date, signed by a duly
authorized partner or officer of each 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 Borrowers 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 Borrowers and the General Partner, as
to such matters as the Agent shall reasonably request.
Section 10.6. Payment of Fees. The Borrowers shall have paid to
the Agent the fees required to be paid as of the Closing Date
pursuant to Section 4.2.
Section 10.7. Performance; No Default. The Borrowers shall have
performed and complied with all terms and conditions herein
required to be performed or complied with by them 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 Borrowers in the Loan Documents or
otherwise made by or on behalf of the Borrowers, the General
Partner 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 Borrowers have provided
financial statements under Section 6.4 adjusted in the best good faith
estimate of the Borrowers 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
Borrowers, the General Partner 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 Borrowers 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 Borrowers 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 Borrowers shall fail to comply with any
covenant contained in Section 7.14 or Section 7.15;
(d) the Borrowers 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
Borrowers by the Agent;
(e) any of the Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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
Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the
General Partner or the Guarantors or any sale, transfer or other
disposition of the assets of any of the Borrowers, the General
Partner or 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 Borrowers, the General Partner 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 Borrowers or a Guarantor to perform each and
every one of their respective obligations under and by virtue of
the Loan Documents;
(o) any of the Borrowers, the General Partner 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 Borrowers, the General Partner, 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) Marshall B. Edwards, Mark S. Dillinger and the
members of the board of directors of Walden that are also
officers of Walden 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) Marshall B. Edwards shall cease to be the
President of, or Mark S. Dillinger shall cease to be the Chief
Financial 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
Borrowers 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 Borrowers;
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
Borrowers 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 Borrowers cure such default within five (5)
days following receipt of written notice of such default,
provided, however, that Borrowers 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 Borrowers cure 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 Borrowers. If any other Event
of Default shall have occurred, the Agent, upon the election of
the Majority Banks, may by notice to the Borrowers terminate the
obligation to make Loans to the Borrowers. No termination under
this Section 12.2 shall relieve the Borrowers of their 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
Borrowers 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
Borrowers 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 Borrowers 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 Borrowers or the Guarantors and any securities or other
property of the Borrowers 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 Borrowers 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 Borrowers 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 Borrowers.
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 Borrowers 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
Borrowers 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 Borrowers, their
respective 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 Borrowers 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 Borrowers
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 Borrowers 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, BKB
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
Borrowers. 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 Borrowers. 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 Borrowers agree 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 Borrowers 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 Borrowers, the General Partner 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 Borrowers, the General
Partner 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 reasonable fees, costs and expenses (including
reasonable attorney's fees and costs) of BKB in connection with
the syndication of interests in the Loans. 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 Borrowers agree 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
Borrowers, the General Partner, the Guarantors or any of their
respective Subsidiaries, (b) any condition of the Real Estate,
(c) any actual or proposed use by the Borrowers 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 Borrowers, the General Partner, the Guarantors or any of
their respective Subsidiaries, (e) the Borrowers 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 Borrowers, the General Partner, 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 Borrowers 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 Borrowers agree to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the
obligations of the Borrowers under this Section 16 are unenforceable for
any reason, the Borrowers hereby agree 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
Borrowers, the General Partner, 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 Borrowers 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 Borrowers, the General Partner, 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 Borrowers, the General Partner 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 Borrowers, the General Partner 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 Borrowers, 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 Borrowers 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 Borrowers and the Banks (other than
the assigning Bank). Within five Business Days after receipt of
such notice, the Borrowers, at their 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 Borrowers.
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 Borrowers, (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 Borrowers 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 Borrowers, the General Partner 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 Borrowers. Neither Borrower shall
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 Borrowers agree 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"), 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 WDOP:
Walden/Drever Operating Partnership, L.P.
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
If to Walden:
Walden Residential Properties, Inc.
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, a 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 each 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 BORROWERS AGREE 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 CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT
THE ADDRESS SPECIFIED IN SECTION 19. THE BORROWERS HEREBY WAIVE ANY
OBJECTION THAT EITHER OF THEM 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 BORROWERS, 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 BORROWERS HEREBY WAIVE ANY RIGHT EITHER OF
THEM 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
BORROWERS (A) CERTIFY 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)
ACKNOWLEDGE 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. BORROWERS ACKNOWLEDGE THAT
EACH OF THEM HAS HAD AN OPPORTUNITY TO REVIEW THIS SECTION 25 WITH ITS
LEGAL COUNSEL AND THAT EACH BORROWER AGREES TO THE FOREGOING AS
ITS FREE, KNOWING AND VOLUNTARY ACT.
Section 26. DEALINGS WITH THE BORROWERS.
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 either 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 Borrowers 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 a Borrower or a
Guarantor 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 Borrowers 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 Borrowers
shall entitle the Borrowers 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 Borrowers 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.
Section 31. REPLACEMENT OF NOTES.
Upon receipt of evidence reasonably satisfactory to the
Borrowers of the loss, theft, destruction or mutilation of any
Note, and in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory
to the Borrowers or, in the case of any such mutilation, upon
surrender and cancellation of the applicable Note, the Borrowers
will execute and deliver, in lieu thereof, a replacement Note,
identical in form and substance to the applicable Note and dated
as of the date of the applicable Note and upon such execution and
delivery all references in the Loan Documents to such Note shall
be deemed to refer to such replacement Note.
Section 32. JOINT AND SEVERAL LIABILITY.
Each of the Borrowers covenants and agrees that each and
every covenant and obligation of any Borrower hereunder and under
the other Loan Documents shall be the joint and several
obligations of each Borrower.
Section 33. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF
BORROWERS.
Section 33.1. Waiver of Automatic or Supplemental Stay. Each of
the Borrowers represent, warrant and covenant to the Banks and
Agent that in the event of the filing of any voluntary or
involuntary petition in bankruptcy by or against the other of the
Borrowers at any time following the execution and delivery of
this Agreement, neither of the Borrowers shall seek a
supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to Section 105 of the Bankruptcy Code or any
other provision of the Bankruptcy Code, to stay, interdict,
condition, reduce or inhibit the ability of the Banks or Agent to
enforce any rights it has by virtue of this Agreement, the Loan
Documents, or at law or in equity, or any other rights the Banks
or Agent has, whether now or hereafter acquired, against the
other Borrower or against any property owned by such other
Borrower.
Section 33.2. Waiver of Defenses. Each of the Borrowers hereby
waives and agrees not to assert or take advantage of any defense
based upon:
(a) any statute of limitations and any action
hereunder or for the collection of the Notes or for the payment
and performance of any of the Obligations;
(b) any incapacity, lack of authority, death or
disability of the other Borrower, any Guarantor or any other
Person;
(c) any failure of the Banks or Agent to commence an
action against the other Borrower, any Guarantor or any other
Person or to file or enforce a claim against the estate (either
in administration, bankruptcy, or any other proceeding) of the
other Borrower, any Guarantor or any other Person, whether or not
demand is made upon the Banks or Agent to file or enforce such
claim;
(d) any failure of the Banks or Agent to give notice
of the existence, creation or incurring of any new or additional
indebtedness or other obligation or of any action or nonaction on
the part of any other Person in connection with the Loan
Documents, including the waiver of any conditions to the making
of any advance of proceeds of any Loan;
(e) any failure on the part of the Banks or Agent to
ascertain the extent or nature of any assets of any Person or any
insurance or other rights with respect thereto, or the liability
of any party liable for the Loan Documents or the obligations
evidenced or secured thereby, or any failure on the part of the
Banks or Agent to disclose to the Borrowers any facts any of them
may now or hereafter know regarding the Borrowers, any
Guarantors, their respective assets, or such other parties,
whether such facts materially increase the risks to Borrowers or
not;
(f) except as specifically required in the Loan
Documents, any notice of intention to accelerate any of the
Obligations or any notice of acceleration of the Obligations;
(g) any lack of acceptance or notice of acceptance of
this Agreement by Banks or Agent;
(h) any lack of presentment, demand, protest, or
notice of dishonor, demand, protest or nonpayment with respect to
any indebtedness or obligations under any of the Loan Documents;
(i) any lack of notice of disposition or of manner of
disposition of any assets of any Person;
(j) except as specifically required in the Loan
Documents, any lack of other notices to which the Borrowers, or
either of them, might otherwise be entitled;
(k) failure to properly record any document or any
other lack of due diligence by the Banks or Agent in creating or
perfecting a security interest in or collection, protection or
realization upon any assets of any Person or in obtaining
reimbursement or performance from any person or entity now or
hereafter liable for the Loan Documents or any obligation secured
thereby;
(l) any invalidity or irregularity, in whole or in
part, of any one or more of the Loan Documents;
(m) the inaccuracy of any representation or other
provision contained in any Loan Document;
(n) any sale or assignment of the Loan Documents, in
whole or in part;
(o) any sale or assignment by any of the Borrowers or
any Guarantor of any assets of such Person, or any portion
thereof, whether or not consented to by the Banks or Agent;
(p) any lack of commercial reasonableness in dealing
with any of the assets of a Person now or hereafter owned by the
other of the Borrowers or any Guarantor;
(q) the dissolution or termination of existence of
either Borrower, any Guarantor or any other Person;
(r) the voluntary or involuntary liquidation, sale or
other disposition of all or substantially all of the assets of
either Borrower or any Guarantor;
(s) the voluntary or involuntary receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, assignment, composition, or readjustment of, or
any similar proceeding affecting, any Borrower, any Guarantor or
any of such Person's properties or assets;
(t) the damage, destruction, condemnation, foreclosure
or surrender of all or any part of the Real Estate or any of the
improvements located thereon;
(u) any failure or delay of Agent or the Banks to
commence an action against Borrowers or any Guarantor, to assert
or enforce any remedies against Borrowers or any Guarantor under
the Note or the Loan Documents, or to realize upon any security;
(v) the invalidity or unenforceability of the Note or
any of the Loan Documents;
(w) the compromise, settlement, release or termination
of any or all of the obligations of a Borrower or any Guarantor
under the Note or the Loan Documents; or
(x) to the fullest extent permitted by law, any other
legal, equitable or surety defenses whatsoever to which a
Borrower might otherwise be entitled
Section 33.3. Waiver. Each of the Borrowers waives, to the
fullest extent that each may lawfully so do, the benefit of all
appraisement, valuation, stay, extension, homestead, exemption
and redemption laws which such Person may claim or seek to take
advantage of in order to prevent or hinder the enforcement of any
of the Loan Documents or the exercise by Banks or Agent of any of
their respective remedies under the Loan Documents and, to the
fullest extent that the Borrowers may lawfully so do, such Person
waives any and all right to have the assets of such Person
marshaled upon any exercise of remedies hereunder. Each of the
Borrowers further agrees that the Banks and Agent shall be
entitled to exercise their respective rights and remedies under
the Loan Documents or at law or in equity in such order as they
may elect. Without limiting the foregoing, each of the Borrowers
further agrees that upon the occurrence of an Event of Default,
the Banks and Agent may exercise any of such rights and remedies
without notice to either of the Borrowers except as required by
law or the Loan Documents and agrees that neither the Banks nor
Agent shall be required to proceed against the other of the
Borrowers, any Guarantor or any other Person or to proceed
against or to exhaust any other security held by the Banks or
Agent at any time or to pursue any other remedy in Bank's or
Agent's power or under any of the Loan Documents before
proceeding against a Borrower or its assets under the Loan
Documents.
Section 33.4. Subordination. Each of the Borrowers hereby
expressly waives any right of contribution from or indemnity
against the other, whether at law or in equity, arising from any
payments made by such Person pursuant to the terms of this
Agreement or the Loan Documents, and each of the Borrowers
acknowledges that it has no right whatsoever to proceed against
the other for reimbursement of any such payments. In connection
with the foregoing, each of the Borrowers expressly waives any
and all rights of subrogation to the Banks or Agent against the
other of the Borrowers, and each of the Borrowers hereby waives
any rights to enforce any remedy which the Banks or Agent may
have against the other of the Borrowers and any rights to
participate in any collateral or any other assets of the other
Borrower. In addition to and without in any way limiting the
foregoing, each of the Borrowers hereby subordinates any and all
indebtedness it may now or hereafter owe to such other Borrower
to all indebtedness of the Borrowers to the Banks and Agent, and
agrees with the Banks and Agent that neither of the Borrowers
shall claim any offset or other reduction of such Borrower's
obligations hereunder because of any such indebtedness and shall
not take any action to obtain any collateral or any other assets
of the other Borrower.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument as of the date first set forth
above.
BANKBOSTON, N.A., individually and
as Agent
By: _____________________________
Jeffrey L. Warwick, Director
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jeffrey L. Warwick
Facsimile: 770/390-8434
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership, by its sole
general partner
By: Walden Residential
Properties, Inc., a Maryland
corporation
By: __________________________
Name:_____________________
Title:______________________
[CORPORATE SEAL]
WALDEN RESIDENTIAL PROPERTIES,
INC., a Maryland corporation
By: _______________________________
Name:__________________________
Title:___________________________
[CORPORATE SEAL]
EXHIBIT A
FORM OF NOTE
$______________ December ___ , 1997
FOR VALUE RECEIVED, the undersigned WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, and WALDEN
RESIDENTIAL PROPERTIES, INC., a Maryland corporation, hereby
jointly and severally promise to pay to
______________________________ or order, in accordance with the
terms of that certain Revolving Credit Agreement dated December
15, 1997 (the "Credit Agreement"), as from time to time in
effect, among the undersigned, BankBoston, N.A., for itself and
as Agent, and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity
Date the principal sum of _______________________________________
_________________________________________________ DOLLARS
($______________), or such amount as may be advanced by the payee
hereof under the Credit Agreement (but excluding Swing Loans made
pursuant to Section 2.4A(a) through (c) of the Credit Agreement) with
daily interest from the date hereof, computed as provided in the
Credit Agreement, on the principal amount hereof from time to
time unpaid, at a rate per annum on each portion of the principal
amount which shall at all times be equal to the rate of interest
applicable to such portion in accordance with the Credit
Agreement, and with interest on overdue principal and, to the
extent permitted by applicable law, on overdue installments of
interest and late charges at the rates provided in the Credit
Agreement. Interest shall be payable on the dates specified in
the Credit Agreement, except that all accrued interest shall be
paid at the stated or accelerated maturity hereof or upon the
prepayment in full hereof. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the
Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as
Agent for the payee hereof, 100 Federal Street, Boston,
Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings
under and is entitled to the benefits and subject to the
provisions of the Credit Agreement. The principal of this Note
may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the
amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in
part, all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all
agreements between the Borrowers 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 Borrowers. 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 paragraph shall control all
agreements between the Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire
principal amount of this Note may become or be declared due and
payable in the manner and with the effect provided in said Credit
Agreement.
This Note shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts (without
giving effect to the conflict of laws rules of any jurisdiction).
The undersigned makers and all guarantors and endorsers,
hereby waive presentment, demand, notice, protest, notice of
intention to accelerate the indebtedness evidenced hereby, notice
of acceleration of the indebtedness evidenced hereby and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and
assent to extensions of time of payment or forbearance or other
indulgence without notice.
IN WITNESS WHEREOF the undersigned have by their duly
authorized officer or partner executed this Note under seal as of
the day and year first above written.
WALDEN/DREVER OPERATING PARTNERSHIP,
L.P.,
a Delaware limited partnership,
by its sole general partner
By: Walden Residential Properties, Inc.,
a Maryland corporation
By:______________________________
Name:_______________________
Title:________________________
[CORPORATE SEAL]
WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation
By:_____________________________
Name:__________________________ Title:______________
[CORPORATE SEAL]
EXHIBIT B
FORM OF SWING LOAN NOTE
$______________ December ____, 1997
FOR VALUE RECEIVED, the undersigned WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, and WALDEN
RESIDENTIAL PROPERTIES, INC., a Maryland corporation, hereby
jointly and severally promise to pay to
______________________________ or order, in accordance with the
terms of that certain Revolving Credit Agreement dated December
15, 1997 (the "Credit Agreement"), as from time to time in
effect, among the undersigned, BankBoston, N.A., for itself and
as Agent, and such other Banks as may be from time to time named
therein, to the extent not sooner paid, on or before the Maturity
Date the principal sum of _____________________________________
________________________ DOLLARS ($______________), or such
amount as may be advanced by the payee hereof under the Credit
Agreement as Swing Loans with daily interest from the date
hereof, computed as provided in the Credit Agreement, on the
principal amount hereof from time to time unpaid, at a rate per
annum on each portion of the principal amount which shall at all
times be equal to the rate of interest applicable to such portion
in accordance with the Credit Agreement, and with interest on
overdue principal and, to the extent permitted by applicable law,
on overdue installments of interest and late charges at the rates
provided in the Credit Agreement. Interest shall be payable on
the dates specified in the Credit Agreement, except that all
accrued interest shall be paid at the stated or accelerated
maturity hereof or upon the prepayment in full hereof.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Credit Agreement.
Payments hereunder shall be made to BankBoston, N.A., as
Agent for the payee hereof, 100 Federal Street, Boston,
Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings
under and is entitled to the benefits and subject to the
provisions of the Credit Agreement. The principal of this Note
may be due and payable in whole or in part prior to the maturity
date stated above and is subject to mandatory prepayment in the
amounts and under the circumstances set forth in the Credit
Agreement, and may be prepaid in whole or from time to time in
part, all as set forth in the Credit Agreement.
Notwithstanding anything in this Note to the contrary, all
agreements between the Borrowers 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 Borrowers. 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 paragraph shall control all
agreements between the Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire
principal amount of this Note may become or be declared due and
payable in the manner and with the effect provided in said Credit
Agreement.
This Note shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts (without
giving effect to the conflict of laws rules of any jurisdiction).
The undersigned makers and all guarantors and endorsers,
hereby waive presentment, demand, notice, protest, notice of
intention to accelerate the indebtedness evidenced hereby, notice
of acceleration of the indebtedness evidenced hereby and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Credit Agreement, and
assent to extensions of time of payment or forbearance or other
indulgence without notice.
IN WITNESS WHEREOF the undersigned have by their duly
authorized officer or partner executed this Note under seal as of
the day and year first above written.
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership, by its sole
general partner
By: Walden Residential
Properties, Inc., a
Maryland corporation
By:_____________________________
Name:__________________________
Title:___________________________
[CORPORATE SEAL]
WALDEN RESIDENTIAL PROPERTIES,
INC., a Maryland corporation
By:_____________________________
Name:__________________________
Title:___________________________
[CORPORATE SEAL]<PAGE>
EXHIBIT C
FORM OF REQUEST FOR LOAN
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.6 of the Revolving Credit
Agreement dated December 15, 1997, as from time to time in effect
(the "Credit Agreement"), among Walden Residential Properties,
Inc. and Walden/Drever Operating Partnership, L.P. (the
"Borrowers"), BankBoston, N.A., for itself and as Agent and the
other Banks from time to time party thereto, the Borrowers hereby
request and certify as follows:
1. Loan. The Borrowers hereby request a [Loan under Section 2.1]
[Swing Loan under Section 2.4A] of the Credit Agreement [strike
inapplicable language]:
Principal Amount: $
LIBOR or Base Rate:
Drawdown Date: , 19
Interest Period:
by credit to the general account of the Borrowers with the Agent
at the Agent's Head Office.
[If the requested Loan is a Swing Loan and the
Borrowers desire for such Loan to be a LIBOR Rate Loan following
its conversion as provided in Section 2.4A(d), specify the Interest
Period following conversion:____________________]
2. Use of Proceeds. Such Loan shall be used for the
following purposes permitted by Section 7.11 of the Credit Agreement:
[Describe]
3. No Default. The undersigned chief financial or chief
accounting officer of Walden, for Walden and as the sole general
partner of WDOP, certify that Borrowers are and will be in
compliance with all covenants under the Loan Documents after
giving effect to the making of the Loan requested hereby.
4. Representations True. Each of the representations and
warranties made by or on behalf of the Borrowers, the General
Partner, the Guarantors and their respective Subsidiaries
contained in the Credit Agreement, in the other Loan Documents or
in any document or instrument delivered pursuant to or in
connection with the Credit Agreement was true as of the date as
of which it was made and shall also be true at and as of the
Drawdown Date for the Loan requested hereby, with the same effect
as if made at and as of such Drawdown Date (except to the extent
of changes resulting from transactions contemplated or permitted
by the Credit 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 has
occurred and is continuing.
5. Other Conditions. All other conditions to the making
of the Loan requested hereby set forth in Section 11 of the Credit
Agreement have been satisfied.
6. Drawdown Date. Except to the extent, if any, specified
by notice actually received by the Agent prior to the Drawdown
Date specified above, the foregoing representations and
warranties shall be deemed to have been made by the Borrowers on
and as of such Drawdown Date.
7. Definitions. Terms defined in the Credit Agreement are
used herein with the meanings so defined.
IN WITNESS WHEREOF, we have hereunto set our hands this
_____ day of _______________, 199___.
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Walden Residential Properties,
Inc.,
a Maryland corporation
By:______________________________
Chief Financial or Chief
Accounting
Officer
WALDEN RESIDENTIAL PROPERTIES,
INC.,
a Maryland corporation
By:___________________________________
Chief Financial or Chief
Accounting Officer
<PAGE>
EXHIBIT D
FORM OF REQUEST FOR EXTENSION OF LOAN
BankBoston, N.A., as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
Ladies and Gentlemen:
Pursuant to the provisions of Section 2.8 of the Revolving Credit
Agreement dated December 15, 1997, as from time to time in effect
(the "Credit Agreement"), among Walden Residential Properties,
Inc. and Walden/Drever Operating Partnership, L.P. (the
"Borrowers"), BankBoston, N.A., for itself and as Agent, and the
other Banks from time to time party thereto, the Borrowers hereby
request and certify as follows:
1. Extension Request. The Borrowers hereby irrevocably
request that the Maturity Date be extended as provided in Section 2.8 of
the Credit Agreement. The aggregate principal amount of Loans
which will be outstanding as of the Maturity Date is
$____________.
2. Investment Grade Rating. Walden has obtained an
Investment Grade Rating from either of the Rating Agencies, which
continues in full force and effect.
3. No Default. The undersigned chief financial or chief
accounting officer of Walden, for Walden and as the sole general
partner of WDOP, certifies that the Borrowers are and will be in
compliance with all covenants under the Loan Documents after
giving effect to the extension requested hereby. Attached to
this Request for Extension of Loan is a Compliance Certificate
prepared using the financial statements of the Borrowers most
recently provided or required to be provided under Section 6.4 or Section 7.4
of the Credit Agreement adjusted in the best good-faith estimate
of the Borrowers to give effect to the extension of the Loan
requested hereby.
4. Representations True. Each of the representations and
warranties made by or on behalf of the Borrowers, the General
Partner, the Guarantors and their respective Subsidiaries
contained in the Credit Agreement, in the other Loan Documents or
in any document or instrument delivered pursuant to or in
connection with the Credit Agreement was true as of the date as
of which it was made and shall also be true at and as of the
Maturity Date (without regard to such extension request) with the
same effect as if made at and as of the Maturity Date (without
regard to such extension request) (except to the extent of
changes resulting from transactions contemplated or permitted by
the Credit 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 has
occurred and is continuing.
5. Other Conditions. All other conditions to the
extension to the Loan requested hereby set forth in Section 2.8 of the
Credit Agreement have been satisfied.
6. Date. Except to the extent, if any, specified by
notice actually received by the Agent prior to the Maturity Date
(without regard to such extension request) specified above, the
foregoing representations and warranties shall be deemed to have
been made by the Borrowers on and as of the Maturity Date
(without regard to such extension request).
7. Definitions. Terms defined in the Credit Agreement are
used herein with the meanings so defined.
IN WITNESS WHEREOF, I have hereunto set my hand this _____
day of ______________, 199__.
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Walden Residential Properties,
Inc.,
a Maryland corporation
By:___________________________
Chief Financial or Chief
Accounting
Officer
WALDEN RESIDENTIAL PROPERTIES,
INC.,
a Maryland corporation
By:___________________________________
Name:______________________________
Title:_______________________________
[CORPORATE SEAL]
EXHIBIT E
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
[INSERT NAMES AND ADDRESSES
OF OTHER BANKS]
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement dated
December 15, 1997 (the "Credit Agreement") by and among Walden
Residential Properties, Inc. and Walden/Drever Operating
Partnership, L.P. (the "Borrowers"), BankBoston, N.A., for itself
and as Agent, and the other Banks from time to time party
thereto. Terms defined in the Credit Agreement and not otherwise
defined herein are used herein as defined in the Credit
Agreement.
Pursuant to the Credit Agreement, the Borrowers are
furnishing to you herewith (or have most recently furnished to
you) the financial statements of the Borrowers and their
respective Subsidiaries for the fiscal period ended
_______________ (the "Balance Sheet Date"). Such financial
statements have been prepared in accordance with generally
accepted accounting principles and present fairly the financial
position of Borrowers and the Subsidiaries covered thereby at the
date thereof and the results of their operations for the periods
covered thereby, subject in the case of interim statements only
to normal year-end audit adjustments.
This certificate is submitted in compliance with
requirements of Section 7.4(e), Section 7.5(d) and Section 10.10 of the Credit
Agreement. If this certificate is provided under a provision
other than Section 7.4(e), the calculations provided below are made
using the financial statements of the Borrowers and their
respective Subsidiaries as of the Balance Sheet Date adjusted in
the best good-faith estimate of the Borrowers to give effect to
the making of a Loan, extension of the Maturity Date, acquisition
or disposition of property or other event that occasions the
preparation of this certificate; and the nature of such event and
the Borrowers' estimate of its effects are set forth in
reasonable detail in an attachment hereto. The undersigned
officer is the chief financial or chief accounting officer of
Walden, for Walden and the sole general partner of WDOP.
The undersigned officers have caused the provisions of the
Credit Agreement to be reviewed and have no knowledge of any
Default or Event of Default. (Note: If the signers do have
knowledge of any Default or Event of Default, the form of
certificate should be revised to specify the Default or Event of
Default, the nature thereof and the actions taken, being taken or
proposed to be taken by the Borrowers with respect thereto.)
The Borrowers are providing the information set forth in the
schedule attached hereto to demonstrate compliance as of the date
hereof with the covenants described therein.
IN WITNESS WHEREOF, we have hereunto set our hands this ___
day of ________________, 199__.
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P.,
a Delaware limited partnership,
by its sole general partner
By: Walden Residential Properties,
Inc.,
a Maryland corporation
By:______________________________
Chief Financial or Chief
Accounting
Officer
WALDEN RESIDENTIAL PROPERTIES,
INC.,
a Maryland corporation
By:____________________________________
Chief Financial or Chief
Accounting Officer
SCHEDULE 1
BANKS AND COMMITMENTS
Commitment
Commitment Percentage
BankBoston, N.A. $150,000,000.00 100%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
LIBOR Lending Office
Same as above
SCHEDULE 2
EXAMPLE OF CALCULATION OF DEBT SERVICE COVERAGE AMOUNT
SCHEDULE 6.17
ENVIRONMENTAL MATTERS
NONE.
SCHEDULE 6.18
SUBSIDIARIES OF WDOP AND WALDEN
SCHEDULE 6.20
REAL ESTATE OWNED BY
BORROWERS AND THEIR RESPECTIVE SUBSIDIARIES<PAGE>
SCHEDULE 6.22
INDEBTEDNESS OF THE BORROWERS AND THEIR SUBSIDIARIES
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.. . . . . . . . .-1-
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . .-1-
Section 1.2. Rules of Interpretation . . . . . . . . . . . . . -13-
Section 2. THE REVOLVING CREDIT FACILITY . . . . . . . . . . . . . -14-
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . -14-
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . . -14-
Section 2.3. Reduction and Termination of Commitment . . . . . -15-
Section 2.4. Notes . . . . . . . . . . . . . . . . . . . . . . -15-
Section 2.4A Swing Loan Commitments. . . . . . . . . . . . . . -15-
Section 2.5. Interest on Loans . . . . . . . . . . . . . . . . -18-
Section 2.6. Requests for Loans. . . . . . . . . . . . . . . . -18-
Section 2.7. Funds for Loans . . . . . . . . . . . . . . . . . -19-
Section 2.8. Extension of Maturity Date. . . . . . . . . . . . -20-
Section 3. REPAYMENT OF THE LOANS. . . . . . . . . . . . . . . . . -20-
Section 3.1. Stated Maturity . . . . . . . . . . . . . . . . . -20-
Section 3.2. Mandatory Prepayments . . . . . . . . . . . . . . -21-
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . -21-
Section 3.4. Partial Prepayments . . . . . . . . . . . . . . . -21-
Section 3.5. Effect of Prepayments . . . . . . . . . . . . . . -21-
Section 3.6. Proceeds from Debt or Equity Offering . . . . . . -21-
Section 4. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . . . . -22-
Section 4.1. Conversion Options. . . . . . . . . . . . . . . . -22-
Section 4.2. Closing Fee . . . . . . . . . . . . . . . . . . . -22-
Section 4.3. Agent's Fee . . . . . . . . . . . . . . . . . . . -23-
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . -23-
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . -23-
Section 4.6. Inability to Determine LIBOR Rate . . . . . . . . -24-
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . -24-
Section 4.8. Additional Interest . . . . . . . . . . . . . . . -24-
Section 4.9. Additional Costs, Etc.. . . . . . . . . . . . . . -24-
Section 4.10. Capital Adequacy . . . . . . . . . . . . . . . . -26-
Section 4.11. Indemnity of Borrowers . . . . . . . . . . . . . -26-
Section 4.12. Interest on Overdue Amounts; Late Charge . . . . -26-
Section 4.13. Certificate . . . . . . . . . . . . . . . . . . . -26-
Section 4.14. Limitation on Interest . . . . . . . . . . . . . -27-
Section 5. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . -27-
Section 6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . -27-
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . -27-
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . -28-
Section 6.3. Title to Properties; Leases . . . . . . . . . . . -29-
Section 6.4. Financial Statements. . . . . . . . . . . . . . . -29-
Section 6.5. No Material Changes . . . . . . . . . . . . . . . -29-
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . -29-
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . -30-
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . -30-
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . -30-
Section 6.10. Tax Status . . . . . . . . . . . . . . . . . . . -30-
Section 6.11. No Event of Default. . . . . . . . . . . . . . . -30-
Section 6.12. Holding Company and Investment Company Acts. . . -31-
Section 6.13. Absence of UCC Financing Statements, Etc.. . . . -31-
Section 6.14. Certain Transactions . . . . . . . . . . . . . . -31-
Section 6.15. Employee Benefit Plans . . . . . . . . . . . . . -31-
Section 6.16. Regulations U and X. . . . . . . . . . . . . . . -31-
Section 6.17. Environmental Compliance . . . . . . . . . . . . -32-
Section 6.18. Subsidiaries . . . . . . . . . . . . . . . . . . -33-
Section 6.19. Loan Documents and the Guarantors. . . . . . . . -33-
Section 6.20. Property . . . . . . . . . . . . . . . . . . . . -34-
Section 6.21. Brokers. . . . . . . . . . . . . . . . . . . . . -34-
Section 6.22. Other Debt . . . . . . . . . . . . . . . . . . . -34-
Section 6.23. Solvency . . . . . . . . . . . . . . . . . . . . -35-
Section 6.24. Partners . . . . . . . . . . . . . . . . . . . . -35-
Section 6.25. No Fraudulent Intent . . . . . . . . . . . . . . -35-
Section 6.26. Transaction in best interests of Borrowers;
Consideration. . . . . . . . . . . . . . . . . . -35-
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS. . . . . . . . . -35-
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . -35-
Section 7.2. Maintenance of Office . . . . . . . . . . . . . . -36-
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . -36-
Section 7.4. Financial Statements, Certificates and Information-36-
Section 7.5. Notices . . . . . . . . . . . . . . . . . . . . . -39-
Section 7.6. Existence; Maintenance of Properties. . . . . . . -40-
Section 7.7. Insurance . . . . . . . . . . . . . . . . . . . . -40-
Section 7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . -40-
Section 7.9. Inspection of Properties and Books. . . . . . . . -41-
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . -41-
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . -41-
Section 7.12. Further Assurances . . . . . . . . . . . . . . . -42-
Section 7.13. Management; Business Operations. . . . . . . . . -42-
Section 7.14. Unencumbered Operating Properties. . . . . . . . -42-
Section 7.15. Limiting Agreements. . . . . . . . . . . . . . . -43-
Section 7.16. Ownership of Real Estate . . . . . . . . . . . . -43-
Section 7.17. Distributions of Income to the Borrowers . . . . -44-
Section 7.18. More Restrictive Agreements. . . . . . . . . . . -44-
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS . . . . . . -44-
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . -44-
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . -46-
Section 8.3. Restrictions on Investments . . . . . . . . . . . -47-
Section 8.4. Merger, Consolidation . . . . . . . . . . . . . . -48-
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . . . . -48-
Section 8.6. Compliance with Environmental Laws. . . . . . . . -48-
Section 8.7. Distributions . . . . . . . . . . . . . . . . . . -50-
Section 8.8. Asset Sales . . . . . . . . . . . . . . . . . . . -50-
Section 8.9. Development Activity. . . . . . . . . . . . . . . -50-
Section 8.10. Restriction on Prepayment of Indebtedness. . . . -51-
Section 8.11. Bankruptcy Remote Subsidiaries . . . . . . . . . -51-
Section 8.12. Restrictions on Transfer . . . . . . . . . . . . -51-
Section 9. FINANCIAL COVENANTS OF THE BORROWERS. . . . . . . . . . -51-
Section 9.1. Borrowing Base Covenant of the Borrowers. . . . . -51-
Section 9.2. Covenants of Walden . . . . . . . . . . . . . . . -52-
Section 10. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . -52-
Section 10.1. Loan Documents . . . . . . . . . . . . . . . . . -52-
Section 10.2. Certified Copies of Organizational Documents . . -53-
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . . . -53-
Section 10.4. Incumbency Certificate; Authorized Signers . . . -53-
Section 10.5. Opinion of Counsel . . . . . . . . . . . . . . . -53-
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . . . -53-
Section 10.7. Performance; No Default. . . . . . . . . . . . . -53-
Section 10.8. Representations and Warranties . . . . . . . . . -53-
Section 10.9. Proceedings and Documents. . . . . . . . . . . . -54-
Section 10.10. Compliance Certificate. . . . . . . . . . . . . -54-
Section 10.11. Partner Consents. . . . . . . . . . . . . . . . -54-
Section 10.12. Other . . . . . . . . . . . . . . . . . . . . . -54-
Section 11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . . . . . -54-
Section 11.1. Prior Conditions Satisfied . . . . . . . . . . . -54-
Section 11.2. Representations True; No Default . . . . . . . . -54-
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . -54-
Section 11.4. Governmental Regulation. . . . . . . . . . . . . -55-
Section 11.5. Proceedings and Documents. . . . . . . . . . . . -55-
Section 11.6. Borrowing Documents. . . . . . . . . . . . . . . -55-
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.. . . . . . . . . -55-
Section 12.1. Events of Default and Acceleration . . . . . . . -55-
Section 12.1A. Limitation of Cure Periods. . . . . . . . . . . -58-
Section 12.2. Termination of Commitments . . . . . . . . . . . -59-
Section 12.3. Remedies . . . . . . . . . . . . . . . . . . . . -59-
Section 12.4. Distribution of Proceeds . . . . . . . . . . . . -59-
Section 13. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . -60-
Section 14. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . -60-
Section 14.1. Authorization. . . . . . . . . . . . . . . . . . -60-
Section 14.2. Employees and Agents . . . . . . . . . . . . . . -61-
Section 14.3. No Liability . . . . . . . . . . . . . . . . . . -61-
Section 14.4. No Representations . . . . . . . . . . . . . . . -61-
Section 14.5. Payments . . . . . . . . . . . . . . . . . . . . -62-
Section 14.6. Holders of Notes . . . . . . . . . . . . . . . . -62-
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . . . -63-
Section 14.8. Agent as Bank. . . . . . . . . . . . . . . . . . -63-
Section 14.9. Resignation. . . . . . . . . . . . . . . . . . . -63-
Section 14.10. Duties in the Case of Enforcement . . . . . . . -63-
Section 15. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . -64-
Section 16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . -64-
Section 17. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . -65-
Section 18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . -66-
Section 18.1. Conditions to Assignment by Banks. . . . . . . . -66-
Section 18.2. Register . . . . . . . . . . . . . . . . . . . . -66-
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . . . -66-
Section 18.4. Participations . . . . . . . . . . . . . . . . . -67-
Section 18.5. Pledge by Bank . . . . . . . . . . . . . . . . . -67-
Section 18.6. No Assignment by Borrowers . . . . . . . . . . . -67-
Section 18.7. Disclosure . . . . . . . . . . . . . . . . . . . -67-
Section 19. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . -68-
Section 20. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . -69-
Section 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE . . -69-
Section 22. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . -70-
Section 23. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . -70-
Section 24. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . -70-
Section 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS . . . . -70-
Section 26. DEALINGS WITH THE BORROWERS. . . . . . . . . . . . . . -71-
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . -71-
Section 28. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . -72-
Section 29. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . -72-
Section 30. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . -72-
Section 31. REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . . -72-
Section 32. JOINT AND SEVERAL LIABILITY. . . . . . . . . . . . . . -72-
Section 33. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF BORROWERS-73-
Section 33.1. Waiver of Automatic or Supplemental Stay . . . . -73-
Section 33.2. Waiver of Defenses . . . . . . . . . . . . . . . -73-
Section 33.3. Waiver . . . . . . . . . . . . . . . . . . . . . -75-
Section 33.4. Subordination. . . . . . . . . . . . . . . . . . -75-
LIST OF EXHIBITS:
EXHIBIT A - Form of Revolving Credit Note
EXHIBIT B - Form of Swing Loan Note
EXHIBIT C - Form of Request for Loan
EXHIBIT D - Form of Request for Extension of Loan
EXHIBIT E - Form of Compliance Certificate
LIST OF SCHEDULES:
Schedule 1 - Banks and Commitments
Schedule 2 - Example of Calculation of Debt Service Coverage Amount
Schedule 6.17 - Environmental Matters
Schedule 6.18 - Subsidiaries of the Borrower and Walden
Schedule 6.20 - Real Estate Owned By Borrowers and their Respective Subsidiaries
Schedule 6.22 - Indebtedness of the Borrowers and Their Subsidiaries
TERM LOAN AGREEMENT
DATED DECEMBER 15, 1997
among
WALDEN RESIDENTIAL PROPERTIES, INC.,
WALDEN/DREVER OPERATING PARTNERSHIP, L.P.
and
BANKBOSTON, N.A.,
THE OTHER BANKS WHICH
ARE A PARTY TO THIS AGREEMENT,
and
THE OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.,
AS MANAGING AGENT
<PAGE>
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT is made the 15th day of December,
1997, by and among 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 75240 ("Walden"), WALDEN/DREVER OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership having its principal place
of business at One Lincoln Center, 5400 LBJ Freeway, Suite 400,
LB45, Dallas, Texas 75240 ("WDOP"; Walden and WDOP are
hereinafter referred to collectively as the "Borrowers"),
BANKBOSTON, N.A., and the other lending institutions which may
become parties hereto pursuant to Section 18 (the "Banks"), and
BANKBOSTON, N.A., as Managing Agent for the Banks (the "Agent").
RECITALS.
WHEREAS, WDOP, BankBoston and Agent have entered into that
certain Term Loan Agreement dated October 1, 1997, (the "Prior
Agreement"); and
WHEREAS, Walden has executed and delivered to Agent and the
Banks a party to the Prior Agreement that certain Unconditional
Guaranty of Payment and Performance dated October 1, 1997 (the
"Prior Guaranty"); and
WHEREAS, Borrowers have requested that Agent and the Banks
refinance the indebtedness evidenced by the Prior Agreement,
which shall facilitate the issuance of senior unsecured debt of
Walden; and
WHEREAS, Agent and the Banks are willing to provide such
facility to Borrowers, upon the terms and conditions set forth
herein; and
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:
Agent. BankBoston, N.A. acting as managing 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 Borrowers and the Banks.
Agent's Special Counsel. Long Aldridge & Norman LLP or such
other counsel as may be approved by the Agent.
Agreement. This Term Loan Agreement, including the
Schedules and Exhibits hereto.
Applicable Margin. On any date that the lower of the
Implied Ratings issued from time to time by either of the Rating
Agencies for Walden is an Investment Grade Rating, the applicable
margin set forth below based on the lower of the Implied Ratings
issued by either of the Rating Agencies and the type of the Loan:
Rating Base Rate Loans LIBOR
Rate Loans
BBB+/Baa1 or better 0% 1.00%
BBB/Baa2 0.125% 1.125%
BBB-/Baa3 0.25% 1.25%
provided, however, that on any date that the lower of the Implied
Ratings for Walden is not an Investment Grade Rating or Walden
has not obtained a rating from either of the Rating Agencies, the
Applicable Margin for Base Rate Loans shall be 0.50% and the
Applicable Margin for LIBOR Rate Loans shall be 1.375%. In the
event of any change in an Implied Rating of Walden by either of
the Rating Agencies or if Walden's Implied Rating shall cease at
any time to be an Investment Grade Rating by either of the Rating
Agencies (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. It is the intention of the parties that
if Walden shall only obtain an Investment Grade Rating from one
of the Rating Agencies without seeking an Investment Grade Rating
from the other of the Rating Agencies, the Borrowers shall be
entitled to the benefit of the rate reductions described above;
provided that if Walden shall have obtained an Investment Grade
Rating from both of the Rating Agencies, the lower of the two
ratings (or the loss of the Investment Grade Rating from one of
the Rating Agencies thereafter), shall control.
Arranger. BancBoston Securities Inc.
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, 1997.
Banks. BKB, 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.
Borrowers. As defined in the preamble hereto.
BKB. BankBoston, N.A.
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 to the Borrowers, 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 Borrowers to the
Agent of their election to convert or continue a Loan in
accordance with Section 4.1.
Debt Offering. The issuance and sale by any Borrower of any
debt securities of such Borrower.
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 Borrowers 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 any Borrower of
any equity securities of such Borrower.
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.
Exchange Agreement. That certain Exchange Agreement dated
May 21, 1997 among Walden, WDOP, Drever Partners, Inc., AOF, Inc.
and AOF II, Inc.
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 Partner. Walden, as the general partner of WDOP.
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. Individually, any Person that becomes a
guarantor of the Obligations, and collectively all of such
Persons.
Guaranty. Collectively, each Unconditional Guaranty of
Payment and Performance made by a 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 Agencies 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
Agencies 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 month 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 the period set forth above, as selected by the
Borrowers 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 Borrowers shall fail to give notice as
provided in Section 4.1, the Borrowers 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 Standard & Poor's Corporation (or in the
case of a rating issued by Moody's Investors Service, Inc., a
rating of Baa3). 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 either of the Rating Agencies within the
previous 365 days, or (b) the rating system of either of the
Rating Agencies (as opposed to the rating of a Person) shall
change, or (c) either of the Rating Agencies shall no longer
perform the functions of a securities rating agency, then the
Borrowers 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 Borrowers or the
Guarantors in connection with the Loans.
Loan Request. See Section 2.6.
Loans. The aggregate 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 Borrowers
from time to time.
Maturity Date. December 15, 1998, 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. See Section 2.4.
Notice. See Section 19.
Obligations. All indebtedness, obligations and liabilities
of the Borrowers 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, 1996 and
filed with the SEC.
Rating Agencies. Standard & Poor's Corporation and Moody's
Investors Service, Inc.
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 a Rating Agency of
its Implied Rating, sends notice to the Borrowers 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, WDOP 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).
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 interests), 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.
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. Without limiting the
foregoing, WDOP is a Subsidiary of Walden.
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 Borrowers 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 Borrowers' 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.
Certain of the initial Unencumbered Operating Properties are
owned by Walden. After the date of this Agreement all new or
replacement Unencumbered Operating Properties shall be owned by
WDOP.
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. As defined in the preamble hereto.
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.
WDN Properties, Ltd. WDN Properties, Ltd., a Texas limited
partnership having its principal place of business at One Lincoln
Center, 5400 LBJ Freeway, Suite 400, LB45, Dallas, Texas 75240.
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 TERM LOAN 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 Borrowers the amount of its
Commitment in the aggregate principal amount of $200,000,000.00.
The Loans shall be made pro rata in accordance with each Bank's
Commitment Percentage. No Bank shall have any obligation to make
Loans to the Borrowers in the maximum aggregate principal amount
outstanding of more than the principal face amount of its Note.
Section 2.2. Intentionally Omitted.
Section 2.3. Intentionally Omitted.
Section 2.4. Notes. The Loans shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of
Exhibit A hereto (collectively, the "Notes"), dated the date of
this Agreement and completed with appropriate insertions. One
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 Borrowers irrevocably authorize each
Bank to make or cause to be made, at or about the time of the
Drawdown Date of any Loan 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 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 Borrowers hereunder or
under any Note to make payments of principal of or interest on
any Note when due.
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 Borrowers promise to pay interest on each Loan
in arrears on each Interest Payment Date with respect thereto.
(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. Intentionally Omitted.
Section 2.7. Intentionally Omitted.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Stated Maturity. The Borrowers promise 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 Borrowing Base, then the
Borrowers shall immediately pay the amount of such excess to the
Agent for the respective accounts of the Banks for application to
the Loans.
(b) All of the Borrowers' interest in the gross
proceeds of each and every sale or refinancing of real estate
assets of the Borrowers and their respective 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 Borrowers 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 Borrowers shall have the
right, at their 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
Borrowers 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.
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 Borrowers, first 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 not be
reborrowed.
Section 3.6. Proceeds from Debt Offering. Unless otherwise
approved by the Majority Banks, the Borrowers shall cause all
gross proceeds of each and every Debt Offering, less all
reasonable costs, fees, expenses, underwriting commissions, fees
and discounts incurred in connection therewith, to be paid by the
Borrowers 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 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Conversion Options.
(a) The Borrowers 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
Borrowers 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 Borrowers 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 Borrowers.
(b) Any Loan may be continued as such Type upon the
expiration of an Interest Period with respect thereto by
compliance by the Borrowers 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 Borrowers do not notify the
Agent of their 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. Intentionally Omitted.
Section 4.3. Intentionally Omitted.
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 Borrowers with BKB, 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 under the Loan Documents.
(b) All payments by the Borrowers 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 Borrowers are compelled by law to make such
deduction or withholding. If any such obligation is imposed upon
the Borrowers with respect to any amount payable by it hereunder
or under any of the other Loan Documents, the Borrowers will pay
to the Agent, for the account of the Banks 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 Borrowers. The Borrowers 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 Borrowers 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 Borrowers and the Banks) to the Borrowers 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 Borrowers 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 Borrowers 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 Borrowers
will pay to the Agent upon demand for the account of the Banks in
accordance with their respective Commitment Percentages, 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 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, or any
class of loans or commitments of which any of the Loans or such
Bank's 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, 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 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 Borrowers hereunder,
then, and in each such case, the Borrowers 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 Borrowers
thereof. The Borrowers agree 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 Borrowers. The Borrowers agree 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 Borrowers 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 Borrowers in making a borrowing
or conversion after the Borrowers have given (or are 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 Borrowers 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 Sectio 4.8, Sectio 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 Borrowers, 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
Borrowers 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 Borrowers. 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 Borrowers and
the Banks and the Agent.
Section 5. SECURITY.
The Banks have agreed to make the Loans to the Borrowers 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 Borrowers represent and warrant to the Agent and the
Banks as follows:
Section 6.1. Corporate Authority, Etc.
(a) Incorporation; Good Standing. WDOP is a Delaware
limited partnership duly organized pursuant to a limited
partnership agreement dated August 12, 1997 and is validly
existing and in good standing under the laws of Delaware. 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 Borrowers, 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 WDOP and Walden and Walden Operating, Inc. (as general
partners of WDOP 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.
(b) Subsidiaries. Each of the Subsidiaries of the
Borrowers (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 such Borrower or such
Subsidiary.
(c) Authorization. The execution, delivery and
performance of this Agreement and the other Loan Documents to
which any of the Borrowers, the General Partner or the Guarantors
is or is 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
Borrowers, the General Partner or the Guarantors is or is 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 Borrowers, the General Partner 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 Borrowers have furnished
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, 1997
satisfactory in form to the Majority Banks and certified by the
chief financial or accounting officer of Walden, for Walden and
as the sole general partner of WDOP, as fairly presenting the
operating income for such parcels for such periods, and
(c) certain other financial information relating to the Borrowers
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
Borrowers and their respective Subsidiaries as of such dates and
the results of the operations of the Borrowers and their
respective Subsidiaries for such periods. There are no
liabilities, contingent or otherwise, of the Borrowers 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 Borrowers and their respective
Subsidiaries taken as a whole as shown on or reflected in the
consolidated balance sheet of the Borrowers, 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 Borrowers,
the General Partner, 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 Borrowers, the Guarantors, the
General Partner 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 Borrowers 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
Borrowers, the General Partner, 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 Borrowers, the General
Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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
Borrowers or their respective 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 Borrowers, the General Partner or the
Guarantors or any of their respective Subsidiaries is a party to
any transaction with either or both of the Borrowers or any of
their respective 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 Borrowers, 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 Borrowers have 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 Borrowers' knowledge with
respect to any other Real Estate, except as set forth in
Schedule 6.17, none of the Borrowers 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
Borrowers or any of their respective Subsidiaries. Although not
a violation of any Environmental Law, Borrowers have 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 Borrowers 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 Borrowers 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 Borrowers' 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 Borrowers 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 Borrowers' knowledge,
on, upon, into or from the other properties of the Borrowers 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 Borrowers' 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 Borrowers' 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 Borrowers, 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 WDOP and Walden. The form and jurisdiction of
organization of each of the Subsidiaries, and WDOP'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 Borrowers 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 none of the
Borrowers 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 Borrowers', 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
Borrowers further have 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 Borrowers', the
Guarantors' or such Subsidiaries' purchase thereof or the date
upon which such property was last security for Indebtedness of
such Borrower, such Guarantor 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 any Borrower, any Guarantor 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 Borrowers, the Guarantors or
their respective Subsidiaries or any part thereof, and, to the
knowledge of the Borrowers, 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 Borrowers or
the Guarantors. None of the property of Borrowers, 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 Borrowers or the
Guarantors. The Real Estate owned by Walden, WDOP and their
respective Subsidiaries is set forth on Schedule 6.20 hereto.
Section 6.21. Brokers. None of the Borrowers nor any of their
respective 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 Borrowers, the General
Partner, 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. None of the Borrowers is 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 such
Borrower. The Borrowers have provided to the Agent copies of all
agreements, mortgages, deeds of trust, financing agreements or
other material agreements binding upon Borrowers, the General
Partner, 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. Schedule 6.22 hereto
sets forth all of the Indebtedness of the type described in
Section 8.1(g) and (h) of the Borrowers and their respective
Subsidiaries as of the date hereof.
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 Borrowers 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,
each Borrower and each Guarantor is able to pay its debts as they
become due, and each Borrower and each Guarantor has sufficient
capital to carry on its business.
Section 6.24. Partners. Walden is the sole general partner of
WDOP and owns a 1% partnership interest in WDOP. 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 WDOP and WROP and owns an approximately 58%
partnership interest in WDOP and a 77.3784% partnership interest
in WROP. WROP is a limited partner of WDOP and owns an
approximately 11% partnership interest in WDOP. Walden owns one
hundred percent (100%) of the issued and outstanding shares of
stock of WDN Properties, Inc. and Walden Operating, Inc.
Section 6.25. Exchange Agreement. The Borrower has delivered or
made available to the Agent a true, correct and complete copy of
the Exchange Agreement. The Exchange Agreement is in full force
and effect in accordance with its respective terms, there are no
material claims resulting from non-performance of the terms
thereof or otherwise or any basis for a material claim by any
party to the Exchange Agreement, nor has there been any waiver of
any material terms thereunder.
Section 6.26. Walden - WDOP Partners. WDOP and Walden have not
entered into that certain form of Agreement of General
Partnership of Walden - WDOP Partners delivered to the Agent
prior to the Closing Date.
Section 6.27. No Fraudulent Intent. Neither the execution and
delivery of this Agreement or any of the other Loan Documents nor
the performance of any actions required hereunder or thereunder
is being undertaken by any Borrower or any Guarantor with or as a
result of any actual intent by any of such Persons to hinder,
delay or defraud any entity to which any of such Persons is now
or will hereafter become indebted.
Section 6.28. Transaction in best interests of Borrowers;
Consideration. The transaction evidenced by this Agreement and
the other Loan Documents is in the best interests of the
Borrowers and the creditors of such Persons. The direct and
indirect benefits to inure to the Borrowers pursuant to this
Agreement and the other Loan Documents constitute substantially
more than "reasonably equivalent value" (as such term is used in
Section 548 of the Bankruptcy Code) and "valuable consideration,"
"fair value," and "fair consideration" (as such terms are used in
any applicable state fraudulent conveyance law), in exchange for
the benefits to be provided by the Borrowers pursuant to this
Agreement and the other Loan Documents, and but for the
willingness of the Borrowers to be jointly and severally liable
as co-borrowers for the Loan, Borrowers would be unable to obtain
the financing contemplated hereunder which financing will enable
the Borrowers and their respective Subsidiaries to have available
financing to conduct and expand their business.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree 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 Borrowers 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 Borrowers will maintain
their chief executive offices 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
Borrowers shall designate upon prior written notice to the Agent
and the Banks, where notices, presentations and demands to or
upon the Borrowers in respect of the Loan Documents may be given
or made.
Section 7.3. Records and Accounts. The Borrowers 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
of the Borrowers 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 Borrowers 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 and
WDOP, the audited consolidated balance sheet of Walden and its
Subsidiaries and of WDOP 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 and WDOP
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 and WDOP and its Subsidiaries,
together with a written statement from such accountants to the
effect that they have read a copy of this Agreement, 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 and WDOP, copies of the unaudited consolidated
balance sheet of Walden and its Subsidiaries and of WDOP and its
Subsidiaries, respectively 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 Walden's
and WDOP'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 and WDOP for such period provided pursuant to
subsection (c) below), together with a certification by the
principal financial or accounting officer of Walden, for Walden
and as the general partner of WDOP, that the information
contained in such financial statements fairly presents the
financial position of Walden and its Subsidiaries and WDOP 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 and WDOP in each year, copies of Form 10-Q
filed with the SEC (unless the SEC has approved an extension in
which event Walden and WDOP 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 WDOP
and the principal financial or accounting officer of Walden in
the form of Exhibit B 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 Walden, for
Walden and as the general partner of WDOP, 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
WDOP;
(h) as soon as practicable but in any event not later
than 45 days after the end of each fiscal quarter of the
Borrowers (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 Borrowers;
(j) not later than five (5) Business Days after Walden
receives notice of the same from either Rating Agency or
otherwise learns of the same, notice of the issuance of any
change in the rating by either 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
either 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 either Rating Agency
(collectively a "Rating Notice");
(k) not later than forty-five (45) days after the end
of each fiscal quarter of the Borrowers (including the fourth
fiscal quarter in each year), a list setting forth the following
information with respect to each new Subsidiary of WDOP: (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 Borrowers 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 Borrowers 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 Borrowers, the General
Partner, 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 Borrowers, the General Partner or the Guarantors or the
existence of which claimed default might become an Event of
Default under Section 12.1(g), the Borrowers 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 Borrowers will promptly
give notice to the Agent (i) upon the Borrowers 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
either 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 Borrowers
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
either Borrower, the General Partner, 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 either Borrower or any Guarantor and stating
the nature and status of such litigation or proceedings. The
Borrowers 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 a Borrower, the General Partner, a
Guarantor or 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 Borrowers 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 Borrowers, 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 Borrowers 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
Borrowers shall promptly give notice to the Agent of such
transaction, which notice shall be accompanied by a certification
of the chief financial officer of Walden for itself and as the
sole general partner of WDOP 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 Borrowers will do or cause to be done all
things necessary to preserve and keep in full force and effect
its existence as a Delaware limited partnership or Maryland
corporation, as applicable. The Borrowers 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 legal existence. Each 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. Each
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, each 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 such Borrower
and its Subsidiaries.
Section 7.7. Insurance. The Borrowers will, at their expense,
procure and maintain or cause to be procured and maintained
insurance covering the Borrowers, their respective 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 Borrowers and their respective
Subsidiaries 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 each of
them 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 such
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, each
Borrower and each Subsidiary of the Borrowers 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 Borrowers 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 Borrowers
shall permit the Banks, through the Agent or any representative
designated by the Agent, at the Borrowers' expense to visit and
inspect any of the properties of the Borrowers or any of their
respective Subsidiaries, to examine the books of account of the
Borrowers and their respective Subsidiaries (and to make copies
thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of the Borrowers and their respective
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 Borrowers'
normal business operations.
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. Each 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 Borrowers may fulfill any of their
obligations hereunder, the Borrowers 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 Borrowers will use the
proceeds of the Loans solely to provide short-term financing (a)
for the refinance of the indebtedness evidenced by the Prior
Agreement, and (b) for such other purposes as the Majority Banks
in their discretion from time to time may agree to in writing.
Section 7.12. Further Assurances. The Borrowers 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 Borrowers 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
Borrowers 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 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 Agreement.
Section 7.14. Unencumbered Operating Properties.
(a) The Borrowers shall 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 Borrowers 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); provided that no more than forty percent
(40%) of the Asset Value of the Unencumbered Operating
Properties may be located in Houston, Texas.
(b) The Borrowers 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 Walden, for itself and as the sole general partner of WDOP 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 Walden, for itself and
as the sole general partner of WDOP, and (iv) that the
Unencumbered Operating Properties comply with the terms of 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 such Borrower's or any Guarantor's
ability to pledge to Agent the Unencumbered Operating Properties,
Real Estate which is owned by the Borrowers or such Guarantors
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
Borrowers or such Guarantor as security for the Loans. Borrowers
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 Borrowers 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
Borrowers, the Guarantors or any of their respective
Subsidiaries.
(b) Borrowers 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 a 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 such
Borrower or any of its Subsidiaries.
Section 7.16. Intentionally Omitted.
Section 7.17. Distributions of Income to the Borrowers. Each
Borrower shall cause all of its Subsidiaries to promptly
distribute to such Borrower (but not less frequently than once
each fiscal quarter of such 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 any 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 either Borrower, any Guarantor or their
respective Subsidiaries than those set forth herein or in any of
the other Loan Documents or which provide for a guaranty of the
obligations thereunder by a Person that is not liable for the
Obligations, the Borrowers shall promptly notify the Agent and,
if requested by the Majority Banks, the Borrowers, 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 or provide for a guaranty of the
Obligations by such Person as determined by the Majority Banks in
their sole discretion.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree 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 Borrowers will
not, and will not permit 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 Borrowers 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 the applicable 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 8.1(h)(i) and Section 9,
secured 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 the Borrowers, provided that
(i) the aggregate outstanding principal amount of such
Indebtedness (excluding the Obligations) and the portion of the
Indebtedness described in Section 8.1(g) that is recourse to Walden and
its Subsidiaries shall not exceed five percent (5%) of Walden's
Consolidated Total Assets (provided, however, that with respect
to senior unsecured recourse Indebtedness of the Borrowers only,
the aggregate outstanding amount of such Indebtedness (excluding
the Obligations, but including any of such Indebtedness permitted
within the five percent (5%) threshold described above) shall not
exceed fifty percent (50%) 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 Borrowers 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
the Borrowers or their respective Subsidiaries in connection with
such Indebtedness shall not individually or in the aggregate be
more restrictive against the Borrowers and their respective
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
Borrowers 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 Agencies
have 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 Agencies;
(i) subject to the provisions of Section 9, Indebtedness in
an aggregate outstanding principal amount not exceeding
$150,000,000.00 at any time of Borrowers pursuant to that certain
Revolving Credit Agreement dated December 15, 1997, among
Borrowers, BKB, the other banks which are a party thereto and
which may become a party thereto and BKB, as Agent; and
(j) unsecured Indebtedness between Walden and WDOP
provided that the terms of such Indebtedness are satisfactory to
the Majority Banks and the repayment of such Indebtedness shall
be subordinate at all times to repayment of the Obligations
pursuant to a subordination and standstill agreement in form and
substance satisfactory to the Majority Banks.
Section 8.2. Restrictions on Liens, Etc. The Borrowers will not,
and will not permit 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 Borrowers or such Subsidiaries which prohibits the creation
or maintenance of any lien securing the Obligations (collectively
"Liens"); provided that the Borrowers and any of their respective
Subsidiaries 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 the Borrowers 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 the Borrowers or their respective Subsidiaries,
which defects do not individually or in the aggregate have a
materially adverse effect on the business of such Borrower
individually or of such Person and its Subsidiaries on a
consolidated basis;
(iv) liens on Real Estate (other than Real Estate of
WDOP) 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 Borrowers will not,
and will not permit 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 such 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) Subject to the terms of this Agreement,
Investments in Subsidiaries of such Borrower existing as of the
date hereof, and Investments in new Subsidiaries of WDOP created
after the date of this Agreement; provided that in no event shall
the aggregate of such Investments in new Subsidiaries created
after the date of this Agreement exceed ten percent (10%) of
Walden's Consolidated Total Assets, and provided further that in
no event shall such Investments in the form of note receivables
from all Subsidiaries whenever created (including the principal
amount payable pursuant to such notes) exceed ten percent (10%)
of Walden's Consolidated Total Assets. For the purposes hereof,
notes receivable from Subsidiaries shall be valued at face value
subject to impairment; 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. Each of the Borrowers 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 a Borrower with and into such Borrower and
(ii) the merger or consolidation of two or more Subsidiaries of a
Borrower; provided that in no event shall WDOP be merged,
consolidated or combined with Walden without the prior written
consent of the Majority Banks.
Section 8.5. Sale and Leaseback. Each of the Borrowers will not,
and will not permit any of its Subsidiaries to, enter into any
arrangement, directly or indirectly, whereby a Borrower 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. Each of the
Borrowers will not, and will not permit any of its 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 Borrowers 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 Borrowers) 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
Borrowers 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 Borrowers 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 Borrowers' 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 Borrowers.
Section 8.7. Distributions. The Borrowers shall not make any
Distributions which would cause it to violate any of the
following covenants:
(a) 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;
(b) In the event that an Event of Default shall have
occurred and be continuing, WDOP 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
(c) 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;
(d) 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 Borrower shall make any Distributions whatsoever,
directly or indirectly.
Section 8.8. Asset Sales. Neither 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 Borrowers 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 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 Borrowers acknowledge
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 such Borrower or such
Subsidiary has the resources and expertise necessary to complete
such project. Nothing herein shall prohibit the Borrowers 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. Neither
Borrower shall 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 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, WROP 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 8.12. Walden - WDOP Partners. WDOP and Walden shall not
enter into that certain form of Agreement of General Partnership
of Walden - WDOP Partners delivered to the Agent prior to the
Closing Date.
Section 8.13. Restrictions on Transfer. Walden will not, directly
or indirectly, make or permit to be made, by voluntary or
involuntary means, (a) any sale, assignment, transfer,
disposition, mortgage, pledge, hypothecation or encumbrance of
its interest in WDOP, WDN Properties, Inc., WDN Properties,
Ltd., WROP, or WDN Operating, Inc., or any dilution of its
interest in WDOP, WDN Properties, Inc., WDN Properties, Ltd.,
WROP, or WDN Operating, Inc., (b) 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, (c) any sale,
assignment, transfer, disposition, mortgage, pledge,
hypothecation or encumbrance of the interest of WDOP in any of
its direct or indirect Subsidiaries; (d) any sale, assignment,
transfer, disposition, mortgage, pledge, hypothecation or
encumbrance of the interest of WDN Properties, Inc. in WDOP, WDN
Properties, Ltd. or WROP, or any dilution of its interest in
WDOP, WDN Properties, Ltd., or WROP; or (e) any sale, assignment,
transfer, disposition, mortgage, pledge, hypothecation, or
encumbrance of the interest of WROP in WDOP, or any dilution of
its interest in WDOP. Walden is and shall remain the sole
general partner of WDOP and shall not in any manner transfer,
assign, diminish or otherwise restrict its Voting Interests in
WDOP.
Section 9. FINANCIAL COVENANTS OF THE BORROWERS
Section 9.1. Borrowing Base Covenant of the Borrowers. The
Borrowers covenant and agree that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans, the
Borrowers 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 9.2. Covenants of Walden. The Borrowers covenant and
agree that, so long as any Loan or Note is outstanding or any
Bank has any obligations to make any Loans, Walden will 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") minus
(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 sum of
(i) Consolidated Operating Cash Flow of Walden and its
Subsidiaries for the Test Period plus (ii) Preferred
Distributions of Walden, WDOP and their respective Subsidiaries
for the Test Period to be less than 1.25 times the sum of (x) the
Debt Service of Walden and its Subsidiaries plus (y) the Capital
Improvement Reserve plus (z) Preferred Distributions of Walden,
WDOP and their respective 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.
(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) $500,000,000.00 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 15, 1997;
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 Borrowers a copy, certified as
of a recent date by the appropriate officer of each State in
which the Borrowers and the General Partner, as applicable, is
organized or 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 Borrowers and the General
Partner, 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
Borrowers and the General Partner, 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 Partner a true copy of its bylaws and the resolutions
adopted by its board of directors authorizing the transactions
described herein, 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 Partner an incumbency
certificate, dated as of the Closing Date, signed by a duly
authorized 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 Borrowers a
certificate, dated as of the Closing Date, signed by a duly
authorized partner or officer of each 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 Borrowers 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 Borrowers and the General Partner, as
to such matters as the Agent shall reasonably request.
Section 10.6. Payment of Fees. The Borrowers shall have paid to
the Agent the fees required to be paid as of the Closing Date
pursuant to Section 4.2.
Section 10.7. Performance; No Default. The Borrowers shall have
performed and complied with all terms and conditions herein
required to be performed or complied with by them 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 Borrowers in the Loan Documents or
otherwise made by or on behalf of the Borrowers, the General
Partner 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 Borrowers have provided
financial statements under Section 6.4 adjusted in the best good faith
estimate of the Borrowers 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
Borrowers, the General Partner 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 Borrowers 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 Borrowers 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 Borrowers shall fail to comply with any
covenant contained in Section 7.14 or Section 7.15;
(d) the Borrowers 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
Borrowers by the Agent;
(e) any of the Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the General Partner, 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
Borrowers, the General Partner, 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 Borrowers, the General Partner, 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 Borrowers, the
General Partner or the Guarantors or any sale, transfer or other
disposition of the assets of any of the Borrowers, the General
Partner or 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 Borrowers, the General Partner 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 Borrowers or a Guarantor to perform each and
every one of their respective obligations under and by virtue of
the Loan Documents;
(o) any of the Borrowers, the General Partner 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 Borrowers, the General Partner, 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) Marshall B. Edwards, Mark S. Dillinger and the
members of the board of directors of Walden that are also
officers of Walden 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) Marshall B. Edwards shall cease to be the
President of, or Mark S. Dillinger shall cease to be the Chief
Financial 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
Borrowers 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 Borrowers;
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
Borrowers 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 Borrowers cure such default within five (5)
days following receipt of written notice of such default,
provided, however, that Borrowers 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 Borrowers cure 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 Borrowers. If any other Event
of Default shall have occurred, the Agent, upon the election of
the Majority Banks, may by notice to the Borrowers terminate the
obligation to make Loans to the Borrowers. No termination under
this Section 12.2 shall relieve the Borrowers of their 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
Borrowers 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
Borrowers 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) 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 (ii) Obligations owing to the Banks with respect to each
type of Obligation such as interest, principal, fees and
expenses, 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 Borrowers 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 Borrowers or the Guarantors and any securities or other
property of the Borrowers 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 Borrowers 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 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 Borrowers 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 Borrowers.
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 Borrowers 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
Borrowers 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 Borrowers, their
respective 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 Borrowers 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 Borrowers
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 Borrowers 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, BKB
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
Borrowers. 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 Borrowers. 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 Borrowers agree 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 Borrowers 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 Borrowers, the General Partner 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 Borrowers, the General
Partner 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 reasonable fees, costs and expenses (including
reasonable attorney's fees and costs) of BKB in connection with
the syndication of interests in the Loans. 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 Borrowers agree 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
Borrowers, the General Partner, the Guarantors or any of their
respective Subsidiaries, (b) any condition of the Real Estate,
(c) any actual or proposed use by the Borrowers 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 Borrowers, the General Partner, the Guarantors or any of
their respective Subsidiaries, (e) the Borrowers 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 Borrowers, the General Partner, 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 Borrowers 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 Borrowers agree to pay promptly the reasonable fees and
expenses of such counsel. If, and to the extent that the
obligations of the Borrowers under this Section 16 are unenforceable for
any reason, the Borrowers hereby agree 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
Borrowers, the General Partner, 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 Borrowers 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 Borrowers, the General Partner, 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 Borrowers, the General Partner 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 Borrowers, the General Partner 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 Borrowers, 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 Borrowers 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 Borrowers and the Banks (other than
the assigning Bank). Within five Business Days after receipt of
such notice, the Borrowers, at their 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 Borrowers.
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 Borrowers, (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 Borrowers 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 Borrowers, the General Partner 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 Borrowers. Neither Borrower shall
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 Borrowers agree 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"), 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 WDOP:
Walden/Drever Operating Partnership, L.P.
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
If to Walden:
Walden Residential Properties, Inc.
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, a 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 each 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 BORROWERS AGREE 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 CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT
THE ADDRESS SPECIFIED IN SECTION 19. THE BORROWERS HEREBY WAIVE ANY
OBJECTION THAT EITHER OF THEM 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 BORROWERS, 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 BORROWERS HEREBY WAIVE ANY RIGHT EITHER OF
THEM 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
BORROWERS (A) CERTIFY 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)
ACKNOWLEDGE 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. BORROWERS ACKNOWLEDGE THAT
EACH OF THEM HAS HAD AN OPPORTUNITY TO REVIEW THIS SECTION 25 WITH ITS
LEGAL COUNSEL AND THAT EACH BORROWER AGREES TO THE FOREGOING AS
ITS FREE, KNOWING AND VOLUNTARY ACT.
SECTION 26. DEALINGS WITH THE BORROWERS.
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 either 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 Borrowers 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; a change in the
manner of distribution of any payments to the Banks or the Agent;
the release of a Borrower or a Guarantor 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 Borrowers 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. 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 Borrowers shall entitle the Borrowers 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 Borrowers 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.
SECTION 31. REPLACEMENT OF NOTES.
Upon receipt of evidence reasonably satisfactory to the
Borrowers of the loss, theft, destruction or mutilation of any
Note, and in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory
to the Borrowers or, in the case of any such mutilation, upon
surrender and cancellation of the applicable Note, the Borrowers
will execute and deliver, in lieu thereof, a replacement Note,
identical in form and substance to the applicable Note and dated
as of the date of the applicable Note and upon such execution and
delivery all references in the Loan Documents to such Note shall
be deemed to refer to such replacement Note.
SECTION 32. JOINT AND SEVERAL LIABILITY.
Each of the Borrowers covenants and agrees that each and
every covenant and obligation of any Borrower hereunder and under
the other Loan Documents shall be the joint and several
obligations of each Borrower.
SECTION 33. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF
BORROWERS.
Section 33.1. Waiver of Automatic or Supplemental Stay. Each of
the Borrowers represent, warrant and covenant to the Banks and
Agent that in the event of the filing of any voluntary or
involuntary petition in bankruptcy by or against the other of the
Borrowers at any time following the execution and delivery of
this Agreement, neither of the Borrowers shall seek a
supplemental stay or any other relief, whether injunctive or
otherwise, pursuant to Section 105 of the Bankruptcy Code or any
other provision of the Bankruptcy Code, to stay, interdict,
condition, reduce or inhibit the ability of the Banks or Agent to
enforce any rights it has by virtue of this Agreement, the Loan
Documents, or at law or in equity, or any other rights the Banks
or Agent has, whether now or hereafter acquired, against the
other Borrower or against any property owned by such other
Borrower.
Section 33.2. Waiver of Defenses. Each of the Borrowers hereby
waives and agrees not to assert or take advantage of any defense
based upon:
(a) any statute of limitations and any action
hereunder or for the collection of the Notes or for the payment
and performance of any of the Obligations;
(b) any incapacity, lack of authority, death or
disability of the other Borrower, any Guarantor or any other
Person;
(c) any failure of the Banks or Agent to commence an
action against the other Borrower, any Guarantor or any other
Person or to file or enforce a claim against the estate (either
in administration, bankruptcy, or any other proceeding) of the
other Borrower, any Guarantor or any other Person, whether or not
demand is made upon the Banks or Agent to file or enforce such
claim;
(d) any failure of the Banks or Agent to give notice
of the existence, creation or incurring of any new or additional
indebtedness or other obligation or of any action or nonaction on
the part of any other Person in connection with the Loan
Documents, including the waiver of any conditions to the making
of any advance of proceeds of any Loan;
(e) any failure on the part of the Banks or Agent to
ascertain the extent or nature of any assets of any Person or any
insurance or other rights with respect thereto, or the liability
of any party liable for the Loan Documents or the obligations
evidenced or secured thereby, or any failure on the part of the
Banks or Agent to disclose to the Borrowers any facts any of them
may now or hereafter know regarding the Borrowers, any
Guarantors, their respective assets, or such other parties,
whether such facts materially increase the risks to Borrowers or
not;
(f) except as specifically required in the Loan
Documents, any notice of intention to accelerate any of the
Obligations or any notice of acceleration of the Obligations;
(g) any lack of acceptance or notice of acceptance of
this Agreement by Banks or Agent;
(h) any lack of presentment, demand, protest, or
notice of dishonor, demand, protest or nonpayment with respect to
any indebtedness or obligations under any of the Loan Documents;
(i) any lack of notice of disposition or of manner of
disposition of any assets of any Person;
(j) except as specifically required in the Loan
Documents, any lack of other notices to which the Borrowers, or
either of them, might otherwise be entitled;
(k) failure to properly record any document or any
other lack of due diligence by the Banks or Agent in creating or
perfecting a security interest in or collection, protection or
realization upon any assets of any Person or in obtaining
reimbursement or performance from any person or entity now or
hereafter liable for the Loan Documents or any obligation secured
thereby;
(l) any invalidity or irregularity, in whole or in
part, of any one or more of the Loan Documents;
(m) the inaccuracy of any representation or other
provision contained in any Loan Document;
(n) any sale or assignment of the Loan Documents, in
whole or in part;
(o) any sale or assignment by any of the Borrowers or
any Guarantor of any assets of such Person, or any portion
thereof, whether or not consented to by the Banks or Agent;
(p) any lack of commercial reasonableness in dealing
with any of the assets of a Person now or hereafter owned by the
other of the Borrowers or any Guarantor;
(q) the dissolution or termination of existence of
either Borrower, any Guarantor or any other Person;
(r) the voluntary or involuntary liquidation, sale or
other disposition of all or substantially all of the assets of
either Borrower or any Guarantor;
(s) the voluntary or involuntary receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, assignment, composition, or readjustment of, or
any similar proceeding affecting, any Borrower, any Guarantor or
any of such Person's properties or assets;
(t) the damage, destruction, condemnation, foreclosure
or surrender of all or any part of the Real Estate or any of the
improvements located thereon;
(u) any failure or delay of Agent or the Banks to
commence an action against Borrowers or any Guarantor, to assert
or enforce any remedies against Borrowers or any Guarantor under
the Note or the Loan Documents, or to realize upon any security;
(v) the invalidity or unenforceability of the Note or
any of the Loan Documents;
(w) the compromise, settlement, release or termination
of any or all of the obligations of a Borrower or any Guarantor
under the Note or the Loan Documents; or
(x) to the fullest extent permitted by law, any other
legal, equitable or surety defenses whatsoever to which a
Borrower might otherwise be entitled
Section 33.3. Waiver. Each of the Borrowers waives, to the
fullest extent that each may lawfully so do, the benefit of all
appraisement, valuation, stay, extension, homestead, exemption
and redemption laws which such Person may claim or seek to take
advantage of in order to prevent or hinder the enforcement of any
of the Loan Documents or the exercise by Banks or Agent of any of
their respective remedies under the Loan Documents and, to the
fullest extent that the Borrowers may lawfully so do, such Person
waives any and all right to have the assets of such Person
marshaled upon any exercise of remedies hereunder. Each of the
Borrowers further agrees that the Banks and Agent shall be
entitled to exercise their respective rights and remedies under
the Loan Documents or at law or in equity in such order as they
may elect. Without limiting the foregoing, each of the Borrowers
further agrees that upon the occurrence of an Event of Default,
the Banks and Agent may exercise any of such rights and remedies
without notice to either of the Borrowers except as required by
law or the Loan Documents and agrees that neither the Banks nor
Agent shall be required to proceed against the other of the
Borrowers, any Guarantor or any other Person or to proceed
against or to exhaust any other security held by the Banks or
Agent at any time or to pursue any other remedy in Bank's or
Agent's power or under any of the Loan Documents before
proceeding against a Borrower or its assets under the Loan
Documents.
Section 33.4. Subordination. Each of the Borrowers hereby
expressly waives any right of contribution from or indemnity
against the other, whether at law or in equity, arising from any
payments made by such Person pursuant to the terms of this
Agreement or the Loan Documents, and each of the Borrowers
acknowledges that it has no right whatsoever to proceed against
the other for reimbursement of any such payments. In connection
with the foregoing, each of the Borrowers expressly waives any
and all rights of subrogation to the Banks or Agent against the
other of the Borrowers, and each of the Borrowers hereby waives
any rights to enforce any remedy which the Banks or Agent may
have against the other of the Borrowers and any rights to
participate in any collateral or any other assets of the other
Borrower. In addition to and without in any way limiting the
foregoing, each of the Borrowers hereby subordinates any and all
indebtedness it may now or hereafter owe to such other Borrower
to all indebtedness of the Borrowers to the Banks and Agent, and
agrees with the Banks and Agent that neither of the Borrowers
shall claim any offset or other reduction of such Borrower's
obligations hereunder because of any such indebtedness and shall
not take any action to obtain any collateral or any other assets
of the other Borrower.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument as of the date first set forth
above.
BANKBOSTON, N.A., individually and
as Agent
By: _____________________________
Jeffrey L. Warwick, Director
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jeffrey L. Warwick
Facsimile: 770/390-8434
<PAGE>
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership, by its sole
general partner
By: Walden Residential
Properties, Inc., a Maryland
corporation
By: __________________________
Name:_____________________
Title:______________________
[CORPORATE SEAL]
WALDEN RESIDENTIAL PROPERTIES,
INC., a Maryland corporation
By: _______________________________
Name:__________________________
Title:___________________________
[CORPORATE SEAL]
<PAGE>
KEYBANK NATIONAL ASSOCIATION
By: _____________________________
Title:
KeyBank National Association
Commercial Real Estate Division
Sixth Floor
127 Public Square
Cleveland, Ohio 44114-1306
Attn: Mr. Laird Fairchild
<PAGE>
EXHIBIT A
FORM OF NOTE
$______________ December ___ , 1997
FOR VALUE RECEIVED, the undersigned WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, and WALDEN
RESIDENTIAL PROPERTIES, INC., a Maryland corporation, hereby
jointly and severally promise to pay to
______________________________ or order, in accordance with the
terms of that certain Term Loan Agreement dated December 15, 1997
(the "Agreement"), as from time to time in effect, among the
undersigned, BankBoston, N.A., for itself and as Agent, and such
other Banks as may be from time to time named therein, to the
extent not sooner paid, on or before the Maturity Date the
principal sum of
_____________________________________________________________
DOLLARS ($______________), or such amount as may be advanced by
the payee hereof under the Agreement with daily interest from the
date hereof, computed as provided in the Agreement, on the
principal amount hereof from time to time unpaid, at a rate per
annum on each portion of the principal amount which shall at all
times be equal to the rate of interest applicable to such portion
in accordance with the Agreement, and with interest on overdue
principal and, to the extent permitted by applicable law, on
overdue installments of interest and late charges at the rates
provided in the Agreement. Interest shall be payable on the
dates specified in the Agreement, except that all accrued
interest shall be paid at the stated or accelerated maturity
hereof or upon the prepayment in full hereof. Capitalized terms
used herein and not otherwise defined herein shall have the
meanings set forth in the Agreement.
Payments hereunder shall be made to BankBoston, N.A., as
Agent for the payee hereof, 100 Federal Street, Boston,
Massachusetts 02110.
This Note is one of one or more Notes evidencing borrowings
under and is entitled to the benefits and subject to the
provisions of the Agreement. The principal of this Note may be
due and payable in whole or in part prior to the maturity date
stated above and is subject to mandatory prepayment in the
amounts and under the circumstances set forth in the Agreement,
and may be prepaid in whole or from time to time in part, all as
set forth in the Agreement.
Notwithstanding anything in this Note to the contrary, all
agreements between the Borrowers 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 Borrowers. 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 paragraph shall control all
agreements between the Borrowers and the Banks and the Agent.
In case an Event of Default shall occur, the entire
principal amount of this Note may become or be declared due and
payable in the manner and with the effect provided in said
Agreement.
This Note shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts (without
giving effect to the conflict of laws rules of any jurisdiction).
The undersigned makers and all guarantors and endorsers,
hereby waive presentment, demand, notice, protest, notice of
intention to accelerate the indebtedness evidenced hereby, notice
of acceleration of the indebtedness evidenced hereby and all
other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as
specifically otherwise provided in the Agreement, and assent to
extensions of time of payment or forbearance or other indulgence
without notice.
IN WITNESS WHEREOF the undersigned have by their duly
authorized officer or partner executed this Note under seal as of
the day and year first above written.
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership, by its sole
general partner
By: Walden Residential
Properties, Inc., a Maryland
corporation
By:______________________________
Name:_______________________
Title:________________________
[CORPORATE SEAL]
WALDEN RESIDENTIAL PROPERTIES,
INC., a Maryland corporation
By: _____________________________
Name:________________________
Title:_________________________
[CORPORATE SEAL]
EXHIBIT B
FORM OF
COMPLIANCE CERTIFICATE
BankBoston, N.A.,
for itself and as Agent
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Dan Stegemoeller
[INSERT NAMES AND ADDRESSES
OF OTHER BANKS]
Ladies and Gentlemen:
Reference is made to the Term Loan Agreement dated December
15, 1997 (the "Agreement") by and among Walden Residential
Properties, Inc. and Walden/Drever Operating Partnership, L.P.
(the "Borrowers"), BankBoston, N.A., for itself and as Agent, and
the other Banks from time to time party thereto. Terms defined
in the Agreement and not otherwise defined herein are used herein
as defined in the Agreement.
Pursuant to the Agreement, the Borrowers are furnishing to
you herewith (or have most recently furnished to you) the
financial statements of the Borrowers and their respective
Subsidiaries for the fiscal period ended _______________ (the
"Balance Sheet Date"). Such financial statements have been
prepared in accordance with generally accepted accounting
principles and present fairly the financial position of Borrowers
and the Subsidiaries covered thereby at the date thereof and the
results of their operations for the periods covered thereby,
subject in the case of interim statements only to normal year-end
audit adjustments.
This certificate is submitted in compliance with
requirements of Section 7.4(e), Section 7.5(d) and Section 10.10 of the
Agreement. If this certificate is provided under a provision other than
Section 7.4(e), the calculations provided below are made using the
financial statements of the Borrowers and their respective
Subsidiaries as of the Balance Sheet Date adjusted in the best
good-faith estimate of the Borrowers to give effect to the making
of a Loan, extension of the Maturity Date, acquisition or
disposition of property or other event that occasions the
preparation of this certificate; and the nature of such event and
the Borrowers' estimate of its effects are set forth in
reasonable detail in an attachment hereto. The undersigned
officer is the chief financial or chief accounting officer of
Walden, for Walden and the sole general partner of WDOP.
The undersigned officers have caused the provisions of the
Agreement to be reviewed and have no knowledge of any Default or
Event of Default. (Note: If the signers do have knowledge of any
Default or Event of Default, the form of certificate should be
revised to specify the Default or Event of Default, the nature
thereof and the actions taken, being taken or proposed to be
taken by the Borrowers with respect thereto.)
The Borrowers are providing the information set forth in the
schedule attached hereto to demonstrate compliance as of the date
hereof with the covenants described therein.
IN WITNESS WHEREOF, we have hereunto set our hands this ___
day of ________________, 199__.
WALDEN/DREVER OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership, by its sole
general partner
By: Walden Residential Properties,
Inc.,
a Maryland corporation
By:______________________________
Chief Financial or
Chief Accounting Officer
WALDEN RESIDENTIAL PROPERTIES,
INC.,
a Maryland corporation
By:____________________________________
Chief Financial or Chief
Accounting Officer
SCHEDULE 1
BANKS AND COMMITMENTS
Commitment
Commitment Percentage
BankBoston, N.A. $200,000,000.00 100%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
LIBOR Lending Office
Same as above
<PAGE>
SCHEDULE 2
EXAMPLE OF CALCULATION OF DEBT SERVICE COVERAGE AMOUNT
<PAGE>
SCHEDULE 6.17
ENVIRONMENTAL MATTERS
NONE.
<PAGE>
SCHEDULE 6.18
SUBSIDIARIES OF WDOP AND WALDEN
<PAGE>
SCHEDULE 6.20
REAL ESTATE OWNED BY
BORROWERS AND THEIR RESPECTIVE SUBSIDIARIES<PAGE>
SCHEDULE 6.22
INDEBTEDNESS OF THE BORROWERS AND THEIR SUBSIDIARIES
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.. . . . . . . . .-1-
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . .-1-
Section 1.2. Rules of Interpretation . . . . . . . . . . . . . -13-
Section 2. THE TERM LOAN FACILITY. . . . . . . . . . . . . . . . . -14-
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . -14-
Section 2.2. Intentionally Omitted . . . . . . . . . . . . . . -14-
Section 2.3. Intentionally Omitted . . . . . . . . . . . . . . -14-
Section 2.4. Notes . . . . . . . . . . . . . . . . . . . . . . -14-
Section 2.5. Interest on Loans . . . . . . . . . . . . . . . . -14-
Section 2.6. Intentionally Omitted . . . . . . . . . . . . . . -15-
Section 2.7. Intentionally Omitted . . . . . . . . . . . . . . -15-
Section 2.8. Extension of Maturity Date. . . . . . . . . . . . -15-
SECTION 3. REPAYMENT OF THE LOANS. . . . . . . . . . . . . . . . . -16-
Section 3.1. Stated Maturity . . . . . . . . . . . . . . . . . -16-
Section 3.2. Mandatory Prepayments . . . . . . . . . . . . . . -16-
Section 3.3. Optional Prepayments. . . . . . . . . . . . . . . -16-
Section 3.4. Partial Prepayments . . . . . . . . . . . . . . . -16-
Section 3.5. Effect of Prepayments . . . . . . . . . . . . . . -16-
Section 3.6. Proceeds from Debt Offering. . . . . . . . . . -16-
SECTION 4. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . . . . -17-
Section 4.1. Conversion Options. . . . . . . . . . . . . . . . -17-
Section 4.2. Intentionally Omitted . . . . . . . . . . . . . . -17-
Section 4.3. Intentionally Omitted . . . . . . . . . . . . . . -17-
Section 4.4. Funds for Payments. . . . . . . . . . . . . . . . -18-
Section 4.5. Computations. . . . . . . . . . . . . . . . . . . -18-
Section 4.6. Inability to Determine LIBOR Rate . . . . . . . . -18-
Section 4.7. Illegality. . . . . . . . . . . . . . . . . . . . -19-
Section 4.8. Additional Interest . . . . . . . . . . . . . . . -19-
Section 4.9. Additional Costs, Etc.. . . . . . . . . . . . . . -19-
Section 4.10. Capital Adequacy . . . . . . . . . . . . . . . . -20-
Section 4.11. Indemnity of Borrowers . . . . . . . . . . . . . -21-
Section 4.12. Interest on Overdue Amounts; Late Charge . . . . -21-
Section 4.13. Certificate . . . . . . . . . . . . . . . . . . . -21-
Section 4.14. Limitation on Interest . . . . . . . . . . . . . -21-
SECTION 5. SECURITY. . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . -22-
Section 6.1. Corporate Authority, Etc. . . . . . . . . . . . . -22-
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . -23-
Section 6.3. Title to Properties; Leases . . . . . . . . . . . -23-
Section 6.4. Financial Statements. . . . . . . . . . . . . . . -24-
Section 6.5. No Material Changes . . . . . . . . . . . . . . . -24-
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . -24-
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . -24-
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . -25-
Section 6.9. Compliance with Other Instruments, Laws, Etc. . . -25-
Section 6.10. Tax Status . . . . . . . . . . . . . . . . . . . -25-
Section 6.11. No Event of Default. . . . . . . . . . . . . . . -25-
Section 6.12. Holding Company and Investment Company Acts. . . -25-
Section 6.13. Absence of UCC Financing Statements, Etc.. . . . -26-
Section 6.14. Certain Transactions . . . . . . . . . . . . . . -26-
Section 6.15. Employee Benefit Plans . . . . . . . . . . . . . -26-
Section 6.16. Regulations U and X. . . . . . . . . . . . . . . -26-
Section 6.17. Environmental Compliance . . . . . . . . . . . . -26-
Section 6.18. Subsidiaries . . . . . . . . . . . . . . . . . . -28-
Section 6.19. Loan Documents and the Guarantors. . . . . . . . -28-
Section 6.20. Property . . . . . . . . . . . . . . . . . . . . -28-
Section 6.21. Brokers. . . . . . . . . . . . . . . . . . . . . -29-
Section 6.22. Other Debt . . . . . . . . . . . . . . . . . . . -29-
Section 6.23. Solvency . . . . . . . . . . . . . . . . . . . . -29-
Section 6.24. Partners . . . . . . . . . . . . . . . . . . . . -30-
Section 6.25. Exchange Agreement . . . . . . . . . . . . . . . -30-
Section 6.26. Walden - WDOP Partners . . . . . . . . . . . . . -30-
Section 6.27. No Fraudulent Intent . . . . . . . . . . . . . . -30-
Section 6.28. Transaction in best interests of Borrowers;
Consideration. . . . . . . . . . . . . . . . . . -30-
SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWERS. . . . . . . . . -30-
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . -31-
Section 7.2. Maintenance of Office . . . . . . . . . . . . . . -31-
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . -31-
Section 7.4. Financial Statements, Certificates and Information-31-
Section 7.5. Notices . . . . . . . . . . . . . . . . . . . . . -34-
Section 7.6. Existence; Maintenance of Properties. . . . . . . -35-
Section 7.7. Insurance . . . . . . . . . . . . . . . . . . . . -35-
Section 7.8. Taxes . . . . . . . . . . . . . . . . . . . . . . -35-
Section 7.9. Inspection of Properties and Books. . . . . . . . -36-
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . -36-
Section 7.11. Use of Proceeds. . . . . . . . . . . . . . . . . -36-
Section 7.12. Further Assurances . . . . . . . . . . . . . . . -36-
Section 7.13. Management; Business Operations. . . . . . . . . -37-
Section 7.14. Unencumbered Operating Properties. . . . . . . . -37-
Section 7.15. Limiting Agreements. . . . . . . . . . . . . . . -38-
Section 7.16. Intentionally Omitted. . . . . . . . . . . . . . -38-
Section 7.17. Distributions of Income to the Borrowers . . . . -38-
Section 7.18. More Restrictive Agreements. . . . . . . . . . . -38-
SECTION 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS . . . . . . -39-
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . -39-
Section 8.2. Restrictions on Liens, Etc. . . . . . . . . . . . -40-
Section 8.3. Restrictions on Investments . . . . . . . . . . . -41-
Section 8.4. Merger, Consolidation . . . . . . . . . . . . . . -43-
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . . . . -43-
Section 8.6. Compliance with Environmental Laws. . . . . . . . -43-
Section 8.7. Distributions . . . . . . . . . . . . . . . . . . -44-
Section 8.8. Asset Sales . . . . . . . . . . . . . . . . . . . -45-
Section 8.9. Development Activity. . . . . . . . . . . . . . . -45-
Section 8.10. Restriction on Prepayment of Indebtedness. . . . -45-
Section 8.11. Bankruptcy Remote Subsidiaries . . . . . . . . . -45-
Section 8.12. Walden - WDOP Partners . . . . . . . . . . . . . -46-
Section 8.13. Restrictions on Transfer . . . . . . . . . . . . -46-
SECTION 9. FINANCIAL COVENANTS OF THE BORROWERS. . . . . . . . . . -46-
Section 9.1. Borrowing Base Covenant of the Borrowers. . . . . -46-
Section 9.2. Covenants of Walden . . . . . . . . . . . . . . . -46-
SECTION 10. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . -47-
Section 10.1. Loan Documents . . . . . . . . . . . . . . . . . -47-
Section 10.2. Certified Copies of Organizational Documents . . -47-
Section 10.3. Bylaws; Resolutions. . . . . . . . . . . . . . . -47-
Section 10.4. Incumbency Certificate; Authorized Signers . . . -48-
Section 10.5. Opinion of Counsel . . . . . . . . . . . . . . . -48-
Section 10.6. Payment of Fees. . . . . . . . . . . . . . . . . -48-
Section 10.7. Performance; No Default. . . . . . . . . . . . . -48-
Section 10.8. Representations and Warranties . . . . . . . . . -48-
Section 10.9. Proceedings and Documents. . . . . . . . . . . . -48-
Section 10.10. Compliance Certificate. . . . . . . . . . . . . -48-
Section 10.11. Partner Consents. . . . . . . . . . . . . . . . -49-
Section 10.12. Other . . . . . . . . . . . . . . . . . . . . . -49-
SECTION 11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . . . . . -49-
Section 11.1. Prior Conditions Satisfied . . . . . . . . . . . -49-
Section 11.2. Representations True; No Default . . . . . . . . -49-
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . -49-
Section 11.4. Governmental Regulation. . . . . . . . . . . . . -49-
Section 11.5. Proceedings and Documents. . . . . . . . . . . . -49-
Section 11.6. Borrowing Documents. . . . . . . . . . . . . . . -49-
SECTION 12. EVENTS OF DEFAULT; ACCELERATION; ETC.. . . . . . . . . -50-
Section 12.1. Events of Default and Acceleration . . . . . . . -50-
Section 12.1A. Limitation of Cure Periods. . . . . . . . . . . -53-
Section 12.2. Termination of Commitments . . . . . . . . . . . -53-
Section 12.3. Remedies . . . . . . . . . . . . . . . . . . . . -54-
Section 12.4. Distribution of Proceeds . . . . . . . . . . . . -54-
SECTION 13. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . -55-
SECTION 14. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . -55-
Section 14.1. Authorization. . . . . . . . . . . . . . . . . . -55-
Section 14.2. Employees and Agents . . . . . . . . . . . . . . -55-
Section 14.3. No Liability . . . . . . . . . . . . . . . . . . -56-
Section 14.4. No Representations . . . . . . . . . . . . . . . -56-
Section 14.5. Payments . . . . . . . . . . . . . . . . . . . . -56-
Section 14.6. Holders of Notes . . . . . . . . . . . . . . . . -57-
Section 14.7. Indemnity. . . . . . . . . . . . . . . . . . . . -57-
Section 14.8. Agent as Bank. . . . . . . . . . . . . . . . . . -57-
Section 14.9. Resignation. . . . . . . . . . . . . . . . . . . -58-
Section 14.10. Duties in the Case of Enforcement . . . . . . . -58-
SECTION 15. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . -58-
SECTION 16. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . -59-
SECTION 17. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . -60-
SECTION 18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . -60-
Section 18.1. Conditions to Assignment by Banks. . . . . . . . -60-
Section 18.2. Register . . . . . . . . . . . . . . . . . . . . -61-
Section 18.3. New Notes. . . . . . . . . . . . . . . . . . . . -61-
Section 18.4. Participations . . . . . . . . . . . . . . . . . -62-
Section 18.5. Pledge by Bank . . . . . . . . . . . . . . . . . -62-
Section 18.6. No Assignment by Borrowers . . . . . . . . . . . -62-
Section 18.7. Disclosure . . . . . . . . . . . . . . . . . . . -62-
SECTION 19. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . -62-
SECTION 20. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . -64-
SECTION 21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE . . -64-
SECTION 22. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . -64-
SECTION 23. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . -64-
SECTION 24. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . -65-
SECTION 25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS . . . . -65-
SECTION 26. DEALINGS WITH THE BORROWERS. . . . . . . . . . . . . . -65-
SECTION 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . -65-
SECTION 28. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . -66-
SECTION 29. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . -66-
SECTION 30. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . -66-
SECTION 31. REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . . -67-
SECTION 32. JOINT AND SEVERAL LIABILITY. . . . . . . . . . . . . . -67-
SECTION 33. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF BORROWERS-67-
Section 33.1. Waiver of Automatic or Supplemental Stay . . . . -67-
Section 33.2. Waiver of Defenses . . . . . . . . . . . . . . . -67-
Section 33.3. Waiver . . . . . . . . . . . . . . . . . . . . . -69-
Section 33.4. Subordination. . . . . . . . . . . . . . . . . . -70-
LIST OF EXHIBITS:
EXHIBIT A - Form of Revolving Credit Note
EXHIBIT B - Form of Compliance Certificate
LIST OF SCHEDULES:
Schedule 1 - Banks and Commitments
Schedule 2 - Example of Calculation of Debt Service Coverage Amount
Schedule 6.17 - Environmental Matters
Schedule 6.18 - Subsidiaries of the Borrower and Walden
Schedule 6.20 - Real Estate Owned By Borrowers and their Respective Subsidiaries
Schedule 6.22 - Indebtedness of the Borrowers and Their Subsidiaries
SETTLEMENT AND EMPLOYMENT AGREEMENT
THIS SETTLEMENT AND EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into as of the 20th day of October, 1997 by and
between Walden Residential Properties, Inc., a Maryland corporation
(the "Company"), and Don R. Daseke ("Daseke").
Recitals:
A. Daseke is and has been employed by the Company pursuant
to an employment agreement dated February 5, 1997 (the "Employment
Agreement").
B. This Agreement describes the agreements of the Company
and Daseke concerning the modification of Daseke's employment
relationship with the Company and the termination of the Employment
Agreement.
C. This Agreement also describes the obligations of the
parties hereto to each other and the compensation and other value
to be received by Daseke from the Company following modification of
the employment relationship.
NOW, THEREFORE, in consideration of the foregoing, of the
representations, warranties, covenants and agreements contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, Daseke and the Company hereby agree as
follows:
1. Employment Relationship. The Company and Daseke hereby
agree that Daseke shall resign as Chairman of the Board of
Directors and Chief Executive Officer of the Company effective as
of the date hereof, and that upon execution and delivery of this
Agreement, this Agreement shall supercede the Employment Agreement
in all respects and the Employment Agreement shall be null and
void, and the parties shall have no further rights or obligations
thereunder.
Subject to the provisions of Section 3(b) hereof, as of the
date hereof, the Company agrees to and does hereby employ Daseke to
perform the duties of Chairman Emeritus of the Board of Directors
of the Company (the "Board"), and Daseke accepts such employment,
upon the terms and conditions set forth herein.
2. Term. The term of this Agreement (the "Term") shall be
for the period commencing as of the date set forth above and
continuing thereafter for a period of three years, unless earlier
terminated by Daseke or the Company pursuant to the terms hereof.
3. Duties and Services.
(a) Subject to the provisions of Section 3(c) hereof,
Daseke agrees to serve the Company as the Chairman Emeritus
and to provide such services to the Company as may be
reasonably requested by the Board or the Chief Executive
Officer of the Company. Daseke will not be prevented from (i)
engaging in any civic or charitable activity for which Daseke
receives no compensation or other pecuniary advantage; (ii)
investing his personal assets in businesses which do not
compete with the Company provided that such investment will
not require any services on the part of Daseke in the
operation of the affairs of the businesses in which
investments are made and provided further that Daseke's
participation in such businesses is solely that of an
investor; (iii) purchasing securities in any corporation whose
securities are publicly traded, provided that such purchases
will not result in Daseke owning beneficially at any time five
percent (5%) or more of the equity securities of any
corporation engaged in a business competitive with that of the
Company; or (iv) participating in any other activity approved
in advance in writing by the Board. In attending to the
business and affairs of the Company, Daseke agrees to serve
the Company faithfully, diligently and to the best of his
ability. As Chairman Emeritus, Daseke shall have no authority
to act for or bind the Company.
(b) Notwithstanding anything in this Agreement to the
contrary, for a sixty (60) day period, commencing on January
1, 1999, Daseke shall have the right to resign his position as
Chairman Emeritus and elect (the "Consultant Election") to be
employed as a consultant to the Company for the remainder of
the Term by delivering written notice of such election to the
Company prior to the expiration of such 60-day period. If
Daseke exercises the Consultant Election, then for the
remainder of the Term Daseke will hold himself ready to render
to the Company and its subsidiaries and affiliates such
advisory and consulting services as may be requested by the
Company's Chief Executive Officer. In furnishing any such
consulting services, Daseke will act as an independent
contractor and not as an employee of the Company. As a
consultant, Daseke shall have no authority to act for or bind
the Company. The Company shall not exercise any control over
the execution of the services or manner of performance of the
consulting services provided by Daseke following the exercise
of the Consultant Election, and Daseke, as a consultant, shall
be responsible to the Company only for the ultimate results
required by the Company. Subject to the provisions of Section
11 hereof, it is understood that, following the exercise of
the Consultant Election, Daseke will or may have other
occupations or employments during the Term, and in using the
services of Consultant hereunder, the Company will exercise
due regard for other commitments of Daseke.
(c) The Company agrees to use its best efforts to
nominate Daseke and cause him to be elected by the
stockholders of the Company at the Company's 2000 annual
meeting for a period commencing on the date of such meeting
and continuing until the 2003 annual meeting of stockholders
of the Company, provided Daseke meets the then existing
criteria established by the Board's Nominating and Corporate
Governance Committee and further subject to the procedures for
election of directors set forth in the Company's Articles of
Incorporation and Bylaws and the Maryland General Corporation
Law.
4. Compensation.
(a) (i) As consideration for the services to be rendered
hereunder by Daseke as Chairman Emeritus, the Company
agrees to pay Daseke, and Daseke agrees to accept,
payable in accordance with the Company's standard payroll
practices for executives, but payable in not less than
bi-weekly installments, compensation of Three Hundred
Four Thousand Five Hundred Dollars ($304,500.00) per
twelve month period of the Term during which he is
providing services as Chairman Emeritus hereunder.
(ii) From and after the date Daseke exercises the
Consultant Election, as consideration for the services to
be rendered hereunder by Daseke as a consultant, the
Company agrees to pay Daseke, and Daseke agrees to
accept, payable in accordance with the Company's standard
payroll practices, but payable in not less than bi-weekly
installments, compensation of Three Hundred Four Thousand
Five Hundred Dollars ($304,500.00) per twelve month
period during the remaining period of the Term. The
amounts payable to Daseke pursuant to this Section 4(a)
are referred to together herein as the "Salary."
(b) (i) Daseke shall be entitled to receive, as a bonus
for services rendered to the Company pursuant to this
Agreement and for services rendered pursuant to the
Employment Agreement prior to the date hereof, an amount
equal to 35% of the bonus pool, established by the
Compensation Committee to be payable to executive
officers of the Company for the 1997 calendar year.
(ii) At all other times while Daseke serves as
Chairman Emeritus, Daseke shall be eligible to receive an
annual incentive bonus as provided for in any incentive
plan of the Company, based on the level of accomplishment
of specific performance targets established by the Board
or any committee thereof, or such other bonus plans as
may be adopted by the Board from time to time in the
future. In addition, while Daseke serves as Chairman
Emeritus, Daseke shall participate in any Company
perquisite and supplemental benefit programs established
for the benefit of senior executives of the Company.
(c) During the Term, Daseke shall not receive any
additional compensation for his services as a member of the
Board.
(d) An office allowance of Seventy-Five Thousand Dollars
($75,000) per year shall be provided to Daseke, while Daseke
serves as Chairman Emeritus, to be allotted (as determined by
Daseke) to salary for a private secretary to be employed by
the Company and assigned to Daseke and lease and other office
expenses.
5. Restricted Stock/Stock Options.
(a) Pursuant to the terms of the several stock
option agreements dated as of February 9, 1994 (200,000
options), February 7, 1995 (90,000 options), February 3,
1996 (135,000 options), August 7, 1996 (35,000 options),
February 5, 1997 (60,000 options) and October 1, 1997
(200,000 options) (collectively, the "Option
Agreements"), providing for the grant to Daseke by the
Company of an aggregate of 720,000 options (the
"Options") to acquire shares of the Company's common
stock, par value $.01 per share (the "Common Stock"),
entered into by and between the Company and Daseke
pursuant to the terms of the Company's Amended and
Restated 1994 Stock Option Plan (the "Plan"), Daseke
currently has vested Options exercisable for 237,500
shares of Common Stock. The Company hereby agrees to
accelerate the vesting of the remaining 482,500 Options
issued to Daseke to the date of this Agreement, thereby
permitting the immediate exercise of all of the Options.
Daseke shall have until October 20, 2002 to exercise the
Options pursuant to the terms of the Plan and the Option
Agreements, the terms of which shall remain in full force
and effect except as expressly modified hereby.
(b) The 30,000 shares of Common Stock (the
"Restricted Shares") granted to Daseke under the
Company's Long-Term Incentive Plan (the "LTIP") on
February 12, 1997, shall remain outstanding in accordance
with the terms of the LTIP and Daseke shall continue to
receive the dividends payable on such shares of Common
Stock. On October 20, 2000, all restrictions on the
transfer of any then outstanding Restricted Shares as set
forth in the LTIP and in the Award Agreement issued under
the LTIP shall lapse and Daseke shall be issued stock
certificates in denominations designated by Daseke
representing the Restricted Shares as soon as practicable
following such date, without any restrictive legend
thereon.
(c) The 88,000 shares of Common Stock acquired by
Daseke on July 19, 1994, the 79,700 shares of Common
Stock acquired by Daseke on December 28, 1995 and the
24,300 shares of Common Stock acquired by Daseke on
January 18, 1996, pursuant to Company loan programs,
shall be retained by Daseke and the loans made to Daseke
by the Company shall remain outstanding and shall
continue to be payable in accordance with the terms of
the notes and other agreements evidencing such loans
following the date hereof.
6. Termination.
(a) On or after January 1, 1999, the Company may at any
time terminate this Agreement, but only upon delivery to
Daseke of a written notice of termination specifying a
termination date at least 30 days, but not more than 60 days,
after the date of delivery of such notice. In the event that
Daseke fails to be re-elected as a director of the Company at
the Company's 2000 annual meeting of stockholders, the Company
will immediately terminate this Agreement. Within 15 days of
any termination of this Agreement pursuant to this Section
6(a) (regardless of the reasons for such termination, subject
to the provisions of Sections 7 and 8 hereof) Daseke shall be
paid the Salary remaining for the Term (as if the Term had not
been terminated under this Section 6), as well as incentive
bonuses which have accrued through the date of such
termination, and benefits payable pursuant to this Agreement,
due hereunder in a single payment.
(b) In the event the Company terminates this Agreement
pursuant to this Section 6, the restrictions on the Restricted
Shares shall lapse as of the date of such termination.
(c) Upon termination of this Agreement pursuant to this
Section 6 and payment of all amounts due hereunder as a result
of such termination, this Agreement shall be null and void and
the parties hereto shall have no further rights or obligations
hereunder, except as otherwise specifically set forth herein,
and the "Term" (as defined in Section 3 hereof) shall be
deemed to have ended.
7. Termination in the Event of Death. This Agreement shall
terminate automatically upon the death of Daseke. In such event,
notwithstanding any other provision of this Agreement to the
contrary, the Company shall pay to Daseke's legal representative
only the Salary due to Daseke up to the date of termination as well
as incentive bonuses, which have accrued through the date of
termination, and benefits payable pursuant to this Agreement. Upon
termination of this Agreement pursuant to this Section 7 and
payment of all amounts due hereunder as a result of such
termination, this Agreement shall be null and void and the parties
hereto shall have no further rights or obligations hereunder,
except as otherwise specifically set forth herein, and the "Term"
(as defined in Section 3 hereof) shall be deemed to have ended.
8. Termination in the Event of Disability. If during the
Term, Daseke becomes physically or mentally disabled so as to
become unable, for a period of more than six (6) consecutive
months, to perform his duties hereunder on substantially a full
time basis ("Disability"), the Company may at its option terminate
this Agreement upon not less than thirty (30) days' written notice.
In the event of such termination, notwithstanding any other
provision of this Agreement to the contrary, Daseke shall be
entitled to continue to receive his Salary and benefits, excluding
any incentive bonuses, for a period equal to the lesser of (a)
twenty-four (24) months from the date of termination and (b) the
remainder of the Term (as if the Term had not been terminated
pursuant to this Section 8), and then shall receive such benefits
as are available to senior executives of the Company under any
applicable disability plan. Upon termination of this Agreement
pursuant to this Section 8 and payment of all amounts due hereunder
as a result of such termination, this Agreement shall be null and
void and the parties hereto shall have no further rights or
obligations hereunder, except as otherwise specifically set forth
herein, and the "Term" (as defined in Section 3 hereof) shall be
deemed to have ended.
9. Other Benefits.
(a) Except as expressly provided herein, this Agreement
shall not:
(i) be deemed to limit or affect the right of
Daseke to receive other forms of additional compensation
or to participate in any insurance, retirement,
disability, profit-sharing, stock purchase, stock option,
stock appreciation rights, cash or stock bonus or other
plan or arrangement or in any other benefits now or
hereafter provided by the Company or any of the Company's
affiliated companies for its employees; or
(ii) be deemed to be a waiver by Daseke of any
vested rights which Daseke may have or may hereafter
acquire under any employee benefit plan or arrangement of
the Company or any of the Company's affiliated companies.
(b) It is contemplated that, in connection with his
services hereunder, Daseke may be required to incur reasonable
business, telephone and travel expenses. The Company agrees
to reimburse Daseke in full for all reasonable and necessary
business, telephone and other related expenses, including
travel expenses, incurred or expended by him incident to the
performance of his duties hereunder, upon submission by Daseke
to the Company of such vouchers or expense statements
satisfactorily evidencing such expenses as may be reasonably
requested by the Company. It being understood that for
purposes of this Section 9 any such expenses approved in
advance by the Company shall be deemed to be "reasonable and
necessary."
(c) It is understood and agreed by the Company that
during the term of Daseke's employment hereunder as Chairman
Emeritus, he shall be entitled to annual paid vacations (taken
consecutively or in segments), the length of which shall be
consistent with the effective discharge of Daseke's duties and
the general customs and practices of the Company applicable to
its executive officers.
10. No Mitigation Obligation. The Company hereby
acknowledges that it will be difficult and may be impossible
(a) for Daseke to find reasonably comparable employment following
the date of termination, and (b) to measure the amount of damages
which Daseke may suffer as a result of termination of employment
hereunder. Accordingly, the payment of the termination
compensation by the Company to Daseke in accordance with the terms
of this Agreement is hereby acknowledged by the Company to be
reasonable and will be liquidated damages, and Daseke will not be
required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other
obligation on the part of Daseke hereunder or otherwise.
11. Non-Competition.
(a) Except as otherwise provided in Section 3 hereof,
during the Term, Daseke shall not, directly or indirectly,
either for himself or any other person, own, manage, control,
participate in, invest in, permit his name to be used by, act
as consultant or advisor to, render services for (alone or in
association with any individual, entity or other business
organization) or otherwise assist in any manner any individual
or entity that engages in or owns, invests in, manages or
controls any venture or enterprise engaged in (each, a
"Competitive Activity") the ownership, management, acquisition
or development of multifamily residential properties, provided
that the term "Competitive Activity" shall not include any
transaction pursuant to which Daseke pays aggregate
consideration of $5,000,000 or less or any transaction
involving assets owned by Daseke as of the date hereof or
otherwise acquired by Daseke during the Term not in violation
of the terms of this Agreement and provided further that
Daseke and the Company will each act reasonably and with due
regard for the other's interests. In the event that Daseke
desires to participate in any transaction which would
otherwise constitute a Competitive Activity hereunder, he
shall notify the Company within fifteen days prior to the
aniticipated closing date of such Competitive Activity, and
upon closing of such activity, this Agreement shall
automatically terminate and be of no further force and effect,
and the Company shall have no further obligations hereunder to
pay any further Salary or other cash benefits, bonuses or
payments to Daseke and Daseke shall have no further right to
receive Salary or other cash benefits, bonuses or payments.
In any event, if this Agreement is terminated under this
Section 11(a), Paragraph 5 is unchanged.
Daseke will not in any manner induce, attempt to induce
or assist others to induce or attempt to induce any investor,
client or tenant of the Company to terminate its, his or her
association with the Company or do anything to interfere with
the relationship between the Company and any of its customers,
clients, tenants or persons or concerns dealing with the
Company during the Term. During the Term, Daseke shall not,
without the prior consent of a majority of the Company's
independent directors, solicit, hire away or employ any person
who is an employee of the Company at the time of such
solicitation or attempted hiring or employment other than his
secretary on the date hereof; provided, however that nothing
herein shall be construed to prohibit Daseke's employment of
any former Company employee whose termination from the Company
was not induced by Daseke.
(b) In the event that any restriction contained in this
Section 11 shall be held too broad to allow enforcement of
such restriction to its full extent, then such restriction
shall be enforced to the maximum extent permitted by law, and
Daseke hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to
enforce such restrictions.
(c) Daseke acknowledges and agrees that the Company's
remedy at law for any breach of his obligations under this
Section 11 may be inadequate, and agrees and consents that
temporary and/or permanent injunctive relief may be entered
enjoining him from breaching this Agreement and further agrees
that any proceeding which may be brought to enforce any
provision of this Section 11 without being requested to prove
actual damages as a result of the premature breach of this
Agreement.
12. Indemnification.
(a) The Company agrees to indemnify and hold harmless
Daseke against any and all losses, claims, damages or
liabilities to which he may become subject under the
Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, or other federal or state statutory
law or regulation, at common law or otherwise, in so far as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement or a material fact
contained in any filing made with the Securities and Exchange
Commission or in any document otherwise circulated to the
stockholders or prospective stockholders of the Company
(collectively, the "Solicitation Documents") or arise out of
or are based upon the omission or alleged omission to state
herein a material fact required to be stated therein or
necessary to make the statements therein not misleading and,
in the case of any prospectus, the omission or alleged
omission to state therein a material fact necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading and, in accordance
with the provisions of Section 12(b) hereof, agrees to
reimburse Daseke, as incurred, for any legal or other expenses
reasonably incurred by him in connection with investigating or
defending any such loss, claim, damage, liability or action.
(b) Promptly after receipt by Daseke under this Section
12 of notice of the commencement of any action, Daseke will,
if a claim in respect thereof is to be made against the
Company under this Section 12, notify the Company in writing
of the commencement thereof, but the failure so to notify the
Company (i) will not relieve it from liability under Section
12(a) hereof unless and to the extent it did not otherwise
learn of such action and such failure results in the
forfeiture by the Company of substantial rights and defenses
and (ii) will not, in any event, relieve the Company from any
obligations to Daseke other than the indemnification
obligation in Section 12(a) hereof. The Company shall be
entitled to appoint counsel of its choice at the Company's
expense to represent the Company and Daseke in any action for
which indemnification is sought (in which case, the Company
shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by Daseke except as set forth
below); provided, however, that such counsel shall be
reasonably satisfactory to Daseke. Notwithstanding the
Company's election to appoint counsel to represent Daseke in
an action, Daseke shall have the right to employ separate
counsel (including local counsel), and the Company shall bear
the reasonable fees, costs and expenses of such separate
counsel if such separate counsel is reasonably satisfactory to
the Company, and (x) the use of counsel chosen by the Company
to represent Daseke would be inappropriate, as determined by
such counsel, under applicable standards of professional
conduct due to an actual or reasonably anticipated material
conflict of interest, or (y) the Company shall not have
employed counsel to represent Daseke within a reasonable time
after notice of institution of such action. The Company will
not, without the prior written consent of Daseke, settle or
compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or
proceeding in respect to which indemnification may be sought
hereunder (whether or not Daseke is the actual or potential
party to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of
Daseke from all liability arising out of such claim, action,
suit or proceeding.
13. Mutual Release.
(a) Daseke, for the purpose of binding himself and his
heirs, legal representatives, successors and assigns, and
entities with which Daseke is affiliated (other than the
Company), and for all persons or entities claiming by, through
or under any of them, hereby RELEASES, WAIVES, ACQUITS AND
FOREVER DISCHARGES to the maximum extent permitted under
applicable law, the Company, and its prior, current and future
officers, employees, directors, stockholders, attorneys,
advisors, receivers and conservators, and their respective
heirs, legal representatives, successors and assigns of and
from any and all actions, causes of action, liabilities,
claims, counterclaims, effective defenses, offsets, demands,
losses or damages of any kind or nature whatsoever (the
"Daseke Claims") in law or in equity, known or unknown,
contingent or fixed, arising under contract, including,
without limitation, the Employment Agreement, tort, statute or
otherwise, and whether based on facts known or unknown, and
existing on the date hereof, or which may arise in the future
based upon facts and circumstances which exist or existed on
or prior to the date hereof (excluding, however, any of the
Daseke Claims arising from the performance or non-performance
of the Company's obligations under this Agreement, the Plan,
the Option Agreements, the LTIP, the Award Agreement issued
under the LTIP and the notes and other agreements referenced
in Section 5(c) hereof and any right to indemnification from
the Company arising from Daseke's status as an officer and
director of the Company and as provided herein), including,
without limitation, any and all actions, causes of action,
liabilities, claims, counterclaims, demands, losses and
damages asserted or that could have been asserted prior to the
execution of this Agreement, or sounding in, arising from or
any way relating to breach of contract, fraud, deceit,
tortious interference, breach of obligations of good faith and
fair dealing, misrepresentation, deceptive trade practices or
federal or state securities violations, existing under or
arising out of events prior to the date of this Agreement,
including specifically any claims or causes of action arising
out of or relating to the Employment Agreement or the
termination thereof or the events surrounding Daseke's
resignation as Chief Executive Officer and Chairman of the
Board of the Company. Daseke for the purpose of binding his
affiliates also hereby TRANSFERS AND ASSIGNS any and all of
the Daseke Claims to the Company and its prior, current and
future officers, employees, directors, stockholders, receivers
and conservators, and their respective heirs, legal
representatives, successors and assigns. This provision shall
not be construed as an admission of any liability by the
Company or any other entity.
(b) The Company, for the purpose of binding its prior,
current and future officers, employees, directors,
stockholders, receivers and conservators and entities with
which they are affiliated, and for all persons or entities
claiming by, through or under any of them, hereby RELEASES,
WAIVES, ACQUITS AND FOREVER DISCHARGES to the maximum extent
permitted under applicable law, Daseke and his heirs, legal
representatives, successors and assigns of and from any and
all actions, causes of action, liabilities, claims,
counterclaims, effective defenses, offsets, demands, losses or
damages or any kind or nature whatsoever (the "Company
Claims"), in law or in equity, known or unknown, contingent or
fixed, arising under contract, tort, statute or otherwise, and
whether based on facts known or unknown, and existing on the
date hereof, or which may arise in the future based upon facts
and circumstances which exist or existed on or prior to the
date hereof (excluding, however, any of the Company Claims
arising from the performance or non-performance of any
obligations under this Agreement, the Plan, the Option
Agreements, the LTIP, the Award Agreement issued under the
LTIP and the notes and other agreements referenced in Section
5(c) hereof and any right to indemnification from Daseke
arising from Daseke's status as an officer and director of the
Company and as provided herein), including, without
limitation, any and all actions, causes of action,
liabilities, claims, counterclaims, demands, losses and
damages asserted or that could have been asserted prior to the
execution of this Agreement, or sounding in, arising from or
in any way relating to breach of contract, fraud, deceit,
tortious interference, breach of obligations of good faith and
fair dealing, misrepresentation, deceptive trade practices or
federal or state securities violations, existing under or
arising out of events prior to the execution of this
Agreement, including specifically any claims or causes of
action arising out of or relating to the Employment Agreement
or the termination thereof or the events surrounding Daseke's
resignation as Chief Executive Officer and Chairman of the
Board of the Company. The Company, for the purpose of binding
its prior, current and future officers, employees, directors,
stockholders, receivers and conservators hereby TRANSFERS AND
ASSIGNS any and all of the Company Claims to Daseke and his
heirs, legal representatives, successors and assigns. This
provision shall not be construed as an admission of any
liability by Daseke.
(c) Daseke, for the purpose of binding himself and his
heirs, legal representatives, successors and assigns, and for
all persons or entities claiming by, through or under him,
hereby RELEASES, WAIVES, ACQUITS AND FOREVER DISCHARGES to the
maximum extent permitted under applicable law, the Company and
its prior, current and future officers, employees, directors,
stockholders, attorneys, advisors, receivers and conservators,
and their respective heirs, legal representatives, successors
and assigns of and from any and all claims of discrimination
of any kind, including age discrimination and any contractual,
tort or other common law claims. This release and waiver
includes all such claims, whether under any applicable federal
laws, including, without limitation, the federal Age
Discrimination in Employment Act, Title VI of the Civil Rights
Act of 1964, the Americans with Disabilities Act, the Equal
Pay Act, the Worker Adjustment and Retraining Notification
Act, the Employee Retirement Income Security Act, the Family
and Medical and Leave Act, the Older American Workers Act or
under any applicable state or local laws or ordinances,
including the Texas Commission on Human Rights Act.
14. Legal Fees and Expenses. The Company agrees to pay
Daseke's reasonable attorneys' fees and expenses, in connection
with the negotiation and execution of this Agreement, not to exceed
$15,000.
15. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to any
law or government regulation or ruling.
16. Successors and Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to Daseke, expressly to assume and
agree to perform this Agreement in the same manner and to the
same extent the Company would be required to perform if no
such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially
all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company"
for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by Daseke's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in Sections
16(a) and 16(b) hereof and with respect to the Company's
obligation to pay legal fees and expenses under Section 16
hereof. Without limiting the generality or effect of the
foregoing, Daseke's right to receive payments hereunder will
not be assignable, transferable or delegable, whether by
pledge, creation of a security interest or otherwise, other
than by a transfer by Daseke's will or by the laws of descent
and distribution and, in the event of any attempted assignment
or transfer contrary to this Section 16(c), the Company shall
have no liability to pay any amount so attempted to be
assigned, transferred or delegated, except with respect to
legal fees and expenses, as and to the extent provided in
Section 14 hereof.
17. Non-Disparagement. None of the parties to this Agreement
shall say, publish or cause to be published or do any thing that
casts the other party hereto or their officers, directors,
employees or stockholders (collectively, the "Protected
Individuals") in an unfavorable light, or disparage or injure the
goodwill or business reputation of the Protected Individuals or any
relationship of the Protected Individuals with any suppliers,
vendors, customers, employees, contractors and/or investors of or
in the Protected Individuals or the financial community in general.
18. Notices. For all purposes of this Agreement, all
communications, including, without limitation, notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS or Purolator,
addressed to the Company (to the attention of the Secretary of the
Company) at the address set forth on the signature pages of this
Agreement and to Daseke at the address set forth on the signature
pages of this Agreement, or to such other address as either party
may have furnished to the other in writing and in accordance
herewith, except that notices of changes of address shall be
effective only upon receipt.
19. Confidentiality. Each of the parties will keep the terms
of this Agreement and the facts and circumstances underlying
Daseke's resignation strictly confidential, and will cause their
respective affiliates and attorneys to do likewise, except for
mutually agreed disclosures and except to the extent disclosure is
required by law or is necessary for tax, insurance or banking
purposes. Daseke hereby acknowledges that he is not authorized to
act as a spokesman for the Company on any matter, except as
otherwise expressly permitted by the Board or the Chief Executive
Officer.
20. Publicity. The initial press release relating to this
Agreement shall be a joint release and thereafter the parties
hereto shall, subject to their respective legal obligations
(including requirements of stock exchanges and other similar
regulatory bodies) and Section 19 hereof, consult with each other,
and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making
public statements with respect to the transactions contemplated
hereby and in making any filings with any federal or state
governmental or regulatory agency or with any national securities
exchange with respect thereto.
21. Governing Law. The validity, interpretation,
construction and performance of this Agreement will be governed by
and construed in accordance with the substantive laws of the State
of Texas, without giving effect to the principles of conflict of
laws of such State.
22. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances
is held invalid, unenforceable or otherwise illegal, the remainder
of this Agreement and the application of such provision to any
other person or circumstances will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary
to make it enforceable, valid or legal.
23. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Daseke and the Company.
No waiver by either party hereto at any time of any breach by the
other party hereto or compliance with any condition or provision of
this Agreement to be performed by such other party will be deemed
a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with
respect to the subject matter hereof have been made by either party
which are not set forth expressly in this Agreement. Except as
otherwise identified, references to Sections are references to
Sections of this Agreement.
24. Survival of Certain Provisions. Notwithstanding anything
herein to the contrary, the obligations of the Company and Daseke,
as the case may be, under Sections 4, 5, 6, 8, 9, 12, 13, 14, 17,
18 and 19 hereof, to the extent applicable, shall remain operative
and in full force and effect regardless of the expiration, for any
reason, of the Term.
25. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.
26. Warranty. Daseke warrants and represents that he is not
a party to any agreement, contract or understanding, whether of
employment or otherwise, which would in any way restrict or
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.
27. Board Approval. By executing this Agreement, the Company
acknowledges that this Agreement has been reviewed and approved by
the Compensation Committee of the Board.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WALDEN RESIDENTIAL PROPERTIES,
INC.
By: /s/ Marshall Edwards
Marshall Edwards
President and Chief
Acquisitions Officer
Address:
One Lincoln Centre
5400 LBJ Freeway
Suite 400
Dallas, Texas 75240
/s/ Don R. Daseke
Don R. Daseke
Address:
DB972940002
032398 v7
111:14199-25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 1, 1997, by and between Walden Residential Properties,
Inc., a Maryland corporation (the "Company"), and Maxwell B. Drever
(the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is a prominent authority on apartment
buildings, particularly in their renovation, whose expertise the
Company would like to acquire;
WHEREAS, Executive has served as the Chairman of the Board of
Directors of Drever Partners, Inc. ("Drever") since 1985 and,
through such service, has acquired special and unique knowledge,
ability and expertise and is expected to make major contributions
to the short- and long-term profitability, growth and financial
strength of the Company following the consummation of the
Contribution (as hereinafter defined);
WHEREAS, pursuant to that certain Contribution Agreement dated
as of May 21, 1997 (the "Contribution Agreement"), a subsidiary of
the Company will acquire all of the outstanding shares of capital
stock of Drever (the "Contribution");
WHEREAS, the Company desires (a) to assure itself of both
present and future continuity of management, (b) to provide certain
minimum termination benefits for Executive, and (c) to provide
additional inducements for Executive to continue to remain in the
employ of the Company following the date hereof; and
WHEREAS, Executive is willing to render part-time services to
the Company on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the agreements set forth herein, the Company and Executive agree as
follows:
1. Employment. The Company agrees to and does hereby employ
Executive to perform the duties of an executive advisor to the
Company, and Executive accepts such employment, upon the terms and
conditions set forth herein.
2. Term. The term of this Agreement shall be the period
commencing as of the date set forth above and continuing thereafter
for a period of five years (as extended as hereinafter provided,
the "Term"); provided, however, that at the end of such five year
period and each anniversary date thereafter, the Term will
automatically be extended for an additional year unless, not later
than 60 days prior to the end of such five year period or any such
anniversary date, as the case may be, the Company or Executive
shall have given notice that the Company or Executive, as the case
may be, does not wish to have the Term extended.
3. Duties and Services.
(a) Executive agrees to serve the Company as an
executive advisor and to devote the amount of time, attention
and energies required in order to provide such consultation
services to the Company with respect to renovation projects as
may be reasonably requested by the Company. Subject to the
provisions in Section 16 hereof, it is understood that
Executive will or may have other occupations or employments
during the term, and in using the services of Executive
hereunder, the Company will exercise due regard for other
commitments of Executive, provided that Executive may not own
more than 9% of the stock of any other publicly-held apartment
real estate investment trust.
(b) As of the date hereof, the Board of Directors of the
Company (the "Board") shall elect Executive to serve as a
director of the Company and to serve as Chairman Emeritus of
the Board and as a member of the Board's Executive Committee
until the Company's 1998 annual meeting of stockholders. The
Company agrees to use its best efforts to nominate Executive
and cause him to be elected by the stockholders of the Company
at the Company's 1998 annual meeting for a period commencing
on the date of such meeting and continuing until the annual
meeting of stockholders of the Company to be determined by the
Board's Nominating and Corporate Governance Committee prior to
such 1998 annual meeting, with any subsequent re-election
being subject to the procedures for election of directors set
forth in the Company's Articles of Incorporation and Bylaws
and the Maryland General Corporation Law. Neither service nor
termination of service on the Board shall affect the
compensation payable to Executive pursuant to the terms of
this Agreement.
4. Compensation.
(a) As consideration for the services to be rendered
hereunder by Executive, the Company agrees to pay Executive,
and Executive agrees to accept, payable in accordance with the
Company's standard payroll practices for executives, but
payable in not less than bi-weekly installments, compensation
of One Hundred Thousand Dollars ($100,000.00) per annum or
such greater amount as may be determined from time to time by
the Board pursuant to performance reviews to be conducted on
an annual basis or such shorter time period as the Board shall
deem appropriate (the "Salary").
(b) An office allowance of Seventy-Five Thousand Dollars
($75,000) per year (the "Allowance") shall be provided to
Executive, to be allotted (as determined by the Executive) to
salary for a private secretary to be employed by the Company
and assigned to Executive, and to other office expenses. At
the end of the year, any amount remaining of the Allowance
shall be paid in cash to Drever, McIntosh and Company of San
Francisco, California.
(c) Executive and his private secretary shall
participate fully in the Company's health plan, and in such
other Company perquisite and supplemental benefit programs
established for the benefit of, respectively, senior
executives and clerical employees of the Company.
(d) Executive shall be eligible to receive an annual
incentive bonus as provided for in any incentive plan of the
Company, based on the level of accomplishment of specific
performance targets established by the Board or any committee
thereof, or such other bonus plans as may be adopted by the
Board from time to time in the future.
(e) Executive shall not receive any additional
compensation for his services as a member of the Board.
5. Restricted Stock; Options.
(a) Subject to approval of certain amendments to the
Company's Amended and Restated 1994 Stock Option Plan (the
"Plan") by the stockholders of the Company, the Company will
issue to Executive 10 year stock options (the "Options"),
covering an aggregate of 350,000 shares of common stock, par
value $.01 per share, of the Company (the "Common Stock"),
issued under the Plan pursuant to an option agreement to be
dated as of the date hereof between the Company and Executive,
the form of which is attached hereto as Exhibit A (the "Option
Agreement). The exercise price for the Options will be equal
to the closing price per share of Common Stock as reported on
the New York Stock Exchange (the "NYSE") on the NYSE trading
day immediately preceding the date hereof. The Options will
vest in four equal installments on the first four anniversary
dates of the date hereof. The exercise price shall be payable
pursuant to the terms of the Option Agreement.
(b) The Company will issue to Executive shares of
restricted stock pursuant to the Company's Long-Term Incentive
Plan with an aggregate market value of $500,000 (the number of
whole shares to be issued will be determined by dividing
$500,000 by the closing price per share of Common Stock as
reported on the NYSE on the NYSE trading day immediately
preceding the date of issue) on each of (i) January 1, 1999 if
this Agreement is still in effect on such date and the closing
price per share of Common Stock as reported on the NYSE for
the NYSE trading day immediately preceding January 1, 1999 is
at least $30.00 and (ii) January 1, 2000 if this Agreement is
still in effect and the closing price per share of Common
Stock reported on the NYSE for the NYSE trading day
immediately preceding January 1, 2000 is at least $35.00. The
restrictions on transfer of the shares of restricted stock
issued pursuant to this Section 5(b) will lapse as to
one-third of such shares on the business day immediately
preceding the first, second and third anniversaries of the
date such shares are issued, provided that restrictions
related to the final one-third installment of the shares of
Common Stock issued on or after January 1, 2000, if any, shall
lapse on the earlier of the expiration of the Term or
January 1, 2003.
6. Termination for Cause.
(a) In the event that Executive shall be discharged for
"Cause" as provided in Section 6(b) hereof, all compensation
payable to Executive pursuant to Section 4 in respect of
periods after such discharge shall terminate immediately upon
such discharge, and the Company shall have no obligations with
respect thereto, nor shall the Company be obligated to pay
Executive severance compensation under Section 8 hereof.
(b) For the purposes of this Agreement, "Cause" shall
mean that, prior to any termination pursuant to Section 6(a)
hereof, Executive shall have committed:
(i) an intentional act or acts of fraud,
embezzlement or theft constituting a felony and resulting
or intended to result directly or indirectly in gain or
personal enrichment for Executive at the expense of the
Company; or
(ii) the continued, repeated, intentional and
willful refusal to perform the duties associated with
Executive's position with the Company, which is not cured
within 15 days following written notice to Executive.
For purposes of this Agreement, no act or failure to act on the
part of Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by
Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered
to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Board then in office at a
meeting of the Board called and held for such purpose, after
reasonable notice to Executive and an opportunity for Executive,
together with his counsel (if Executive chooses to have counsel
present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, Executive had
committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein will
limit the right of Executive or his beneficiaries to contest the
validity or propriety of any such determination.
7. Termination Compensation.
(a) If, during the Term, this Agreement is terminated
(i) for any reason other than (A) pursuant to Section 6(a)
hereof, (B) by reason of death or (C) by reason of
"Disability," or (ii) by Executive due to "Constructive
Discharge," then Executive shall receive termination pay in an
amount equal to the highest annualized rate of Executive's
Salary prior to the date of termination, payable in cash
within five business days of the date of termination.
(b) For the purposes of this Agreement, "Constructive
Discharge" shall mean:
(i) any reduction in Salary;
(ii) a material reduction in Executive's job
function, authority, duties or responsibilities, or a
similar change in Executive's reporting relationships;
(iii) a required relocation of Executive of more than
35 miles from Executive's current job location;
(iv) any breach of any of the terms of this
Agreement by the Company which is not cured within 15
days following written notice thereof by Executive to the
Company; or
(v) in the event of a "Change in Control" (as
hereinafter defined) Executive has reasonably determined
that, as a result of a change in circumstances following
the Change in Control of the Company that significantly
affect his relationship with the Company, he is unable to
exercise the authority, duties and responsibilities
contemplated by Section 3 hereof;
provided, however, that the term "Constructive Discharge" shall not
include a specific event described in the preceding clause (i),
(ii), (iii), (iv) or (v) unless Executive actually terminates his
employment with the Company within 60 days after the occurrence of
such event.
(c) The amount of compensation payable pursuant to this
Section 8 is not subject to any deduction (except for
withholding taxes), reduction, offset or counterclaim, and the
Company may not give advance notice of termination in lieu of
the payment provided for in this Section 7.
8. Termination in the Event of Death. This Agreement shall
terminate automatically upon the death of Executive. In such
event, the Company shall pay to Executive's legal representative
only the base salary due to Executive up to the date of termination
as well as incentive bonuses, which have accrued through the date
of termination, and benefits payable pursuant to this Agreement.
9. Termination in the Event of Disability. If during the
Term, Executive becomes physically or mentally disabled so as to
become unable, for a period of more than six (6) consecutive
months, to perform his duties hereunder on substantially a full
time basis ("Disability"), the Company may at its option terminate
this Agreement upon not less than thirty (30) days' written notice.
In the event of such termination, Executive shall be entitled to
continue to receive his base salary and benefits, excluding any
incentive bonuses, for a period equal to the lesser of (a)
twenty-four (24) months from the date of termination and (b) the
remainder of the Term, and then shall receive such benefits as are
available to senior executives of the Company under any applicable
disability plan.
10. Change in Control of the Company.
(a) If a Change in Control (as hereinafter defined) of
the Company occurs prior to the scheduled expiration of the
Term and within three years after the Change in Control of the
Company (i) Executive is terminated by the Company for reasons
other than (A) death, (B) Disability, or (C) Cause or (ii)
Executive terminates his employment as a result of
Construction Discharge, the Company, within 30 days of
Executive's termination of employment, will pay to Executive,
in lieu of any severance obligation under Section 8 hereof, an
amount equal to 2.99 times Executive's compensation, which,
for purposes of this Section 10, shall mean an amount equal to
the highest annualized rate of Executive's Salary prior to the
date of termination, plus Executive's cash bonus for the year
immediately prior to such termination.
(b) For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time during the Term
any of the following events occurs:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or
other legal person and as a result of such merger,
consolidation or reorganization less than a
majority of the combined voting power of the
then-outstanding securities of such corporation or
person immediately after such transaction are held
in the aggregate by the holders of Voting Stock (as
hereinafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells all or
substantially all of its assets to any other
corporation or other legal person, less than a
majority of the combined voting power of the
then-outstanding voting securities of which
are held in the aggregate by the holders of
Voting Stock of the Company immediately prior
to such sale;
(iii) There is a report filed on
Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as
promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person
(as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act)
of securities representing 25% or more of the
combined voting power of the then-outstanding
securities of the Company entitled to vote
generally in the election of directors of the
Company ("Voting Stock"), other than as a
result of the transactions contemplated by the
Contribution Agreement and the Exchange
Agreement, dated as of May 21, 1997 by and
among the Company, Drever and the other
parties named therein;
(iv) The Company files a report or proxy
statement with the Securities and Exchange
Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form
or report or item therein) that a change in
control of the Company has or may have
occurred or will or may occur in the future
pursuant to any then-existing contract or
transaction; or
(v) If during any period of two
consecutive years, individuals who at the
beginning of any such period constitute the
directors of the Company cease for any reason
to constitute at least a majority thereof
unless the election, or the nomination for
election by the Company's stockholders, of
each director of the Company first elected
during such period was approved by a vote of
at least two-thirds of the directors of the
Company then still in office who were
directors of the Company at the beginning of
any such period.
Notwithstanding the foregoing provisions of Section 10(b)(iii) or
10(b)(iv) hereof, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because the Company,
an entity in which the Company directly or indirectly beneficially
owns 50% or more of the voting securities of such entity, any
Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares
of voting securities of the Company, whether in excess of 25% or
otherwise, or because the Company, reports that a change in control
of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
11. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined (as
hereafter provided) that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement (a
"Payment"), would be subject to the excise tax imposed by
Section 4999 (or any successor provision thereto) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment
or payments (a "Gross-Up Payment") in an amount such that,
after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this
Section 11, including whether an Excise Tax is payable by
Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by a nationally recognized firm of
certified public accountants (the "Accounting Firm") selected
by Executive in his sole discretion. Executive shall direct
the Accounting Firm to submit its determination and detailed
supporting calculations to both the Company and Executive
within 15 calendar days after the termination date, if
applicable, or such earlier time or times as may be requested
by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the
Company shall pay the required Gross-Up Payment to Executive
within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall, at the same time
as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his federal income tax return. Any
determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and
Executive. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision
thereto) at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that
Executive is required to make a payment of any Excise Tax,
Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such
Underpayment shall be promptly paid by the Company to, or for
the benefit of, Executive within five business days after
receipt of such determination and calculations.
(c) The Company and Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as
the case may be, reasonably requested by the Accounting Firm,
and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination
contemplated by Section 11(b) hereof.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and
calculations contemplated by Section 11(b) hereof shall be
borne by the Company. If such fees and expenses are initially
paid by Executive, the Company shall reimburse Executive the
full amount of such fees and expenses within five business
days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.
12. Life Insurance. At all times during the Term prior to
the exercise of the Consultant Election, the Company shall, at its
sole expense, obtain and maintain in full force and effect life
insurance on Executive's life in an amount equal to twice
Executive's Salary, payable to a beneficiary of Executive's choice.
13. Other Benefits.
(a) Except as expressly provided herein, this Agreement
shall not:
(i) be deemed to limit or affect the right of
Executive to receive other forms of additional
compensation or to participate in any insurance,
retirement, disability, profit-sharing, stock purchase,
stock option, stock appreciation rights, cash or stock
bonus or other plan or arrangement or in any other
benefits now or hereafter provided by the Company or any
of the Company's affiliated companies for its employees;
or
(ii) be deemed to be a waiver by Executive of any
vested rights which Executive may have or may hereafter
acquire under any employee benefit plan or arrangement of
the Company or any of the Company's affiliated companies.
(b) It is contemplated that, in connection with his
services hereunder, Executive may be required to incur
reasonable business, entertainment, telephone and travel
expenses. The Company agrees to reimburse Executive in full
for all reasonable and necessary business, entertainment,
telephone and other related expenses, including travel
expenses, incurred or expended by him incident to the
performance of his duties hereunder, upon submission by
Executive to the Company of such vouchers or expense
statements satisfactorily evidencing such expenses as may be
reasonably requested by the Company.
(c) It is understood and agreed by the Company that
during the term of Executive's employment hereunder, he shall
be entitled to annual paid vacations (taken consecutively or
in segments), the length of which shall be consistent with the
effective discharge of Executive's duties and the general
customs and practices of the Company applicable to its
executive officers.
14. No Mitigation Obligation. The Company hereby
acknowledges that it will be difficult and may be impossible
(a) for Executive to find reasonably comparable employment
following the date of termination, and (b) to measure the amount of
damages which Executive may suffer as a result of termination of
employment hereunder. Accordingly, the payment of the termination
compensation by the Company to Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be
reasonable and will be liquidated damages, and Executive will not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor will
any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other
obligation on the part of Executive hereunder or otherwise.
15. Confidentiality.
(a) Recognizing that the knowledge and information about
the business methods, systems, plans and policies of the
Company and of its affiliated companies which Executive has
heretofore and shall hereafter receive, obtain or establish as
an employee of the Company or its affiliated companies are
valuable and unique assets of the Company and its affiliated
companies, Executive agrees that he shall not (otherwise than
pursuant to his duties hereunder) disclose, without the
written consent of the Company, any confidential knowledge or
information pertaining to the Company or its affiliated
companies, or their business, personnel or plans, to any
person, firm, corporation or other entity, which would result
in any material harm or damage to the Company, its business or
prospects, for any reason or purpose whatsoever, unless
required by law or legal process. In the event Executive is
required by law or legal process to provide documents or
disclose information, he shall take all reasonable steps to
maintain confidentiality of documents and information,
including notifying the Company and giving it an opportunity
to seek a protective order, at its sole cost and expense.
(b) The provisions of this Section 15 shall survive the
expiration or termination of this Agreement, without regard to
the reason therefor, for a period of two years from the
earlier of (i) expiration of the Term or (ii) the date of
termination.
16. Non-Competition.
(a) Except as otherwise provided in Section 3(a) hereof,
during the Term and any period during which Executive receives
any severance payments hereunder (the "Noncompetition
Period"), Executive shall not, directly or indirectly, either
for himself or any other person, own, manage, control,
participate in, invest in, permit his name to be used by, act
as consultant or advisor to, render services for (alone or in
association with any individual, entity or other business
organization) or otherwise assist in any manner any individual
or entity that engages in or owns, invests in, manages or
controls any venture or enterprise engaged in (each, a
"Competitive Activity") the ownership, management, acquisition
or development of multifamily residential properties, provided
that the term "Competitive Activity" shall not include any
transaction pursuant to which Executive pays equity
consideration of $5,000,000 or less or any transaction
involving assets owned by Executive as of the date hereof or
otherwise acquired by Executive during the Terms not in
violation of the terms of this Agreement and provided further
that Executive and the Company will each act reasonably and
with due regard for the other's interests.
Executive will not in any manner induce, attempt to
induce or assist others to induce or attempt to induce any
investor, client or tenant of the Company to terminate its,
his or her association with the Company or do anything to
interfere with the relationship between the Company and any of
its customers, clients, tenants or persons or concerns dealing
with the Company during the Noncompetition Period. Executive
shall not, without the prior consent of a majority of the
Company's independent directors, solicit, hire away or employ
any person who is an employee of the Company during the
Noncompetition Period.
(b) In the event that any restriction contained in this
Section 16 shall be held too broad to allow enforcement of
such restriction to its full extent, then such restriction
shall be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to
enforce such restrictions.
(c) Executive acknowledges and agrees that the Company's
remedy at law for any breach of his obligations under this
Section 16 may be inadequate, and agrees and consents that
temporary and/or permanent injunctive relief may be entered
enjoining him from breaching this Agreement and further agrees
that any proceeding which may be brought to enforce any
provision of this Section 16 without being requested to prove
actual damages as a result of the premature breach of this
Agreement.
17. Legal Fees and Expenses. It is the intent of the Company
that Executive not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense
of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if it should appear to Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement
void or unenforceable or in any way reduce the possibility of
collecting the amounts due hereunder, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Executive any payments or benefits provided hereunder, the Company
irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Company as
hereafter provided, to advise and represent Executive in connection
with any such interpretation, enforcement or defense, including,
without limitation, the initiation or defense of any litigation or
other legal action, whether by or against the Company or any
director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. The Company will pay and be solely
financially responsible for any and all attorneys' and related fees
and expenses incurred by Executive in connection with any of the
foregoing, except only in the event of litigation where the Company
fully and finally prevails on all causes of action.
18. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to any
law or government regulation or ruling.
19. Successors and Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to Executive, expressly to assume
and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no
such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially
all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company"
for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in
Sections 19(a) and 19(b) hereof and with respect to the
Company's obligation to pay legal fees and expenses under
Section 19 hereof. Without limiting the generality or effect
of the foregoing, Executive's right to receive payments
hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest or
otherwise, other than by a transfer by Executive's will or by
the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
Section 19(c), the Company shall have no liability to pay any
amount so attempted to be assigned, transferred or delegated,
except with respect to legal fees and expenses, as and to the
extent provided in Section 17 hereof.
20. Notices. For all purposes of this Agreement, all
communications, including, without limitation, notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS or Purolator,
addressed to the Company (to the attention of the Secretary of the
Company) at the address set forth on the signature pages of this
Agreement and to Executive at the address set forth on the
signature pages of this Agreement, or to such other address as
either party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
21. Governing Law. The validity, interpretation,
construction and performance of this Agreement will be governed by
and construed in accordance with the substantive laws of the State
of Texas, without giving effect to the principles of conflict of
laws of such State.
22. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances
is held invalid, unenforceable or otherwise illegal, the remainder
of this Agreement and the application of such provision to any
other person or circumstances will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary
to make it enforceable, valid or legal.
23. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and the
Company. No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition
or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
Except as otherwise identified, references to Sections are
references to Sections of this Agreement.
24. Survival of Certain Provisions. Notwithstanding anything
herein to the contrary, the obligations of the Company under
Sections 7, 9, 10, 11, 13 and 17 hereof, to the extent applicable,
shall remain operative and in full force and effect regardless of
the expiration, for any reason, of the Term.
25. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.
26. Warranty. Executive warrants and represents that he is
not a party to any agreement, contract or understanding, whether of
employment or otherwise, which would in any way restrict or
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.
27. Board Approval. By executing this Agreement, the Company
acknowledges that this Agreement has been reviewed and approved by
the Compensation Committee of the Board.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Marshall B. Edwards
Marshall B. Edwards
Chief Executive Officer,
President
and Chief Acquisitions Officer
Address:
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
/s/ Maxwell B. Drever
Maxwell B. Drever, Individually
Address:
Four Embarcadero Center
Suite 1812
San Francisco, California 94111
DB971780008
111797 v7
111:14199-27
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 1, 1997, by and between Walden Residential Properties,
Inc., a Maryland corporation (the "Company"), and Michael E.
Masterson (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive has served as the President of Drever
Partners, Inc. ("Drever") since 1992 and, through such service, has
acquired special and unique knowledge, ability and expertise and is
expected to make major contributions to the short- and long-term
profitability, growth and financial strength of the Company
following the consummation of the Contribution (as hereinafter
defined);
WHEREAS, pursuant to that certain Contribution Agreement dated
as of May 21, 1997 (the "Contribution Agreement"), a subsidiary of
the Company will acquire all of the outstanding shares of capital
stock of Drever (the "Contribution");
WHEREAS, the Company desires (a) to assure itself of both
present and future continuity of management, (b) to provide certain
minimum termination benefits for Executive, and (c) to provide
additional inducements for Executive to continue to remain in the
employ of the Company following the date hereof; and
WHEREAS, Executive is willing to render services to the
Company on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the agreements set forth herein, the Company and Executive agree as
follows:
1. Employment. Subject to the provisions of Section 3(c)
hereof, the Company agrees to and does hereby employ Executive to
perform the duties of Vice Chairman of the Company, and Executive
accepts such employment, upon the terms and conditions set forth
herein.
2. Term. The term of this Agreement shall be the period
commencing as of the date set forth above and continuing thereafter
for a period of five years (as extended as hereinafter provided,
the "Term"); provided, however, that at the end of such five year
period and each anniversary date thereafter, the Term will
automatically be extended for an additional year unless, not later
than 60 days prior to the end of such five year period or any such
anniversary date, as the case may be, the Company or Executive
shall have given notice that the Company or Executive, as the case
may be, does not wish to have the Term extended.
3. Duties and Services.
(a) Subject to the provisions of Section 3(c) hereof,
Executive agrees to serve the Company as the Vice Chairman and
to devote his full time, attention and energies to the
business of the Company and will not, without the prior
written consent of the Board of Directors of the Company (the
"Board"), be engaged (whether or not during normal business
hours) in any other business or professional activity, whether
or not such activities are pursued for gain, profit or other
pecuniary advantage. Notwithstanding the foregoing, Executive
will not be prevented from (i) engaging in any civic or
charitable activity for which Executive receives no
compensation or other pecuniary advantage; (ii) investing his
personal assets in businesses which do not compete with the
Company provided that such investment will not require any
services on the part of Executive in the operation of the
affairs of the businesses in which investments are made and
provided further that Executive's participation in such
businesses is solely that of an investor; (iii) purchasing
securities in any corporation whose securities are publicly
traded, provided that such purchases will not result in
Executive owning beneficially at any time five percent (5%) or
more of the equity securities of any corporation engaged in a
business competitive with that of the Company; or (iv)
participating in any other activity approved in advance in
writing by the Board. Executive also agrees to perform from
time to time such other executive services as the Company
shall reasonably request, provided that such services shall be
consistent with his position and status as Vice Chairman. In
attending to the business and affairs of the Company,
Executive agrees to serve the Company faithfully, diligently
and to the best of his ability.
(b) The duties and responsibilities of Executive shall
be commensurate with those of the vice chairman of any large,
publicly-held corporation similar to the Company.
(c) Notwithstanding anything in this Agreement to the
contrary, for a sixty (60) day period, commencing on the
second anniversary of the date hereof, Executive shall have
the right to resign his position as Vice Chairman and elect
(the "Consultant Election") to be employed as a consultant to
the Company for the remainder of the Term by delivering
written notice of such election to the Company prior to the
expiration of such 60-day period. If Executive exercises the
Consultant Election, then for the remainder of the Term
Executive will hold himself ready to render to the Company and
its subsidiaries and affiliates such advisory and consulting
services as may be requested by the Company's Chief Executive
Officer, President or other authorized officer. In furnishing
any such consulting services, Executive will act as an
independent contractor and not as an employee of the Company.
As a consultant, Executive shall have no authority to act for
or bind the Company. The Company shall not exercise any
control over the execution of the services or manner of
performance of the consulting services provided by Executive
following the exercise of the Consultant Election, and
Executive, as a consultant, shall be responsible to the
Company only for the ultimate results required by the Company.
Subject to the provisions of Section 17 hereof, it is
understood that, following the exercise of the Consultant
Election, Executive will or may have other occupations or
employments during the Term, and in using the services of
Consultant hereunder, the Company will exercise due regard for
other commitments of Executive.
(d) As of the date hereof, the Board shall elect
Executive to serve as a director of the Company until the
Company's 1998 annual meeting of stockholders. The Company
agrees to use its best efforts to nominate Executive and cause
him to be elected by the stockholders of the Company at the
Company's 1998 annual meeting for a period commencing on the
date of such meeting and continuing until the annual meeting
of stockholders of the Company to be determined by the Board's
Nominating and Corporate Governance Committee prior to such
1998 annual meeting, with any subsequent re-election being
subject to the procedures for election of directors set forth
in the Company's Articles of Incorporation and Bylaws and the
Maryland General Corporation Law.
4. Compensation.
(a) (i) As consideration for the services to be rendered
hereunder by Executive as Vice Chairman, the Company
agrees to pay Executive, and Executive agrees to accept,
payable in accordance with the Company's standard payroll
practices for executives, but payable in not less than
bi-weekly installments, compensation of Two Hundred Fifty
Thousand Dollars ($250,000.00) per annum or such greater
amount as may be determined from time to time by the
Board pursuant to performance reviews to be conducted on
an annual basis or such shorter time period as the Board
shall deem appropriate.
(ii) From and after the date Executive exercises the
Consultant Election, as consideration for the services to
be rendered hereunder by Executive as a consultant, the
Company agrees to pay Executive, and Executive agrees to
accept, payable in accordance with the Company's standard
payroll practices, but payable in not less than bi-weekly
installments, compensation of One Hundred Thousand
Dollars ($100,000.00) per annum. The amounts payable to
Executive pursuant to this Section 4(a) is referred to
together herein as the "Salary."
(b) At all times during the Term prior to the exercise
of the Consultant Election, Executive shall be eligible to
receive an annual incentive bonus as provided for in any
incentive plan of the Company, based on the level of
accomplishment of specific performance targets established by
the Board or any committee thereof, or such other bonus plans
as may be adopted by the Board from time to time in the
future. In addition, Executive shall participate in any
Company perquisite and supplemental benefit programs
established for the benefit of senior executives of the
Company.
(c) Executive shall not receive any additional
compensation for his services as a member of the Board.
5. Restricted Stock; Options.
(a) Subject to approval of certain amendments to the
Company's Amended and Restated 1994 Stock Option Plan (the
"Plan") by the stockholders of the Company, the Company will
issue to Executive 10 year stock options (the "Options"),
covering an aggregate of 225,000 shares of common stock, par
value $.01 per share, of the Company (the "Common Stock"),
issued under the Plan pursuant to an option agreement to be
dated as of the date hereof between the Company and Executive,
the form of which is attached hereto as Exhibit A (the "Option
Agreement). The exercise price for the Options will be equal
to the closing price per share of Common Stock as reported on
the New York Stock Exchange (the "NYSE") on the NYSE trading
day immediately preceding the date hereof. The exercise price
shall be payable, and the options shall vest, pursuant to the
terms of the Option Agreement.
(b) The Company will issue to Executive shares of
restricted stock pursuant to the Company's Long-Term Incentive
Plan with an aggregate market value of $500,000 (the number of
whole shares to be issued will be determined by dividing
$500,000 by the closing price per share of Common Stock as
reported on the NYSE on the NYSE trading day immediately
preceding the date of issue) on each of (i) January 1, 1999 if
this Agreement is still in effect on such date and the closing
price per share of Common Stock as reported on the NYSE for
the NYSE trading day immediately preceding January 1, 1999 is
at least $30.00 and (ii) January 1, 2000 if this Agreement is
still in effect and the closing price per share of Common
Stock reported on the NYSE for the NYSE trading day
immediately preceding January 1, 2000 is at least $35.00. The
restrictions on transfer of the shares of restricted stock
issued pursuant to this Section 5(b) will lapse as to
one-third of such shares on the business day immediately
preceding the first, second and third anniversaries of the
date such shares are issued.
6. Termination for Cause.
(a) In the event that Executive shall be discharged for
"Cause" as provided in Section 6(b) hereof, all compensation
payable to Executive pursuant to Section 4 in respect of
periods after such discharge shall terminate immediately upon
such discharge, and the Company shall have no obligations with
respect thereto, nor shall the Company be obligated to pay
Executive severance compensation under Section 8 hereof.
(b) For the purposes of this Agreement, "Cause" shall
mean that, prior to any termination pursuant to Section 6(a)
hereof, Executive shall have committed:
(i) an intentional act or acts of fraud,
embezzlement or theft constituting a felony and resulting
or intended to result directly or indirectly in gain or
personal enrichment for Executive at the expense of the
Company; or
(ii) the continued, repeated, intentional and
willful refusal to perform the duties associated with
Executive's position with the Company, which is not cured
within 15 days following written notice to Executive.
For purposes of this Agreement, no act or failure to act on the
part of Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by
Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered
to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Board then in office at a
meeting of the Board called and held for such purpose, after
reasonable notice to Executive and an opportunity for Executive,
together with his counsel (if Executive chooses to have counsel
present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, Executive had
committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein will
limit the right of Executive or his beneficiaries to contest the
validity or propriety of any such determination.
7. Termination Without Cause. Either the Company or
Executive may terminate this Agreement without Cause, but only upon
delivery to the other party of a written notice of termination
specifying a termination date at least 30 days, but not more than
60 days, after the date of delivery of such notice. Executive may
elect to terminate this Agreement under this Section 7 at any time
prior to receiving the Board resolution described in Section 6(b)
hereof notwithstanding that the Company claims a right to terminate
Executive under Section 6(a) hereof and such election by Executive
shall be binding on both parties.
8. Termination Compensation.
(a) If, during the Term, this Agreement is terminated
(i) for any reason other than (A) pursuant to Section 6(a)
hereof, (B) by reason of death, (C) by reason of "Disability,"
or (D) by notice by Executive pursuant to Section 7 hereof or
(ii) by Executive due to "Constructive Discharge," then
Executive shall receive termination pay in an amount equal to
the highest annualized rate of Executive's Salary prior to the
date of termination (x) under Section 4(a)(i) hereof if
Executive is Vice Chairman on the date of termination or (y)
under Section 4(a)(ii) hereof if Executive has exercised the
Consultant Election prior to the date of termination, payable
in cash within five business days of the date of termination.
(b) For the purposes of this Agreement, "Constructive
Discharge" shall mean:
(i) any reduction in Salary;
(ii) a material reduction in Executive's job
function, authority, duties or responsibilities, or a
similar change in Executive's reporting relationships;
(iii) a required relocation of Executive of more than
35 miles from Executive's current job location;
(iv) any breach of any of the terms of this
Agreement by the Company which is not cured within 15
days following written notice thereof by Executive to the
Company; or
(v) in the event of a "Change in Control" (as
hereinafter defined) Executive has reasonably determined
that, as a result of a change in circumstances following
the Change in Control of the Company that significantly
affect his relationship with the Company, he is unable to
exercise the authority, duties and responsibilities
contemplated by Section 3 hereof;
provided, however, that the term "Constructive Discharge" shall not
include a specific event described in the preceding clause (i),
(ii), (iii), (iv) or (v) unless Executive actually terminates his
employment with the Company within 60 days after the occurrence of
such event.
(c) The amount of compensation payable pursuant to this
Section 8 is not subject to any deduction (except for
withholding taxes), reduction, offset or counterclaim, and the
Company may not give advance notice of termination in lieu of
the payment provided for in this Section 8.
9. Termination in the Event of Death. This Agreement shall
terminate automatically upon the death of Executive. In such
event, the Company shall pay to Executive's legal representative
only the base salary due to Executive up to the date of termination
as well as incentive bonuses, which have accrued through the date
of termination, and benefits payable pursuant to this Agreement.
10. Termination in the Event of Disability. If during the
Term, Executive becomes physically or mentally disabled so as to
become unable, for a period of more than six (6) consecutive
months, to perform his duties hereunder on substantially a full
time basis ("Disability"), the Company may at its option terminate
this Agreement upon not less than thirty (30) days' written notice.
In the event of such termination, Executive shall be entitled to
continue to receive his base salary and benefits, excluding any
incentive bonuses, for a period equal to the lesser of (a)
twenty-four (24) months from the date of termination and (b) the
remainder of the Term, and then shall receive such benefits as are
available to senior executives of the Company under any applicable
disability plan.
11. Change in Control of the Company.
(a) If a Change in Control (as hereinafter defined) of
the Company occurs prior to the scheduled expiration of the
Term and within three years after the Change in Control of the
Company (i) Executive is terminated by the Company for reasons
other than (A) death, (B) Disability, or (C) Cause or (ii)
Executive terminates his employment as a result of
Construction Discharge, the Company or any successor thereto,
within 30 days of Executive's termination of employment, will
pay to Executive, in lieu of any severance obligation under
Section 8 hereof, an amount equal to 2.99 times Executive's
compensation, which, for purposes of this Section 11, shall
mean an amount equal to the highest annualized rate of
Executive's Salary prior to the date of termination (x) under
Section 4(a)(i) hereof if Executive is Vice Chairman at the
time of the Change in Control or (y) under Section 4(a)(ii)
hereof if Executive shall have exercised the Consultant
Election prior to the Change in Control, plus Executive's cash
bonus for the year immediately prior to such termination.
(b) For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time during the Term
any of the following events occurs:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or
other legal person and as a result of such merger,
consolidation or reorganization less than a
majority of the combined voting power of the
then-outstanding securities of such corporation or
person immediately after such transaction are held
in the aggregate by the holders of Voting Stock (as
hereinafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells all or
substantially all of its assets to any other
corporation or other legal person, less than a
majority of the combined voting power of the
then-outstanding voting securities of which
are held in the aggregate by the holders of
Voting Stock of the Company immediately prior
to such sale;
(iii) There is a report filed on
Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as
promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person
(as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act)
of securities representing 25% or more of the
combined voting power of the then-outstanding
securities of the Company entitled to vote
generally in the election of directors of the
Company ("Voting Stock"), other than as a
result of the transactions contemplated by the
Contribution Agreement and the Exchange
Agreement, dated as of May 21, 1997 by and
among the Company, Drever and the other
parties named therein;
(iv) The Company files a report or proxy
statement with the Securities and Exchange
Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form
or report or item therein) that a change in
control of the Company has or may have
occurred or will or may occur in the future
pursuant to any then-existing contract or
transaction; or
(v) If during any period of two
consecutive years, individuals who at the
beginning of any such period constitute the
directors of the Company cease for any reason
to constitute at least a majority thereof
unless the election, or the nomination for
election by the Company's stockholders, of
each director of the Company first elected
during such period was approved by a vote of
at least two-thirds of the directors of the
Company then still in office who were
directors of the Company at the beginning of
any such period.
Notwithstanding the foregoing provisions of Section 11(b)(iii) or
11(b)(iv) hereof, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because the Company,
an entity in which the Company directly or indirectly beneficially
owns 50% or more of the voting securities of such entity, any
Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares
of voting securities of the Company, whether in excess of 25% or
otherwise, or because the Company, reports that a change in control
of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
12. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined (as
hereafter provided) that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement (a
"Payment"), would be subject to the excise tax imposed by
Section 4999 (or any successor provision thereto) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment
or payments (a "Gross-Up Payment") in an amount such that,
after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this
Section 12, including whether an Excise Tax is payable by
Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by a nationally recognized firm of
certified public accountants (the "Accounting Firm") selected
by Executive in his sole discretion. Executive shall direct
the Accounting Firm to submit its determination and detailed
supporting calculations to both the Company and Executive
within 15 calendar days after the termination date, if
applicable, or such earlier time or times as may be requested
by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the
Company shall pay the required Gross-Up Payment to Executive
within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall, at the same time
as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his federal income tax return. Any
determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and
Executive. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision
thereto) at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that
Executive is required to make a payment of any Excise Tax,
Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such
Underpayment shall be promptly paid by the Company to, or for
the benefit of, Executive within five business days after
receipt of such determination and calculations.
(c) The Company and Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as
the case may be, reasonably requested by the Accounting Firm,
and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination
contemplated by Section 12(b) hereof.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and
calculations contemplated by Section 12(b) hereof shall be
borne by the Company. If such fees and expenses are initially
paid by Executive, the Company shall reimburse Executive the
full amount of such fees and expenses within five business
days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.
13. Life Insurance. At all times during the Term prior to
the exercise of the Consultant Election, the Company shall, at its
sole expense, obtain and maintain in full force and effect life
insurance on Executive's life in an amount equal to twice
Executive's Salary, payable to a beneficiary of Executive's choice.
14. Other Benefits.
(a) Except as expressly provided herein, this Agreement
shall not:
(i) be deemed to limit or affect the right of
Executive to receive other forms of additional
compensation or to participate in any insurance,
retirement, disability, profit-sharing, stock purchase,
stock option, stock appreciation rights, cash or stock
bonus or other plan or arrangement or in any other
benefits now or hereafter provided by the Company or any
of the Company's affiliated companies for its employees;
or
(ii) be deemed to be a waiver by Executive of any
vested rights which Executive may have or may hereafter
acquire under any employee benefit plan or arrangement of
the Company or any of the Company's affiliated companies.
(b) It is contemplated that, in connection with his
services hereunder, Executive may be required to incur
reasonable business, entertainment, telephone and travel
expenses. The Company agrees to reimburse Executive in full
for all reasonable and necessary business, entertainment,
telephone and other related expenses, including travel
expenses, incurred or expended by him incident to the
performance of his duties hereunder, upon submission by
Executive to the Company of such vouchers or expense
statements satisfactorily evidencing such expenses as may be
reasonably requested by the Company.
(c) It is understood and agreed by the Company that
during the term of Executive's employment hereunder as Vice
Chairman, he shall be entitled to annual paid vacations (taken
consecutively or in segments), the length of which shall be
consistent with the effective discharge of Executive's duties
and the general customs and practices of the Company
applicable to its executive officers.
15. No Mitigation Obligation. The Company hereby
acknowledges that it will be difficult and may be impossible
(a) for Executive to find reasonably comparable employment
following the date of termination, and (b) to measure the amount of
damages which Executive may suffer as a result of termination of
employment hereunder. Accordingly, the payment of the termination
compensation by the Company to Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be
reasonable and will be liquidated damages, and Executive will not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor will
any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other
obligation on the part of Executive hereunder or otherwise.
16. Confidentiality.
(a) Recognizing that the knowledge and information about
the business methods, systems, plans and policies of the
Company and of its affiliated companies which Executive has
heretofore and shall hereafter receive, obtain or establish as
an employee of the Company or its affiliated companies are
valuable and unique assets of the Company and its affiliated
companies, Executive agrees that he shall not (otherwise than
pursuant to his duties hereunder) disclose, without the
written consent of the Company, any confidential knowledge or
information pertaining to the Company or its affiliated
companies, or their business, personnel or plans, to any
person, firm, corporation or other entity, which would result
in any material harm or damage to the Company, its business or
prospects, for any reason or purpose whatsoever, unless
required by law or legal process. In the event Executive is
required by law or legal process to provide documents or
disclose information, he shall take all reasonable steps to
maintain confidentiality of documents and information,
including notifying the Company and giving it an opportunity
to seek a protective order, at its sole cost and expense.
(b) The provisions of this Section 16 shall survive the
expiration or termination of this Agreement, without regard to
the reason therefor, for a period of two years from the
earlier of (i) expiration of the Term or (ii) the date of
termination.
17. Non-Competition.
(a) Except as otherwise provided in Section 3(a) hereof,
during the Term and any period during which Executive receives
any severance payments hereunder (the "Noncompetition
Period"), Executive shall not, directly or indirectly, either
for himself or any other person, own, manage, control,
participate in, invest in, permit his name to be used by, act
as consultant or advisor to, render services for (alone or in
association with any individual, entity or other business
organization) or otherwise assist in any manner any individual
or entity that engages in or owns, invests in, manages or
controls any venture or enterprise engaged in (each, a
"Competitive Activity") the ownership, management, acquisition
or development of multifamily residential properties.
Executive will not in any manner induce, attempt to
induce or assist others to induce or attempt to induce any
investor, client or tenant of the Company to terminate its,
his or her association with the Company or do anything to
interfere with the relationship between the Company and any of
its customers, clients, tenants or persons or concerns dealing
with the Company during the Noncompetition Period. Executive
shall not, without the prior consent of a majority of the
Company's independent directors, solicit, hire away or employ
any person who is an employee of the Company during the
Noncompetition Period.
(b) In the event that any restriction contained in this
Section 17 shall be held too broad to allow enforcement of
such restriction to its full extent, then such restriction
shall be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to
enforce such restrictions.
(c) Executive acknowledges and agrees that the Company's
remedy at law for any breach of his obligations under this
Section 17 may be inadequate, and agrees and consents that
temporary and/or permanent injunctive relief may be entered
enjoining him from breaching this Agreement and further agrees
that any proceeding which may be brought to enforce any
provision of this Section 17 without being requested to prove
actual damages as a result of the premature breach of this
Agreement.
18. Legal Fees and Expenses. It is the intent of the Company
that Executive not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense
of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if it should appear to Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement
void or unenforceable or in any way reduce the possibility of
collecting the amounts due hereunder, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Executive any payments or benefits provided hereunder, the Company
irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Company as
hereafter provided, to advise and represent Executive in connection
with any such interpretation, enforcement or defense, including,
without limitation, the initiation or defense of any litigation or
other legal action, whether by or against the Company or any
director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. The Company will pay and be solely
financially responsible for any and all attorneys' and related fees
and expenses incurred by Executive in connection with any of the
foregoing, except only in the event of litigation where the Company
fully and finally prevails on all causes of action.
19. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to any
law or government regulation or ruling.
20. Successors and Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to Executive, expressly to assume
and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no
such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially
all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company"
for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in
Sections 20(a) and 20(b) hereof and with respect to the
Company's obligation to pay legal fees and expenses under
Section 18 hereof. Without limiting the generality or effect
of the foregoing, Executive's right to receive payments
hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest or
otherwise, other than by a transfer by Executive's will or by
the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
Section 20(c), the Company shall have no liability to pay any
amount so attempted to be assigned, transferred or delegated,
except with respect to legal fees and expenses, as and to the
extent provided in Section 18 hereof.
21. Notices. For all purposes of this Agreement, all
communications, including, without limitation, notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS or Purolator,
addressed to the Company (to the attention of the Secretary of the
Company) at the address set forth on the signature pages of this
Agreement and to Executive at the address set forth on the
signature pages of this Agreement, or to such other address as
either party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
22. Governing Law. The validity, interpretation,
construction and performance of this Agreement will be governed by
and construed in accordance with the substantive laws of the State
of Texas, without giving effect to the principles of conflict of
laws of such State.
23. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances
is held invalid, unenforceable or otherwise illegal, the remainder
of this Agreement and the application of such provision to any
other person or circumstances will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary
to make it enforceable, valid or legal.
24. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and the
Company. No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition
or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
Except as otherwise identified, references to Sections are
references to Sections of this Agreement.
25. Survival of Certain Provisions. Notwithstanding anything
herein to the contrary, the obligations of the Company under
Sections 8, 10, 11, 12, 14 and 18 hereof, to the extent applicable,
shall remain operative and in full force and effect regardless of
the expiration, for any reason, of the Term.
26. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.
27. Warranty. Executive warrants and represents that he is
not a party to any agreement, contract or understanding, whether of
employment or otherwise, which would in any way restrict or
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.
28. Board Approval. By executing this Agreement, the Company
acknowledges that this Agreement has been reviewed and approved by
the Compensation Committee of the Board.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Don R. Daseke
Don R. Daseke
Chairman of the Board
and Chief Executive Officer
Address:
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
/s/ Michael E. Masterson
Michael E. Masterson, Individually
Address:
P. O. Box 241
Tiburon, California 94920
DA971760019
093097 v4
111:14199-27
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 1, 1997, by and among Walden Residential Properties, Inc.,
a Maryland corporation (the "Company"), the Company and Michael L.
Collier (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive has served as the President of Concierge
Management Company ("CMC") since 1987 and, through such service,
has acquired special and unique knowledge, ability and expertise
and is expected to make major contributions to the short- and
long-term profitability, growth and financial strength of the
Company following the consummation of the Contribution (as
hereinafter defined);
WHEREAS, pursuant to that certain Contribution Agreement dated
as of May 21, 1997 (the "Contribution Agreement"), a subsidiary of
the Company will acquire all of the outstanding shares of capital
stock of Drever Partners, Inc., of which CMC is a wholly-owned
subsidiary (the "Contribution");
WHEREAS, the Company desires (a) to assure itself of both
present and future continuity of management, (b) to provide certain
minimum termination benefits for Executive, and (c) to provide
additional inducements for Executive to continue to remain in the
employ of the Company following the date hereof; and
WHEREAS, Executive is willing to render services to the
Company on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the agreements set forth herein, the Company and Executive agree as
follows:
1. Employment. Subject to the provisions of Section 3(c)
hereof, CMC agrees to and does hereby employ Executive to perform
the duties of Executive Vice President of Property Management of
the Company, and Executive accepts such employment, upon the terms
and conditions set forth herein.
2. Term. The term of this Agreement shall be the period
commencing as of the date set forth above and continuing thereafter
for a period of five years (as extended as hereinafter provided,
the "Term"); provided, however, that at the end of such five year
period and each anniversary date thereafter, the Term will
automatically be extended for an additional year unless, not later
than 60 days prior to the end of such five year period or any such
anniversary date, as the case may be, the Company or Executive
shall have given notice that the Company or Executive, as the case
may be, does not wish to have the Term extended.
3. Duties and Services.
(a) Subject to the provisions of Section 3(c) hereof,
Executive agrees to serve the Company as the Executive Vice
President of Property Management and to devote his full time,
attention and energies to the business of the Company and will
not, without the prior written consent of the Board of
Directors of the Company (the "Board"), be engaged (whether or
not during normal business hours) in any other business or
professional activity, whether or not such activities are
pursued for gain, profit or other pecuniary advantage.
Notwithstanding the foregoing, Executive will not be prevented
from (i) engaging in any civic or charitable activity for
which Executive receives no compensation or other pecuniary
advantage; (ii) investing his personal assets in businesses
which do not compete with CMC and/or the Company provided that
such investment will not require any services on the part of
Executive in the operation of the affairs of the businesses in
which investments are made and provided further that
Executive's participation in such businesses is solely that of
an investor; (iii) purchasing securities in any corporation
whose securities are publicly traded, provided that such
purchases will not result in Executive owning beneficially at
any time five percent (5%) or more of the equity securities of
any corporation engaged in a business competitive with that of
the Company; or (iv) participating in any other activity
approved in advance in writing by the Board. Executive also
agrees to perform from time to time such other executive
services as the Company shall reasonably request, provided
that such services shall be consistent with his position and
status as Executive Vice President of Property Management of
the Company. In attending to the business and affairs of the
Company, Executive agrees to serve the Company faithfully,
diligently and to the best of his ability.
(b) The duties and responsibilities of Executive shall
be commensurate with those of the executive vice president of
property management of any corporation similar to the Company.
(c) Notwithstanding anything in this Agreement to the
contrary, for a sixty (60) day period, commencing on the
fourth anniversary of the date hereof, Executive shall have
the right to resign his position as the Executive Vice
President of Property Management of the Company and elect (the
"Consultant Election") to be employed as a consultant to the
Company for the remainder of the Term by delivering written
notice of such election to the Company prior to the expiration
of such 60-day period. If Executive exercises the Consultant
Election, then for the remainder of the Term Executive will
hold himself ready to render to the Company and its
subsidiaries and affiliates such advisory and consulting
services as may be requested by the Company's Chief Executive
Officer, President or other authorized officer. In furnishing
any such consulting services, Executive will act as an
independent contractor and not as an employee of the Company.
As a consultant, Executive shall have no authority to act for
or bind the Company. The Company shall not exercise any
control over the execution of the services or manner of
performance of the consulting services provided by Executive
following the exercise of the Consultant Election, and
Executive, as a consultant, shall be responsible to the
Company only for the ultimate results required by the Company.
Subject to the provisions of Section 17 hereof, it is
understood that, following the exercise of the Consultant
Election, Executive will or may have other occupations or
employments during the Term, and in using the services of
Consultant hereunder, the Company will exercise due regard for
other commitments of Executive.
(d) During the Term and prior to the Consultant
Election, if any, Executive agrees to attend all meetings of
the Board without additional compensation.
4. Compensation.
(a) (i) As consideration for the services to be rendered
hereunder by Executive as Executive Vice President of
Property Management of the Company, the Company agrees to
pay Executive, and Executive agrees to accept, payable in
accordance with the Company's standard payroll practices
for executives, but payable in not less than bi-weekly
installments, compensation of Two Hundred Thousand
Dollars ($200,000.00) per annum or such greater amount as
may be determined from time to time by the Board pursuant
to performance reviews to be conducted on an annual basis
or such shorter time period as the Board shall deem
appropriate.
(ii) From and after the date Executive exercises the
Consultant Election, as consideration for the services to
be rendered hereunder by Executive as a consultant, the
Company agrees to pay Executive, and Executive agrees to
accept, payable in accordance with the Company's standard
payroll practices, but payable in not less than bi-weekly
installments, compensation of One Hundred Thousand
Dollars ($100,000.00) per annum. The amounts payable to
Executive pursuant to this Section 4(a) is referred to
together herein as the "Salary."
(b) At all times during the Term prior to the exercise
of the Consultant Election, Executive shall be eligible to
receive an annual incentive bonus as provided for in any
incentive plan of the Company, based on the level of
accomplishment of specific performance targets established by
the Board or any committee thereof, or such other bonus plans
as may be adopted by the Board from time to time in the
future. In addition, Executive shall participate in any
Company perquisite and supplemental benefit programs
established for the benefit of senior executives of the
Company.
5. Restricted Stock; Options.
(a) The Company will issue to Executive 10 year stock
options (the "Options"), covering an aggregate of 150,000
shares of common stock, par value $.01 per share, of the
Company (the "Common Stock"), issued under the Company's
Amended and Restated 1994 Stock Option Plan pursuant to an
option agreement to be dated as of the date hereof between the
Company and Executive, the form of which is attached hereto as
Exhibit A (the "Option Agreement). The exercise price for the
Options will be equal to the closing price per share of Common
Stock as reported on the New York Stock Exchange ("NYSE") on
the NYSE trading day immediately preceding the date hereof.
The exercise price shall be payable, and the options shall
vest, pursuant to the terms of the Option Agreement.
(b) The Company will issue to Executive shares of
restricted stock pursuant to the Company's Long-Term Incentive
Plan with an aggregate market value of $250,000 (the number of
whole shares to be issued will be determined by dividing
$250,000 by the closing price per share of Common Stock as
reported on the NYSE on the NYSE trading day immediately
preceding the date of issue) on each of (i) January 1, 1999 if
this Agreement is still in effect on such date and the closing
price per share of Common Stock as reported on the NYSE for
the NYSE trading day immediately preceding January 1, 1999 is
at least $30.00 and (ii) January 1, 2000 if this Agreement is
still in effect and the closing price per share of Common
Stock reported on the NYSE for the NYSE trading day
immediately preceding January 1, 2000 is at least $35.00. The
restrictions on transfer of the shares of restricted stock
issued pursuant to this Section 5(b) will lapse as to
one-third of such shares on the business day immediately
preceding the first, second and third anniversaries of the
date such shares are issued.
6. Termination for Cause.
(a) In the event that Executive shall be discharged for
"Cause" as provided in Section 6(b) hereof, all compensation
payable to Executive pursuant to Section 4 in respect of
periods after such discharge shall terminate immediately upon
such discharge, and the Company shall have no obligations with
respect thereto, nor shall the Company be obligated to pay
Executive severance compensation under Section 8 hereof.
(b) For the purposes of this Agreement, "Cause" shall
mean that, prior to any termination pursuant to Section 6(a)
hereof, Executive shall have committed:
(i) an intentional act or acts of fraud,
embezzlement or theft constituting a felony and resulting
or intended to result directly or indirectly in gain or
personal enrichment for Executive at the expense of the
Company; or
(ii) the continued, repeated, intentional and
willful refusal to perform the duties associated with
Executive's position with the Company, which is not cured
within 15 days following written notice to Executive.
For purposes of this Agreement, no act or failure to act on the
part of Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by
Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered
to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Board then in office at a
meeting of the Board called and held for such purpose, after
reasonable notice to Executive and an opportunity for Executive,
together with his counsel (if Executive chooses to have counsel
present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, Executive had
committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein will
limit the right of Executive or his beneficiaries to contest the
validity or propriety of any such determination.
7. Termination Without Cause. Either the Company or
Executive may terminate this Agreement without Cause, but only upon
delivery to the other party of a written notice of termination
specifying a termination date at least 30 days, but not more than
60 days, after the date of delivery of such notice. Executive may
elect to terminate this Agreement under this Section 7 at any time
prior to receiving the Board resolution described in Section 6(b)
hereof notwithstanding that the Company claims a right to terminate
Executive under Section 6(a) hereof and such election by Executive
shall be binding on both parties.
8. Termination Compensation.
(a) If, during the Term, this Agreement is terminated
(i) for any reason other than (A) pursuant to Section 6(a)
hereof, (B) by reason of death, (C) by reason of "Disability,"
or (D) by notice by Executive pursuant to Section 7 hereof or
(ii) by Executive due to "Constructive Discharge," then
Executive shall receive termination pay in an amount equal to
the highest annualized rate of Executive's Salary prior to the
date of termination (x) under Section 4(a)(i) hereof if
Executive is the Executive Vice President of Property
Management of the Company on the date of termination or (y)
under Section 4(a)(ii) hereof if Executive has exercised the
Consultant Election prior to the date of termination, payable
in cash within five business days of the date of termination.
(b) For the purposes of this Agreement, "Constructive
Discharge" shall mean:
(i) any reduction in Salary;
(ii) a material reduction in Executive's job
function, authority, duties or responsibilities, or a
similar change in Executive's reporting relationships;
(iii) a required relocation of Executive of more than
35 miles from Executive's current job location;
(iv) any breach of any of the terms of this
Agreement by the Company which is not cured within 15
days following written notice thereof by Executive to the
Company; or
(v) in the event of a "Change in Control" (as
hereinafter defined) Executive has reasonably determined
that, as a result of a change in circumstances following
the Change in Control of the Company that significantly
affect his relationship with the Company, he is unable to
exercise the authority, duties and responsibilities
contemplated by Section 3 hereof;
provided, however, that the term "Constructive Discharge" shall not
include a specific event described in the preceding clause (i),
(ii), (iii), (iv) or (v) unless Executive actually terminates his
employment with CMC within 60 days after the occurrence of such
event.
(c) The amount of compensation payable pursuant to this
Section 8 is not subject to any deduction (except for
withholding taxes), reduction, offset or counterclaim, and the
Company may not give advance notice of termination in lieu of
the payment provided for in this Section 8.
9. Termination in the Event of Death. This Agreement shall
terminate automatically upon the death of Executive. In such
event, the Company shall pay to Executive's legal representative
only the base salary due to Executive up to the date of termination
as well as incentive bonuses, which have accrued through the date
of termination, and benefits payable pursuant to this Agreement.
10. Termination in the Event of Disability. If during the
Term, Executive becomes physically or mentally disabled so as to
become unable, for a period of more than six (6) consecutive
months, to perform his duties hereunder on substantially a full
time basis ("Disability"), the Company may at its option terminate
this Agreement upon not less than thirty (30) days' written notice.
In the event of such termination, Executive shall be entitled to
continue to receive his base salary and benefits, excluding any
incentive bonuses, for a period equal to the lesser of (a)
twenty-four (24) months from the date of termination and (b) the
remainder of the Term, and then shall receive such benefits as are
available to senior executives of the Company under any applicable
disability plan.
11. Change in Control of the Company.
(a) If a Change in Control (as hereinafter defined) of
the Company occurs prior to the scheduled expiration of the
Term and within three years after the Change in Control of the
Company (i) Executive is terminated by the Company for reasons
other than (A) death, (B) Disability, or (C) Cause or (ii)
Executive terminates his employment as a result of
Construction Discharge, the Company, within 30 days of
Executive's termination of employment, will pay to Executive,
in lieu of any severance obligation under Section 8 hereof, an
amount equal to 2.99 times Executive's compensation, which,
for purposes of this Section 11, shall mean an amount equal to
the highest annualized rate of Executive's Salary prior to the
date of termination (x) under Section 4(a)(i) hereof if
Executive is Executive Vice President of Property Management
at the time of the Change in Control or (y) under Section
4(a)(ii) hereof if Executive shall have exercised the
Consultant Election prior to the Change in Control, plus
Executive's cash bonus for the year immediately prior to such
termination.
(b) For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time during the Term
any of the following events occurs:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or
other legal person and as a result of such merger,
consolidation or reorganization less than a
majority of the combined voting power of the
then-outstanding securities of such corporation or
person immediately after such transaction are held
in the aggregate by the holders of Voting Stock (as
hereinafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells all or
substantially all of its assets to any other
corporation or other legal person, less than a
majority of the combined voting power of the
then-outstanding voting securities of which
are held in the aggregate by the holders of
Voting Stock of the Company immediately prior
to such sale;
(iii) There is a report filed on
Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as
promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person
(as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act)
of securities representing 25% or more of the
combined voting power of the then-outstanding
securities of the Company entitled to vote
generally in the election of directors of the
Company ("Voting Stock"), other than as a
result of the transactions contemplated by the
Contribution Agreement and the Exchange
Agreement, dated as of May 21, 1997 by and
among the Company, Drever and the other
parties named therein;
(iv) The Company files a report or proxy
statement with the Securities and Exchange
Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form
or report or item therein) that a change in
control of the Company has or may have
occurred or will or may occur in the future
pursuant to any then-existing contract or
transaction; or
(v) If during any period of two
consecutive years, individuals who at the
beginning of any such period constitute the
directors of the Company cease for any reason
to constitute at least a majority thereof
unless the election, or the nomination for
election by the Company's stockholders, of
each director of the Company first elected
during such period was approved by a vote of
at least two-thirds of the directors of the
Company then still in office who were
directors of the Company at the beginning of
any such period.
Notwithstanding the foregoing provisions of Section 11(b)(iii) or
11(b)(iv) hereof, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because the Company,
an entity in which the Company directly or indirectly beneficially
owns 50% or more of the voting securities of such entity, any
Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares
of voting securities of the Company, whether in excess of 25% or
otherwise, or because the Company, reports that a change in control
of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
12. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined (as
hereafter provided) that any payment or distribution by the
CMC and/or Company to or for the benefit of Executive, whether
paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by
reason of any other agreement, policy, plan, program or
arrangement (a "Payment"), would be subject to the excise tax
imposed by Section 4999 (or any successor provision thereto)
of the Internal Revenue Code of 1986, as amended (the "Code"),
or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an
additional payment or payments (a "Gross-Up Payment") in an
amount such that, after payment by Executive of all taxes
(including any interest or penalties imposed with respect to
such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this
Section 12, including whether an Excise Tax is payable by
Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by a nationally recognized firm of
certified public accountants (the "Accounting Firm") selected
by Executive in his sole discretion. Executive shall direct
the Accounting Firm to submit its determination and detailed
supporting calculations to the Company, the Company and
Executive within 15 calendar days after the termination date,
if applicable, or such earlier time or times as may be
requested by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the
Company shall pay the required Gross-Up Payment to Executive
within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall, at the same time
as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his federal income tax return. Any
determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and
Executive. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision
thereto) at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that
Executive is required to make a payment of any Excise Tax,
Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to the
Company and Executive as promptly as possible. Any such
Underpayment shall be promptly paid by the Company to, or for
the benefit of, Executive within five business days after
receipt of such determination and calculations.
(c) The Company and Executive shall provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of CMC, the Company or Executive,
as the case may be, reasonably requested by the Accounting
Firm, and otherwise cooperate with the Accounting Firm in
connection with the preparation and issuance of the
determination contemplated by Section 12(b) hereof.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and
calculations contemplated by Section 12(b) hereof shall be
borne by the Company. If such fees and expenses are initially
paid by Executive, the Company shall reimburse Executive the
full amount of such fees and expenses within five business
days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.
13. Life Insurance. At all times during the Term prior to
the exercise of the Consultant Election, the Company shall, at its
sole expense, obtain and maintain in full force and effect life
insurance on Executive's life in an amount equal to twice
Executive's Salary, payable to a beneficiary of Executive's choice.
14. Other Benefits.
(a) Except as expressly provided herein, this Agreement
shall not:
(i) be deemed to limit or affect the right of
Executive to receive other forms of additional
compensation or to participate in any insurance,
retirement, disability, profit-sharing, stock purchase,
stock option, stock appreciation rights, cash or stock
bonus or other plan or arrangement or in any other
benefits now or hereafter provided by the Company or any
of the Company's affiliated companies for its employees;
or
(ii) be deemed to be a waiver by Executive of any
vested rights which Executive may have or may hereafter
acquire under any employee benefit plan or arrangement of
the Company or any of the Company's affiliated companies.
(b) It is contemplated that, in connection with his
services hereunder, Executive may be required to incur
reasonable business, entertainment, telephone and travel
expenses. The Company agrees to reimburse Executive in full
for all reasonable and necessary business, entertainment,
telephone and other related expenses, including travel
expenses, incurred or expended by him incident to the
performance of his duties hereunder, upon submission by
Executive to the Company of such vouchers or expense
statements satisfactorily evidencing such expenses as may be
reasonably requested by the Company.
(c) It is understood and agreed by the Company that
during the term of Executive's employment hereunder as
Executive Vice President of Property Management of the
Company, he shall be entitled to annual paid vacations (taken
consecutively or in segments), the length of which shall be
consistent with the effective discharge of Executive's duties
and the general customs and practices of the Company
applicable to its executive officers.
15. No Mitigation Obligation. The Company hereby
acknowledges that it will be difficult and may be impossible
(a) for Executive to find reasonably comparable employment
following the date of termination, and (b) to measure the amount of
damages which Executive may suffer as a result of termination of
employment hereunder. Accordingly, the payment of the termination
compensation by the Company to Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be
reasonable and will be liquidated damages, and Executive will not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor will
any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other
obligation on the part of Executive hereunder or otherwise.
16. Confidentiality.
(a) Recognizing that the knowledge and information about
the business methods, systems, plans and policies of the
Company and of its affiliated companies which Executive has
heretofore and shall hereafter receive, obtain or establish as
an employee of the Company are valuable and unique assets of
the Company and its affiliated companies, Executive agrees
that he shall not (otherwise than pursuant to his duties
hereunder) disclose, without the written consent of the
Company, any confidential knowledge or information pertaining
to the Company or its affiliated companies, the Company, or
their business, personnel or plans, to any person, firm,
corporation or other entity, which would result in any
material harm or damage to the Company, its business or
prospects, for any reason or purpose whatsoever, unless
required by law or legal process. In the event Executive is
required by law or legal process to provide documents or
disclose information, he shall take all reasonable steps to
maintain confidentiality of documents and information,
including notifying the Company and giving it an opportunity
to seek a protective order, at its sole cost and expense.
(b) The provisions of this Section 16 shall survive the
expiration or termination of this Agreement, without regard to
the reason therefor, for a period of two years from the
earlier of (i) expiration of the Term or (ii) the date of
termination.
17. Non-Competition.
(a) Except as otherwise provided in Section 3(a) hereof,
during the Term and any period during which Executive receives
any severance payments hereunder (the "Noncompetition
Period"), Executive shall not, directly or indirectly, either
for himself or any other person, own, manage, control,
participate in, invest in, permit his name to be used by, act
as consultant or advisor to, render services for (alone or in
association with any individual, entity or other business
organization) or otherwise assist in any manner any individual
or entity that engages in or owns, invests in, manages or
controls any venture or enterprise engaged in (each, a
"Competitive Activity") the ownership, management, acquisition
or development of multifamily residential properties.
Executive will not in any manner induce, attempt to
induce or assist others to induce or attempt to induce any
investor, client or tenant of the Company or any of its
affiliated companies, including, without limitation, CMC, to
terminate its, his or her association with the Company or any
of its affiliated companies, including, without limitation,
CMC, or do anything to interfere with the relationship between
the Company or any of its affiliated companies, including,
without limitation, CMC, and any of its customers, clients,
tenants or persons or concerns dealing with the Company or any
of its affiliated companies, including, without limitation,
CMC, during the Noncompetition Period. Executive shall not,
without the prior consent of a majority of the Company's
independent directors, solicit, hire away or employ any person
who is an employee of the Company or any of its affiliated
companies, including, without limitation, CMC, during the
Noncompetition Period.
(b) In the event that any restriction contained in this
Section 17 shall be held too broad to allow enforcement of
such restriction to its full extent, then such restriction
shall be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to
enforce such restrictions.
(c) Executive acknowledges and agrees that the Company's
remedy at law for any breach of his obligations under this
Section 17 may be inadequate, and agrees and consents that
temporary and/or permanent injunctive relief may be entered
enjoining him from breaching this Agreement and further agrees
that any proceeding which may be brought to enforce any
provision of this Section 17 without being requested to prove
actual damages as a result of the premature breach of this
Agreement.
18. Legal Fees and Expenses. It is the intent of the Company
that Executive not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense
of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if it should appear to Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement
void or unenforceable or in any way reduce the possibility of
collecting the amounts due hereunder, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Executive any payments or benefits provided hereunder, the Company
irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Company as
hereafter provided, to advise and represent Executive in connection
with any such interpretation, enforcement or defense, including,
without limitation, the initiation or defense of any litigation or
other legal action, whether by or against the Company or any
director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. The Company will pay and be solely
financially responsible for any and all attorneys' and related fees
and expenses incurred by Executive in connection with any of the
foregoing, except only in the event of litigation where the Company
fully and finally prevails on all causes of action.
19. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as CMC and/or the Company is required to withhold
pursuant to any law or government regulation or ruling.
20. Successors and Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to Executive, expressly to assume
and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no
such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially
all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company"
for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in
Sections 20(a) and 20(b) hereof and with respect to the
Company's obligation to pay legal fees and expenses under
Section 18 hereof. Without limiting the generality or effect
of the foregoing, Executive's right to receive payments
hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest or
otherwise, other than by a transfer by Executive's will or by
the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
Section 20(c), the Company shall have no liability to pay any
amount so attempted to be assigned, transferred or delegated,
except with respect to legal fees and expenses, as and to the
extent provided in Section 18 hereof.
21. Notices. For all purposes of this Agreement, all
communications, including, without limitation, notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS or Purolator,
addressed to the Company (to the attention of the Secretary of the
Company) at the address set forth on the signature pages of this
Agreement and to Executive at the address set forth on the
signature pages of this Agreement, or to such other address as
either party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address
shall be effective only upon receipt.
22. Governing Law. The validity, interpretation,
construction and performance of this Agreement will be governed by
and construed in accordance with the substantive laws of the State
of Texas, without giving effect to the principles of conflict of
laws of such State.
23. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances
is held invalid, unenforceable or otherwise illegal, the remainder
of this Agreement and the application of such provision to any
other person or circumstances will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary
to make it enforceable, valid or legal.
24. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and the
Company. No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition
or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
Except as otherwise identified, references to Sections are
references to Sections of this Agreement.
25. Survival of Certain Provisions. Notwithstanding anything
herein to the contrary, the obligations of the Company under
Sections 8, 10, 11, 12, 14 and 18 hereof, to the extent applicable,
shall remain operative and in full force and effect regardless of
the expiration, for any reason, of the Term.
26. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.
27. Warranty. Executive warrants and represents that he is
not a party to any agreement, contract or understanding, whether of
employment or otherwise, which would in any way restrict or
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.
28. Board Approval. By executing this Agreement, the Company
acknowledges that this Agreement has been reviewed and approved by
the Compensation Committee of the Board.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Marshall B. Edwards
Marshall B. Edwards
Chief Executive Officer,
President and
Chief Acquisitions Officer
Address:
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
/s/ Michael L. Collier
Michael L. Collier, Individually
Address:
DB972160078
111797 v8
111:14199-27
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 20, 1997, by and between Walden Residential Properties,
Inc., a Maryland corporation (the "Company"), and Marshall B.
Edwards (the "Executive").
W I T N E S S E T H:
WHEREAS, Executive is the President and Chief Acquisitions
Officer of the Company and has made and is expected to continue to
make major contributions to the short- and long-term profitability,
growth and financial strength of the Company;
WHEREAS, the Company desires (a) to assure itself of both
present and future continuity of management, (b) to continue
certain minimum termination benefits for Executive, and (c) to
provide additional inducement for Executive to continue to remain
in the ongoing employ of the Company; and
WHEREAS, Executive is willing to render services to the
Company on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the agreements set forth herein, the Company and Executive agree as
follows:
1. Employment. The Company agrees to and does hereby employ
the Executive to perform the duties of Chief Executive Officer,
President and Chief Acquisitions Officer of the Company, and
Executive accepts such employment, upon the terms and conditions
set forth herein.
2. Term. The term of this Agreement shall be the period
commencing as of the date set forth above and continuing thereafter
for a period of five years (as extended as hereinafter provided,
the "Term"); provided, however, that at the end of such five year
period and each anniversary date thereafter, the Term will
automatically be extended for an additional year unless, not later
than 60 days prior to the end of such five year period or any such
anniversary date, as the case may be, the Company or Executive
shall have given notice that it or Executive, as the case may be,
does not wish to have the Term extended.
3. Duties and Services.
(a) Executive agrees to serve the Company as the Chief
Executive Officer, President and Chief Acquisitions Officer
and to devote his full time, attention and energies to the
business of the Company and will not, without the prior
written consent of the Board of Directors of the Company (the
"Board"), be engaged (whether or not during normal business
hours) in any other business or professional activity, whether
or not such activities are pursued for gain, profit or other
pecuniary advantage. Notwithstanding the foregoing, Executive
will not be prevented from (i) engaging in any civic or
charitable activity for which Executive receives no
compensation or other pecuniary advantage; (ii) investing his
personal assets in businesses which do not compete with the
Company provided that such investment will not require any
services on the part of Executive in the operation of the
affairs of the businesses in which investments are made and
provided further that Executive's participation in such
businesses is solely that of an investor; (iii) purchasing
securities in any corporation whose securities are regularly
traded, provided that such purchases will not result in
Executive owning beneficially at any time five percent (5%) or
more of the equity securities of any corporation engaged in a
business competitive with that of the Company; or (iv)
participating in any other activity approved in advance in
writing by the Board. Executive also agrees to perform from
time to time such other executive services as the Company
shall reasonably request, provided that such services shall be
consistent with his position and status as Chief Executive
Officer, President and Chief Acquisitions Officer. In
attending to the business and affairs of the Company,
Executive agrees to serve the Company faithfully, diligently
and to the best of his ability.
(b) The duties and responsibilities of Executive shall
be commensurate with those of the chief executive officer,
president and chief acquisitions officer of any large,
publicly-held corporation similar to the Company.
4. Compensation.
(a) As consideration for the services to be rendered
hereunder by Executive, the Company agrees to pay Executive,
and Executive agrees to accept, payable in accordance with the
Company's standard payroll practices for executives, but
payable in not less than monthly installments, compensation of
Three Hundred Four Thousand Five Hundred Dollars ($304,500)
per annum or such greater amount as may be determined from
time to time by the Board pursuant to performance reviews to
be conducted on an annual basis or such shorter time period as
the Board shall deem appropriate (the "Salary").
(b) Executive shall be eligible to receive an annual
incentive bonus as provided for in any incentive plan of the
Company, based on the level of accomplishment of specific
performance targets established by the Board or any committee
thereof, or such other bonus plans as may be adopted by the
Board from time to time in the future. In addition, Executive
shall participate in any Company perquisite and supplemental
benefit programs established for the benefit of senior
executives of the Company.
(c) Executive shall not receive any additional
compensation for his services as a member of the Board.
5. Termination for Cause.
(a) In the event that Executive shall be discharged for
"Cause" as provided in Section 5(b) hereof, all compensation
payable to Executive pursuant to Section 4 in respect of
periods after such discharge shall terminate immediately upon
such discharge, and the Company shall have no obligations with
respect thereto, nor shall the Company be obligated to pay
Executive severance compensation under Section 7 hereof.
(b) For the purposes of this Agreement, "Cause" shall
mean that, prior to any termination pursuant to Section 5(a)
hereof, Executive shall have committed:
(i) an intentional act or acts of fraud,
embezzlement or theft constituting a felony and resulting
or intended to result directly or indirectly in gain or
personal enrichment for Executive at the expense of the
Company; or
(ii) the continued, repeated, intentional and
willful refusal to perform the duties associated with
Executive's position with the Company, which is not cured
within 15 days following written notice to Executive.
For purposes of this Agreement, no act or failure to act on the
part of Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by
Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.
Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered
to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Board then in office at a
meeting of the Board called and held for such purpose, after
reasonable notice to Executive and an opportunity for Executive,
together with his counsel (if Executive chooses to have counsel
present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, Executive had
committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein will
limit the right of Executive or his beneficiaries to contest the
validity or propriety of any such determination.
6. Termination Without Cause. Either the Company or
Executive may terminate his employment without Cause, but only upon
delivery to the other party of a written notice of termination
specifying a termination date at least 30 days, but not more than
60 days, after the date of delivery of such notice. Executive may
elect to terminate his employment under this Section 6 at any time
prior to receiving the Board resolution described in Section 5(b)
hereof notwithstanding that the Company claims a right to terminate
Executive under Section 5(a) hereof and such election by Executive
shall be binding on both parties.
7. Termination Compensation.
(a) If, during the Term, Executive's employment is
terminated (i) for any reason other than (A) pursuant to
Section 5(a) hereof, (B) by reason of death, (C) by reason of
"Disability" or (D) by notice by Executive pursuant to
Section 6 hereof or (ii) by Executive due to "Constructive
Discharge", then Executive shall receive termination pay in an
amount equal to the highest annualized rate of Executive's
Salary prior to the date of termination, payable in cash
within five business days of the date of termination.
(b) For the purposes of this Agreement, "Constructive
Discharge" shall mean:
(i) any reduction in Salary;
(ii) a material reduction in Executive's job
function, authority, duties or responsibilities, or a
similar change in Executive's reporting relationships;
(iii) a required relocation of Executive of more than
35 miles from Executive's current job location;
(iv) any breach of any of the terms of this
Agreement by the Company which is not cured within 15
days following written notice thereof by Executive to the
Company; or
(v) in the event of a "Change in Control" (as
hereinafter defined) Executive has reasonably determined
that, as a result of a change in circumstances following
the Change in Control of the Company, that significantly
affect his employment, that he is unable to exercise the
authority, proven duties and responsibilities
contemplated by Section 3 hereof; or
provided, however, that the term "Constructive Discharge" shall not
include a specific event described in the preceding clause (i),
(ii), (iii), (iv) or (v) unless Executive actually terminates his
employment with the Company within 60 days after the occurrence of
such event.
(c) The amount of compensation payable pursuant to this
Section 7 is not subject to any deduction (except for
withholding taxes), reduction, offset or counterclaim, and the
Company may not give advance notice of termination in lieu of
the payment provided for in this Section 7.
8. Termination in the Event of Death. This Agreement shall
terminate automatically upon the death of Executive. In such
event, the Company shall pay to Executive's legal representative
only the Salary due to Executive up to the date of termination as
well as incentive bonuses, which have accrued through the date of
termination, and benefits payable pursuant to this Agreement.
9. Termination in the Event of Disability. If during the
Term, Executive becomes physically or mentally disabled so as to
become unable, for a period of more than six (6) consecutive
months, to perform his duties hereunder on substantially a full
time basis ("Disability"), the Company may at its option terminate
Executive's employment hereunder upon not less than thirty (30)
days' written notice. In the event of such termination, Executive
shall be entitled to continue to receive his Salary and benefits,
excluding any incentive bonuses, for a period equal to the lesser
of (a) twenty-four (24) months from the date of termination and (b)
the remainder of the Term, and then shall receive such benefits as
are available to senior executives of the Company under any
applicable disability plan.
10. Change in Control of the Company.
(a) If a Change in Control (as hereinafter defined) of
the Company occurs prior to the scheduled expiration of the
Term and within three years after the Change in Control of the
Company (i) Executive is terminated by the Company for reasons
other than (A) death, (B) Disability or (C) Cause or (ii)
Executive terminates his employment as a result of
Construction Discharge, the Company, within 30 days of
Executive's termination of employment, will pay to Executive,
in lieu of any severance obligation under Section 7 hereof, an
amount equal to 2.99 times Executive's compensation, which,
for purposes of this Section 10, shall mean an amount equal to
the highest annualized rate of Executive's Salary prior to the
date of termination, plus Executive's cash bonus payable for
the year immediately prior to such termination.
(b) For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time during the Term
any of the following events occurs:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or
other legal person and as a result of such merger,
consolidation or reorganization less than a
majority of the combined voting power of the
then-outstanding securities of such corporation or
person immediately after such transaction are held
in the aggregate by the holders of Voting Stock (as
hereinafter defined) of the Company immediately
prior to such transaction;
(ii) The Company sells all or
substantially all of its assets to any other
corporation or other legal person, less than a
majority of the combined voting power of the
then-outstanding voting securities of which
are held in the aggregate by the holders of
Voting Stock of the Company immediately prior
to such sale;
(iii) There is a report filed on
Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), each as
promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person
(as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act)
of securities representing 10% or more of the
combined voting power of the then-outstanding
securities of the Company entitled to vote
generally in the election of directors of the
Company ("Voting Stock");
(iv) The Company files a report or proxy
statement with the Securities and Exchange
Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form
or report or item therein) that a change in
control of the Company has or may have
occurred or will or may occur in the future
pursuant to any then-existing contract or
transaction; or
(v) If during any period of two
consecutive years, individuals who at the
beginning of any such period constitute the
directors of the Company cease for any reason
to constitute at least a majority thereof
unless the election, or the nomination for
election by the Company's stockholders, of
each director of the Company first elected
during such period was approved by a vote of
at least two-thirds of the directors of the
Company then still in office who were
directors of the Company at the beginning of
any such period.
Notwithstanding the foregoing provisions of Section 10(b)(iii) or
10(b)(iv) hereof, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because the Company,
an entity in which the Company directly or indirectly beneficially
owns 50% or more of the voting securities of such entity, any
Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares
of voting securities of the Company, whether in excess of 10% or
otherwise, or because the Company, reports that a change in control
of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
11. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that it shall be determined (as
hereafter provided) that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement (a
"Payment"), would be subject to the excise tax imposed by
Section 4999 (or any successor provision thereto) of the
Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment
or payments (a "Gross-Up Payment") in an amount such that,
after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this
Section 11, including whether an Excise Tax is payable by
Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by a nationally recognized firm of
certified public accountants (the "Accounting Firm") selected
by Executive in his sole discretion. Executive shall direct
the Accounting Firm to submit its determination and detailed
supporting calculations to both the Company and Executive
within 15 calendar days after the termination date, if
applicable, or such earlier time or times as may be requested
by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the
Company shall pay the required Gross-Up Payment to Executive
within five business days after receipt of such determination
and calculations. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it shall, at the same time
as it makes such determination, furnish Executive with an
opinion that he has substantial authority not to report any
Excise Tax on his federal income tax return. Any
determination by the Accounting Firm as to the amount of the
Gross-Up Payment shall be binding upon the Company and
Executive. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision
thereto) at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should
have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that
Executive is required to make a payment of any Excise Tax,
Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the
Company and Executive as promptly as possible. Any such
Underpayment shall be promptly paid by the Company to, or for
the benefit of, Executive within five business days after
receipt of such determination and calculations.
(c) The Company and Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as
the case may be, reasonably requested by the Accounting Firm,
and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination
contemplated by Section 11(b) hereof.
(d) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and
calculations contemplated by Section 11(b) hereof shall be
borne by the Company. If such fees and expenses are initially
paid by Executive, the Company shall reimburse Executive the
full amount of such fees and expenses within five business
days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.
12. Life Insurance.
The Company shall, at its sole expense, obtain and maintain in
full force and effect life insurance on Executive's life in an
amount equal to twice Executive's Salary, payable to a beneficiary
of Executive's choice.
13. Other Benefits.
(a) Except as expressly provided herein, this Agreement
shall not:
(i) be deemed to limit or affect the right of
Executive to receive other forms of additional
compensation or to participate in any insurance,
retirement, disability, profit-sharing, stock purchase,
stock option, stock appreciation rights, cash or stock
bonus or other plan or arrangement or in any other
benefits now or hereafter provided by the Company or any
of the Company's affiliated companies for its employees;
or
(ii) be deemed to be a waiver by Executive of any
vested rights which Executive may have or may hereafter
acquire under any employee benefit plan or arrangement of
the Company or any of the Company's affiliated companies.
(b) It is contemplated that, in connection with his
employment hereunder, Executive may be required to incur
reasonable business, entertainment and travel expenses. The
Company agrees to reimburse Executive in full for all
reasonable and necessary business, entertainment and other
related expenses, including travel expenses, incurred or
expended by him incident to the performance of his duties
hereunder, upon submission by Executive to the Company of such
vouchers or expense statements satisfactorily evidencing such
expenses as may be reasonably requested by the Company.
(c) It is understood and agreed by the Company that
during the term of Executive's employment hereunder, he shall
be entitled to annual paid vacations (taken consecutively or
in segments), the length of which shall be consistent with the
effective discharge of Executive's duties and the general
customs and practices of the Company applicable to its
executive officers.
14. No Mitigation Obligation. The Company hereby
acknowledges that it will be difficult and may be impossible
(a) for Executive to find reasonably comparable employment
following the date of termination, and (b) to measure the amount of
damages which Executive may suffer as a result of termination of
employment hereunder. Accordingly, the payment of the termination
compensation by the Company to Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be
reasonable and will be liquidated damages, and Executive will not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor will
any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other
obligation on the part of Executive hereunder or otherwise.
15. Confidentiality.
(a) Recognizing that the knowledge and information about
the business methods, systems, plans and policies of the
Company and of its affiliated companies which Executive has
heretofore and shall hereafter receive, obtain or establish as
an employee of the Company or its affiliated companies are
valuable and unique assets of the Company and its affiliated
companies, Executive agrees that he shall not (otherwise than
pursuant to his duties hereunder) disclose, without the
written consent of the Company, any confidential knowledge or
information pertaining to the Company or its affiliated
companies, or their business, personnel or plans, to any
person, firm, corporation or other entity, which would result
in any material harm or damage to the Company, its business or
prospects, for any reason or purpose whatsoever, unless
required by law or legal process. In the event Executive is
required by law or legal process to provide documents or
disclose information, he shall take all reasonable steps to
maintain confidentiality of documents and information
including notifying the Company and giving it an opportunity
to seek a protective order, at its sole cost and expense.
(b) The provisions of this Section 15 shall survive the
expiration or termination of this Agreement, without regard to
the reason therefor, for a period of two years from the
earlier of (i) expiration of the Term or (ii) termination of
Executive's employment with the Company.
16. Non-Competition.
(a) Except as otherwise provided in Section 3(a) hereof,
during the Term and any period during which Executive receives
any severance payments hereunder (the "Noncompetition
Period"), Executive shall not, directly or indirectly, either
for himself or any other person, own, manage, control,
participate in, invest in, permit his name to be used by, act
as consultant or advisor to, render services for (alone or in
association with any individual, entity or other business
organization) or otherwise assist in any manner any individual
or entity that engages in or owns, invests in, manages or
controls any venture or enterprise engaged in (each, a
"Competitive Activity") the ownership, management, acquisition
or development of multifamily residential properties.
Executive will not in any manner induce, attempt to
induce or assist others to induce or attempt to induce any
investor, client or tenant of the Company to terminate its,
his or her association with the Company or do anything to
interfere with the relationship between the Company and any of
its customers, clients, tenants or persons or concerns dealing
with the Company during the Noncompetition Period. Executive
shall not, without the prior consent of a majority of the
Company's independent directors, solicit, hire away or employ
any person who is an employee of the Company during the
Noncompetition Period.
(b) In the event that any restriction contained in this
Section 16 shall be held too broad to allow enforcement of
such restriction to its full extent, then such restriction
shall be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to
enforce such restrictions.
(c) Executive acknowledges and agrees that the Company's
remedy at law for any breach of his obligations under this
Section 16 may be inadequate, and agrees and consents that
temporary and/or permanent injunctive relief may be entered
enjoining him from breaching this Agreement and further agrees
that any proceeding which may be brought to enforce any
provision of this Section 16 without being requested to prove
actual damages as a result of the premature breach of this
Agreement.
17. Legal Fees and Expenses. It is the intent of the Company
that Executive not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense
of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive
hereunder. Accordingly, if it should appear to Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement
void or unenforceable or in any way reduce the possibility of
collecting the amounts due hereunder, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Executive any payments or benefits provided hereunder, the Company
irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Company as
hereafter provided, to advise and represent Executive in connection
with any such interpretation, enforcement or defense, including,
without limitation, the initiation or defense of any litigation or
other legal action, whether by or against the Company or any
director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. The Company will pay and be solely
financially responsible for any and all attorneys' and related fees
and expenses incurred by Executive in connection with any of the
foregoing, except only in the event of litigation where the Company
fully and finally prevails on all causes of action.
18. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to any
law or government regulation or ruling.
19. Successors and Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form
and substance satisfactory to Executive, expressly to assume
and agree to perform this Agreement in the same manner and to
the same extent the Company would be required to perform if no
such succession had taken place. This Agreement will be
binding upon and inure to the benefit of the Company and any
successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially
all of the business or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise
(and such successor shall thereafter be deemed the "Company"
for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights or
obligations hereunder except as expressly provided in
Sections 19(a) and 19(b) hereof and with respect to the
Company's obligation to pay legal fees and expenses under
Section 17 hereof. Without limiting the generality or effect
of the foregoing, Executive's right to receive payments
hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest or
otherwise, other than by a transfer by Executive's will or by
the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this
Section 19(c), the Company shall have no liability to pay any
amount so attempted to be assigned, transferred or delegated,
except with respect to legal fees and expenses, as and to the
extent provided in Section 17 hereof.
20. Notices. For all purposes of this Agreement, all
communications, including, without limitation, notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS or Purolator,
addressed to the Company (to the attention of the Secretary of the
Company) at the address set forth on the signature pages of this
Agreement and to Executive at the address set forth on the
signature pages of this Agreement, or to such other address as any
party may have furnished to the other in writing and in accordance
herewith, except that notices of changes of address shall be
effective only upon receipt.
21. Governing Law. The validity, interpretation,
construction and performance of this Agreement will be governed by
and construed in accordance with the substantive laws of the State
of Texas, without giving effect to the principles of conflict of
laws of such State.
22. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances
is held invalid, unenforceable or otherwise illegal, the remainder
of this Agreement and the application of such provision to any
other person or circumstances will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary
to make it enforceable, valid or legal.
23. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and the
Company. No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition
or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
Except as otherwise identified, references to Sections are
references to Sections of this Agreement.
24. Survival of Certain Provisions. Notwithstanding anything
herein to the contrary, the obligations of the Company under
Sections 7, 9, 10, 11, 13, 16 and 17 hereof, to the extent
applicable, shall remain operative and in full force and effect
regardless of the expiration, for any reason, of the Term.
25. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.
26. Warranty. Executive warrants and represents that he is
not a party to any agreement, contract or understanding, whether of
employment or otherwise, which would in any way restrict or
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.
27. Board Approval. By executing this Agreement, the Company
acknowledges that this Agreement has been reviewed and approved by
the Compensation Committee of the Board.
28. Prior Agreements. This Agreement shall in all respects
supersede all previous agreements providing severance pay benefits,
whether written or oral, between Executive and the Company,
including the Employment Agreement dated February 5, 1997.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: /s/ Mark S. Dillinger
Mark S. Dillinger
Executive Vice President and
Chief Financial Officer
Address:
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
/s/ Marshall B. Edwards
Marshall B. Edwards, Individually
Address:
DB973220018
011398 v3
111:14199-19
CONSTRUCTION LOAN AGREEMENT
(Lakeside)
THIS CONSTRUCTION LOAN AGREEMENT is made as of the 27th day
of February, 1998, by and among WALDEN/GRUPE ELK GROVE, L.P., a
Delaware limited partnership (the "Borrower"), having its
principal place of business at c/o The Grupe Company, 3255
W. March Lane, 4th Floor, Stockton, California 95219, BankBoston,
N.A., a national banking association, and the other lending
institutions which may become parties hereto pursuant to Section 21
(collectively, the "Banks"), and BankBoston, N.A., as Agent for
the Banks (the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower has requested that the Banks provide a
construction loan facility to Borrower;
WHEREAS, Agent and the Banks are willing to provide such
facility to Borrower upon the terms and conditions set forth
herein;
NOW, THEREFORE, for and in consideration of Ten and No/100
Dollars ($10.00), and other good and valuable considerations, the
receipt and sufficiency whereof are hereby acknowledged, the
parties hereto 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 1 or elsewhere in the provisions of
this Agreement or other Loan Documents referred to below:
Advance. Any disbursement of the proceeds of the Loan
made or to be made by the Banks pursuant to the terms of this
Agreement.
Agent. BankBoston, N.A. 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 LLP or
such other counsel as may be approved by the Agent.
Agreement. This Agreement, including the Schedules and
Exhibits hereto.
Agreement Regarding Fees. See Section 5.1.
Appraisal. An appraisal of the value of the Project,
determined on a fair value basis, performed by a qualified
independent appraiser selected by the Agent who is not an
employee of the Borrower, the Guarantors, the Agent or a Bank,
the form and substance of such appraisal and the identity of the
appraiser to be in accordance with regulatory laws and policies
(both regulatory and internal) applicable to the Banks and
otherwise acceptable to the Majority Banks.
Appraised Value. The fair value of the Project
determined by the most recent Appraisal of such parcel or update
obtained pursuant to this Agreement, subject, however, to such
changes or adjustments to the value determined thereby as may be
required by the appraisal departments of the Majority Banks in
their good faith business judgment.
Architect's Contract. The contract(s) between the
Borrower and the Borrower's Architect, providing for the design
of the Improvements and the supervision of the construction
thereof.
Assignment of Leases. The Absolute Assignment of
Leases and Rents, dated or to be dated on or prior to the Closing
Date, made by the Borrower to the Agent for the benefit of the
Banks, as the same may be modified or amended, pursuant to which
the Borrower assigns its right, title and interest as landlord in
and to the Leases and the rents, issues and profits of the
Project, such Absolute Assignment of Leases and Rents to be in
form and substance satisfactory to the Agent.
Assignment of Project Documents. The Assignment of
Project Documents, dated or to be dated on or prior to the
Closing Date, made by the Borrower to the Agent for the benefit
of the Banks, as the same may be modified or amended, pursuant to
which the Borrower assigns and grants a security interest in the
Borrower's right, title and interest in and to the Architect's
Contract, the Construction Contract, the Plans and Specifications
and the Project Approvals, such Assignment of Project Documents
to be in form and substance satisfactory to the Agent.
Balance Sheet Date. As to the Borrower and the General
Partner February 27, 1998. As to Walden and WDOP December 31,
1997. As to The Grupe Company December 31, 1996.
Banks. BKB, the other lending institutions a party to
this Agreement and any other Person who becomes an assignee of
any rights of a Bank pursuant to Section 21 (but not including any
Participant, as defined in Section 21).
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 Advances. Those Advances bearing interest
calculated by reference to the Base Rate.
BKB. BankBoston, N.A.
Borrower. As defined in the preamble hereto.
Borrower's Architect. Lee Jagoe Architecture/Planning,
having a usual place of business at 2800 W. March Lane, Suite
475, Stockton, California 95219.
Borrower's Requisition. See Section 3.1.
Business Day. Any day on which banking institutions in
Boston, Massachusetts are open for the transaction of banking
business and, in the case of LIBOR Rate Advances, which also is a
LIBOR Business Day.
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.
Closing Date. The first date on which the conditions
set forth in Section 11 have been satisfied and any Advances are to be
made.
Code. The Internal Revenue Code of 1986 and the
regulations thereunder, as amended and in effect from time to
time.
Collateral. All of (a) the property, rights and
interests of the Borrower that are or are intended to be subject
to the security interests, assignments, and mortgage liens
created by the Security Documents, including, without limitation,
the Project, and (b) the Guaranty.
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 Advances to the Borrower, as the
same may be reduced 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.
Completion Date. April 30, 1999.
Construction Contract. The Construction Agreement,
dated as of February 27, 1998, between the Borrower and
Marchbrook Building Company, providing for the construction of
the Improvements on the Land.
Construction Inspector. AECC, Inc., or, at the Agent's
option, another firm of consulting architects, engineers or
inspectors appointed by the Agent from time to time.
Construction Schedule. The schedule, broken down by
trade, job and subcontractor, of the estimated dates of
commencement and completion of construction of the Improvements,
prepared by the Contractor, approved by the Majority Banks and
attached hereto as Exhibit A.
Contingency Reserve. The amount(s) allocated as
contingency reserve in the Project Budget, to be advanced only in
accordance with the provisions of Section 2.6 hereof.
Contractor. Marchbrook Building Company, a California
corporation, having a usual place of business at 3255 West March
Lane, Suite 400, Stockton, California 95219.
Conversion Request. A notice given by the Borrower to
the Agent of its election to convert or continue an Advance in
accordance with Section 5.3.
Default. A condition or event which would, with the
giving of notice or lapse of time or both, constitute an Event of
Default.
Default Rate. See Section 5.12.
Defective Work. See Section 2.4.
Designee. See Section 10.11.
Direct Costs. Direct Costs shall mean and include the
costs of the Land, the Personal Property, and all labor,
materials, fixtures, machinery and equipment required to
construct, equip and complete the Improvements in accordance with
the Plans and Specifications.
Disbursement Schedule. The schedule of the amounts of
Advances anticipated to be requisitioned by the Borrower each
month during the term of construction of the Improvements
(including an itemization of Direct Costs and Indirect Costs to
be included in each such requisition), approved by the Majority
Banks and attached hereto as Exhibit B.
Distribution. With respect to any Person, the
declaration or payment of any cash, cash flow, dividend or
distribution to any partner of such Person or on or in respect of
any shares of any class of capital stock or beneficial interest
of such Person, other than dividends or distributions payable
solely in equity securities of such Person; the purchase,
redemption, exchange or other retirement of any partnership
interest, shares of any class of capital stock or other
beneficial interest of such Person, directly or indirectly
through a Subsidiary of such Person or otherwise; the return of
capital by such Person to its partners, members or shareholders
as such; or any other distribution on or in respect of any
partnership interests or shares of any class of capital stock or
other beneficial interest of such 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 Advances.
Draw Request. With respect to each Advance, the
Borrower's Requisition for such Advance, and documents required
by this Agreement to be furnished to the Agent as a condition to
such Advance.
Drawdown Date. The date on which any Advance is made
or is to be made, and the date on which any Advance which is made
prior to the Maturity Date is converted or combined in accordance
with Section 5.3.
Employee Benefit Plan. Any employee benefit plan
within the meaning of Section 3(3) of ERISA maintained or contributed to
by the Borrower or any ERISA Affiliate, other than a
Multiemployer Plan.
Environmental Laws. See Section 3.7 of the Security
Deed.
ERISA. The Employee Retirement Income Security Act of
1974, as amended and in effect from time to time and any rules or
regulations promulgated pursuant thereto.
ERISA Affiliate. Any Person which is treated as a
single employer with the Borrower under Section 414 of the Code.
Event of Default. See Section 13.1.
Financing Statements. Uniform Commercial Code Form 1
Financing Statement(s) from the Borrower to the Agent for the
benefit of the Banks giving notice of a security interest in the
Collateral, such financing statements to be in form and substance
satisfactory to the Agent.
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 or pro forma financial statements of the
Borrower 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.
General Partner. Elk Grove-Lakeside Apartments, L.P.,
a California limited partnership having its place of business at
c/o The Grupe Company, 3255 W. March Lane, 4th Floor, Stockton,
California 95219.
Governmental Authority. The United States of America,
the State of California, any political subdivision thereof, and
any agency, authority, department, commission, board, bureau, or
instrumentality of any of them.
Gross Cash Receipts. Gross Cash Receipts shall mean
the sum of cash received by or for the account of the Borrower in
connection with the ownership or operation of the Project,
including, without limitation, in payment of the following items:
(a) Rentals and any other amounts received from
tenants occupying space in the Project;
(b) Parking revenues received by the Borrower in
connection with the operation of any parking
facilities; and
(c) Receipts from vending machines, recreational
facilities and any and all other operating
revenues received from the Project.
Gross Cash Receipts shall be determined on the basis of
sound cash basis accounting practices applied on a consistent
basis.
Guaranteed Pension Plan. Any employee pension benefit
plan within the meaning of Section 3(2) of ERISA maintained or
contributed to by the Borrower 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, WDOP, Walden, The Grupe
Company and any other Person that becomes a guarantor of the
Obligations.
Guaranty. Collectively, the Unconditional Guaranty of
Payment and Performance made by Walden and WDOP in favor of the
Agent and the Banks, the Unconditional Guaranty of Payment and
Performance made by The Grupe Company in favor of the Agent and
the Banks, and each Unconditional Guaranty of Payment and
Performance made by any other Guarantor in favor of the Agent and
the Banks, as the same may be modified and amended, such Guaranty
to be in form and substance satisfactory to the Agent.
Hazardous Materials. See Section 3.7 of the Security
Deed.
Improvements. The approximately 280-unit residential
apartment complex and related improvements to be constructed on
the Land in accordance with the Plans and Specifications.
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 in, directly or indirectly, 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 obligations to reimburse the issuer in respect
of any letters of credit; and (d) any obligation as a lessee or
obligor under a Capitalized Lease.
Indemnity Agreement. The Indemnity Agreement Regarding
Hazardous Materials, dated or to be dated on or prior to the
Closing Date, made by the Borrower and the Guarantors in favor of
the Agent and the Banks, pursuant to which the Borrower and the
Guarantors agree to indemnify the Agent and the Banks with
respect to Hazardous Materials and Environmental Laws, such
Indemnity Agreement to be in form and substance satisfactory to
the Agent.
Indirect Costs. Indirect Costs shall mean and include
title insurance premiums, survey charges, engineering fees,
architectural fees, real estate taxes, appraisal costs,
commitment fees and interest payable to the Banks under the Loan,
premiums for insurance, marketing, advertising and leasing costs,
brokerage commissions, legal fees, accounting fees, overhead and
administrative costs, and all other expenses which are
expenditures relating to the Project and are not Direct Costs.
Interest Payment Date. The first day of each calendar
month during the term of the Loan, and in addition thereto with
respect to each LIBOR Rate Advance, the last day of the Interest
Period relating thereto.
Interest Period. With respect to each LIBOR Rate
Advance (a) initially, the period commencing on the Drawdown Date
of such Advance and ending one, two, three or six months
thereafter, and (b) thereafter, each period commencing on the day
following the last day of the next preceding Interest Period
applicable to such Advance 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:
(A) if any Interest Period with respect to a LIBOR
Rate Advance 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;
(B) if the Borrower shall fail to give notice as
provided in Section 5.3, the Borrower shall be deemed to have
requested a conversion of the affected LIBOR Rate Advance to
a Base Rate Advance on the last day of the then current
Interest Period with respect thereto; and
(C) no Interest Period relating to any LIBOR Rate
Advance shall extend beyond the Maturity Date.
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.
Land. The real property located in Sacramento County,
California, and described in Schedule B to the Security Deed.
Leases. Leases, licenses and agreements, whether
written or oral, relating to the use or occupation of space in
the Improvements or on the Land.
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 Advance to which such Interest Period applies.
LIBOR Rate Advance. Those Advances bearing interest
calculated by reference to a LIBOR Rate.
Liens. See Section 10.5.
Loan. The construction loan which is the subject of
this Agreement.
Loan Amount. $19,423,157.00.
Loan Checking Account. See Section 3.3.
Loan Documents. This Agreement, the Notes, the
Indemnity Agreement and the Security Documents, and all other
agreements, documents and instruments now or hereafter
evidencing, securing or otherwise relating to the Loan.
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.
Management Agreement. That certain Management
Agreement, dated as of February 27, 1998, between Borrower and
Franklin Landings Management Company providing for the management
of the operation of the Project, together with any renewals or
replacements thereof.
Maturity Date. February 27, 2001.
Multiemployer Plan. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate.
Net Operating Income. Net Operating Income shall mean
Gross Cash Receipts less Operating Expenses.
Notes. See Section 4.1.
Obligations. All indebtedness, obligations and
liabilities of the Borrower to any of the Banks or the Agent
under this Agreement or any of the other Loan Documents or in
respect of any of the Advances 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 Expenses. Operating Expenses shall mean the
sum of the following:
(a) All taxes and assessments imposed upon the Project
actually paid by or on behalf of the Borrower;
(b) The amounts paid by or on behalf of the Borrower
on account of insurance premiums for insurance
carried in connection with the Project or
Borrower's ownership and operation thereof, and
deductible amounts expended by the Borrower not
reimbursed under any such insurance;
(c) Expenses paid by or on behalf of Borrower for the
operation, marketing, maintenance and repair of
the Project properly chargeable against income
according to generally accepted accounting
practices;
(d) Management fees in accordance with the Management
Agreement; and
(e) An amount approved by the Agent as a reasonable
reserve for expenses relating to the Project which
are not payable on a regular basis (including, but
not limited to, taxes and insurance), but
excluding any amounts paid from funded reserves.
For the purposes of this Agreement, Operating Expenses shall not
include any of the following:
(i) Foreign, U.S., state and local income taxes,
franchise taxes or other taxes based on the income
imposed on the Borrower generally and not as owner
of the Project;
(ii) Depreciation and any other non-cash expenditures
of the Borrower for income tax purposes;
(iii) Any improvements to the completed portion of the
Project of a capital nature (as determined in
accordance with generally accepted accounting
practices), or reserves for such items;
(iv) Any expense paid or incurred in connection with
the sale of all or any part of the Project or any
interest therein;
(v) All costs, expenses, fees, commissions or other
compensation paid by or on behalf of the Borrower
in connection with the renovation of the completed
portion of the Project; and
(vi) Any payment of principal or interest under the
Notes.
Operating Expenses shall be determined on the basis of
sound cash basis accounting practices applied on a consistent
basis, modified as described above.
Outstanding. With respect to the Advances or the Loan,
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 10.5.
Person. Any individual, corporation, partnership,
trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or
political subdivision thereof.
Personal Property. All materials, furnishings,
fixtures, furniture, machinery, equipment and all items of
tangible personal property now or hereafter owned or acquired by
the Borrower, wherever located, and either (i) to be located on
or incorporated into the Land or the Improvements, (ii) used in
connection with the construction of the Improvements or (iii) to
be used in connection with the operation or maintenance of the
Land or the Improvements or both.
Phase. The applicable portion(s) of the Project
described on Schedule 1.1 attached hereto.
Plans and Specifications. The plans and specifications
for the Improvements prepared by the Borrower's Architect and
more particularly identified on Exhibit C attached hereto.
Project. The Land, Improvements and Personal Property.
Project Approvals. All approvals, consents, waivers,
orders, agreements, acknowledgments, authorizations, permits and
licenses required under applicable Requirements or under the
terms of any agreement, restriction, covenant or easement
affecting the Project, or otherwise necessary or desirable, for
the ownership and acquisition of the Land and the Improvements,
the construction and equipping of the Improvements, and the use,
occupancy and operation of the Project following completion of
construction of the Improvements, whether obtained from a
Governmental Authority or any other Person.
Project Budget. The budget for total estimated Project
Costs, submitted by the Borrower, approved by the Majority Banks
and the Construction Inspector, and attached hereto as Exhibit D,
which includes: (a) a line item cost breakdown for Direct Costs
by trades, jobs and subcontractors; (b) a line item cost
breakdown for Indirect Costs; and (c) a schedule of the sources
of funds to pay Project Costs, indicating by item the portion of
Project Costs to be funded through the Loan and Required Equity
Funds.
Project Costs. The sum of all Direct Costs and
Indirect Costs that will be incurred by the Borrower in
connection with the acquisition of the Land, the construction,
equipping and completion of the Improvements, the marketing and
leasing of leasable space in the Improvements, and the operation
and carrying of the Project through the Maturity Date.
Real Estate. All real property at any time owned,
leased (as lessee or sublessee) or operated by the Borrower or
the General Partner.
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 21.2.
Requirements. Any law, ordinance, code, order, rule or
regulation of any Governmental Authority and any zoning
agreement, development agreement or similar agreement with any
Governmental Authority relating in any way to the acquisition and
ownership of the Project, the construction of the Improvements,
or the use, occupancy and operation of the Project following the
completion of construction of the Improvements, including those
relating to subdivision control, zoning, building, use and
occupancy, fire prevention, health, safety, sanitation,
handicapped access, historic preservation and protection,
tidelands, wetlands, flood control, access and earth removal, and
all Environmental Laws.
Required Equity Funds. The amount, if any, as the
Majority Banks shall determine must be deposited with Agent from
time to time pursuant to Section 9.16 hereof.
Retainage. See Section 2.3.
Security Deed. The Construction Deed of Trust with
Assignment of Rents, Security Agreement and Fixture Filing, dated
or to be dated on or prior to the Closing Date, made by the
Borrower to the Agent for the benefit of the Banks, pursuant to
which the Borrower grants a lien, security title and security
interest in and to the Project, such Security Deed to be in form
and substance satisfactory to the Agent.
Security Documents. The Security Deed, the Assignment
of Project Documents, the Assignment of Leases, the Financing
Statements and the Guaranty, and any other agreement, document or
instrument now or hereafter securing the Obligations.
Stored Materials. See Section 2.8.
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.
Survey. An instrument survey of the Land and the
Improvements prepared in accordance with the Agent's survey
requirements, such survey to be satisfactory to the Agent in form
and substance.
Surveyor Certificate. With respect to any Survey, a
certificate executed by the surveyor who prepares such Survey
dated as of a recent date and containing such information
relating to the Project as the Agent or the Title Insurance
Company may require, such certificate to be satisfactory to the
Agent in form and substance.
Taking. Any condemnation for public use of, or damage
by reason of, the action of any Governmental Authority, or any
transfer by private sale in lieu thereof, either temporarily or
permanently.
Termination Date. August 31, 1999, or the termination
of the Banks' obligations to make Advances pursuant to Section 13.2
hereof, whichever date occurs first.
Title Insurance Company. Chicago Title Insurance
Company.
Title Policy. An ALTA Loan Policy Form (10/17/70)
title insurance policy with ALTA form 1 coverage (LP 3)
construction loan package or its equivalent issued by the Title
Insurance Company (with such reinsurance or co-insurance as the
Agent may require, any such reinsurance to be with direct access
endorsements) in an amount not less than the Loan Amount insuring
the priority of the Security Deed as a first priority lien and
that the Borrower holds marketable fee simple title to the
Project, subject only to such exceptions as the Agent may approve
and which shall not contain exceptions for mechanics liens,
persons in occupancy or matters which would be shown by a survey,
shall not insure over any matter except to the extent that any
such affirmative insurance is acceptable to the Agent in its sole
discretion, and shall contain a pending disbursements clause or
endorsement and such other endorsements and affirmative insurance
as the Agent in its discretion may require including, without
limitation, a CLTA 111.5 variable rate of interest endorsement.
Total Commitment. The sum of the Commitments of the
Banks, as in effect from time to time.
Type. As to any Advance, its nature as a Base Rate
Advance or a LIBOR Rate Advance.
Walden. Walden Residential Properties, Inc., a
Maryland corporation.
Walden Revolving Credit Agreement. That certain
Revolving Credit Agreement dated as of December 15, 1997, among
Walden, WDOP, BKB, individually and as agent, and the other
lenders a party thereto, as the same may be modified, amended,
restated, consolidated or renewed.
WDOP. Walden/Drever Operating Partnership, L.P., a
Delaware limited partnership.
Section 1.2 Rules of Interpretation.
(a) A reference to any agreement, budget, document or
schedule shall include such agreement, budget, document or
schedule as revised, 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. AGREEMENT TO MAKE ADVANCES; LIMITATIONS
Section 2.1 Agreement to Make Advances. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees
to lend to the Borrower and the Borrower may borrow from time to
time between the Closing Date and the Termination Date upon
submission by the Borrower of a Draw Request in accordance with
Section 3.1, such amounts as are requested by the Borrower up to a
maximum aggregate principal amount equal to such Bank's
Commitment Percentage of the Loan Amount to pay for Project Costs
actually incurred by the Borrower and reflected in the Project
Budget as being funded by the Loan; provided, however, that in no
event shall the maximum aggregate principal amount outstanding
exceed such Bank's Commitment. The Advances shall be made pro
rata in accordance with each Bank's Commitment Percentage. Each
Draw Request for an Advance hereunder shall constitute a
representation and warranty by the Borrower that the conditions
set forth in Section 11, in the case of the initial Advance, Section 12, in the
case of all other Advances, and Section 12.6, in the case of the Advance
of any Retainage withheld pursuant to Section 2.3, have been satisfied
on the date of such Draw Request. No Bank shall have any
obligation to make Advances to the Borrower in the maximum
aggregate principal amount outstanding of more than the principal
face amount of its Note.
Section 2.2 Project Budget. The Project Budget reflects, by
category and line items, the purposes and the amounts for which
funds to be advanced by the Banks under this Agreement are to be
used. The Banks shall not be required to disburse for any
category or line item more than the amount specified therefor in
the Project Budget.
Section 2.3 Amount of Advances. In no event shall any Bank be
obligated to advance more than its Commitment, or, if less, its
Commitment Percentage of total Project Costs actually incurred by
the Borrower less Required Equity Funds. In no event shall any
Advance for Direct Costs of constructing the Improvements exceed
an amount equal to the sum of (a) the total value of the labor,
materials, fixtures, machinery and equipment completed, approved
and incorporated into the Land or the Improvements prior to the
date of the Draw Request for such Advance, minus (b) retainage in
an amount equal to ten percent (10%) of such total value
described in (a) ("Retainage"), minus (c) the total amount of any
Advances previously made by the Banks for such Direct Costs.
Notwithstanding the foregoing, an Advance in excess thereof may
be made hereunder for the purpose of making final payment of any
balance due any subcontractor (including materialmen or suppliers
within the term "subcontractor") after full and final completion
of the work on the Improvements being done by such subcontractor
or after full and final completion of the work on the
Improvements constituting a Phase of the Project being done by
such subcontractor, as certified by the Construction Inspector,
and delivery to the Agent of such items as are required by Section 12.6
as the Agent may deem applicable, including without limitation,
such evidence as may be reasonably required by the Agent to
assure the Banks that no party claims or has a right to claim any
statutory or common law lien arising out of such subcontractor's
work or the supplying of labor, equipment, material, and/or
services in connection therewith. Retainage shall otherwise be
advanced by the Banks subject to the terms of this Agreement to
the Borrower upon satisfaction of the conditions set forth in
Section 12.6. With respect to any other Direct Costs and all Indirect
Costs, in no event shall any Advance exceed an amount equal to
the amount of such Direct Costs and Indirect Costs approved by
the Agent, incurred by the Borrower prior to the date of the Draw
Request for such Advance, and theretofore paid or to be paid with
the proceeds of such Advance, less the total amount of any
Advances previously made by the Banks for such Direct Costs and
Indirect Costs.
Section 2.4 Quality of Work. No Advance shall be due unless all
work done at the date the Draw Request for such Advance is
submitted is done in a good and workmanlike manner and without
defects, as confirmed by the report of the Construction
Inspector. Notwithstanding the foregoing, but without limiting
the provisions of Section 9.3, if a portion of the Work for which
payment is included within a Draw Request has not been performed
in a good and workmanlike manner and without defects as
determined by the Architect, the Contractor, the Construction
Inspector or the Agent ("Defective Work"), then the amount to be
advanced pursuant to such Draw Request shall be reduced by the
portion thereof attributable to the Defective Work provided that
all other conditions to the making of an Advance have been
satisfied. No Advance shall be due thereafter upon a Draw
Request with respect to such Defective Work until such Defective
Work has been corrected and brought into full compliance with the
requirements of this Agreement. No Advance shall be made upon
any Draw Request if, upon the date of submittal thereof, any
Defective Work has remained uncorrected for a period of more than
thirty (30) days, unless correction of such Defective Work is
under way and progressing reasonably satisfactorily to the Agent
and the Construction Inspector.
Section 2.5 Cost Overruns and Savings. If the Borrower becomes
aware of any change in Project Costs which will increase or
decrease a category or line item of Project Costs reflected on
the Project Budget (as the Project Budget is revised from time to
time and approved by the Majority Banks), the Borrower shall
immediately notify the Agent in writing and promptly submit to
the Agent a revised Project Budget for the approval of the
Majority Banks. If the revised Project Budget indicates an
increase in a category or line item of Project Costs, no further
Advances need be made by the Banks unless and until (a) the
revised Project Budget so submitted by the Borrower is approved
by the Majority Banks, and (b) the Borrower has deposited with
the Agent any Required Equity Funds. If the revised Project
Budget indicates a decrease in a line item of Project Costs, no
reductions in Project Costs will be made or savings reallocated
by the Borrower unless and until (c) the revised Project Budget
so submitted by the Borrower is approved by the Majority Banks,
and (d) in the case of decreases in a line item of Direct Costs,
the Borrower has furnished the Agent, the Majority Banks and the
Construction Inspector with evidence satisfactory to them that
the labor performed and materials supplied in connection with
such line item of Direct Costs have been satisfactorily completed
in accordance with the Plans and Specifications and paid for in
full.
Section 2.6 Contingency Reserve. The amount allocated as
Contingency Reserve in the Project Budget will only be disbursed
upon the prior approval of the Majority Banks. The disbursement
of a portion of Contingency Reserve shall in no way prejudice the
Banks from withholding disbursement of any further portion of
Contingency Reserve.
Section 2.7 Development Fee; Land Equity. Except as expressly
provided herein, the Banks shall not be required to disburse any
funds for the amount allocated as "Development Fee" in the
Project Budget unless and until Agent shall have received all of
the items set forth in Section 12.6. Except as expressly provided
herein, the Banks shall not be required to disburse any funds for
the amount allocated as "Land-Cash Equity" or "Land-Earned
Equity" (the total amount of those line items being $875,851.00)
in the Project Budget unless and until Agent shall have received
all of the items set forth in Section 12.6 and the Designee shall have
acquired the entire general partnership interest of the General
Partner in the Borrower in accordance with the terms and
conditions set forth in Section 10.11.
Section 2.8 Stored Materials. The Banks shall not be required to
disburse any funds for any materials, furnishings, fixtures,
machinery or equipment not yet incorporated into the Land or
Improvements ("Stored Materials") unless the following conditions
are satisfied:
(a) The Stored Materials are components in a form
ready for incorporation into the Land or the Improvements and
shall (subject to forces beyond Borrower's reasonable control) be
so incorporated within a period of 30 days;
(b) The Stored Material are stored at the Land or such
other location approved by the Agent, and are protected against
theft, vandalism and the elements;
(c) The Stored Materials have been paid for in full or
will be paid for with the funds to be disbursed, all lien rights
and claims of the supplier have been released or will be released
upon payment with disbursed funds and no seller or supplier
reserves or purports to reserve title or the right of removal or
repossession, or the right to consider such Store Materials
personal property after their incorporation into the
Improvements;
(d) Borrower has or shall have upon payment with
disbursed funds title to the Stored Materials subject to no
liens, charges, title retention agreements or other encumbrances
except those in favor of Agent, and Agent has or will have upon
payment with disbursed funds a perfected first priority security
interest in the Stored Materials;
(e) Borrower shall supply to the Agent evidence
reasonably satisfactory to the Agent that the Stored Materials
are included in the coverage of the insurance policies required
hereunder and are insured for an amount equal to their
replacement cost; and
(f) If the Stored Materials are not stored at the
Land, (i) the Stored Materials are stored and segregated in a
bonded warehouse or storage yard approved by the Agent, (ii) that
the warehouse or yard has been notified that the Agent has a
security interest in the subject Stored Materials, (iii) the
Contractor and the Borrower's Architect have inspected the fully
fabricated components at the off-site location, and have approved
the Draw Request for such Stored Materials, (iv) the Agent has
received from Borrower a copy of the warehouse receipt (which
copy shall include an acknowledgment from the owner or lessee of
the warehouse that such party has possession of the original
warehouse receipt) and color photographs of such Stored Materials
clearly identifying such Stored Materials, and (v) the Agent has
received satisfactory evidence that the Stored Materials are
protected against theft, damage, vandalism, and the elements,
have been suitably identified as belonging to Borrower for use in
the Project and that such seller, supplier or fabricator has been
notified of the security interest of the Agent therein.
Section 2.9 Final Disbursement of Remaining Loan Proceeds.
Notwithstanding anything to the contrary contained herein
regarding the Banks' obligations to fund Advances in excess of
total Project Costs, the Agent and each of the Banks agrees that
contemporaneously with, but subject to the complete satisfaction
of each of the conditions to, the acquisition of all of the
General Partner's interest in Borrower by the Designee in
accordance with Section 10.11, the Banks shall, upon submission by
Borrower of a Borrower's Requisition and subject to the terms and
conditions contained in this Agreement, including without
limitation, Section 12, make a final Advance to the Borrower equal to
the sum of (a) the Loan Amount less (b) the aggregate amount of
all Advances theretofore made by the Banks pursuant to this
Agreement.
SECTION 3. MAKING THE ADVANCES
Section 3.1 Draw Request. At such time as the Borrower shall
desire to obtain an Advance, the Borrower shall complete, execute
and deliver to the Agent the Borrower's Requisition in the form
of Exhibit E attached hereto (hereinafter referred to as
"Borrower's Requisition"). Each Borrower's Requisition shall be
accompanied by:
(a) a written notice of the Borrower specifying (i)
the requested Type of Advance comprising such Advance, (ii) in
the case of an Advance comprised of a LIBOR Advance, the initial
Interest Period; and (iii) the amount of each Type of Advance;
provided, however, that each LIBOR Advance shall be in an amount
of $100,000.00 or integral multiple of $1,000.00 in excess
thereof;
(b) If the Borrower's Requisition includes payments
for Direct Costs, it shall be accompanied by a completed and
itemized Direct Cost Statement in form satisfactory to the Agent,
executed by the Borrower, together with copies of invoices for
all items of Direct Cost covered thereby;
(c) If the Borrower's Requisition includes amounts to
be paid to the Contractor under the Construction Contract, it
shall be accompanied by: (i) a completed and fully itemized
Application and Certificate for Payment (AIA Document G702 or
similar form approved by the Agent) containing the certification
of the Contractor and the Borrower's Architect or other licensed
design professional acceptable to Agent as to the accuracy of
same, and showing all subcontractors and materialmen by name and
trade or job, the total amount of each subcontract or purchase
order, the amount theretofore paid to each subcontractor or
materialman as of the date of such application, and the amount to
be paid from the proceeds of the Advance to each subcontractor
and materialman; (ii) a certificate of the Contractor in the form
of Exhibit F attached hereto; (iii) a certificate of the
Borrower's Architect or other licensed design professional
acceptable to Agent in the form of Exhibit G attached hereto or
such other form as the Agent may approve; and (iv) copies of
requisitions and invoices from subcontractors and materialmen
supporting all items of cost covered by such application;
(d) If the Borrower's Requisition includes payments
for Indirect Costs, it shall be accompanied by a completed and
itemized Indirect Cost Statement in form satisfactory to the
Agent, executed by the Borrower, together with copies of invoices
for all items of Indirect Costs covered thereby;
(e) written lien waivers executed by the Contractor
and such laborers, subcontractors and materialmen whose
contract(s) for the provision of services or materials for
construction of the Project requires payment in excess of
$50,000.00, for work done and materials supplied by such Person
which were paid for pursuant to the next preceding Draw Request
in form acceptable to Agent, which form shall, to the extent
permitted by applicable law, contain lien subordinations from the
Contractor and each such laborer, subcontractor and materialman;
(f) a written request of the Borrower for any
necessary changes in the Plans and Specifications, the Project
Budget, the Disbursement Schedule or the Construction Schedule;
(g) copies of all change orders and construction
change directives, accompanied by a change order summary prepared
by and executed by the Borrower, copies of all subcontracts
involving work in the amount of $100,000.00 or more (if requested
by the Agent), and, to the extent requested by the Agent or the
Majority Banks, of all inspection or test reports and other
documents relating to the construction of the Improvements, not
previously delivered to the Agent; and
(h) If the Borrower's Requisition includes payment for
Stored Materials, it shall be accompanied by evidence as to the
satisfaction of the requirements set forth in Section 2.8 hereof; and
(i) such other information, documentation and
certification as the Agent or the Majority Banks shall reasonably
request.
Each Draw Request shall constitute a representation and warranty
by the Borrower that all of the conditions set forth in this
Agreement to such Advance, including, without limitation, Section 11,
have been satisfied on the date of such Draw Request.
Section 3.2 Notice and Frequency of Advances.
(a) Each Draw Request shall be submitted to the Agent
at least ten (10) Business Days prior to the date of the
requested Advance, and no more frequently than once each month.
The Agent shall promptly notify each of the Banks following the
receipt of a Draw Request, but in any event no later than 2:00
p.m. five (5) Business Days prior to the proposed Drawdown Date.
(b) Except as provided in this Section 3.2, each such Draw
Request shall be irrevocable and binding on the Borrower and
shall obligate the Borrower to accept the Advance requested from
the Banks on the Drawdown Date. If the Borrower does not specify
the Type of Advance requested in a Draw Request, the Borrower
shall be deemed to have selected a Base Rate Advance. Any
failure by a Bank to fund its proportionate share of a requested
Advance shall not relieve the Borrower from its obligations under
this Agreement. Nothing in this Section 3.2(b) shall prevent the
Borrower from seeking recourse against any Bank that fails to
advance its proportionate share of a requested Advance as
required by this Agreement; it being acknowledged that any Bank
that is prepared to fund its proportionate share of a requested
Advance shall have no liability with respect to any other Bank
that fails to advance its proportionate share.
(c) There shall be no more than five (5) LIBOR Rate
Advances outstanding at any one time.
Section 3.3 Deposit of Funds Advanced. The Borrower shall open
and maintain a checking account with Wells Fargo Bank, N.A. (the
"Loan Checking Account"). Except as otherwise provided for in
Section 3.4 and 3.5 hereof, the Agent shall deposit the proceeds of
each Advance into the Loan Checking Account.
Section 3.4 Advances to Contractor. In the event that the Agent
or the Majority Banks shall determine in the exercise of their
business judgment that cause exists to do so, the Agent may make
any or all advances for Direct Costs incurred under the
Construction Contract directly to the Contractor for deposit in
an appropriately designated special bank account, and the
execution of this Agreement by the Borrower shall, and hereby
does, constitute an irrevocable authorization so to advance the
proceeds of the Loan. No further authorization from the Borrower
shall be necessary to warrant such direct advances to the
Contractor and all such advances shall satisfy pro tanto the
obligations of the Banks hereunder and shall be secured by the
Security Deed and the other Security Documents as fully as if
made directly to the Borrower.
Section 3.5 Advances to Title Insurance Company or to Others. In
the event that the Agent or the Majority Banks shall determine in
the exercise of their business judgment that cause exists to do
so, the Agent may make any or all advances through the Title
Insurance Company or a recognized construction disbursement
service and any portion of the Loan so disbursed by the Agent on
behalf of the Banks shall be deemed disbursed as of the date on
which the Bank makes such disbursement. In the event that the
Agent or the Majority Banks shall determine in the exercise of
their business judgment that cause exists to do so, the Agent may
make advances of portions of the proceeds of the Loan to any
Person to whom the Agent or the Majority Banks in good faith
determine payment is due and any portion of the Loan so disbursed
by the Agent on behalf of the Banks shall be deemed disbursed as
of the date on which the Agent makes such disbursement. The
execution of this Agreement by the Borrower shall, and hereby
does, constitute an irrevocable authorization so to advance the
proceeds of the Loan. No further authorization from the Borrower
shall be necessary to warrant such direct advances and all such
advances shall satisfy pro tanto the obligations of the Banks
hereunder and shall be secured by the Security Deed and the other
Security Documents as fully as if made directly to the Borrower.
Section 3.6 Advances Do Not Constitute a Waiver. No Advance made
by the Banks shall constitute a waiver of any of the conditions
to the Banks' obligation to make further Advances nor, in the
event the Borrower fails to satisfy any such condition, shall any
such Advance have the effect of precluding the Banks from
thereafter declaring such failure to satisfy a condition to be an
Event of Default.
Section 3.7. Funds for Loans.
(a) Not later than 11:00 a.m. (Boston time) on the
proposed Drawdown Date of any Advance, 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 Advance 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 Secton 11 and Section 12
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 Advance made available to
the Agent by the Banks by crediting such amount. 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 Advance to the extent it
is obligated to fund such Advance hereunder 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 Advance, including any additional
Advance that may be requested by the Borrower subject to the
terms and conditions hereof to provide funds to replace those not
advanced by the Bank so failing or refusing; provided that no
Bank shall be obligated to advance any amount in excess of the
limits set forth in Section 2.1. 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 Advance as provided in Section 13.5(b).
(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
Advance, Agent may in its discretion assume that such Bank has
made such Advance available to Agent in accordance with the
provisions of this Agreement and Agent may, if it chooses, in
reliance upon such assumption make such Advance available to
Borrower, and such Bank shall be liable to the Agent for the
amount of such advance.
Section 3.8 Interest Reserve.
(a) The Project Budget includes a Construction Period
Interest reserve of $783,980.00. By execution hereof, the
Borrower irrevocably authorizes the Agent, without the necessity
of any further authorization, to disburse directly to the Agent
for the account of the Banks rather than to the Borrower out of
the interest reserve such sums as are necessary to pay, on a
monthly basis, accrued interest; provided, however, that all Net
Operating Income shall be utilized by Borrower first to pay
accrued interest. Upon disbursement, the amount that is
disbursed shall be disbursed pro rata by the Banks and shall be
added to the then outstanding principal sum of the Loan and shall
bear interest at the rate provided for in this Agreement. Upon
the occurrence of an Event of Default under this Agreement or any
other Loan Document, the Agent shall have the right but not the
obligation to continue to disburse payments of monthly interest
installments from the interest reserve. If the interest reserve
account is exhausted, or upon the occurrence of an Event of
Default, or if the Agent determines, in its sole discretion, that
the remaining funds in the interest reserve will be insufficient
to pay in full the then due and payable monthly interest
installments or any portions thereof through the Maturity Date,
then upon seven (7) days prior written notice of any such event
from the Agent, the Borrower shall commence the payment of
monthly interest installments. Establishment of the interest
reserve shall in no way relieve the Borrower of its obligation to
make interest payments. Upon the occurrence of a Default or an
Event of Default under any Loan Document, the Agent may, at its
option, cease making any further disbursement from the interest
reserve.
SECTION 4. THE NOTE; INTEREST; MATURITY AND PREPAYMENT
Section 4.1 Notes. The Advances shall be evidenced by separate
promissory notes of the Borrower in substantially the form of
Exhibit H hereto (collectively, the "Notes"), dated of even date
with this Agreement and completed with appropriate insertions.
One 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 Advance 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
Advance or (as the case may be) the receipt of such payment. The
outstanding amount of the Loan 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 Note to make payments of
principal of or interest on any Note when due.
Section 4.2. Interest on Advances.
(a) Each Base Rate Advance shall bear interest for the
period commencing with the Drawdown Date thereof and ending on
the date on which such Base Rate Advance is paid in full or is
converted to a LIBOR Rate Advance from a Base Rate Advance at the
rate of one-half of one percent per annum (0.50%) plus the Base
Rate.
(b) Each LIBOR Rate Advance 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 of one and one-half percent (1.50%) per annum above the
LIBOR Rate determined for such Interest Period.
(c) The Borrower promises to pay interest on each
Advance in arrears on each Interest Payment Date with respect
thereto.
(d) Base Rate Advances and LIBOR Rate Advances may be
converted to Advances of the other Type as provided in Section 5.3.
Section 4.3. Stated Maturity. The Borrower promises to pay on the
Maturity Date and there shall become absolutely due and payable
on the Maturity Date, all principal of the Loan outstanding on
such date, together with any and all accrued and unpaid interest
thereon.
Section 4.4. Optional Prepayments. The Borrower shall have the
right, at its election, to prepay the outstanding amount of the
Loan, 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 Advances pursuant to this
Section 4.4 may be made only on the last day of the Interest Period
relating thereto except as otherwise required pursuant to Section 5.7.
The Borrower shall give the Agent, no later than 10:00 a.m.,
Boston time, at least five (5) Business Days prior written notice
of any prepayment pursuant to this Section 4.4, in each case specifying
the proposed date of payment of the Loan and the principal amount
to be paid.
Section 4.5. Partial Prepayments. Each partial prepayment of the
Loan under Section 4.4 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 Base
Rate Advances and then to the principal of LIBOR Rate Advances.
No amounts of the Loan prepaid under Section 4.4 may be reborrowed.
Except as otherwise expressly provided herein, all payments shall
first be applied to accrued but unpaid interest and then to
principal.
SECTION 5. GENERAL PROVISIONS
Section 5.1 Commitment Fee. The Borrower agrees to pay to BKB on
the Closing Date a commitment and loan structuring fee as
provided in the Agreement Regarding Fees between Borrower and BKB
(the "Agreement Regarding Fees") which shall be fully earned and
non-refundable when paid.
SECTION 5.2. INTENTIONALLY DELETED.
Section 5.3. Conversion Options.
(a) The Borrower may elect from time to time to
convert any outstanding Advance to an Advance of another Type and
such Advance shall thereafter bear interest as a Base Rate
Advance or a LIBOR Rate Advance, as applicable; provided that (i)
with respect to any such conversion of a LIBOR Rate Advance to a
Base Rate Advance, 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 Advance; (ii)
with respect to any such conversion of a Base Rate Advance to a
LIBOR Rate Advance, 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 Advance, the principal
amount of the Advance so converted shall be in a minimum
aggregate amount of $100,000.00 or an integral multiple of $1,000
in excess thereof and, after giving effect to the making of such
Advance, there shall be no more than five (5) LIBOR Rate Advances
outstanding at any one time; and (iii) no Advance may be
converted into a LIBOR Rate Advance when any Default or Event of
Default has occurred and is continuing. All or any part of the
outstanding Advances of any Type may be converted as provided
herein, subject to the foregoing limits. On the date on which
such conversion is being made, each Bank shall take, to the
extent it deems it necessary to do so, such action as is
necessary to transfer its Commitment Percentage of such Advance
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 Advance to a LIBOR Rate Advance shall
be irrevocable by the Borrower.
(b) Any Advance 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 5.3; provided that
no LIBOR Rate Advance 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 Advance 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 outstanding
Advance, such Advance shall be automatically converted to a Base
Rate Advance at the end of the applicable Interest Period.
Section 5.4 Funds for Payments.
(a) All payments of principal, interest, 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 in each case not later than 11:00 a.m. (Boston time)
on the day when due in immediately available funds in lawful
money of the United States.
(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 to deduct or
withhold 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
or the Agent, as the case may be, 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 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 5.5 Computations. All computations of interest on the
Loan 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", 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 Loan as reflected on the records of the Agent from
time to time shall be considered prima facie evidence of such
outstanding amount.
Section 5.6. Inability to Determine LIBOR Rate. In the event
that, prior to the commencement of any Interest Period relating
to any LIBOR Rate Advance, 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 Draw Request with respect to LIBOR
Rate Advances shall be automatically withdrawn and shall be
deemed a Draw Request for Base Rate Advances and (b) each LIBOR
Rate Advance will automatically, on the last day of the then
current Interest Period thereof, become a Base Rate Advance, and
the obligations of the Banks to make LIBOR Rate Advances shall be
suspended until the Agent determines in the exercise of its good
faith business judgment that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent shall so
notify the Borrower and the Banks.
Section 5.7. 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 Advances, 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 Advances or
convert Advances of another type to LIBOR Rate Advances shall
forthwith be suspended and (b) the LIBOR Rate Advances then
outstanding shall be converted automatically to Base Rate
Advances on the last day of each Interest Period applicable to
such LIBOR Rate Advances or within such earlier period as may be
required by law.
Section 5.8. Additional Interest. If any LIBOR Rate Advance or
any portion thereof is repaid or is converted to a Base Rate
Advance for any reason on a date which is prior to the last day
of the Interest Period applicable to such LIBOR Rate Advance, the
Borrower will pay to the Agent upon demand for the account of the
Banks in accordance with their respective Commitment Percentages,
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 Advance 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 Advance
(including any spread over such LIBOR Rate) 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 5.9. 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 or the Loan (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 Advances 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 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 Advances, such Bank's Commitment, or
any class of loans or commitments of which any of the Loans or
such Bank's 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 Advances or such Bank's 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 or any of the Advances, 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 5.10. Capital Adequacy. If after the date hereof any Bank
determines that (a) the adoption of or change in any law, rule,
regulation, guideline, directive or request (whether or not
having the force of law) regarding capital requirements for banks
or bank holding companies or any change in the interpretation,
application or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or 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
Advances 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 5.11. 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
Advances as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to
Banks of funds obtained by it in order to maintain its LIBOR Rate
Advances, or (b) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have
given) a Draw Request or a Conversion Request.
Section 5.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law)
interest on the Loan 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 (5.0%) above the Base Rate until such amount shall be
paid in full (after as well as before judgment), or if such rate
shall exceed the maximum rate permitted by law, then at the
maximum rate permitted by law (the "Default Rate"). 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 Loan or
any other amounts payable hereunder or under the Loan Documents,
which is not paid within ten days of the date when due.
Section 5.13. Certificate. A certificate, prepared in good faith
by a Bank consistent with such Bank's practice in calculating
such amounts, setting forth any amounts payable pursuant to Section 5.8,
Section 5.9, Section 5.10, Section 5.11 or Section 5.12 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 5.14. 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 circumstance, 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 6. COLLATERAL SECURITY AND THE GUARANTY
The Obligations shall be secured by a perfected first
priority mortgage lien and security interest in the Collateral,
whether now owned or hereafter acquired, pursuant to the terms of
the Security Documents to which the Borrower is a party. The
obligations shall also be guaranteed pursuant to the terms of the
Guaranty.
SECTION 7. CERTAIN RIGHTS OF THE BANKS
Section 7.1 Right to Retain the Construction Inspector. The Banks
acting through the Agent shall have the right to retain, at the
Borrower's cost and expense, the Construction Inspector to
perform the following services on behalf of the Banks:
(a) to review and advise the Agent and the Banks as to
the current status of the Project and the Project Budget;
(b) to review and advise the Agent and the Banks
whether in the opinion of the Construction Inspector, the Project
Budget accurately reflects all Project Costs;
(c) to review and advise the Agent and the Banks
whether, in the opinion of the Construction Inspector, the Plans
and Specifications are satisfactory for the intended purposes
thereof;
(d) to make periodic inspections (approximately at the
date of each Draw Request) for the purpose of assuring that
construction of the Improvements to date is in accordance with
the Plans and Specifications and to approve the Borrower's then
current Draw Request as being consistent with the Project Budget
and the Borrower's obligations under this Agreement, and to
advise the Agent and the Banks of the anticipated cost of and
time for completion of construction of the Improvements and the
adequacy of any Contingency Reserve;
(e) to review and advise the Agent and the Banks on
any proposed change orders or construction change directives; and
(f) to review the Construction Contract and
subcontracts, for the purpose of providing the Agent and the
Banks with an opinion as to the cost of construction to be
incurred to complete the Project, and also for the purpose of
assuring that all such subcontracts are for work required by the
Plans and Specifications to be performed.
The fees of the Construction Inspector shall be paid by the
Borrower forthwith upon billing therefor and expenses incurred by
the Banks or the Agent on account thereof shall be reimbursed to
the Banks or the Agent as the case may be forthwith upon request
therefor, but neither the Banks, the Agent nor the Construction
Inspector shall have any liability to the Borrower on account of
(i) the services performed by the Construction Inspector,
(ii) any neglect or failure on the part of the Construction
Inspector to properly perform its services, or (iii) any approval
by the Construction Inspector of construction of the
Improvements. Neither the Banks, the Agent nor the Construction
Inspector assumes any obligation to the Borrower or any other
Person concerning the quality of construction of the Improvements
or the absence therefrom of defects.
Section 7.2 Right to Obtain Appraisals. The Agent on behalf of
the Banks shall have the right to obtain from time to time, at
the Borrower's cost and expense, updated Appraisals of the
Project which will be ordered by the Agent, provided that so long
as no Default or Event of Default shall have occurred and be
continuing, the Borrower shall only be obligated to pay for the
costs and expenses associated with one such Appraisal during any
twenty-four (24) month period. The costs and expenses incurred
by the Agent in obtaining such Appraisals shall be paid by the
Borrower forthwith upon billing or request by the Agent for
reimbursement therefor.
Section 7.3 Charges Against Accounts. The Agent and the Banks
shall have the right, and the Borrower hereby irrevocably
authorizes the Agent and the Banks, to charge any account of the
Borrower with the Agent or any Bank without the further approval
of the Borrower, for (i) any installment of interest due under
the Notes, (ii) any costs or expenses incurred by the Agent or
the Banks which are to be paid or reimbursed by the Borrower
under the terms of this Agreement or any of the other Loan
Documents (including, without limiting the generality of the
foregoing, all Construction Inspector, Appraisal and reasonable
attorney's fees) or (iii) any other sums due to the Agent or the
Banks under the Notes, this Agreement or any of the other Loan
Documents, all to the extent that the same are not paid by the
respective due dates thereof.
SECTION 8. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the
Banks as follows:
Section 8.1 Organization; Authority, Etc.
(a) Organization; Good Standing. The Borrower is a
Delaware limited partnership duly organized pursuant to a limited
partnership agreement dated as of February 27, 1998 and is
validly existing and in good standing under the laws of the State
of Delaware. Elk Grove-Lakeside Apartments, L.P., is a
California limited partnership duly organized pursuant to a
limited partnership agreement dated February 26, 1998, and a
certificate of limited partnership filed on October 23, 1997,
with the Secretary of State of the State of California, and is
validly existing and in good standing under the laws of the State
of California. LSAC G.P. Corporation is the sole general partner
of Elk Grove-Lakeside Apartments, L.P. and is a California
corporation duly organized pursuant to its articles of
incorporation filed with the Secretary of State of the State of
California and is validly existing and in good standing under the
laws of the State of California. Walden Development Corporation
is a corporation duly organized pursuant to its Certificate of
Incorporation filed on February 6, 1998 with the Secretary of
State of the State of Delaware and is validly existing and in
good standing under the laws of the State of Delaware. Walden is
a Maryland corporation duly organized pursuant to its Articles of
Incorporation and amendments thereto filed with the Maryland
Secretary of State and is validly existing and in good standing
under the laws of the State of Maryland. WDOP is a Delaware
limited partnership duly organized pursuant to a limited
partnership agreement dated August 12, 1997 and is validly
existing and in good standing under the laws of the State of
Delaware. The Grupe Company is a corporation duly organized
pursuant to its amended and restated articles of incorporation
dated December 1, 1988 filed with the Secretary of State of the
State of California and is validly existing and in good standing
under the laws of the State of California. Each of the Borrower,
the General Partner and the Guarantors (i) has all requisite
power to own its property and conduct its business as now
conducted and as presently contemplated, and (ii) is in good
standing as a foreign entity and is duly authorized to do
business in the jurisdiction where the Land is located and in
each other jurisdiction where such qualification is necessary
except where a failure to be so qualified in such other
jurisdiction would not have a materially adverse effect on its
business, assets or financial condition. Walden is a real estate
investment trust in full compliance with and entitled to the
benefits of Section 856 of the Code.
(b) Subsidiaries. The Borrower and the General
Partner do not, and will not, have any Subsidiaries. Each of the
Subsidiaries of Walden and WDOP (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 Walden or WDOP, as applicable, or such Subsidiary.
(c) Authorization. The execution, delivery and
performance of this Agreement and the other Loan Documents to
which the Borrower, the General Partner or the Guarantors is or
is 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, award, 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
organizational or formation documents of, or any agreement or
other instrument binding upon, such Person or any of its
properties, (v) do not require the approval or consent of, or
filing with, any governmental agency or authority other than
those already obtained and the filing of the Security Deed, the
Assignment of Leases and the Financing Statements in the
appropriate public records with respect thereto, and (vi) except
as provided in the Loan Documents, 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 the
Borrower, the General Partner or the Guarantors is to become a
party will result in valid and legally binding obligations of
such Person enforceable against it 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 8.2 Title to Project and Other Properties.
(a) The Borrower holds good clear record and
marketable fee simple absolute title to the Land and the
Improvements, and owns the Personal Property, subject to no
rights of others, including any mortgages, leases, conditional
sale agreements, title retention agreements, liens or other
encumbrances, other than the permitted exceptions listed in the
Security Deed.
(b) The Borrower owns all of the assets reflected in
the balance sheet of the Borrower 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.
Section 8.3 Financial Statements. There has been furnished to the
Agent a balance sheet or financial statement of the Borrower, the
General Partner and each of the Guarantors, as of the applicable
Balance Sheet Date, and a statement of income for the fiscal year
then ended, certified by the chief financial officer of the
Borrower, the General Partner or the Guarantors, respectively.
Such balance sheets, financial statements and statements of
income have been prepared with respect to Borrower, General
Partner and The Grupe Company, using a federal income tax basis
of accounting consistently applied, and with respect to Walden
and WDOP, in accordance with generally accepted accounting
principles, and fairly present the financial condition of such
Person as at the close of business on the date thereof and the
results of operations for the fiscal year then ended. As of the
date of this Agreement, there are no liabilities or contingent
liabilities of the Borrower, the General Partner or any of the
Guarantors which are not disclosed in said balance sheets or
financial statements and the related notes thereto other than the
Obligations.
Section 8.4 No Material Changes, Etc. Since the Balance Sheet
Date, there has occurred no materially adverse change in the
financial condition or business of the Borrower, the General
Partner or the Guarantors as shown on or reflected in the balance
sheets or financial statements of such Person as of the Balance
Sheet Date, 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 8.5 Franchises, Patents, Copyrights, Etc. The Borrower,
the General Partner and the Guarantors possess all franchises,
patents, copyrights, trademarks, trade names, licenses and
permits, and rights in respect of the foregoing, adequate for the
conduct of its business substantially as now conducted or as it
is intended to be conducted with respect to the Project, without
known conflict with any rights of others. The Project is not
owned or operated under or by reference to any registered or
protected trademark, tradename, servicemark or logo.
Section 8.6 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 General Partner or
any of the Guarantors before any court, tribunal, arbitrator,
mediator or administrative agency or board that, if adversely
determined, might either in any case or in the aggregate,
adversely affect the properties, assets, financial condition or
business of such Person, including, without limitation, the
Project, 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, the
General Partner or the Guarantors to construct, use and occupy
the Improvements or to pay and perform the Obligations in the
manner contemplated by this Agreement and the other Loan
Documents.
Section 8.7 No Materially Adverse Contracts, Etc. None of the
Borrower, General Partner, 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, General Partner,
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 8.8 Compliance with Other Instruments, Laws, Etc. None of
the Borrower, the General Partner, the Guarantors or any of their
respective Subsidiaries is in violation of any provision of its
partnership documents, charter or other organizational documents
or 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 8.9 Tax Status. The Borrower, the General Partner, 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
any of them 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, (c) if a
partnership, limited partnership, limited liability partnership,
or limited liability company, has and will maintain partnership
tax classification under the Code, and (d) has set aside on their
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 8.10 No Event of Default. No Default or Event of Default
has occurred and is continuing.
Section 8.11 Holding Company and Investment Company Acts. None of
the Borrower, the General Partner, 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 8.12 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 in, any Collateral or any other assets or
property of the Borrower or any rights related thereto.
Section 8.13 Setoff, Etc. The Collateral and the Agent's rights
with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrower is the
owner of the Collateral free from any lien, security interest,
encumbrance and any other claim or demand.
Section 8.14 Certain Transactions. Except as set forth on
Schedule 8.14 hereto, none of the officers, trustees, directors,
partners or employees of the Borrower, General Partner or any of
the Guarantors is presently a party to any transaction with the
Borrower or the General Partner (other than for services as
employees, officers, directors, trustees and partners), 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 officer, trustee, director, partner or such employee
or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, trustee,
director, partner or any such employee has a substantial interest
or is an officer, director, trustee or partner.
Section 8.15 Employee Benefit Plans; Multiemployer Plans;
Guaranteed Pension Plans. Neither the Borrower nor any ERISA
Affiliate maintains or contributes to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan.
Section 8.16 Regulations U and X. No portion of the 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 8.17 Partners. Elk Grove-Lakeside Apartments, L.P. is the
sole general partner of the Borrower and owns a 51% partnership
interest in Borrower. LSAC G.P. Corporation is the sole general
partner of Elk Grove-Lakeside Apartments, L.P. and owns a 1%
interest in Elk Grove-Lakeside Apartments, L.P. Walden
Development Corporation is the sole limited partner of the
Borrower and owns a 49% partnership interest in Borrower. WDOP
owns all of the stock of Walden Development Corporation.
Section 8.18 Availability of Utilities. All utility services
necessary and sufficient for the construction, development and
operation of the Project for its intended purposes are presently
and will at all times be, available to the boundaries of the Land
through dedicated public rights of way or through perpetual
private easements, approved by the Agent, with respect to which
the Security Deed creates a valid and enforceable first lien,
including, but not limited to, water supply, storm and sanitary
sewer, gas, electric, telephone and cable facilities, and
drainage. No such utility services are subject to any
moratorium, or would be subject to any threatened moratorium,
imposed by any authority having jurisdiction.
Section 8.19 Access. The rights of way for all roads necessary
for the full utilization of the Project for its intended purposes
have either been acquired by the appropriate Governmental
Authority or have been dedicated to public use and accepted by
such Governmental Authority, and all such roads have been
completed. All curb cuts, driveways and traffic signals shown on
the Plans and Specifications are existing or have been fully
approved by the appropriate Governmental Authority and funds are
available for the construction thereof and after completion
thereof, shall be maintained at all times for the Project.
Section 8.20 Condition of Project. Neither the Project nor any
part thereof is now damaged or injured as result of any fire,
explosion, accident, flood or other casualty or has been the
subject of any Taking, and no Taking is pending or to the
knowledge of the Borrower contemplated.
Section 8.21 Compliance with Requirements. The Plans and
Specifications and construction of the Improvements pursuant
thereto and the use and occupancy of the Project contemplated
thereby comply with, and will at all times comply with, all
Requirements. The Borrower will give all such notices to, and
take all such other actions with respect to, such Governmental
Authority as may be required under applicable Requirements to
construct the Improvements and to use, occupy and operate the
Project following the completion thereof.
Section 8.22 Project Approvals. Except as set forth on Schedule
8.22(a) hereto, the Borrower has obtained all Project Approvals.
All Project Approvals obtained by the Borrower are listed and
described on Schedule 8.22(b) hereto, have been validly issued
and are in full force and effect and the Project Approvals not
heretofore obtained by the Borrower will be obtained by the
Borrower in the ordinary course following completion of the
construction of the Improvements in accordance with the Plans and
Specifications. No Project Approvals will terminate, or become
void or voidable or terminable, upon any sale, transfer or other
disposition of the Project, including any transfer pursuant to
foreclosure sale under the Security Deed.
Section 8.23 Construction Contract. The Construction Contract is
in full force and effect and both the Borrower and the Contractor
is in full compliance with its obligations under the Construction
Contract. The work to be performed by the Contractor under the
Construction Contract is the work called for by the Plans and
Specifications, and all work required to complete the
Improvements in accordance with the Plans and Specifications is
provided for under the Construction Contract.
Section 8.24 Architect's Contract. The parties to the Architect's
Contract have fully performed and complied with their respective
obligations thereunder.
Section 8.25 Other Contracts. The Borrower has made no contract
or arrangement of any kind or type whatsoever (whether oral or
written, formal or informal), the performance of which by the
other party thereto could give rise to a lien or encumbrance on
the Project other than the Construction Contract and the
Architect's Contract other than with Agent's prior written
consent.
Section 8.26 Real Property Taxes; Special Assessments. There are
no unpaid or outstanding real estate or other taxes or
assessments on or against the Project or any part thereof which
are payable by the Borrower (except only real estate taxes not
yet due and payable). The Borrower has delivered to the Agent
true and correct copies of real estate tax bills for the Project
for the past fiscal tax year. No abatement proceedings are
pending with reference to any real estate taxes assessed against
the Project. There are no betterment assessments or other
special assessments presently pending with respect to any part of
the Project, and the Borrower has received no notice of any such
special assessment being contemplated.
Section 8.27 Violations. The Borrower has received no notice of,
and otherwise has no knowledge of, any violation of any
applicable Requirements, Project Approvals or other agreement
affecting the Borrower or the Real Estate.
Section 8.28 Plans and Specifications. The Borrower has furnished
the Agent with true and complete sets of the Plans and
Specifications. The Plans and Specifications so furnished to the
Agent comply (and the Improvements when constructed in accordance
with the Plans and Specifications will likewise comply) with all
Requirements, all Project Approvals, and all restrictions,
covenants, easements and other agreements affecting the Project,
and have been approved by the Contractor, the Borrower's
Architect, and such Governmental Authority as is required for
construction of the Improvements.
Section 8.29 Project Budget. The Project Budget accurately
reflects all Project Costs.
Section 8.30 Feasibility. Each of the Construction Schedule and
the Disbursement Schedule is realistic and feasible, and is
accurate to date.
Section 8.31 Insurance. The Borrower has not received any notice
from any insurer or its agent requiring performance of any work
with respect to the Real Estate or the Improvements or canceling
or threatening to cancel any policy of insurance, and the Project
complies with the requirements of the Borrower's and the
Contractor's insurance carriers, as applicable.
Section 8.32 Other Material Agreements; No Options. There are no
material agreements pertaining to or benefitting the Project or
the operation or maintenance thereof (including, without
limitation, purchase options) other than as described in this
Agreement, or otherwise disclosed in writing to the Agent by the
Borrower, and no Person has any right or option to acquire the
Project or any portion thereof or interest therein.
Section 8.33 Brokers. None of the Borrower, the General Partner
or the Guarantors has engaged or otherwise dealt with any broker,
finder or similar entity in connection with this Agreement or the
Loan contemplated hereunder.
Section 8.34 Management Agreement. The Borrower has delivered to
the Agent a true, correct and complete copy of the Management
Agreement providing for the management of the Project. Such
Management Agreement is subordinate to the terms of the Security
Documents.
Section 8.35 Tenants. As of the date hereof, there are no tenants
in possession or Persons having rights to occupy the Project or
any portion thereof.
Section 8.36 Construction of Improvements. Except as set forth on
Schedule 8.36 hereto, as of the date hereof, no construction of
the Improvements has been performed and no other work has
commenced at the Land. To the extent any work or construction
has been commenced prior to the date hereof, all such work and
construction has been performed in compliance with the Plans and
Specifications, the Requirements and the Project Approvals and
Schedule 8.36 attached hereto sets forth the identity of all
contractors, subcontractors, equipment suppliers, laborers,
mechanics, materialmen or other parties that may have a right to
claim a lien against the Project. Any and all amounts due and
payable to such Persons have been paid as of the date hereof or
will be paid from the proceeds of the initial Advance to be made
hereunder. As of the date hereof, the Borrower has not paid any
sums to the Contractor under the Construction Contract or to any
other Person on account of any work performed or to be performed
in connection with the construction of the Improvements.
Section 8.37 Loan Documents. All of the representations and
warranties made by or on behalf of the Borrower, the General
Partner or the Guarantors 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, the General Partner nor the Guarantors has
failed to disclose such information as is necessary to make such
representations and warranties not misleading.
Section 8.38 Solvency. As of the Closing Date and after giving
effect to the transactions contemplated by this Agreement and the
other Loan Documents, including the Loan to be made hereunder,
none of the Borrower, the General Partner or 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 the Guarantors are able to pay their respective
debts as they become due, and the Borrower and the Guarantors
have sufficient capital to carry on their respective businesses.
Section 8.39 Effect of Draw Request. Each Draw Request submitted
to the Agent as provided in Section 3.1 hereof shall constitute an
affirmation that, except to the extent of changes disclosed in
writing to Agent resulting from transactions contemplated or
permitted by the Loan Documents and any changes occurring in the
ordinary course of business that singly or in the aggregate are
not materially adverse, the representations and warranties
contained in Section 8 of this Agreement and in the other Loan Documents
remain true and correct as of the date thereof; and, except to
the extent of changes disclosed in writing to Agent prior to the
Drawdown Date of the requested Advance or any portion thereof,
resulting from transactions contemplated or permitted by the Loan
Documents and any changes occurring in the ordinary course of
business that singly or in the aggregate are not materially
adverse, shall constitute an affirmation that the same remain
true and correct on the Drawdown Date.
SECTION 9. AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as the Loan
is outstanding or the Banks have any obligation to make any
Advances:
Secton 9.1 Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on
the Loan and all other amounts provided for in the Notes, this
Agreement and the other Loan Documents to which the Borrower is a
party, all in accordance with the terms of the Notes, this
Agreement and such other Loan Documents.
Section 9.2 Commencement, Pursuit and Completion of Construction.
The Borrower will commence construction of the Improvements
within thirty (30) days after the date hereof. The Borrower will
diligently pursue construction of the Improvements in accordance
with the Construction Schedule, and will complete construction of
the Improvements on or before the Completion Date, all in
accordance with the Plans and Specifications, in full compliance
with all restrictions, covenants and easements affecting the
Project, all Requirements, and all Project Approvals, and with
all terms and conditions of the Loan Documents, without deviation
from the Plans and Specifications unless the Borrower obtains the
prior approval of the Majority Banks. Notwithstanding the
foregoing, but without limiting or affecting any provision in any
other Section of this Agreement, the Borrower may without the
prior consent of the Majority Banks authorize changes in the
Construction Contract through customary change orders or
construction change directives provided that (a) such changes
individually do not exceed $50,000.00 or in the aggregate with
all prior change orders do not exceed $150,000.00, (b) none of
such changes individually or in the aggregate will in the
determination of the Agent delay the completion of the Project
beyond the Completion Date, (c) none of such changes individually
or in the aggregate will materially affect the size, utilization,
appearance or value of the Improvements for the purposes
contemplated by the Plans and Specifications, and (d) the
Construction Inspector (or another architect or engineer
designated by the Agent) shall have certified to the Agent in
writing that such changes do not constitute a substantial change
in the Plans and Specifications and do not constitute a change in
the scope of the work under the Construction Contract. Borrower
shall promptly deliver to the Agent copies of all "change orders"
whether or not the prior consent of the Agent thereto is
required. The Borrower will pay all sums and perform all such
acts as may be necessary or appropriate to complete such
construction of the Improvements in accordance with the Plans and
Specifications and in full compliance with all restrictions,
covenants and easements affecting the Project, all Requirements
and all Project Approvals, and with all terms and conditions of
the Loan Documents, all of which shall be accomplished on or
before the Completion Date, free from any liens, claims or
assessments (actual or contingent) asserted against the Project
for any material, equipment, labor or other items furnished in
connection therewith. The Borrower will furnish evidence of
satisfactory compliance with this Section 9.2 to the Agent on or before
the Completion Date.
Section 9.3 Correction of Defects. The Borrower will promptly
correct or cause to be corrected all defects in the Improvements
or any departure from the Plans and Specifications not previously
approved by the Majority Banks. The Borrower agrees that any
Advance made by the Agent or the Banks, whether before or after
such defects or departures from the Plans and Specifications are
discovered by, or brought to the attention of, the Agent or the
Banks, shall not constitute a waiver of the Agents' and the
Banks' right to require compliance with this Section 9.3.
Section 9.4 Maintenance of Office. The Borrower will maintain its
chief executive office in Stockton, California, or at such other
place in the United States of America as the Borrower shall
designate upon prior written notice to the Agent, where notices,
presentations and demands to or upon the Borrower in respect of
the Loan Documents may be given or made.
Section 9.5 Records and Accounts. The Borrower will (a) keep
true and accurate records and books of account in which full,
true and correct entries will be made in accordance with federal
income tax accounting principles consistently applied, which
records and books will not be maintained on a consolidated basis
with those of any other Person, including, any affiliate of the
Borrower and (b) maintain adequate accounts and reserves for all
taxes (including income taxes), depreciation and amortization of
its properties, contingencies, and other reserves, all of which
accounts shall not be commingled with accounts of any other
Person, including any affiliate of the Borrower, and (c) in order
to assist the Agent and the Banks in monitoring the financial
condition of the Borrower and the Collateral, maintain, or cause
to be maintained, at the Agent all operating accounts and escrow
accounts of the Borrower, except as may be otherwise agreed by
the Agent in writing.
Section 9.6 Financial Statements, Certificates and Information.
The Borrower will deliver to the Agent and each of the Banks:
(a) as soon as practicable, but in any event not later
than one hundred and twenty (120) days after the end of each
fiscal year of the Borrower, the balance sheet of the Borrower at
the end of such year, and the related statement of income,
statement of retained earnings, changes in capital and statement
of 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 using a federal
income tax basis of accounting consistently applied, together
with the certification of the chief financial officer of the
General Partner that the information contained in such statements
fairly presents the financial position of the Borrower as of the
date thereof (provided that upon the request of the Agent, such
statements shall be accompanied by an auditor's report prepared
without qualification by an independent certified public
accountant acceptable to the Majority Banks);
(b) as soon as practicable, but in any event not later
than thirty (30) days after the end of each calendar month
(commencing with the first calendar month after the opening of
the Project), copies of the statement of income, statement of
retained earnings, changes in capital and statement of cash flows
for such month and the portion of the Borrower's fiscal year then
elapsed, a statement showing the aging of all receivables and
payables for the Project, all in reasonable detail and prepared
using a federal income tax basis of accounting consistently
applied, together with a certification by the principal financial
or accounting officer of the General Partner that the information
contained in such financial statements fairly presents the
financial position of the Borrower on the date thereof (subject
to year-end adjustments);
(c) contemporaneously with the delivery of the
financial statements referred to in clause (a) above, a statement
of all contingent liabilities of the Borrower which are not
reflected in such financial statements or referred to in the
notes thereto, and a statement of projected cash flows of the
Borrower for the current fiscal year, all in reasonable detail
and certified by the principal financial or accounting officer of
the General Partner;
(d) within fifteen (15) days after the end of each
calendar quarter, a leasing report setting forth the Borrower's
efforts to market and lease the then unleased space in the
Improvements and the results of such efforts;
(e) within fifteen (15) days after the end of each
calendar month (commencing after the date on which the
Improvements are occupied by any tenant under a Lease) a current
rent roll and summary thereof in form satisfactory to the Agent
as of the end of such month, together with a listing of each
tenant that has taken occupancy of the Improvements during such
month, stating the name of the tenant, the date of the occupancy
and the unit so occupied;
(f) promptly after they are filed with the Internal
Revenue Service, copies of all annual federal income tax returns
and amendments thereto of the Borrower and the General Partner;
(g) contemporaneously with the mailing thereof, copies
of all information of a financial nature having a material impact
on the Borrower or the Project sent to the partners of the
Borrower; and
(h) from time to time such other financial data and
information (including accountants' management letters) as the
Agent or the Majority Banks may reasonably request.
Section 9.7 Notices
(a) Defaults. The Borrower will promptly notify the
Agent in writing of the occurrence of any Default or Event of
Default, specifying the nature and existence of such Default or
Event of Default and what action the Borrower is taking or
proposes to take with respect thereto. 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 Partner or any of the Guarantors 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 Partner or such Guarantor, the
Borrower shall forthwith give written notice thereof to the
Agent, 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) of any violation of any
Environmental Law that the Borrower or the General Partner
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
(ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any
agency of potential environmental liability, or any federal,
state or local environmental agency or board, that in either case
involves the Project or has the potential to materially affect
the assets, liabilities, financial conditions or operations of
the Borrower or the General Partner or the Agent's liens or
security interests pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The
Borrower will, immediately upon becoming aware thereof, notify
the Agent in writing of any setoff, claims, withholdings or other
defenses to which any of the Collateral, or the Agent's rights
with respect to the Collateral, are subject.
(d) Notice of Nonpayment. The Borrower will
immediately notify the Agent in writing if the Borrower receives
any notice, whether oral or written, from any laborer,
subcontractor, materialman or supplier to the effect that such
laborer, subcontractor, materialman or supplier has not been paid
when due for any labor, equipment or materials furnished in
connection with the construction of the Improvements.
(e) Notice of Litigation and Judgments. The Borrower
will give notice to the Agent in writing within fifteen (15) days
of becoming aware of any litigation or proceedings threatened in
writing or any pending litigation and proceedings affecting the
Project or affecting the Borrower or the General Partner or any
of the Guarantors or to which any of such Persons is to become a
party involving an uninsured claim against any of such Persons
that could reasonably be expected to have a materially adverse
effect on such Person 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,
within ten (10) days of any judgment not covered by insurance,
final or otherwise, against the Borrower, the General Partner or
any of the Guarantors in an amount in excess of $100,000.00
Section 9.8 Existence; Maintenance of Properties. 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 Delaware limited
partnership. The Borrower will cause the General Partner 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. The Borrower
(a) will cause all of its properties used or useful in the
conduct of its business to be maintained and kept in first class
condition, repair and working order and supplied with all
necessary equipment, (b) will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower may be necessary
so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (c) will
continue to engage primarily in the businesses now conducted by
it and in related businesses.
Section 9.9 Insurance. The Borrower will obtain and maintain
insurance with respect to the Project as required by the Security
Deed. The Borrower will maintain with respect to its other
properties and business insurance with financially sound and
reputable insurers against such casualties and contingencies as
shall be in accordance with the general practices of businesses
engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such
periods as may be reasonable and prudent.
Section 9.10 Taxes.
(a) The Borrower will pay all taxes, assessments and
other governmental charges imposed upon it with respect to the
Project or imposed upon the Project at the time and in the manner
required by the Security Deed.
(b) The Borrower 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 its other real properties, sales and activities, or
any part thereof, or upon the income or profits therefrom, that
if unpaid might by law become a lien or charge upon any of its
property; provided that any such tax, assessment, charge or levy
with respect to properties other than the Project need not be
paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the
Borrower shall have set aside on its books adequate reserves with
respect thereto; and provided further that the Borrower will pay
all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien that may have
attached as security therefor. Nothing in this Section 9.10(b) shall
limit, negate or affect the provisions of Section 9.24(a) or (b) hereof.
Section 9.11 Inspection of Project, Other Properties and Books.
(a) The Borrower shall permit the Banks, through the
Agent or any representative designated by the Agent, and the
Construction Inspector, at the Borrower's expense, to visit and
inspect the Project and all materials to be used in the
construction thereof and will cooperate with the Agent and the
Construction Inspector during such inspections (including making
available working drawings of the Plans and Specifications);
provided that this provision shall not be deemed to impose on the
Banks, the Agent or the Construction Inspector any obligation to
undertake such inspections.
(b) The Borrower shall permit the Banks, through the
Agent or any representative designated by the Agent, at the
Borrower's expense, to obtain updated commercial finance
examinations of the books of account of the Borrower and the
General Partner (and to make copies thereof and extracts
therefrom) and to discuss the affairs, finances and accounts of
the Borrower or the General Partner 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.
Section 9.12 Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply with (a) the applicable laws
and regulations wherever its business is conducted, including all
Environmental Laws and all Requirements, (b) the provisions of
its partnership agreement, (c) all agreements and instruments by
which it or any of its properties may be bound, including the
Architect's Contract, the Construction Contract, and all
restrictions, covenants and easements affecting the Project,
(d) all applicable decrees, orders and judgments, and (e) 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, including all Project Approvals.
Section 9.13 Project Approvals. The Borrower will promptly obtain
all Project Approvals not heretofore obtained by the Borrower
(including those listed and described on Schedule 8.22(a) hereto
and any other Project Approvals which may hereafter become
required, necessary or desirable) and will furnish the Agent with
evidence that the Borrower has obtained such Project Approvals
promptly upon its request. The Borrower will give all such
notices to, and take all such other actions with respect to, such
Governmental Authority as may be required under applicable
Requirements to construct the Improvements and to use, occupy and
operate the Project following the completion of the construction
of the Improvements. The Borrower will also promptly obtain all
utility installations and connections required for the operation
and servicing of the Project for its intended purposes, and will
furnish the Agent with evidence thereof. The Borrower will duly
perform and comply with all of the terms and conditions of all
Project Approvals obtained at any time, including all Project
Approvals listed and described on Schedules 8.22(a) and 8.22(b)
hereto.
Section 9.14 Use of Proceeds. The Borrower will use the proceeds
of the Loan solely for the purpose of paying for Project Costs in
accordance with the Project Budget as the same may be revised
from time to time in accordance with the terms hereof.
Section 9.15 Project Costs. The Borrower will pay when due all
Project Costs in excess of the Loan Amount, regardless of the
amount.
Section 9.16 Insufficiency of Loan Proceeds. The Borrower will
deposit funds with the Agent for the benefit of the Banks as
follows: If at any time while the Loan is outstanding or the
Banks have any obligation to make Advances hereunder, the Agent
or the Majority Banks shall in their reasonable discretion
determine that the remaining undisbursed portion of the Loan,
together with the undisbursed balance of Required Equity Funds,
if any, and any other sums previously deposited by the Borrower
with the Agent in connection with the Loan, is or will be
insufficient to fully complete and equip the Improvements in
accordance with the Plans and Specifications, to operate and
carry the Project after completion of the Improvements until
payment in full of the Loan by the Borrower, to pay all other
Project Costs, to pay all interest accrued or to accrue on the
Loan during the term of the Loan from and after the date hereof,
and to pay all other sums due or to become due under the Loan
Documents (or as to any budget category or line item in the
Project Budget, if the undisbursed funds for such category or
line item are or will be insufficient to fully pay for the costs
attributed to such budget category or line item), regardless of
how such condition may be caused, the Borrower will, within ten
(10) Business Days after written notice of such determination
from the Agent, deposit with the Agent such sums of money in cash
as the Agent or the Majority Banks may reasonably require, in an
amount sufficient to remedy the condition described in such
notice, and sufficient to pay any liens for labor, equipment and
materials alleged to be due and payable at that time in
connection with the Improvements, and, at the Agent's or the
Majority Bank's option, no further Advances of the Loan shall be
made by the Banks until the provisions of this Section 9.16 have been
fully complied with. All such deposited sums shall stand as
additional security for the obligations and shall be disbursed by
the Agent on behalf of Banks in the same manner as Advances under
this Agreement before any further Advances of the Loan proceeds
shall be made. Neither the Agent nor the Banks shall have any
obligation to pay Borrower any interest with respect to the
deposited funds.
Section 9.17 Leases. The Borrower will take or cause to be taken
all steps within the power of the Borrower to market and lease
the leasable area of the Improvements to such tenants and upon
such terms and conditions as may be approved by the Agent, as
hereinafter provided. Any proposed standard form of lease to be
used by the Borrower in connection with the Improvements shall be
submitted to and approved by the Agent prior to its submission to
any proposed tenant, and the Borrower will make such amendments,
modifications or additions thereto as may be reasonably required
by the Agent. Borrower shall not, and shall not permit the
management company under the Management Agreement to become a
party to, or agree to come a party to, any Lease without the
prior approval of the Agent. Notwithstanding the foregoing,
following the Agent's approval of the standard form of Lease to
be used by Borrower for the Project, Borrower or the management
company under the Management Agreement may, without the prior
approval of the Agent, enter into Leases with individuals (as
opposed to corporations or any other entities) for a single
apartment unit in the ordinary course of business and in
accordance with sound and customary leasing practices for similar
properties in the Sacramento, California area. Additionally,
Borrower shall not, and shall not permit the management company
under the Management Agreement to, amend, supplement or otherwise
modify, or terminate or cancel, or accept the surrender of, or
grant any concessions to or waive the performance of any
obligations of any tenant under, any Lease, without the prior
approval of the Agent. Notwithstanding anything herein to the
contrary, the Borrower or the management company under the
Management Agreement may amend, supplement or otherwise modify or
terminate or cancel, or accept the surrender of, or grant
concessions to or waive the performance of any obligations of a
tenant under any Lease with an individual for a single apartment
unit in the ordinary course of business and otherwise in a manner
consistent with sound and customary leasing and management
practices for similar properties in the Sacramento, California
area. The Borrower shall not, directly or indirectly, cause or
permit to exist any condition which would result in the
termination or cancellation of, or which would relieve the
performance of any obligations of any tenant under, any Lease.
Section 9.18 Laborers, Subcontractors and Materialmen. The
Borrower will furnish to the Agent, upon request at any time, and
from time to time, affidavits listing all laborers, suppliers,
subcontractors, materialmen, and any other Persons who might or
could claim statutory or common law liens in excess of $50,000.00
and are furnishing or have furnished labor, equipment or material
to the Project or any part thereof, together with affidavits, or
other evidence satisfactory to the Agent, showing that such
parties have been paid (or will be paid from proceeds of the next
Advance) all amounts then due for labor, equipment and materials
furnished to the Project. The Borrower will also furnish to the
Agent, at any time and from time to time upon demand by the
Agent, lien waivers bearing a date not prior to the Drawdown Date
of the immediately preceding Draw Request and prepared on a form
satisfactory to the Agent from the Contractor and such
subcontractors, suppliers or materialmen as the Agent may
reasonably designate.
Section 9.19 Further Assurance of Title. The Borrower will
further assure title as follows: If at any time the Agent or the
Agent's counsel has reason to believe that any Advance is not
secured or will or may not be secured by the Security Deed as a
first lien or security interest on the Project, then the Borrower
shall, within ten (10) days after written notice from the Agent,
do all things and matters reasonably necessary to assure to the
satisfaction of the Agent and the Agent's counsel that any
Advance previously made hereunder or to be made hereunder is
secured or will be secured by the Security Deed as a first lien
or security interest on the Project, and the Agent, at its
option, may decline to make further Advances hereunder until the
Agent has received such assurance; but nothing in this Section 9.19
shall limit the Agent's right to require endorsements extending
the effective date of the Title Policy as herein set forth.
SECTION 9.20 INTENTIONALLY DELETED.
Section 9.21 Publicity. The Borrower will permit the Agent and
the Banks to obtain publicity in connection with the construction
of the Improvements through press releases and participation in
such events as ground breaking and opening ceremonies. The
Borrower will give the Agent and the Banks ample advance notice
of such events and will cooperate with and provide to the Agent
and the Banks as much assistance as possible in connection with
obtaining such publicity.
Section 9.22 Sign Regarding Construction Financing. At Agent's
option, Borrower shall erect promptly and maintain on a suitable
site on the Land a sign indicating that construction financing is
being provided by the Banks, such location and sign to be subject
to the approval of the Agent. Borrower further covenants and
agrees to prevent the destruction or removal of said sign without
the prior written approval of the Agent.
Section 9.23 Further Assurances.
(a) Regarding Construction. The Borrower will furnish
or cause to be furnished to the Agent all instruments, documents,
boundary surveys, footing or foundation surveys, certificates,
plans and specifications, title and other insurance, reports and
agreements and each and every other document and instrument
required to be furnished by the terms of this Agreement or the
other Loan Documents, all at the Borrower's expense.
(b) Regarding Preservation of Collateral. The
Borrower will execute and deliver to the Agent and the Banks such
further documents, instruments, assignments and other writings,
and will do such other acts necessary or desirable, to preserve
and protect the Collateral at any time securing or intended to
secure the Obligations, as the Agent may reasonably require.
(c) Regarding this Agreement. The Borrower will
cooperate with, and will do such further acts and execute such
further instruments and documents as the Agent shall reasonably
request to carry out to its satisfaction the transactions
contemplated by this Agreement and the other Loan Documents.
Section 9.24 Fundamental Changes of Borrower. The Borrower: (a)
does not own and will not own any encumbered asset other than (i)
the Project, and (ii) incidental personal property necessary for
the operation of the Project (which will only be encumbered by
liens in favor of the Agent); (b) is not engaged and will not
engage in any business other than the ownership, management and
operation of the Project; (c) will not enter into any contract or
agreement with any partner, principal or affiliate of the
Borrower or any affiliate of any partner of the Borrower except
upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an
arms length basis with third parties other than an affiliate; (d)
has not made and will not make any loans or advances to any third
party (including any affiliate); (e) is and will be solvent and
pay its debt from its assets as the same shall become due; (f)
has done or caused to be done and will do all things necessary to
preserve its existence, and will not, nor will any partner,
limited or general, or shareholder thereof, amend, modify or
otherwise change its partnership certificate, partnership
agreement, articles of incorporation or by laws in a manner which
adversely affects the Borrower's existence as a single purpose
entity; (g) will conduct and operate its business as presently
conducted and operated; (h) will maintain books and records and
bank accounts separate from those of its affiliates, including
its general partners; (i) will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct
from any other entity (including any affiliate thereof, including
any partner or any affiliate of any partner of the Borrower); (j)
will file its own tax returns; (k) will maintain adequate capital
for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated
business operations; (l) will not seek the dissolution or winding
up, in whole or in part, of the Borrower; (m) will not commingle
the funds and other assets of the Borrower with those of any
general partner, any affiliate or any other person; (n) has and
will maintain its assets in such a manner that it is not costly
or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person; and (o)
does not and will not hold itself out to be responsible for the
debts or obligations of any other person.
Section 9.25. Registered Servicemark. Without the prior written
consent of the Agent, such consent not to be unreasonably
withheld or delayed, the Project shall not be owned or operated
by the Borrower under any registered or protected trademark,
tradename, servicemark or logo. Without limiting the foregoing,
the Agent may condition its consent to the use of any of the
foregoing upon the granting to the Agent for the benefit of the
Banks of a perfected first priority security interest therein.
Section 9.26. ERISA. The Borrower will do, or cause to be done,
all things necessary to ensure that its underlying assets will
not be deemed to be "plan assets" within the meaning of the
regulations promulgated under ERISA at 29 CFR 2510.3-101 (the
"Plan Asset Regulations"). Borrower has certified to the Banks
that it shall conduct its affairs so as to constitute a "real
estate operating company" within the meaning of the Plan Asset
Regulations. Borrower has provided the Agent with a copy of such
certification.
SECTION 10. NEGATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as the Loan
is outstanding or any of the Banks has any obligation to make any
Advances:
Section 10.1 Restriction on Change Orders. Except as permitted in
Section 9.2, the Borrower will not cause, permit or suffer to exist any
deviations from the Plans and Specifications and will not approve
or consent to any change order or construction change directive
without the prior approval of the Agent.
Section 10.2 Restrictions on Easements, Covenants and
Restrictions. The Borrower will not create or suffer to be
created or to exist any easement, right of way, restriction,
covenant, condition, license or other right in favor of any
Person which affects or might affect title to the Project or the
use and occupancy of the Project or any part thereof without (i)
submitting to the Agent the proposed instrument creating such
easement, right of way, covenant, condition, license or other
right, accompanied by a survey showing the exact proposed
location thereof and such other information as the Agent may
reasonably request, and (ii) obtaining the prior approval of the
Agent, such approval not to be unreasonably withheld or delayed.
Section 10.3 No Amendments, Terminations or Waivers.
(a) Except as permitted in Section 9.2, the Borrower will not
amend, supplement or otherwise modify, whether by change order or
otherwise, any of the terms and conditions of the Architect's
Contract or the Construction Contract without in each case the
prior approval of the Majority Banks. The Borrower shall enter
into no contracts of any kind relating to the development,
construction or operation of the Project other than (i) the
Construction Contract for the construction of Improvements to the
Project, and (ii) bona fide service contracts with unaffiliated
third parties terminable without cause upon thirty (30) days
prior written notice, without the prior written consent of the
Agent, such approval not to be unreasonably withheld or delayed.
(b) The Borrower will not, directly or indirectly,
terminate or cancel, or cause or permit to exist any condition
which would result in the termination or cancellation of, or
which would relieve the performance of any obligations of any
other party under, the Architect's Contract or the Construction
Contract.
(c) The Borrower will not, directly or indirectly,
waive or agree or consent to the waiver of, the performance of
any obligations of any other party under the Architect's Contract
or the Construction Contract.
Section 10.4 Restrictions on Indebtedness. The Borrower will not
create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Agent and the Banks arising
under any of the Loan Documents;
(b) current liabilities of the Borrower 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 to the extent that payment
therefor shall not at the time be required to be made in
accordance with the provisions of Section 9.10;
(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 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; and
(e) endorsements for collection, deposit or
negotiation and warranties of products or services, in each case
incurred in the ordinary course of business.
Section 10.5 Restrictions on Liens, Etc. The Borrower will not
(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 thirty (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) permit any liens or claims of lien of
warehousemen, mechanics, materialmen and other like liens and
claims of lien to exist against the Project without causing any
such lien or claim of lien to be released of record or bonded off
in the full amount of the lien plus any interest, costs or
penalties accruing thereon during the pendency of any suit
contesting the same within twenty (20) days after notice thereof
by the Agent to the Borrower; (f) sell, assign, pledge or
otherwise transfer or encumber any accounts, contract rights,
general intangibles, chattel paper or instruments, with or
without recourse; or (g) incur or maintain any obligation to any
holder of Indebtedness of the Borrower which prohibits the
creation or maintenance of any lien securing the Obligations
(collectively "Liens"); provided that the Borrower may create or
incur or suffer to be created or incurred or to exist:
(i) liens to secure taxes, assessments and other
governmental charges in respect of obligations not overdue;
(ii) liens to secure claims for labor, material or
supplies in respect of obligations not overdue to the extent
the same are not required to be released or bonded off
pursuant to this Agreement.
(iii) liens in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 10.4(d);
(iv) liens in favor of the Agent under the Loan
Documents; and
(v) other liens on the Project consisting of
easements, rights of way, covenants and restrictions if and
to the extent the same have been approved by the Agent.
Section 10.6 Restrictions on Investments. The Borrower will not
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;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000; and
(c) 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 thereof that at the
time of purchase have been rated and the ratings for which are
not less than "P 1" if rated by Moody's Investors Services, Inc.,
and not less than "A 1" if rated by Standard and Poor's.
Section 10.7 Merger, Consolidation and Disposition of Assets.
(a) The Borrower will not become a party to any
merger, consolidation or other business combination, or agree to
or effect any asset acquisition or stock acquisition or other
acquisition of beneficial or legal ownership interests.
(b) Except as expressly provided herein, the Borrower
will not become a party to or agree to or effect any disposition
of the Project or any part thereof.
(c) The Borrower will not become a party to or agree
to effect any disposition of assets, other than assets not
included in the Project in the ordinary course of business.
Section 10.8 Sale and Leaseback. The Borrower will not enter into
any arrangement directly or indirectly whereby the Borrower shall
sell or transfer any property owned by it in order then or
thereafter to lease such property or lease other property that
the Borrower intends to use for substantially the same purpose as
the property being sold or transferred.
Section 10.9 Compliance with Environmental Laws. The Borrower
will not 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 Materials; (b) cause
or permit to be located on any of the Real Estate any underground
tank or other underground storage receptacle for Hazardous
Materials; (c) generate any Hazardous Materials on any of the
Real Estate except for de minimis quantities necessary for the
operation of the Project in the ordinary course of business in
full compliance with Environmental Laws; or (d) conduct any
activity at any Real Estate or use any Real Estate in any manner
so as to cause a Release.
Section 10.10 Distributions. The Borrower will not make any
Distributions.
Section 10.11 Restrictions on Partnership Transfers. The Borrower
will not cause or permit (a) the General Partner, or any general
partner, member or shareholder of any direct or indirect general
partner of Borrower, or (b) Walden Development Corporation, the
sole limited partner of Borrower, to assign, pledge, encumber,
mortgage, grant a security interest in, sell, transfer or
otherwise convey in any manner whatsoever, all or a portion of
any such partner's, member's or shareholder's interest in
Borrower, or to admit any new partners to the Borrower, without
the prior written consent of the Majority Banks, which consent
may be granted by the Majority Banks in their sole discretion;
provided, however, that subject to the full and complete
satisfaction of each and every condition set forth in (a)-(c) of
this Section 10.11 below, without the consent of the Majority Banks, an
entity designated by Walden (the "Designee") and reasonably
acceptable to Agent may acquire the entire general partnership
interest of Elk Grove-Lakeside Apartments, L.P. in the Borrower
(the Borrower and each Guarantor hereby acknowledging that Agent
shall have no obligation approve the transfer of the General
Partner's interest in Borrower to any entity (A) that would cause
Walden or WDOP to become, directly or indirectly, (i) the general
partner of Borrower or (ii) liable for the Obligations other than
pursuant to the Guaranty executed by Walden and WDOP, or (B) that
may in any manner affect otherwise limit or the obligations of
Walden or WDOP under the Guaranty executed by Walden and WDOP):
(a) No Default or Event of Default shall have occurred
and be continuing;
(b) The Designee shall have executed an agreement in
form and substance satisfactory to the Agent assuming the
obligations of the General Partner under the Borrower's
partnership agreement and under the Loan Documents; and
(c) The Borrower, the Designee, Walden and WDOP shall
have executed such other agreements, acknowledgments and
ratifications as the Agent may reasonably request, each in form
and substance reasonably satisfactory to Agent.
The Agent and the Banks each acknowledge and agree that upon the
transfer of all of the General Partner's interest in Borrower to
the Designee in accordance with the terms and conditions of this
Section 10.11 (a) General Partner shall not be liable to Agent or any
Bank for any Obligation accruing after the date of such transfer
unless related to or arising out of any act or omission of
General Partner occurring prior to such transfer, (b) the
Guaranty executed by The Grupe Company shall terminate and be
returned to The Grupe Company, and (c) The Grupe Company shall be
released from any liability under the Indemnity Agreement on
account of any loss or damage incurred by any of the "Indemnified
Parties" (as defined in the Indemnity Agreement) as a result of
any occurrence arising after the date of such transfer.
Section 10.12 Improvement District; Covenants, Conditions and
Restrictions. Borrower shall not consent to, vote in favor of,
or directly or indirectly advocate or assist in the incorporation
of any part of the Project into any improvement or other district
without the prior written consent of the Agent in each instance.
Also, Borrower shall not, without the prior written consent of
the Agent in each instance, amend, modify or terminate any
Requirement or any covenants, conditions and restrictions which
Agent has approved, affecting any part of the Project.
SECTION 11. CONDITIONS TO INITIAL ADVANCE
The obligation of the Agent and the Banks to make the
initial Advance shall be subject to the satisfaction of the
following conditions precedent:
Section 11.1 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 the Note.
Section 11.2 Construction Documents. The Construction Contract
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 certified or a fully executed copy of
each such document. The Borrower's Architect and the Contractor
shall have duly executed and delivered to the Agent for the
benefit of the Banks a consent to the assignment of the
Architect's Contract and the Construction Contract, in form and
substance satisfactory to the Agent, and the Agent shall have
received a fully executed copy thereof.
Section 11.3 Subcontracts. The Borrower shall have delivered to
the Agent, and the Agent shall have approved, a list of all
subcontractors and materialmen who have been or, to the extent
identified by the Borrower, whose contract for supplying labor,
equipment or materials for the Project exceeds $25,000.00, a copy
of the standard form of subcontract to be used by the Contractor,
and correct and complete photocopies of all executed subcontracts
and contracts.
Section 11.4 Other Contracts. The Borrower shall have delivered
to the Agent correct and complete photocopies of all other
executed contracts with contractors, subcontractors, engineers or
consultants for the Project, and of all development, management,
brokerage, sales or leasing agreements for the Project.
Section 11.5 Certified Copies of Organization Documents. The
Agent shall have received from the Borrower, each of its direct
and indirect general partners and the Guarantors a copy,
certified as of a recent date by the Secretary of State of the
State of its organization, as applicable, to be true and
complete, of its partnership agreement and certificate or
articles of incorporation, as applicable, and any other of its
organization documents as in effect on such date of
certification, and as to the Borrower and the General Partner, a
certificate from the Secretary of State of the State of
California of their qualification to do business in the State of
California.
Section 11.6 Resolutions; Bylaws. All action necessary for the
valid execution, delivery and performance by the Borrower, each
of its direct and indirect general partners and the Guarantors of
this Agreement and the other Loan Documents to which it 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
Borrower, each of its direct and indirect general partners and
the Guarantors true copies of their respective bylaws (as
applicable) and the resolutions adopted by its partners or board
of directors, as applicable, authorizing the transactions
described herein, each certified by its general partners or
secretary as of a recent date to be true and complete.
Section 11.7 Incumbency Certificate; Authorized Signers. The
Agent shall have received from any direct or indirect general
partner of the Borrower that is a corporation and the Guarantors
an incumbency certificate, dated as of the Closing Date, signed
by a duly authorized officer of such Person, and giving the name
and bearing a specimen signature of each individual who shall be
authorized: (a) to sign, in the name and on behalf of the
Borrower, such general partner or such Guarantor, each of the
Loan Documents to which such Person is or is to become a party;
(b) in the case of the Borrower, to make Draw Requests; and (c)
to give notices and to take other action on its behalf under the
Loan Documents.
Section 11.8 Validity of Liens. The Security Documents shall be
effective to create in favor of the Agent a legal, valid and
enforceable first lien and security interest in the Collateral.
All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of the Agent to
protect and preserve such lien and security interest shall have
been duly effected. The Agent shall have received evidence
thereof in form and substance satisfactory to the Agent.
Section 11.9 Deliveries. The following items or documents shall
have been delivered to the Agent by the Borrower and shall be in
form and substance satisfactory to the Agent:
(a) Plans and Specifications. Two complete sets of
the Plans and Specifications and approval thereof by any
necessary Governmental Authority, with a certification from the
Borrower's Architect (or such other licensed professionals as
Agent in its discretion shall deem acceptable) that the
Improvements to be constructed comply with all Requirements and
Project Approvals and that the Construction Contract
satisfactorily provides for the construction of the Improvements.
(b) Title Policy. The Title Policy, together with
proof of payment of all fees and premiums for such policy and
true and accurate copies of all documents listed as exceptions
under such policy.
(c) Other Insurance. Duplicate originals or certified
copies of all policies of insurance required by the Security Deed
to be obtained and maintained by the Borrower during the
construction of the Improvements, and certificates of insurance
evidencing the insurance required by the Security Deed be
obtained and maintained by the Borrower and the Contractor.
(d) Evidence of Sufficiency of Funds. Evidence that
the proceeds of the Loan will be sufficient to cover all Project
Costs reasonably anticipated to be incurred to complete the
Improvements prior to Completion Date, to carry the Project
through the Maturity Date, and to satisfy the obligations of the
Borrower to the Agent and the Banks under this Agreement.
(e) Evidence of Access, Availability of Utilities,
Project Approvals. Evidence as to:
(i) the methods of access to and egress from the
Project, and nearby or adjoining public ways, meeting the
reasonable requirements of the Project and the status of
completion of any required improvements to such access;
(ii) the availability of water supply and storm and
sanitary sewer facilities meeting the reasonable
requirements of the Project;
(iii) the availability of all other required
utilities, in location and capacity sufficient to meet the
reasonable needs of the Project; and
(iv) the obtaining of all Project Approvals which
are required, necessary or desirable for the construction of
the Improvements and the access thereto, together with
copies of all such Project Approvals.
(f) Environmental Report. An environmental site
assessment report or reports of one or more qualified
environmental engineering or similar inspection firms approved by
the Agent, which report or reports shall indicate a condition of
the Land and any existing improvements thereon in compliance with
all Requirements and in all respects satisfactory to the Agent in
its sole discretion and upon which report or reports the Agent
and the Banks are expressly entitled to rely.
(g) Soils Report. A soils report for the Land
prepared by a soils engineer approved by the Agent, which report
shall indicate that, based upon actual surface and subsurface
examinations of the Land, the soils conditions are fully
satisfactory for the proposed construction and operation of the
Improvements in accordance with the Plans and Specifications.
(h) Survey. A Survey of the Land (and any existing
improvements thereon) and Surveyor's Certificate.
(i) Taxes. Evidence of payment of all real estate
taxes and municipal charges on the Land (and any existing
improvements thereon) which were due and payable prior to the
Closing Date.
(j) INTENTIONALLY DELETED.
(k) Draw Request. A Draw Request complying with the
provisions of Section 3.1 hereof.
(l) Form Lease. The standard form of Lease to be used
by the Borrower in connection with the Improvements in form and
substance satisfactory to the Agent.
Section 11.10 Construction Inspector Report. The Agent shall have
received a report or written confirmation from the Construction
Inspector that (a) the Construction Inspector has reviewed the
Plans and Specifications, (b) the Plans and Specifications have
been received, reviewed and approved by each Governmental
Authority to which the Plans and Specifications are required
under applicable Requirements to be submitted, (c) the
Construction Contract satisfactorily provides for the
construction of the Improvements, and (d) in the opinion of the
Construction Inspector, construction of the Improvements can be
completed on or before the Completion Date for an amount not
greater than the amount allocated for such purpose in the Project
Budget.
Section 11.11 Legal Opinions. The Agent shall have received
favorable opinions in form and substance satisfactory to the
Agent and the Agent's counsel, addressed to the Agent and the
Banks and dated as of the Closing Date, from counsel to the
Borrower, the General Partner, the Guarantors and such other
parties as the Agent may reasonably require as to such matters as
the Agent shall reasonably request (including without limitation
an opinion that the assets of the Borrower will not be
consolidated with the assets of any other entity or the General
Partner, in the event of bankruptcy or insolvency of such entity
or the General Partner).
Section 11.12 Lien Search. The Agent shall have received a
certification from Title Insurance Company or counsel
satisfactory to the Agent (which shall be updated from time to
time at the Borrower's expense upon request by the Agent) that a
search of the public records disclosed no conditional sales
contracts, security agreements, chattel mortgages, leases of
personalty, financing statements or title retention agreements
which affect the Collateral.
Section 11.13 Approval of Existing Work. The Agent shall have
received such items contemplated by Section 12.5 as the Agent may
require with respect to any work done to the Land or any
construction of the Improvements performed prior to the date
hereof, if any.
Section 11.14 Notices. All notices required by any Governmental
Authority under applicable Requirements to be filed prior to
commencement of construction of the Improvements shall have been
filed.
Section 11.15 Appraisal. The Agent shall have received and
approved an Appraisal, in form and substance satisfactory to the
Majority Banks, stating that the Project, assuming completion in
accordance with the Plans and Specifications, has an Appraised
Value of at least the Loan Amount.
Section 11.16 Commitment Fee. The Borrower shall have paid to the
Agent the commitment fee pursuant to Section 5.1.
Section 11.17 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 Drawdown Date of the initial Advance, and on the Drawdown
Date of the initial Advance, there shall exist no Default or
Event of Default.
Section 11.18 Representations and Warranties. The representations
of warranties made by the Borrower and the Guarantors in the Loan
Documents or otherwise made by or on behalf of the Borrower, the
General Partner or the Guarantors in connection therewith or
after the date thereof shall have been true and correct in all
respects when made and shall also be true and correct in all
respects on the Drawdown Date of the initial Advance.
Section 11.19 Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement
and the other Loan Documents shall be satisfactory to the Agent
and the Agent's 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
counsel may reasonably require.
Section 11.20. Other. The Agent shall have received such other
documents, instruments, certificates, opinions, assurances,
consents and approvals as the Agent or the Agent's counsel may
reasonably have requested.
SECTION 12. CONDITIONS OF SUBSEQUENT ADVANCES
The obligation of the Banks to make any Advance after the
initial Advance shall be subject to the satisfaction of the
following conditions precedent:
Section 12.1 Prior Conditions Satisfied. All conditions precedent
to the initial Advance and any prior Advance shall continue to be
satisfied as of the Drawdown Date of such subsequent Advance.
Section 12.2 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 Drawdown Date of such Advance, and on the Drawdown Date of
such Advance there shall exist no Default or Event of Default.
Section 12.3 Representations and Warranties. Each of 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 Partner or the Guarantors in
connection therewith after the date thereof shall have been true
and correct in all respects on the date when made and shall also
be true and correct in all material respects on the Drawdown Date
of such Advance (except to the extent of changes disclosed in
writing to Agent resulting from transactions contemplated or
permitted by the Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are
not materially adverse).
Section 12.4 No Damage or Taking. The Improvements shall not have
been injured or damaged by fire, explosion, accident, flood or
other casualty and neither the Improvements nor the Land shall be
affected by any condemnation proceeding, unless the Agent shall
have received insurance proceeds or condemnation award sufficient
in the judgment of the Agent to effect the satisfactory
restoration of the Improvements and to permit the completion
thereof on or prior to the Completion Date and the Borrower is
entitled otherwise to receive the net proceeds thereof pursuant
to the Security Deed.
Section 12.5 Receipt of the Agent. The Agent shall have received:
(a) Draw Request. A Draw Request complying with the
requirements hereof, including those set forth in Section 3.1 hereof;
(b) Endorsement to Title Policy. A CLTA Form 122
"date down" endorsement or its equivalent to the Title Policy
indicating no change in the state of title and containing no
survey exceptions not approved by the Agent, which endorsement
shall, expressly or by virtue of a proper "pending disbursements"
clause or endorsement in the Title Policy, increase the coverage
of the Title Policy to the aggregate amount of all proceeds of
the Loan advanced on or before the effective date of such
endorsement. Additionally, the Agent shall have received a CLTA
Form 102.5 endorsement or its equivalent to the Title Policy upon
completion of the foundation for the Project;
(c) Current Survey. An updated Survey if required by
the Title Insurance Company or the Agent after approval of the
initial survey. The Agent shall require updated surveys only to
show completed foundations and, upon completion, to show the
Improvements "as-built", unless the Agent shall reasonably
believe that there exists any encroachment, any matter which
might materially and adversely affect title to the Project, or
any material deviation from the Plans and Specifications, in
which event additional updated surveys may be required by the
Agent;
(d) Approval by Construction Inspector. Approval of
the Draw Request for such Advance by the Construction Inspector,
accompanied by a certificate or report from the Construction
Inspector to the effect that in its opinion, based on on-site
observations and submissions by the Contractor, the construction
of the Improvements to the date thereof was performed in a good
and workmanlike manner and in accordance with the Plans and
Specifications, stating the estimated total cost of construction
of the Improvements, stating the percentage of in-place
construction of the Improvements, and stating that the remaining
non-disbursed portion of the Loan and Required Equity Funds
allocated for such purpose in the Project Budget is adequate to
complete the construction of the Improvements;
(e) Contracts. Evidence that one hundred percent
(100%) of the cost of the remaining construction work is covered
by a firm fixed price or guaranteed maximum price contract or
subcontracts, or orders for the supplying of materials, with
contractors, subcontractors, materialmen or suppliers
satisfactory to the Agent.
Section 12.6 Release of Retainage. In addition to the conditions
hereinbefore set forth in this Section 12, the Banks' obligation to make
any Advance of Retainage shall, except as provided in Section 2.3, be
subject to receipt by the Agent, of the following:
(a) Project Approvals. Evidence satisfactory to the
Agent that the Borrower has obtained all Project Approvals from,
given all notices to, and taken all such other actions with
respect to, such Governmental Authority as may be required under
applicable Requirements for the permanent use and occupancy of
the Improvements for their intended uses, together with copies of
all such Project Approvals.
(b) Approval by Construction Inspector. Notification
from the Construction Inspector to the effect that the
Improvements have been completed in a good and workmanlike manner
in accordance with the Plans and Specifications.
(c) Final Survey. A final Survey acceptable to the
Agent showing the as-built location of the completed
Improvements.
(d) [INTENTIONALLY DELETED]
(e) Certificate of the Borrower's Design Professional.
A certificate of the Borrower's Architect or such other licensed
design professional(s) acceptable to Agent that the Improvements
have been completed in accordance with the Plans and
Specifications and that the Improvements comply with all
applicable Requirements and Project Approvals and are in all
respects ready for occupancy.
(f) Payment of Costs. Evidence satisfactory to the
Agent that all sums due in connection with the construction of
the Improvements have been paid in full (or will be paid out of
the funds requested to be advanced) and that no party claims or
has a right to claim any statutory or common law lien arising out
of the construction of the Improvements or the supplying of
labor, material, equipment and/or services in connection
therewith.
(g) Final Lien Waivers. Final unconditional lien
waivers in such form as may be permitted by applicable law to
remove or dissolve any unfiled lien claims, or such other form
satisfactory to the Agent, from each Contractor and such
suppliers, subcontractors and materialmen as may be reasonably
requested by the Agent, duly executed and notarized.
(h) Notice of Completion. Evidence satisfactory to
the Agent that a valid Notice of Completion for the Improvements
has been recorded in the appropriate public records.
(i) INTENTIONALLY DELETED.
(j) Warranties. Copies of the warranty issued by the
Contractor to the Borrower pursuant to the Construction Contract
and of all other warranties issued to the Borrower by
subcontractors and manufacturers for labor performed and
materials supplied in connection with the construction of the
Improvements.
(k) Insurance. Duplicate original or certified copies
of all policies of insurance required by the Security Deed to be
obtained and maintained by the Borrower following completion of
construction of the Improvements.
(l) Title Endorsement. An endorsement to the Title
Policy changing the effective date thereof to the date of the
satisfaction by the Borrower of the conditions set forth in this
Section 12.6 and insuring lien free completion of the Improvements,
which endorsement shall expressly or by virtue of a "pending
disbursements" clause increase the coverage of the Title Policy
to the aggregate amount of all Advances outstanding on the
effective date of such endorsement without additional exceptions
except for matters approved by the Agent.
SECTION 13. EVENTS OF DEFAULT AND REMEDIES
Section 13.1 Events of Default. 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) any failure by the Borrower to pay as and when due
and payable any interest on or principal of or other sum payable
under the Notes, whether on the Maturity Date or any accelerate
date of maturity or at any other date fixed for payment; or
(b) any failure by the Borrower to deposit with the
Agent any funds required by Section 9.16 hereof to be deposited with the
Agent, at the time and otherwise in accordance with Section 9.16; or
(c) any failure by the Borrower to pay as and when due
and payable any other sums to be paid by the Borrower to the
Agent or the Banks under this Agreement or any of the other Loan
Documents; or
(d) title to the Collateral is or becomes
unsatisfactory to the Majority Banks by reason of any lien,
charge, encumbrance, title condition or exception (including
without limitation, any mechanic's, materialman's or similar
statutory or common law lien or notice thereof), and such matter
causing title to be or become unsatisfactory is not cured or
removed (including by bonding) within twenty (20) days after
notice thereof from the Agent to the Borrower; or
(e) any refusal by the Title Insurance Company to
insure any Advance as being secured by the Security Deed as a
valid first lien and security interest on the Project and
continuance of such refusal for a period of twenty (20) days
after notice thereof by the Agent to the Borrower; or
(f) the Improvements are not completed by the
Completion Date or, in the reasonable judgment of the Majority
Banks, construction of the Improvements will not be completed by
the Completion Date; or
(g) the Project or any part thereof is injured by
fire, explosion, accident, flood or other casualty, unless the
Agent shall have received insurance proceeds sufficient in the
reasonable judgment of the Majority Banks to effect the
satisfactory restoration of the Project and to permit the
completion of the Improvements on or prior to the date that is
six (6) months prior to the Maturity Date and the Borrower is
otherwise entitled to receive the net insurance proceeds to
restore the Project as provided in the Security Deed; or
(h) the Project or any part thereof is subject to a
Taking either temporarily or permanently; or
(i) any cessation at any time in construction of the
Improvements for more than ten (10) consecutive days except for
strikes, acts of God, fire or other casualty, or other causes
entirely beyond the Borrower's control, or any cessation at any
time in construction of the Improvements for more than thirty
(30) consecutive days, regardless of the cause thereof; or
(j) any failure by the Borrower to duly observe or
perform any term, covenant, condition or agreement contained in
Section 9.9, 9.14, 9.20 or 10 hereof; or
(k) any Guarantor denies that such Guarantor has any
liability or obligations under the Guaranty or the Indemnity
Agreement, or shall notify the Agent or any Bank of such
Guarantor's intention to attempt to cancel or terminate the
Guaranty or the Indemnity Agreement, or shall fail to observe or
comply with any term, covenant, condition and agreement under the
Guaranty or the Indemnity Agreement; or
(l) any representation or warranty made or deemed to
be made by or on behalf of the Borrower, the General Partner or
any Guarantor in this Agreement or in any of the other Loan
Documents, or in any report, certificate, financial statement,
Draw Request, document or other instrument delivered pursuant to
or in connection with this Agreement, any Advance or any of the
other Loan Documents, shall prove to have been false or incorrect
in any material respect upon the date when made or deemed to be
made or repeated; or
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of the Borrower, the General
Partner or any Guarantor, or any sale, transfer or other
disposition of all or substantially all of the assets of the
Borrower, the General Partner or any Guarantor, other than as
permitted under the terms of this Agreement or the applicable
Guaranty; or
(n) any suit or proceeding shall be filed against the
Borrower, the General Partner, any Guarantor or the Project 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 the
Guarantor to perform each and every one of their respective
obligations under and by virtue of the Loan Documents; or
(o) any failure by the Borrower to obtain any Project
Approvals, or the revocation or other invalidation of any Project
Approvals previously obtained; or
(p) Marshall B. Edwards, Mark S. Dillinger and the
members of the board of directors of Walden that are also
officers of Walden 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; or
(q) any change in the legal or beneficial ownership of
the Borrower, the General Partner, any general partner of any
direct or indirect partner of the Borrower or any Guarantor
except as permitted in this Agreement or the applicable Guaranty;
or
(r) any failure by the Borrower, the General Partner
or any Guarantor or any of their respective Subsidiaries to pay
at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received, or any failure
to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received 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; or
(s) the Borrower, the General Partner, any Guarantor
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 the Borrower, the General Partner or any Guarantor or
of any substantial part of the assets of any such Person,
including, without limitation, the Project, (ii) shall commence
any case or other proceeding relating to the Borrower, the
General Partner or any Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, composition,
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;
(t) a petition or application shall be filed for the
appointment of a trustee or other custodian, liquidator or
receiver of the Borrower, the General Partners or any Guarantor
or any of their respective Subsidiaries or any substantial part
of the assets of any such Person, including, without limitation,
the Project, or a case or other proceeding shall be commenced
against any such Person under any bankruptcy, reorganization,
arrangement, insolvency, composition, 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 sixty (60) days following the filing or
commencement thereof;
(u) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the
Borrower, the General Partner, any Guarantor 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;
(v) any uninsured final judgment shall be rendered
against the Borrower or the General Partner, or any uninsured
final judgment shall be rendered against any of the Guarantors
such that, with other outstanding uninsured final judgments
against such Persons, the amount of such uninsured final
judgments exceeds in the aggregate $1,000,000.00, and shall
remain in force, undischarged, unsatisfied and unstayed for more
than thirty (30) days, whether or not consecutive; or
(w) 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 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 the Borrower or the
Guarantor which is a party thereto or any of their respective
stockholders, partners or beneficiaries, 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; or
(x) the Borrower or the General Partner or any
Guarantor shall be indicted for a federal crime, a punishment for
which could include the forfeiture of any of its assets; or
(y) any failure by the Borrower, the General Partner
or the Guarantors to duly observe or perform any other term,
covenant, condition or agreement in this Agreement or in any of
the other Loan Documents (other than those specified above in
this Section 13.1); or
(z) Marshall B. Edwards shall cease to be the
President of, or Mark S. Dillinger shall cease to be the Chief
Financial 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
(aa) any "Event of Default", as defined in any of the
other Loan Documents, shall occur; or
(bb) without limiting Section 13.1(r) above, any "Event of
Default" (as defined in the Walden Revolving Credit Agreement)
occurs under the Walden Revolving Credit Agreement (the parties
hereto covenanting and agreeing, for the purposes of this
Agreement, that in the event the Walden Revolving Credit
Agreement or the other "Loan Documents" (as such term is defined
in the Walden Revolving Credit Agreement) shall terminate or no
longer be in full force and effect prior to the payment and
performance by the Borrower of all of the Obligations, the
provisions of the Walden Revolving Credit Agreement and such
"Loan Documents" shall for the purposes hereof continue in full
force and effect as if the same had not been terminated and the
Walden Revolving Credit Agreement and such "Loan Documents"
remained in full force and effect); or
(cc) INTENTIONALLY DELETED.
(dd) the occurrence of a default by any party under the
Management Agreement, or the termination of the Management
Agreement without the prior written consent of Agent;
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 13.1(s),
Section 13.1(t) or Section 13.1(u), 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 13.1A. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 13.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the
occurrence of any failure described in Section 13.1(a) or Section 13.1(b) or
Section 13.1(c), 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 13.1(y) 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 excluded from any provision of cure of
defaults contained in any of the other Loan Documents.
Section 13.2. Termination of Commitments. If any one or more
Events of Default specified in Section 13.1(s), Section 13.1(t) or
Section 13.1(u) 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 Advances 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 Advances to the Borrower. No termination
under this Section 13.2 shall relieve the Borrower, the General Partner
or the Guarantors of their respective obligations to the Banks
arising under this Agreement or the other Loan Documents.
Section 13.3 Completion of Project. If any one or more of the
Events of Default shall have occurred, and whether or not the
Agent or the Majority Banks shall have terminated the Banks'
obligations to make Advances and/or accelerated the maturity of
the Loan pursuant to this Agreement as provided above, the Agent,
if the construction of the Improvements has not been fully
completed, may cause the Project to be completed and may enter
upon and take possession of the Land, whether in person, by agent
or by court appointed receiver, and construct, equip and complete
the Project in accordance with the Plans and Specifications, with
such changes therein as the Majority Banks may, from time to
time, and in their sole discretion, deem appropriate. In
connection with any construction of the Project undertaken by the
Agent pursuant to the provisions of this Section 13.3, the Agent may:
(a) use any funds of the Borrower, including any
balance which may be held by the Agent as security or in escrow,
and any funds remaining unadvanced under the Loan;
(b) employ existing contractors, subcontractors,
agents, architects, engineers, and the like, or terminate the
same and employ others;
(c) employ security watchmen to protect the Project;
(d) make such additions, changes and corrections in
the Plans and Specifications as shall, in the judgment of the
Agent or the Majority Banks, be necessary or desirable;
(e) take over and use any and all Personal Property
contracted for or purchased by the Borrower, if appropriate, or
dispose of the same as the Agent or the Majority Banks see fit;
(f) execute all applications and certificates on
behalf of the Borrower which may be required by any Governmental
Authority or Requirements or contract documents or agreements;
(g) pay, settle or compromise all existing or future
bills and claims which are or may be liens against the Project,
or may be necessary for the completion of the Improvements or the
clearance of title to the Project;
(h) complete the marketing and leasing of leasable
space in the Improvements, enter into new Leases, and modify or
amend existing Leases, all as the Agent or the Majority Banks
shall deem to be necessary or desirable;
(i) prosecute and defend all actions and proceedings
in connection with the construction of the Improvements or in any
other way affecting the Land or the Improvements; and
(j) take such action hereunder, or refrain from acting
hereunder, as the Agent or the Majority Banks may, in their sole
and absolute discretion, from time to time determine, and without
any limitation whatsoever, to carry out the intent of this Section 13.3.
The Borrower shall be liable to the Agent and the Banks for all
costs paid or incurred for the construction, equipping and
completion of the Project, whether the same shall be paid or
incurred pursuant to the provisions of this Section 13.3 or otherwise,
and all payments made or liabilities incurred by the Agent and
the Banks hereunder of any kind whatsoever shall be deemed
Advances made to the Borrower under this Agreement and shall be
secured by the Security Deed and the other Security Documents.
To the extent that any costs so paid or incurred by the Agent or
the Banks, together with all other Advances made by the Agent and
the Banks hereunder, exceed the Loan Amount, the amount of such
excess costs shall be added to the Loan Amount, and the
Borrower's obligation to repay the same, together with interest
thereon at the Default Rate, shall be deemed to be evidenced by
this Agreement and secured by the Security Deed and the other
Security Documents. In the event the Agent takes possession of
the Project and assumes control of such construction as
aforesaid, (A) Agent shall not be obligated to continue such
construction longer than it shall see fit and may thereafter, at
any time, change any course of action undertaken by it or abandon
such construction and decline to make further payments for the
account of the Borrower whether or not the Project shall have
been completed, and (B) Agent shall not have assumed any
liability to Borrower or any other Person for completing the
Improvements or for the quality of any such construction. For
the purpose of this Section 13.3, the construction, equipping and
completion of the Project shall be deemed to include any action
necessary to cure any Event of Default by the Borrower under any
of the terms and provisions of any of the Loan Documents.
Section 13.4 Other Remedies. If any one or more of the Events of
Default shall have occurred, and whether or not the Agent or the
Majority Banks shall have terminated the Banks' obligations to
make Advances pursuant to Section 13.2 and/or accelerated the maturity
of the Loan pursuant to Section 13.1, the Agent may proceed to protect
and enforce the rights and remedies of the Agent and the Banks
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 as permitted by applicable law the obtaining
of the ex parte appointment of a receiver, and, if any amount
owed to the Agent or the Banks shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the Agent or the Banks.
No remedy conferred upon the Agent or the Banks or the holder of
any Note in this Agreement or in any of the other Loan Documents
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 thereunder or now or
hereafter existing at law or in equity or by statute or any other
provision of law.
Section 13.5 Distribution of Collateral Proceeds. In the event
that, following the occurrence or during the continuance of any
Default or Event of Default, the Agent receives any monies in
connection with the enforcement of any of the Security Documents,
or otherwise with respect to the realization upon any of the
Collateral, 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 respect of the
Collateral 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) in the event that any Bank shall have
wrongfully failed or refused to make an advance under Section 3.7 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 (ii) Obligations owing to the Banks with respect to each
type of Obligation such as interest, principal, fees and
expenses, 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 13.6 Power of Attorney. For the purposes of carrying out
the provisions and exercising the rights, remedies, powers and
privileges granted by or referred to in this Section 13, the Borrower
hereby irrevocably constitutes and appoints the Agent its true
and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and do and
perform any acts which are referred to in this Section 13, in the name
and on behalf of the Borrower. The power vested in such
attorney-in-fact is, and shall be deemed to be, coupled with an
interest and irrevocable.
Section 13.7 Waivers. The Borrower hereby waives to the extent
not prohibited by applicable law (a) all presentments, demands
for performance, notices of nonperformance (except to the extent
required by the provisions hereof or of any of the other Loan
Documents), protests and notices of dishonor, (b) any requirement
of diligence or promptness on the Agent's or the Bank's part in
the enforcement of their rights (but not fulfillment of its
obligations) under the provisions of this Agreement or any of the
other Loan Documents, and (c) any and all notices of every kind
and description which may be required to be given by any statute
or rule of law (other than those required to be delivered to the
Borrower pursuant to the Loan Documents) not and any defense of
any kind which the Borrower may now or hereafter have with
respect to its liability under this Agreement or under any of the
other Loan Documents.
SECTION 14. 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 the Bank 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 in the possession of such Bank may be
applied to or set off against the payment of the Obligations and
any and all other liabilities, direct, or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising, of the Borrower to such Bank. Each of the Banks agrees
with each other Bank not to exercise any such setoff rights
without the prior written consent of the Agent and that if such
Bank shall receive from 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 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 15. THE AGENT.
Section 15.1. 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 15.2. 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 15.3. 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, shall be liable for losses due to its willful
misconduct or gross negligence.
Section 15.4. 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, in the other Loan Documents, or in
any agreement, instrument, Draw Request or certificate delivered
in connection therewith 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 any Guarantor 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 any Guarantor 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, any of
their respective Subsidiaries or the value of or ability of the
Banks to realize upon any Collateral. 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 15.5. 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 Advance or (ii) to comply with the provisions of Section 14 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 Guarantor, whether on account of outstanding Advances,
interest, fees or otherwise, to the remaining nondelinquent Banks
for application to, and reduction of, their respective pro rata
shares of all outstanding Advances. 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 Advances. 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
Advances 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 Advances
have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing
such delinquency.
Section 15.6. Holders of Notes. Subject to the terms of Article
21, 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 15.7. 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 16), 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 15.8. Agent as Bank. In its individual capacity, any Bank
acting as Agent shall have the same obligations and the same
rights, powers and privileges in respect to its Commitment and
the Advances made by it, and as the holder of any of the Notes as
it would have were it not also the Agent.
Section 15.9. Resignation. The Agent may resign at any time by
giving 60 calendar 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 appointed and shall have accepted such
appointment within thirty (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 or removed 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. Upon any change
in the Agent under this Agreement, the resigning Agent shall
execute such assignments of and amendments to the Loan Documents
as may be necessary to substitute the successor Agent for the
resigning Agent.
Section 15.10. 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 16. 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 stamp or
intangibles taxes in connection with the Security Deed or the
other 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 title insurance
premiums and the reasonable fees, expenses and disbursements of
the Agent's counsel or any local 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 21.4), the making of each Advance
hereunder, and amendments, modifications, approvals, consents or
waivers hereto or hereunder, (d) the reasonable fees, expenses
and disbursements of the Agent (determined in good faith and in
accordance with the Agent's internal policies applicable
generally to its customers) incurred in connection with the
preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, and the making
of each Advance hereunder (including all , appraisal fees,
engineer's fees, charges for commercial finance examinations and
engineering and environmental reviews, all fees paid to the
Construction Inspector and surveyor fees), (e) all reasonable
out-of-pocket expenses, including reasonable attorneys' fees and
costs, which attorneys may be employees of the Agent or any Bank,
and the fees and costs of consultants, accountants, auctioneers,
receivers, brokers, property managers, appraisers, investment
bankers or other experts retained by the Agent in connection with
(i) the enforcement of or preservation of rights under any of the
Loan Documents against the Borrower, the General Partner or any
Guarantor 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 Bank's relationship with the
Borrower, the General Partner or the Guarantors, (f) all
reasonable fees, expenses and disbursements (including reasonable
attorney's fees and costs) incurred by BKB in connection with the
syndication of interests in the Loan by BKB, (g) all reasonable
costs, expenses and disbursements incurred by the Agent in
providing draw requests, documents, financial statements and
reports, or other information from time to time provided to the
Banks, and (h) all reasonable fees, expenses and disbursements of
the Agent incurred in connection with UCC searches, UCC filings,
title rundowns or title searches. The covenants of this Section 16
shall survive payment or satisfaction of payment of all amounts
owing with respect to the Note.
SECTION 17. INDEMNIFICATION
The Borrower agrees to indemnify and hold harmless the Agent
and each Bank 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
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 17 based upon any agreement, arrangement or action made or
taken, or alleged to have been made or taken by the Borrower, the
General Partner, the Guarantors or any of their respective
Subsidiaries, (b) any disbursement of the proceeds of any of the
Advances, (c) any condition of the Project whether related to the
quality of construction or otherwise, (d) any actual or proposed
use by the Borrower of the proceeds of any of the Advances, (e)
any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Borrower, the
General Partner, the Guarantors or any of their respective
Subsidiaries, (f) any actual or alleged violation of any
Requirements or Project Approvals, (g) the Borrower entering into
or performing this Agreement or any of the other Loan Documents
or (h) with respect to the Borrower and the General Partner and
their respective properties and assets, the violation by Borrower
or the General Partner of any Environmental Law, the Release or
threatened Release of any Hazardous Materials or any action,
suit, proceeding or investigation brought or threatened with
respect to any Hazardous Materials (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,
the Borrower shall not be obligated under this Section 17 to indemnify
any Person for liabilities arising from such Person's own gross
negligence or willful misconduct. In litigation, or the
preparation therefor, the Agent and the Banks 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. The
obligations of the Borrower under this Section 17 shall survive the
repayment of the Loan and shall continue in full force and effect
so long as the possibility of such claim, action or suit exists.
If, and to the extent that, the obligations of the Borrower under
this Section 17 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.
SECTION 18. LIABILITY OF THE AGENT AND THE BANKS
No action shall be commenced by the Borrower for any claim
against the Agent or any Bank under the terms of this Agreement
unless written notice thereof, specifically setting forth the
claim of the Borrower, shall have been given to such Person
within fifteen (15) days after the Borrower has acquired
knowledge of the occurrence of the event which the Borrower
alleges gave rise to such claim, and failure to give such notice
shall constitute a waiver of any such claim. The liability of
the Agent or any Bank to the Borrower for any breach of the terms
of this Agreement by such Person shall not exceed a sum equal to
the amount which such Person shall be determined to have failed
to advance in consequence of a breach by such Person of its
obligations under this Agreement, together with interest thereon
at the rate payable by the Borrower under the terms of the Note
for Advances which the Borrower is to receive hereunder, computed
from the date when the Advance should have been made by such
Person to the date when the Advance is, in fact, made by such
Person, and, upon the making of any such payment by such Person
to the Borrower, the same shall be treated as an Advance under
this Agreement, in the same fashion as any other Advance under
the terms of this Agreement. In no event shall the Agent or any
Bank be liable to the Borrower, or anyone claiming by, under or
through the Borrower, for any special, exemplary, punitive or
consequential damages, whatever the nature of the breach of the
terms of this Agreement by the Agent or any Bank, such damages
and claims therefor being expressly waived by the Borrower.
SECTION 19. RIGHTS OF THIRD PARTIES
All conditions to the performance of the obligations of the
Agent and the Banks under this Agreement, including the
obligation to make Advances, are imposed solely and exclusively
for the benefit of the Agent and the Banks and no other Person
shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that the
Agent and the Banks will refuse to make Advances in the absence
of strict compliance with any or all thereof and no other Person
shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in
whole or in part by the Agent and the Banks at any time if in
their sole discretion they deems it desirable to do so. In
particular, the Agent and the Banks make no representations and
assume no obligations as to third parties concerning the quality
of the construction by the Borrower of the Improvements or the
absence therefrom of defects.
SECTION 20. 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 in other papers delivered by or on behalf of
the Borrower, the General Partner, the Guarantors, or any of
their respective Subsidiaries pursuant hereto and thereto shall
be deemed to have been relied upon by the Agent and the Banks,
notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Banks of the
Advances, 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 Advances.
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 Partner, 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 21. ASSIGNMENT AND PARTICIPATION.
Section 21.1. 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 Advances 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 Partner 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, (f) such assignment is subject to the terms of any
intercreditor agreement among the Banks and the Agent, and
(g) such assignee shall acquire an interest in the Loan of not
less than $5,000,000.00. 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 21.2, 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 Partner, and the Guarantors.
Section 21.2. 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 Loan 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 21.3. 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 (5) 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 reasonably 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 21.4. 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, the General Partner or the Guarantors
except the rights granted to the Banks pursuant to Section 14, (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 Partner 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 21.5. 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 21.6. 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 21.7. 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 22. 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 23. NOTICES
Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement (hereinafter in
this Section 23 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 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:
Walden/Grupe Elk Grove, L.P.
c/o The Grupe Company
3255 W. March Lane, 4th Floor
Stockton, California 95219
Attn: Ms. Niem Dang
With a copy to:
Robin K. Minick, Esq.
Munsch Hardt Kopf Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
and to each other Bank which may hereafter become a party to the
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 the 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 24. 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 CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT
THE ADDRESS SPECIFIED IN SECTION 23 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 25. HEADINGS.
The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions
hereof.
SECTION 26. 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 27. 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 30.
SECTION 28. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.
THE BORROWER, THE AGENT AND THE BANKS EACH 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 28.
BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW
THIS SECTION 28 WITH ITS LEGAL COUNSEL AND THAT BORROWER AGREES TO THE
FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.
SECTION 29. 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 30. 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; a change in the
manner of distribution of any payments to the Banks or the Agent;
the release of the Borrower or a Guarantor 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 30; 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 15 may not be amended
without the written consent of the Agent. 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 31. 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 32. 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 33. 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.
SECTION 34. REPLACEMENT OF NOTES.
Upon receipt of evidence reasonably satisfactory to the
Borrower of the loss, theft, destruction or mutilation of any
Note, and in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory
to the Borrower or, in the case of any such mutilation, upon
surrender and cancellation of the applicable Note, the Borrower
will execute and deliver, in lieu thereof, a replacement Note,
identical in form and substance to the applicable Note and dated
as of the date of the applicable Note and upon such execution and
delivery all references in the Loan Documents to such Note shall
be deemed to refer to such replacement Note.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument as of the date first set forth
above.
WALDEN/GRUPE ELK GROVE, L.P., a
Delaware limited partnership
By: Elk Grove-Lakeside Apartments,
L.P., a California limited
partnership, general partner
By: LSAC G.P. Corporation, a
California corporation,
general partner
By:___________________________
Name:________________________
Print or Type
Name
Title:__________________________
[SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
BankBoston, N.A., individually and
as Agent
By: _______________________________
Jeffrey L. Warwick,
Director
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jeffrey L. Warwick
Facsimile: 770/390-8434
and
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Facsimile: 617/434-7108
I:\FINANCE\SECFIL~1\10-K-97\EX-10-25.WPD
3/11/98
<PAGE>
EXHIBIT A
Construction Schedule
EXHIBIT B
Disbursement Schedule
<PAGE>
EXHIBIT C
Plans and Specifications
<PAGE>
EXHIBIT D
Project Budget<PAGE>
EXHIBIT E
Borrower's Requisition
<PAGE>
EXHIBIT F
Contractor's Requisition Certificate
<PAGE>
EXHIBIT G
Borrower's Architect's Requisition Certificate
<PAGE>
EXHIBIT H
FORM OF NOTE
<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
Name and Address Commitment Commitment
Percentage
BankBoston $19,423,157.00 100%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
LIBOR Lending Office
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
<PAGE>
SCHEDULE 1.1
DESCRIPTION OF PHASES
<PAGE>
SCHEDULE 8.14
TRANSACTIONS WITH AFFILIATES
1. _____ shall serve as the manager of the Project.
SCHEDULE 8.22
PROJECT APPROVALS
SCHEDULE 8.36
SCHEDULE OF CONTRACTORS AND SUBCONTRACTORS
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.. . . . . . . . . .1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Rules of Interpretation. . . . . . . . . . . . . . . 14
Section 2. AGREEMENT TO MAKE ADVANCES; LIMITATIONS . . . . . . . . . 15
Section 2.1 Agreement to Make Advances. . . . . . . . . . . . . 15
Section 2.2 Project Budget. . . . . . . . . . . . . . . . . . . 15
Section 2.3 Amount of Advances. . . . . . . . . . . . . . . . . 15
Section 2.4 Quality of Work. . . . . . . . . . . . . . . . . . 16
Section 2.5 Cost Overruns and Savings. . . . . . . . . . . . . 16
Section 2.6 Contingency Reserve. . . . . . . . . . . . . . . . 17
Section 2.7 Development Fee; Land Equity . . . . . . . . . . . . 17
Section 2.8 Stored Materials. . . . . . . . . . . . . . . . . . 17
Section 2.9 Final Disbursement of Remaining Loan Proceeds. . . . 18
Section 3. MAKING THE ADVANCES . . . . . . . . . . . . . . . . . . . 18
Section 3.1 Draw Request. . . . . . . . . . . . . . . . . . . . 18
Section 3.2 Notice and Frequency of Advances. . . . . . . . . . 20
Section 3.3 Deposit of Funds Advanced. . . . . . . . . . . . . 20
Section 3.4 Advances to Contractor. . . . . . . . . . . . . . . 20
Section 3.5 Advances to Title Insurance Company or to Others. . 20
Section 3.6 Advances Do Not Constitute a Waiver. . . . . . . . 21
Section 3.7. Funds for Loans . . . . . . . . . . . . . . . . . . 21
Section 3.8 Interest Reserve . . . . . . . . . . . . . . . . . . 22
Section 4. THE NOTE; INTEREST; MATURITY AND PREPAYMENT . . . . . . . 22
Section 4.1 Notes.. . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.2. Interest on Advances. . . . . . . . . . . . . . . . 22
Section 4.3. Stated Maturity. . . . . . . . . . . . . . . . . . 23
Section 4.4. Optional Prepayments. . . . . . . . . . . . . . . 23
Section 4.5. Partial Prepayments. . . . . . . . . . . . . . . . 23
Section 5. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 23
Section 5.1 Commitment Fee . . . . . . . . . . . . . . . . . . . 23
Section 5.2. INTENTIONALLY DELETED . . . . . . . . . . . . . . . 23
Section 5.3. Conversion Options. . . . . . . . . . . . . . . . . 23
Section 5.4 Funds for Payments . . . . . . . . . . . . . . . . . 24
Section 5.5 Computations. . . . . . . . . . . . . . . . . . . . 25
Section 5.6. Inability to Determine LIBOR Rate. . . . . . . . . 25
Section 5.7. Illegality. . . . . . . . . . . . . . . . . . . . 25
Section 5.8. Additional Interest. . . . . . . . . . . . . . . . 26
Section 5.9. Additional Costs, Etc. . . . . . . . . . . . . . . 26
Section 5.10. Capital Adequacy. . . . . . . . . . . . . . . . . 27
Section 5.11. Indemnity of Borrower. . . . . . . . . . . . . . 27
Section 5.12. Interest on Overdue Amounts; Late Charge. . . . . 28
Section 5.13. Certificate. . . . . . . . . . . . . . . . . . . 28
Section 5.14. Limitation on Interest. . . . . . . . . . . . . . 28
Section 6. COLLATERAL SECURITY AND THE GUARANTY. . . . . . . . . . . 28
Section 7. CERTAIN RIGHTS OF THE BANKS . . . . . . . . . . . . . . . 29
Section 7.1 Right to Retain the Construction Inspector. . . . . 29
Section 7.2 Right to Obtain Appraisals. . . . . . . . . . . . . 29
Section 7.3 Charges Against Accounts. . . . . . . . . . . . . . 30
Section 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 30
Section 8.1 Organization; Authority, Etc.. . . . . . . . . . . . 30
Section 8.2 Title to Project and Other Properties. . . . . . . . 31
Section 8.3 Financial Statements. . . . . . . . . . . . . . . . 32
Section 8.4 No Material Changes, Etc. . . . . . . . . . . . . . 32
Section 8.5 Franchises, Patents, Copyrights, Etc. . . . . . . . 32
Section 8.6 Litigation. . . . . . . . . . . . . . . . . . . . . 32
Section 8.7 No Materially Adverse Contracts, Etc. . . . . . . . 33
Section 8.8 Compliance with Other Instruments, Laws, Etc. . . . 33
Section 8.9 Tax Status. . . . . . . . . . . . . . . . . . . . . 33
Section 8.10 No Event of Default. . . . . . . . . . . . . . . . 33
Section 8.11 Holding Company and Investment Company Acts. . . . 34
Section 8.12 Absence of UCC Financing Statements, Etc. . . . . 34
Section 8.13 Setoff, Etc. . . . . . . . . . . . . . . . . . . . 34
Section 8.14 Certain Transactions. . . . . . . . . . . . . . . 34
Section 8.15 Employee Benefit Plans; Multiemployer Plans;
Guaranteed Pension Plans. . . . . . . . . . . . . . 34
Section 8.16 Regulations U and X. . . . . . . . . . . . . . . . 34
Section 8.17 Partners. . . . . . . . . . . . . . . . . . . . . 34
Section 8.18 Availability of Utilities. . . . . . . . . . . . . 34
Section 8.19 Access. . . . . . . . . . . . . . . . . . . . . . 35
Section 8.20 Condition of Project. . . . . . . . . . . . . . . 35
Section 8.21 Compliance with Requirements. . . . . . . . . . . 35
Section 8.22 Project Approvals. . . . . . . . . . . . . . . . . 35
Section 8.23 Construction Contract. . . . . . . . . . . . . . . 35
Section 8.24 Architect's Contract. . . . . . . . . . . . . . . 35
Section 8.25 Other Contracts. . . . . . . . . . . . . . . . . . 36
Section 8.26 Real Property Taxes; Special Assessments. . . . . 36
Section 8.27 Violations. . . . . . . . . . . . . . . . . . . . 36
Section 8.28 Plans and Specifications. . . . . . . . . . . . . 36
Section 8.29 Project Budget. . . . . . . . . . . . . . . . . . 36
Section 8.30 Feasibility. . . . . . . . . . . . . . . . . . . . 36
Section 8.31 Insurance. . . . . . . . . . . . . . . . . . . . . 36
Section 8.32 Other Material Agreements; No Options. . . . . . . 36
Section 8.33 Brokers. . . . . . . . . . . . . . . . . . . . . . 37
Section 8.34 Management Agreement. . . . . . . . . . . . . . . 37
Section 8.35 Tenants. . . . . . . . . . . . . . . . . . . . . . 37
Section 8.36 Construction of Improvements. . . . . . . . . . . 37
Section 8.37 Loan Documents. . . . . . . . . . . . . . . . . . 37
Section 8.38 Solvency. . . . . . . . . . . . . . . . . . . . . 37
Section 8.39 Effect of Draw Request. . . . . . . . . . . . . . 37
Section 9. AFFIRMATIVE COVENANTS OF THE BORROWER . . . . . . . . . . 38
Section 9.1 Punctual Payment. . . . . . . . . . . . . . . . . . 38
Section 9.2 Commencement, Pursuit and Completion of Construction.38
Section 9.3 Correction of Defects. . . . . . . . . . . . . . . 39
Section 9.4 Maintenance of Office. . . . . . . . . . . . . . . 39
Section 9.5 Records and Accounts. . . . . . . . . . . . . . . . 39
Section 9.6 Financial Statements, Certificates and Information. 39
Section 9.7 Notices. . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.8 Existence; Maintenance of Properties. . . . . . . . 41
Section 9.9 Insurance. . . . . . . . . . . . . . . . . . . . . . 42
Section 9.10 Taxes.. . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.11 Inspection of Project, Other Properties and Books.. 42
Section 9.12 Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.13 Project Approvals. . . . . . . . . . . . . . . . . 43
Section 9.14 Use of Proceeds. . . . . . . . . . . . . . . . . . 43
Section 9.15 Project Costs. . . . . . . . . . . . . . . . . . . 43
Section 9.16 Insufficiency of Loan Proceeds. . . . . . . . . . 43
Section 9.17 Leases. . . . . . . . . . . . . . . . . . . . . . 44
Section 9.18 Laborers, Subcontractors and Materialmen. . . . . 45
Section 9.19 Further Assurance of Title. . . . . . . . . . . . 45
Section 9.20 INTENTIONALLY DELETED. . . . . . . . . . . . . . . 45
Section 9.21 Publicity. . . . . . . . . . . . . . . . . . . . . 45
Section 9.22 Sign Regarding Construction Financing. . . . . . . 45
Section 9.23 Further Assurances. . . . . . . . . . . . . . . . . 46
Section 9.24 Fundamental Changes of Borrower. . . . . . . . . . 46
Section 9.25. Registered Servicemark. . . . . . . . . . . . . . 47
Section 9.26. ERISA. . . . . . . . . . . . . . . . . . . . . . . 47
Section 10. NEGATIVE COVENANTS OF THE BORROWER . . . . . . . . . . . 47
Section 10.1 Restriction on Change Orders. . . . . . . . . . . 47
Section 10.2 Restrictions on Easements, Covenants and
Restrictions. . . . . . . . . . . . . . . . . . . . 47
Section 10.3 No Amendments, Terminations or Waivers. . . . . . . 47
Section 10.4 Restrictions on Indebtedness. . . . . . . . . . . 48
Section 10.5 Restrictions on Liens, Etc. . . . . . . . . . . . 48
Section 10.6 Restrictions on Investments. . . . . . . . . . . . 49
Section 10.7 Merger, Consolidation and Disposition of Assets.. . 50
Section 10.8 Sale and Leaseback. . . . . . . . . . . . . . . . 50
Section 10.9 Compliance with Environmental Laws. . . . . . . . 50
Section 10.10 Distributions. . . . . . . . . . . . . . . . . . 50
Section 10.11 Restrictions on Partnership Transfers. . . . . . 50
Section 10.12 Improvement District; Covenants, Conditions and
Restrictions. . . . . . . . . . . . . . . . . . . . . 51
Section 11. CONDITIONS TO INITIAL ADVANCE. . . . . . . . . . . . . . 51
Section 11.1 Loan Documents. . . . . . . . . . . . . . . . . . 51
Section 11.2 Construction Documents. . . . . . . . . . . . . . 51
Section 11.3 Subcontracts. . . . . . . . . . . . . . . . . . . 52
Section 11.4 Other Contracts. . . . . . . . . . . . . . . . . . 52
Section 11.5 Certified Copies of Organization Documents. . . . 52
Section 11.6 Resolutions; Bylaws. . . . . . . . . . . . . . . . 52
Section 11.7 Incumbency Certificate; Authorized Signers. . . . 52
Section 11.8 Validity of Liens. . . . . . . . . . . . . . . . . 53
Section 11.9 Deliveries. . . . . . . . . . . . . . . . . . . . 53
Section 11.10 Construction Inspector Report. . . . . . . . . . 54
Section 11.11 Legal Opinions. . . . . . . . . . . . . . . . . . 54
Section 11.12 Lien Search. . . . . . . . . . . . . . . . . . . 55
Section 11.13 Approval of Existing Work. . . . . . . . . . . . 55
Section 11.14 Notices. . . . . . . . . . . . . . . . . . . . . 55
Section 11.15 Appraisal. . . . . . . . . . . . . . . . . . . . 55
Section 11.16 Commitment Fee. . . . . . . . . . . . . . . . . . 55
Section 11.17 Performance; No Default. . . . . . . . . . . . . 55
Section 11.18 Representations and Warranties. . . . . . . . . . 55
Section 11.19 Proceedings and Documents. . . . . . . . . . . . 55
Section 11.20. Other. . . . . . . . . . . . . . . . . . . . . . 56
Section 12. CONDITIONS OF SUBSEQUENT ADVANCES. . . . . . . . . . . . 56
Section 12.1 Prior Conditions Satisfied. . . . . . . . . . . . 56
Section 12.2 Performance; No Default. . . . . . . . . . . . . . 56
Section 12.3 Representations and Warranties. . . . . . . . . . 56
Section 12.4 No Damage or Taking. . . . . . . . . . . . . . . . 56
Section 12.5 Receipt of the Agent. . . . . . . . . . . . . . . 56
Section 12.6 Release of Retainage. . . . . . . . . . . . . . . 57
Section 13. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . 59
Section 13.1 Events of Default. . . . . . . . . . . . . . . . . 59
Section 13.2. Termination of Commitments . . . . . . . . . . . . 63
Section 13.3 Completion of Project. . . . . . . . . . . . . . . 63
Section 13.4 Other Remedies. . . . . . . . . . . . . . . . . . 65
Section 13.5 Distribution of Collateral Proceeds. . . . . . . . 65
Section 13.6 Power of Attorney. . . . . . . . . . . . . . . . . 66
Section 13.7 Waivers. . . . . . . . . . . . . . . . . . . . . . 66
Section 14. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 15. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . 67
Section 15.1. Authorization. . . . . . . . . . . . . . . . . . 67
Section 15.2. Employees and Agents. . . . . . . . . . . . . . . 67
Section 15.3. No Liability. . . . . . . . . . . . . . . . . . . 67
Section 15.4. No Representations. . . . . . . . . . . . . . . . 67
Section 15.5. Payments.. . . . . . . . . . . . . . . . . . . . . 68
Section 15.6. Holders of Notes. . . . . . . . . . . . . . . . . 69
Section 15.7. Indemnity. . . . . . . . . . . . . . . . . . . . 69
Section 15.8. Agent as Bank. . . . . . . . . . . . . . . . . . 69
Section 15.9. Resignation. . . . . . . . . . . . . . . . . . . 69
Section 15.10. Duties in the Case of Enforcement. . . . . . . . 70
Section 16. EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . . 70
Section 17. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 71
Section 18. LIABILITY OF THE AGENT AND THE BANKS . . . . . . . . . . 72
Section 19. RIGHTS OF THIRD PARTIES. . . . . . . . . . . . . . . . . 72
Section 20. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . . 73
Section 21. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . 73
Section 21.1. Conditions to Assignment by Banks. . . . . . . . 73
Section 21.2. Register. . . . . . . . . . . . . . . . . . . . . 74
Section 21.3. New Notes. . . . . . . . . . . . . . . . . . . . 74
Section 21.4. Participations. . . . . . . . . . . . . . . . . . 74
Section 21.5. Pledge by Bank. . . . . . . . . . . . . . . . . . 75
Section 21.6. No Assignment by Borrower. . . . . . . . . . . . 75
Section 21.7. Disclosure. . . . . . . . . . . . . . . . . . . . 75
Section 22. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . 75
Section 23. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 24. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE . . . 76
Section 25. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 26. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 77
Section 27. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . 77
Section 28. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS . . . . . 77
Section 29. DEALINGS WITH THE BORROWER . . . . . . . . . . . . . . . 78
Section 30. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . 78
Section 31. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 78
Section 32. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . . 79
Section 33. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . . 79
Section 34. REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . . . 79
EXHIBITS
A Construction Schedule
B Disbursement Schedule
C Plans and Specifications
D Project Budget
E Borrower Requisition
F Contractor's Requisition Certificate
G Borrower's Architect's Requisition Certificate
H Form of Note
SCHEDULES
Schedule 1 Banks and Commitments
Schedule 1.1 Description of Phases
Schedule 8.14 Transactions with Affiliates
Schedule 8.22 Project Approvals
Schedule 8.36 Schedule of Contractors and Subcontractors
CONSTRUCTION LOAN AGREEMENT
DATED AS OF FEBRUARY 27, 1998
among
WALDEN/GRUPE ELK GROVE, L.P.,
and
BANKBOSTON, N.A.,
THE OTHER BANKS WHICH
ARE A PARTY TO THIS AGREEMENT,
and
THE OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.,
AS AGENT
CONSTRUCTION LOAN AGREEMENT
(Roseville)
THIS CONSTRUCTION LOAN AGREEMENT is made as of the 27th day
of February, 1998, by and among WALDEN/GRUPE ROSEVILLE, L.P., a
Delaware limited partnership (the "Borrower"), having its
principal place of business at c/o The Grupe Company, 3255
W. March Lane, 4th Floor, Stockton, California 95219, BankBoston,
N.A., a national banking association, and the other lending
institutions which may become parties hereto pursuant to Section 21
(collectively, the "Banks"), and BankBoston, N.A., as Agent for
the Banks (the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower has requested that the Banks provide a
construction loan facility to Borrower;
WHEREAS, Agent and the Banks are willing to provide such
facility to Borrower upon the terms and conditions set forth
herein;
NOW, THEREFORE, for and in consideration of Ten and No/100
Dollars ($10.00), and other good and valuable considerations, the
receipt and sufficiency whereof are hereby acknowledged, the
parties hereto 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 1 or elsewhere in the provisions of
this Agreement or other Loan Documents referred to below:
Advance. Any disbursement of the proceeds of the Loan
made or to be made by the Banks pursuant to the terms of this
Agreement.
Agent. BankBoston, N.A. 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 LLP or
such other counsel as may be approved by the Agent.
Agreement. This Agreement, including the Schedules and
Exhibits hereto.
Agreement Regarding Fees. See Section 5.1.
Appraisal. An appraisal of the value of the Project,
determined on a fair value basis, performed by a qualified
independent appraiser selected by the Agent who is not an
employee of the Borrower, the Guarantors, the Agent or a Bank,
the form and substance of such appraisal and the identity of the
appraiser to be in accordance with regulatory laws and policies
(both regulatory and internal) applicable to the Banks and
otherwise acceptable to the Majority Banks.
Appraised Value. The fair value of the Project
determined by the most recent Appraisal of such parcel or update
obtained pursuant to this Agreement, subject, however, to such
changes or adjustments to the value determined thereby as may be
required by the appraisal departments of the Majority Banks in
their good faith business judgment.
Architect's Contract. The contract(s) between the
Borrower and the Borrower's Architect, providing for the design
of the Improvements and the supervision of the construction
thereof.
Assignment of Leases. The Absolute Assignment of
Leases and Rents, dated or to be dated on or prior to the Closing
Date, made by the Borrower to the Agent for the benefit of the
Banks, as the same may be modified or amended, pursuant to which
the Borrower assigns its right, title and interest as landlord in
and to the Leases and the rents, issues and profits of the
Project, such Absolute Assignment of Leases and Rents to be in
form and substance satisfactory to the Agent.
Assignment of Project Documents. The Assignment of
Project Documents, dated or to be dated on or prior to the
Closing Date, made by the Borrower to the Agent for the benefit
of the Banks, as the same may be modified or amended, pursuant to
which the Borrower assigns and grants a security interest in the
Borrower's right, title and interest in and to the Architect's
Contract, the Construction Contract, the Plans and Specifications
and the Project Approvals, such Assignment of Project Documents
to be in form and substance satisfactory to the Agent.
Balance Sheet Date. As to the Borrower and the General
Partner February 27, 1998. As to Walden and WDOP December 31,
1997. As to The Grupe Company December 31, 1996.
Banks. BKB, the other lending institutions a party to
this Agreement and any other Person who becomes an assignee of
any rights of a Bank pursuant to Section 21 (but not including any
Participant, as defined in Section 21).
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 Advances. Those Advances bearing interest
calculated by reference to the Base Rate.
BKB. BankBoston, N.A.
Borrower. As defined in the preamble hereto.
Borrower's Architect. Lee Jagoe Architecture/Planning,
having a usual place of business at 2800 W. March Lane, Suite
475, Stockton, California 95219.
Borrower's Requisition. See Section 3.1.
Business Day. Any day on which banking institutions in
Boston, Massachusetts are open for the transaction of banking
business and, in the case of LIBOR Rate Advances, which also is a
LIBOR Business Day.
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.
City Deed of Trust. That certain Deed of Trust with
Assignment of rents as Additional Security dated January __ ,
1998, form General Partner for the benefit of the City of
Roseville, recorded in Book___, page ____, or as Instrument
No.________, Placer County, California recently securing the City
Note.
City Note. That certain Promissory Note: Secured by
Deed of Trust, dated January 23, 1998, from General Partner to
the order of the City of Roseville in the principal face amount
of $2,726,743.59 in connection with the deferral of certain
development fees.
Closing Date. The first date on which the conditions
set forth in Section 11 have been satisfied and any Advances are to be
made.
Code. The Internal Revenue Code of 1986 and the
regulations thereunder, as amended and in effect from time to
time.
Collateral. All of (a) the property, rights and
interests of the Borrower that are or are intended to be subject
to the security interests, assignments, and mortgage liens
created by the Security Documents, including, without limitation,
the Project, and (b) the Guaranty.
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 Advances to the Borrower, as the
same may be reduced 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.
Completion Date. June 30, 1999.
Construction Contract. The Construction Agreement,
dated as of February 27, 1998, between the Borrower and
Marchbrook Building Company, providing for the construction of
the Improvements on the Land.
Construction Inspector. AECC, Inc., or, at the Agent's
option, another firm of consulting architects, engineers or
inspectors appointed by the Agent from time to time.
Construction Schedule. The schedule, broken down by
trade, job and subcontractor, of the estimated dates of
commencement and completion of construction of the Improvements,
prepared by the Contractor, approved by the Majority Banks and
attached hereto as Exhibit A.
Contingency Reserve. The amount(s) allocated as
contingency reserve in the Project Budget, to be advanced only in
accordance with the provisions of Section 2.6 hereof.
Contractor. Marchbrook Building Company, a California
corporation, having a usual place of business at 3255 West March
Lane, Suite 400, Stockton, California 95219.
Conversion Request. A notice given by the Borrower to
the Agent of its election to convert or continue an Advance in
accordance with Section 5.3.
Default. A condition or event which would, with the
giving of notice or lapse of time or both, constitute an Event of
Default.
Default Rate. See Section 5.12.
Defective Work. See Section 2.4.
Designee. See Section 10.11.
Direct Costs. Direct Costs shall mean and include the
costs of the Land, the Personal Property, and all labor,
materials, fixtures, machinery and equipment required to
construct, equip and complete the Improvements in accordance with
the Plans and Specifications.
Disbursement Schedule. The schedule of the amounts of
Advances anticipated to be requisitioned by the Borrower each
month during the term of construction of the Improvements
(including an itemization of Direct Costs and Indirect Costs to
be included in each such requisition), approved by the Majority
Banks and attached hereto as Exhibit B.
Distribution. With respect to any Person, the
declaration or payment of any cash, cash flow, dividend or
distribution to any partner of such Person or on or in respect of
any shares of any class of capital stock or beneficial interest
of such Person, other than dividends or distributions payable
solely in equity securities of such Person; the purchase,
redemption, exchange or other retirement of any partnership
interest, shares of any class of capital stock or other
beneficial interest of such Person, directly or indirectly
through a Subsidiary of such Person or otherwise; the return of
capital by such Person to its partners, members or shareholders
as such; or any other distribution on or in respect of any
partnership interests or shares of any class of capital stock or
other beneficial interest of such 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 Advances.
Draw Request. With respect to each Advance, the
Borrower's Requisition for such Advance, and documents required
by this Agreement to be furnished to the Agent as a condition to
such Advance.
Drawdown Date. The date on which any Advance is made
or is to be made, and the date on which any Advance which is made
prior to the Maturity Date is converted or combined in accordance
with Section 5.3.
Employee Benefit Plan. Any employee benefit plan
within the meaning of Section 3(3) of ERISA maintained or contributed to
by the Borrower or any ERISA Affiliate, other than a
Multiemployer Plan.
Environmental Laws. See Section 3.7 of the Security
Deed.
ERISA. The Employee Retirement Income Security Act of
1974, as amended and in effect from time to time and any rules or
regulations promulgated pursuant thereto.
ERISA Affiliate. Any Person which is treated as a
single employer with the Borrower under Section 414 of the Code.
Event of Default. See Section 13.1.
Financing Statements. Uniform Commercial Code Form 1
Financing Statement(s) from the Borrower to the Agent for the
benefit of the Banks giving notice of a security interest in the
Collateral, such financing statements to be in form and substance
satisfactory to the Agent.
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 or pro forma financial statements of the
Borrower 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.
General Partner. Antelope Creek Apartments, L.P., a
California limited partnership having its place of business at
c/o The Grupe Company, 3255 W. March Lane, 4th Floor, Stockton,
California 95219.
Governmental Authority. The United States of America,
the State of California, any political subdivision thereof, and
any agency, authority, department, commission, board, bureau, or
instrumentality of any of them.
Gross Cash Receipts. Gross Cash Receipts shall mean
the sum of cash received by or for the account of the Borrower in
connection with the ownership or operation of the Project,
including, without limitation, in payment of the following items:
(a) Rentals and any other amounts received from
tenants occupying space in the Project;
(b) Parking revenues received by the Borrower in
connection with the operation of any parking
facilities; and
(c) Receipts from vending machines, recreational
facilities and any and all other operating
revenues received from the Project.
Gross Cash Receipts shall be determined on the basis of
sound cash basis accounting practices applied on a consistent
basis.
Guaranteed Pension Plan. Any employee pension benefit
plan within the meaning of Section 3(2) of ERISA maintained or
contributed to by the Borrower 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, WDOP, Walden, The Grupe
Company and any other Person that becomes a guarantor of the
Obligations.
Guaranty. Collectively, the Unconditional Guaranty of
Payment and Performance made by Walden and WDOP in favor of the
Agent and the Banks, the Unconditional Guaranty of Payment and
Performance made by The Grupe Company in favor of the Agent and
the Banks, and each Unconditional Guaranty of Payment and
Performance made by any other Guarantor in favor of the Agent and
the Banks, as the same may be modified and amended, such Guaranty
to be in form and substance satisfactory to the Agent.
Hazardous Materials. See Section 3.7 of the Security
Deed.
Improvements. The approximately 336-unit residential
apartment complex and related improvements to be constructed on
the Land in accordance with the Plans and Specifications.
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 in, directly or indirectly, 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 obligations to reimburse the issuer in respect
of any letters of credit; and (d) any obligation as a lessee or
obligor under a Capitalized Lease.
Indemnity Agreement. The Indemnity Agreement Regarding
Hazardous Materials, dated or to be dated on or prior to the
Closing Date, made by the Borrower and the Guarantors in favor of
the Agent and the Banks, pursuant to which the Borrower and the
Guarantors agree to indemnify the Agent and the Banks with
respect to Hazardous Materials and Environmental Laws, such
Indemnity Agreement to be in form and substance satisfactory to
the Agent.
Indirect Costs. Indirect Costs shall mean and include
title insurance premiums, survey charges, engineering fees,
architectural fees, real estate taxes, appraisal costs,
commitment fees and interest payable to the Banks under the Loan,
premiums for insurance, marketing, advertising and leasing costs,
brokerage commissions, legal fees, accounting fees, overhead and
administrative costs, and all other expenses which are
expenditures relating to the Project and are not Direct Costs.
Interest Payment Date. The first day of each calendar
month during the term of the Loan, and in addition thereto with
respect to each LIBOR Rate Advance, the last day of the Interest
Period relating thereto.
Interest Period. With respect to each LIBOR Rate
Advance (a) initially, the period commencing on the Drawdown Date
of such Advance and ending one, two, three or six months
thereafter, and (b) thereafter, each period commencing on the day
following the last day of the next preceding Interest Period
applicable to such Advance 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:
(A) if any Interest Period with respect to a LIBOR
Rate Advance 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;
(B) if the Borrower shall fail to give notice as
provided in Section 5.3, the Borrower shall be deemed to have
requested a conversion of the affected LIBOR Rate Advance to
a Base Rate Advance on the last day of the then current
Interest Period with respect thereto; and
(C) no Interest Period relating to any LIBOR Rate
Advance shall extend beyond the Maturity Date.
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.
Land. The real property located in Placer County,
California, and described in Schedule B to the Security Deed.
Leases. Leases, licenses and agreements, whether
written or oral, relating to the use or occupation of space in
the Improvements or on the Land.
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 Advance to which such Interest Period applies.
LIBOR Rate Advance. Those Advances bearing interest
calculated by reference to a LIBOR Rate.
Liens. See Section 10.5.
Loan. The construction loan which is the subject of
this Agreement.
Loan Amount. $25,835,450.00.
Loan Checking Account. See Section 3.3.
Loan Documents. This Agreement, the Notes, the
Indemnity Agreement and the Security Documents, and all other
agreements, documents and instruments now or hereafter
evidencing, securing or otherwise relating to the Loan.
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.
Management Agreement. That certain Management
Agreement, dated as of February 27, 1998, between Borrower and
Franklin Landings Management Company providing for the management
of the operation of the Project, together with any renewals or
replacements thereof.
Maturity Date. February 27, 2001.
Multiemployer Plan. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate.
Net Operating Income. Net Operating Income shall mean
Gross Cash Receipts less Operating Expenses.
Notes. See Section 4.1.
Obligations. All indebtedness, obligations and
liabilities of the Borrower to any of the Banks or the Agent
under this Agreement or any of the other Loan Documents or in
respect of any of the Advances 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 Expenses. Operating Expenses shall mean the
sum of the following:
(a) All taxes and assessments imposed upon the Project
actually paid by or on behalf of the Borrower;
(b) The amounts paid by or on behalf of the Borrower
on account of insurance premiums for insurance
carried in connection with the Project or
Borrower's ownership and operation thereof, and
deductible amounts expended by the Borrower not
reimbursed under any such insurance;
(c) Expenses paid by or on behalf of Borrower for the
operation, marketing, maintenance and repair of
the Project properly chargeable against income
according to generally accepted accounting
practices;
(d) Management fees in accordance with the Management
Agreement; and
(e) An amount approved by the Agent as a reasonable
reserve for expenses relating to the Project which
are not payable on a regular basis (including, but
not limited to, taxes and insurance), but
excluding any amounts paid from funded reserves.
For the purposes of this Agreement, Operating Expenses shall not
include any of the following:
(i) Foreign, U.S., state and local income taxes,
franchise taxes or other taxes based on the income
imposed on the Borrower generally and not as owner
of the Project;
(ii) Depreciation and any other non-cash expenditures
of the Borrower for income tax purposes;
(iii) Any improvements to the completed portion of the
Project of a capital nature (as determined in
accordance with generally accepted accounting
practices), or reserves for such items;
(iv) Any expense paid or incurred in connection with
the sale of all or any part of the Project or any
interest therein;
(v) All costs, expenses, fees, commissions or other
compensation paid by or on behalf of the Borrower
in connection with the renovation of the completed
portion of the Project; and
(vi) Any payment of principal or interest under the
Notes.
Operating Expenses shall be determined on the basis of
sound cash basis accounting practices applied on a consistent
basis, modified as described above.
Outstanding. With respect to the Advances or the Loan,
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 10.5.
Person. Any individual, corporation, partnership,
trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or
political subdivision thereof.
Personal Property. All materials, furnishings,
fixtures, furniture, machinery, equipment and all items of
tangible personal property now or hereafter owned or acquired by
the Borrower, wherever located, and either (i) to be located on
or incorporated into the Land or the Improvements, (ii) used in
connection with the construction of the Improvements or (iii) to
be used in connection with the operation or maintenance of the
Land or the Improvements or both.
Phase. The applicable portion(s) of the Project
described on Schedule 1.1 attached hereto.
Plans and Specifications. The plans and specifications
for the Improvements prepared by the Borrower's Architect and
more particularly identified on Exhibit C attached hereto.
Project. The Land, Improvements and Personal Property.
Project Approvals. All approvals, consents, waivers,
orders, agreements, acknowledgments, authorizations, permits and
licenses required under applicable Requirements or under the
terms of any agreement, restriction, covenant or easement
affecting the Project, or otherwise necessary or desirable, for
the ownership and acquisition of the Land and the Improvements,
the construction and equipping of the Improvements, and the use,
occupancy and operation of the Project following completion of
construction of the Improvements, whether obtained from a
Governmental Authority or any other Person.
Project Budget. The budget for total estimated Project
Costs, submitted by the Borrower, approved by the Majority Banks
and the Construction Inspector, and attached hereto as Exhibit D,
which includes: (a) a line item cost breakdown for Direct Costs
by trades, jobs and subcontractors; (b) a line item cost
breakdown for Indirect Costs; and (c) a schedule of the sources
of funds to pay Project Costs, indicating by item the portion of
Project Costs to be funded through the Loan and Required Equity
Funds.
Project Costs. The sum of all Direct Costs and
Indirect Costs that will be incurred by the Borrower in
connection with the acquisition of the Land, the construction,
equipping and completion of the Improvements, the marketing and
leasing of leasable space in the Improvements, and the operation
and carrying of the Project through the Maturity Date.
Real Estate. All real property at any time owned,
leased (as lessee or sublessee) or operated by the Borrower or
the General Partner.
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 21.2.
Requirements. Any law, ordinance, code, order, rule or
regulation of any Governmental Authority and any zoning
agreement, development agreement or similar agreement with any
Governmental Authority relating in any way to the acquisition and
ownership of the Project, the construction of the Improvements,
or the use, occupancy and operation of the Project following the
completion of construction of the Improvements, including those
relating to subdivision control, zoning, building, use and
occupancy, fire prevention, health, safety, sanitation,
handicapped access, historic preservation and protection,
tidelands, wetlands, flood control, access and earth removal, and
all Environmental Laws.
Required Equity Funds. The amount, if any, as the
Majority Banks shall determine must be deposited with Agent from
time to time pursuant to Section 9.16 hereof.
Retainage. See Section 2.3.
Security Deed. The Construction Deed of Trust with
Assignment of Rents, Security Agreement and Fixture Filing, dated
or to be dated on or prior to the Closing Date, made by the
Borrower to the Agent for the benefit of the Banks, pursuant to
which the Borrower grants a lien, security title and security
interest in and to the Project, such Security Deed to be in form
and substance satisfactory to the Agent.
Security Documents. The Security Deed, the Assignment
of Project Documents, the Assignment of Leases, the Financing
Statements and the Guaranty, and any other agreement, document or
instrument now or hereafter securing the Obligations.
Stored Materials. See Section 2.8.
Subordination Agreement. That certain Agreement, dated
as of February 27, 1998, between Agent and the City of Roseville
in the form attached as Exhibit "I" hereto.
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.
Survey. An instrument survey of the Land and the
Improvements prepared in accordance with the Agent's survey
requirements, such survey to be satisfactory to the Agent in form
and substance.
Surveyor Certificate. With respect to any Survey, a
certificate executed by the surveyor who prepares such Survey
dated as of a recent date and containing such information
relating to the Project as the Agent or the Title Insurance
Company may require, such certificate to be satisfactory to the
Agent in form and substance.
Taking. Any condemnation for public use of, or damage
by reason of, the action of any Governmental Authority, or any
transfer by private sale in lieu thereof, either temporarily or
permanently.
Termination Date. August 31, 1999, or the termination
of the Banks' obligations to make Advances pursuant to Section 13.2
hereof, whichever date occurs first.
Title Insurance Company. Chicago Title Insurance
Company.
Title Policy. An ALTA Loan Policy Form (10/17/70)
title insurance policy with ALTA form 1 coverage (LP 3)
construction loan package or its equivalent issued by the Title
Insurance Company (with such reinsurance or co-insurance as the
Agent may require, any such reinsurance to be with direct access
endorsements) in an amount not less than the Loan Amount insuring
the priority of the Security Deed as a first priority lien and
that the Borrower holds marketable fee simple title to the
Project, subject only to such exceptions as the Agent may approve
and which shall not contain exceptions for mechanics liens,
persons in occupancy or matters which would be shown by a survey,
shall not insure over any matter except to the extent that any
such affirmative insurance is acceptable to the Agent in its sole
discretion, and shall contain a pending disbursements clause or
endorsement and such other endorsements and affirmative insurance
as the Agent in its discretion may require including, without
limitation, a CLTA 111.5 variable rate of interest endorsement.
Total Commitment. The sum of the Commitments of the
Banks, as in effect from time to time.
Type. As to any Advance, its nature as a Base Rate
Advance or a LIBOR Rate Advance.
Walden. Walden Residential Properties, Inc., a
Maryland corporation.
Walden Revolving Credit Agreement. That certain
Revolving Credit Agreement dated as of December 15, 1997, among
Walden, WDOP, BKB, individually and as agent, and the other
lenders a party thereto, as the same may be modified, amended,
restated, consolidated or renewed.
WDOP. Walden/Drever Operating Partnership, L.P., a
Delaware limited partnership.
Section 1.2 Rules of Interpretation.
(a) A reference to any agreement, budget, document or
schedule shall include such agreement, budget, document or
schedule as revised, 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. AGREEMENT TO MAKE ADVANCES; LIMITATIONS
Section 2.1 Agreement to Make Advances. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees
to lend to the Borrower and the Borrower may borrow from time to
time between the Closing Date and the Termination Date upon
submission by the Borrower of a Draw Request in accordance with
Section 3.1, such amounts as are requested by the Borrower up to a
maximum aggregate principal amount equal to such Bank's
Commitment Percentage of the Loan Amount to pay for Project Costs
actually incurred by the Borrower and reflected in the Project
Budget as being funded by the Loan; provided, however, that in no
event shall the maximum aggregate principal amount outstanding
exceed such Bank's Commitment. The Advances shall be made pro
rata in accordance with each Bank's Commitment Percentage. Each
Draw Request for an Advance hereunder shall constitute a
representation and warranty by the Borrower that the conditions
set forth in Section 11, in the case of the initial Advance, Section 12, in the
case of all other Advances, and Section 12.6, in the case of the Advance
of any Retainage withheld pursuant to Section 2.3, have been satisfied
on the date of such Draw Request. No Bank shall have any
obligation to make Advances to the Borrower in the maximum
aggregate principal amount outstanding of more than the principal
face amount of its Note.
Section 2.2 Project Budget. The Project Budget reflects, by
category and line items, the purposes and the amounts for which
funds to be advanced by the Banks under this Agreement are to be
used. The Banks shall not be required to disburse for any
category or line item more than the amount specified therefor in
the Project Budget.
Section 2.3 Amount of Advances. In no event shall any Bank be
obligated to advance more than its Commitment, or, if less, its
Commitment Percentage of total Project Costs actually incurred by
the Borrower less Required Equity Funds. In no event shall any
Advance for Direct Costs of constructing the Improvements exceed
an amount equal to the sum of (a) the total value of the labor,
materials, fixtures, machinery and equipment completed, approved
and incorporated into the Land or the Improvements prior to the
date of the Draw Request for such Advance, minus (b) retainage in
an amount equal to ten percent (10%) of such total value
described in (a) ("Retainage"), minus (c) the total amount of any
Advances previously made by the Banks for such Direct Costs.
Notwithstanding the foregoing, an Advance in excess thereof may
be made hereunder for the purpose of making final payment of any
balance due any subcontractor (including materialmen or suppliers
within the term "subcontractor") after full and final completion
of the work on the Improvements being done by such subcontractor
or after full and final completion of the work on the
Improvements constituting a Phase of the Project being done by
such subcontractor, as certified by the Construction Inspector,
and delivery to the Agent of such items as are required by Section 12.6
as the Agent may deem applicable, including without limitation,
such evidence as may be reasonably required by the Agent to
assure the Banks that no party claims or has a right to claim any
statutory or common law lien arising out of such subcontractor's
work or the supplying of labor, equipment, material, and/or
services in connection therewith. Retainage shall otherwise be
advanced by the Banks subject to the terms of this Agreement to
the Borrower upon satisfaction of the conditions set forth in
Section 12.6. With respect to any other Direct Costs and all Indirect
Costs, in no event shall any Advance exceed an amount equal to
the amount of such Direct Costs and Indirect Costs approved by
the Agent, incurred by the Borrower prior to the date of the Draw
Request for such Advance, and theretofore paid or to be paid with
the proceeds of such Advance, less the total amount of any
Advances previously made by the Banks for such Direct Costs and
Indirect Costs.
Section 2.4 Quality of Work. No Advance shall be due unless all
work done at the date the Draw Request for such Advance is
submitted is done in a good and workmanlike manner and without
defects, as confirmed by the report of the Construction
Inspector. Notwithstanding the foregoing, but without limiting
the provisions of Section 9.3, if a portion of the Work for which
payment is included within a Draw Request has not been performed
in a good and workmanlike manner and without defects as
determined by the Architect, the Contractor, the Construction
Inspector or the Agent ("Defective Work"), then the amount to be
advanced pursuant to such Draw Request shall be reduced by the
portion thereof attributable to the Defective Work provided that
all other conditions to the making of an Advance have been
satisfied. No Advance shall be due thereafter upon a Draw
Request with respect to such Defective Work until such Defective
Work has been corrected and brought into full compliance with the
requirements of this Agreement. No Advance shall be made upon
any Draw Request if, upon the date of submittal thereof, any
Defective Work has remained uncorrected for a period of more than
thirty (30) days, unless correction of such Defective Work is
under way and progressing reasonably satisfactorily to the Agent
and the Construction Inspector.
Section 2.5 Cost Overruns and Savings. If the Borrower becomes
aware of any change in Project Costs which will increase or
decrease a category or line item of Project Costs reflected on
the Project Budget (as the Project Budget is revised from time to
time and approved by the Majority Banks), the Borrower shall
immediately notify the Agent in writing and promptly submit to
the Agent a revised Project Budget for the approval of the
Majority Banks. If the revised Project Budget indicates an
increase in a category or line item of Project Costs, no further
Advances need be made by the Banks unless and until (a) the
revised Project Budget so submitted by the Borrower is approved
by the Majority Banks, and (b) the Borrower has deposited with
the Agent any Required Equity Funds. If the revised Project
Budget indicates a decrease in a line item of Project Costs, no
reductions in Project Costs will be made or savings reallocated
by the Borrower unless and until (c) the revised Project Budget
so submitted by the Borrower is approved by the Majority Banks,
and (d) in the case of decreases in a line item of Direct Costs,
the Borrower has furnished the Agent, the Majority Banks and the
Construction Inspector with evidence satisfactory to them that
the labor performed and materials supplied in connection with
such line item of Direct Costs have been satisfactorily completed
in accordance with the Plans and Specifications and paid for in
full.
Section 2.6 Contingency Reserve. The amount allocated as
Contingency Reserve in the Project Budget will only be disbursed
upon the prior approval of the Majority Banks. The disbursement
of a portion of Contingency Reserve shall in no way prejudice the
Banks from withholding disbursement of any further portion of
Contingency Reserve.
Section 2.7 Development Fee; Land Equity. Except as expressly
provided herein, the Banks shall not be required to disburse any
funds for the amount allocated as "Development Fee" in the
Project Budget unless and until Agent shall have received all of
the items set forth in Section 12.6. Except as expressly provided
herein, the Banks shall not be required to disburse any funds for
the amount allocated as "Land-Cash Equity" or "Land-Earned
Equity" (the total amount of those line items being
$1,830,286.00) in the Project Budget unless and until Agent shall
have received all of the items set forth in Section 12.6 and the
Designee shall have acquired the entire general partnership
interest of the General Partner in the Borrower in accordance
with the terms and conditions set forth in Section 10.11.
Section 2.8 Stored Materials. The Banks shall not be required to
disburse any funds for any materials, furnishings, fixtures,
machinery or equipment not yet incorporated into the Land or
Improvements ("Stored Materials") unless the following conditions
are satisfied:
(a) The Stored Materials are components in a form
ready for incorporation into the Land or the Improvements and
shall (subject to forces beyond Borrower's reasonable control) be
so incorporated within a period of 30 days;
(b) The Stored Material are stored at the Land or such
other location approved by the Agent, and are protected against
theft, vandalism and the elements;
(c) The Stored Materials have been paid for in full or
will be paid for with the funds to be disbursed, all lien rights
and claims of the supplier have been released or will be released
upon payment with disbursed funds and no seller or supplier
reserves or purports to reserve title or the right of removal or
repossession, or the right to consider such Store Materials
personal property after their incorporation into the
Improvements;
(d) Borrower has or shall have upon payment with
disbursed funds title to the Stored Materials subject to no
liens, charges, title retention agreements or other encumbrances
except those in favor of Agent, and Agent has or will have upon
payment with disbursed funds a perfected first priority security
interest in the Stored Materials;
(e) Borrower shall supply to the Agent evidence
reasonably satisfactory to the Agent that the Stored Materials
are included in the coverage of the insurance policies required
hereunder and are insured for an amount equal to their
replacement cost; and
(f) If the Stored Materials are not stored at the
Land, (i) the Stored Materials are stored and segregated in a
bonded warehouse or storage yard approved by the Agent, (ii) that
the warehouse or yard has been notified that the Agent has a
security interest in the subject Stored Materials, (iii) the
Contractor and the Borrower's Architect have inspected the fully
fabricated components at the off-site location, and have approved
the Draw Request for such Stored Materials, (iv) the Agent has
received from Borrower a copy of the warehouse receipt (which
copy shall include an acknowledgment from the owner or lessee of
the warehouse that such party has possession of the original
warehouse receipt) and color photographs of such Stored Materials
clearly identifying such Stored Materials, and (v) the Agent has
received satisfactory evidence that the Stored Materials are
protected against theft, damage, vandalism, and the elements,
have been suitably identified as belonging to Borrower for use in
the Project and that such seller, supplier or fabricator has been
notified of the security interest of the Agent therein.
Section 2.9 Final Disbursement of Remaining Loan Proceeds.
Notwithstanding anything to the contrary contained herein
regarding the Banks' obligations to fund Advances in excess of
total Project Costs, the Agent and each of the Banks agrees that
contemporaneously with, but subject to the complete satisfaction
of each of the conditions to, the acquisition of all of the
General Partner's interest in Borrower by the Designee in
accordance with Section 10.11, the Banks shall, upon submission by
Borrower of a Borrower's Requisition and subject to the terms and
conditions contained in this Agreement, including without
limitation, Section 12, make a final Advance to the Borrower equal to
the sum of (a) the Loan Amount less (b) the aggregate amount of
all Advances theretofore made by the Banks pursuant to this
Agreement.
SECTION 3. MAKING THE ADVANCES
Section 3.1 Draw Request. At such time as the Borrower shall
desire to obtain an Advance, the Borrower shall complete, execute
and deliver to the Agent the Borrower's Requisition in the form
of Exhibit E attached hereto (hereinafter referred to as
"Borrower's Requisition"). Each Borrower's Requisition shall be
accompanied by:
(a) a written notice of the Borrower specifying (i)
the requested Type of Advance comprising such Advance, (ii) in
the case of an Advance comprised of a LIBOR Advance, the initial
Interest Period; and (iii) the amount of each Type of Advance;
provided, however, that each LIBOR Advance shall be in an amount
of $100,000.00 or integral multiple of $1,000.00 in excess
thereof;
(b) If the Borrower's Requisition includes payments
for Direct Costs, it shall be accompanied by a completed and
itemized Direct Cost Statement in form satisfactory to the Agent,
executed by the Borrower, together with copies of invoices for
all items of Direct Cost covered thereby;
(c) If the Borrower's Requisition includes amounts to
be paid to the Contractor under the Construction Contract, it
shall be accompanied by: (i) a completed and fully itemized
Application and Certificate for Payment (AIA Document G702 or
similar form approved by the Agent) containing the certification
of the Contractor and the Borrower's Architect or other licensed
design professional acceptable to Agent as to the accuracy of
same, and showing all subcontractors and materialmen by name and
trade or job, the total amount of each subcontract or purchase
order, the amount theretofore paid to each subcontractor or
materialman as of the date of such application, and the amount to
be paid from the proceeds of the Advance to each subcontractor
and materialman; (ii) a certificate of the Contractor in the form
of Exhibit F attached hereto; (iii) a certificate of the
Borrower's Architect or other licensed design professional
acceptable to Agent in the form of Exhibit G attached hereto or
such other form as the Agent may approve; and (iv) copies of
requisitions and invoices from subcontractors and materialmen
supporting all items of cost covered by such application;
(d) If the Borrower's Requisition includes payments
for Indirect Costs, it shall be accompanied by a completed and
itemized Indirect Cost Statement in form satisfactory to the
Agent, executed by the Borrower, together with copies of invoices
for all items of Indirect Costs covered thereby;
(e) written lien waivers executed by the Contractor
and such laborers, subcontractors and materialmen whose
contract(s) for the provision of services or materials for
construction of the Project requires payment in excess of
$50,000.00, for work done and materials supplied by such Person
which were paid for pursuant to the next preceding Draw Request
in form acceptable to Agent, which form shall, to the extent
permitted by applicable law, contain lien subordinations from the
Contractor and each such laborer, subcontractor and materialman;
(f) a written request of the Borrower for any
necessary changes in the Plans and Specifications, the Project
Budget, the Disbursement Schedule or the Construction Schedule;
(g) copies of all change orders and construction
change directives, accompanied by a change order summary prepared
by and executed by the Borrower, copies of all subcontracts
involving work in the amount of $100,000.00 or more (if requested
by the Agent), and, to the extent requested by the Agent or the
Majority Banks, of all inspection or test reports and other
documents relating to the construction of the Improvements, not
previously delivered to the Agent; and
(h) If the Borrower's Requisition includes payment for
Stored Materials, it shall be accompanied by evidence as to the
satisfaction of the requirements set forth in Section 2.8 hereof; and
(i) such other information, documentation and
certification as the Agent or the Majority Banks shall reasonably
request.
Each Draw Request shall constitute a representation and warranty
by the Borrower that all of the conditions set forth in this
Agreement to such Advance, including, without limitation, Section 11,
have been satisfied on the date of such Draw Request.
Section 3.2 Notice and Frequency of Advances.
(a) Each Draw Request shall be submitted to the Agent
at least ten (10) Business Days prior to the date of the
requested Advance, and no more frequently than once each month.
The Agent shall promptly notify each of the Banks following the
receipt of a Draw Request, but in any event no later than 2:00
p.m. five (5) Business Days prior to the proposed Drawdown Date.
(b) Except as provided in this Section 3.2, each such Draw
Request shall be irrevocable and binding on the Borrower and
shall obligate the Borrower to accept the Advance requested from
the Banks on the Drawdown Date. If the Borrower does not specify
the Type of Advance requested in a Draw Request, the Borrower
shall be deemed to have selected a Base Rate Advance. Any
failure by a Bank to fund its proportionate share of a requested
Advance shall not relieve the Borrower from its obligations under
this Agreement. Nothing in this Section 3.2(b) shall prevent the
Borrower from seeking recourse against any Bank that fails to
advance its proportionate share of a requested Advance as
required by this Agreement; it being acknowledged that any Bank
that is prepared to fund its proportionate share of a requested
Advance shall have no liability with respect to any other Bank
that fails to advance its proportionate share.
(c) There shall be no more than five (5) LIBOR Rate
Advances outstanding at any one time.
Section 3.3 Deposit of Funds Advanced. The Borrower shall open
and maintain a checking account with Wells Fargo Bank, N.A. (the
"Loan Checking Account"). Except as otherwise provided for in
Section 3.4 and 3.5 hereof, the Agent shall deposit the proceeds of
each Advance into the Loan Checking Account.
Section 3.4 Advances to Contractor. In the event that the Agent
or the Majority Banks shall determine in the exercise of their
business judgment that cause exists to do so, the Agent may make
any or all advances for Direct Costs incurred under the
Construction Contract directly to the Contractor for deposit in
an appropriately designated special bank account, and the
execution of this Agreement by the Borrower shall, and hereby
does, constitute an irrevocable authorization so to advance the
proceeds of the Loan. No further authorization from the Borrower
shall be necessary to warrant such direct advances to the
Contractor and all such advances shall satisfy pro tanto the
obligations of the Banks hereunder and shall be secured by the
Security Deed and the other Security Documents as fully as if
made directly to the Borrower.
Section 3.5 Advances to Title Insurance Company or to Others. In
the event that the Agent or the Majority Banks shall determine in
the exercise of their business judgment that cause exists to do
so, the Agent may make any or all advances through the Title
Insurance Company or a recognized construction disbursement
service and any portion of the Loan so disbursed by the Agent on
behalf of the Banks shall be deemed disbursed as of the date on
which the Bank makes such disbursement. In the event that the
Agent or the Majority Banks shall determine in the exercise of
their business judgment that cause exists to do so, the Agent may
make advances of portions of the proceeds of the Loan to any
Person to whom the Agent or the Majority Banks in good faith
determine payment is due and any portion of the Loan so disbursed
by the Agent on behalf of the Banks shall be deemed disbursed as
of the date on which the Agent makes such disbursement. The
execution of this Agreement by the Borrower shall, and hereby
does, constitute an irrevocable authorization so to advance the
proceeds of the Loan. No further authorization from the Borrower
shall be necessary to warrant such direct advances and all such
advances shall satisfy pro tanto the obligations of the Banks
hereunder and shall be secured by the Security Deed and the other
Security Documents as fully as if made directly to the Borrower.
Section 3.6 Advances Do Not Constitute a Waiver. No Advance made
by the Banks shall constitute a waiver of any of the conditions
to the Banks' obligation to make further Advances nor, in the
event the Borrower fails to satisfy any such condition, shall any
such Advance have the effect of precluding the Banks from
thereafter declaring such failure to satisfy a condition to be an
Event of Default.
Section 3.7. Funds for Loans.
(a) Not later than 11:00 a.m. (Boston time) on the
proposed Drawdown Date of any Advance, 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 Advance 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 11 and
Section 12 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 Advance made available to
the Agent by the Banks by crediting such amount. 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 Advance to the extent it
is obligated to fund such Advance hereunder 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 Advance, including any additional
Advance that may be requested by the Borrower subject to the
terms and conditions hereof to provide funds to replace those not
advanced by the Bank so failing or refusing; provided that no
Bank shall be obligated to advance any amount in excess of the
limits set forth in Section 2.1. 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 Advance as provided in Section 13.5(b).
(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
Advance, Agent may in its discretion assume that such Bank has
made such Advance available to Agent in accordance with the
provisions of this Agreement and Agent may, if it chooses, in
reliance upon such assumption make such Advance available to
Borrower, and such Bank shall be liable to the Agent for the
amount of such advance.
Section 3.8 Interest Reserve.
(a) The Project Budget includes a Construction Period
interest reserve of $864,111.00. By execution hereof, the
Borrower irrevocably authorizes the Agent, without the necessity
of any further authorization, to disburse directly to the Agent
for the account of the Banks rather than to the Borrower out of
the interest reserve such sums as are necessary to pay, on a
monthly basis, accrued interest; provided, however, that all Net
Operating Income shall be utilized by Borrower first to pay
accrued interest. Upon disbursement, the amount that is
disbursed shall be disbursed pro rata by the Banks and shall be
added to the then outstanding principal sum of the Loan and shall
bear interest at the rate provided for in this Agreement. Upon
the occurrence of an Event of Default under this Agreement or any
other Loan Document, the Agent shall have the right but not the
obligation to continue to disburse payments of monthly interest
installments from the interest reserve. If the interest reserve
account is exhausted, or upon the occurrence of an Event of
Default, or if the Agent determines, in its sole discretion, that
the remaining funds in the interest reserve will be insufficient
to pay in full the then due and payable monthly interest
installments or any portions thereof through the Maturity Date,
then upon seven (7) days prior written notice of any such event
from the Agent, the Borrower shall commence the payment of
monthly interest installments. Establishment of the interest
reserve shall in no way relieve the Borrower of its obligation to
make interest payments. Upon the occurrence of a Default or an
Event of Default under any Loan Document, the Agent may, at its
option, cease making any further disbursement from the interest
reserve.
SECTION 4. THE NOTE; INTEREST; MATURITY AND PREPAYMENT
Section 4.1 Notes. The Advances shall be evidenced by separate
promissory notes of the Borrower in substantially the form of
Exhibit H hereto (collectively, the "Notes"), dated of even date
with this Agreement and completed with appropriate insertions.
One 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 Advance 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
Advance or (as the case may be) the receipt of such payment. The
outstanding amount of the Loan 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 Note to make payments of
principal of or interest on any Note when due.
Section 4.2. Interest on Advances.
(a) Each Base Rate Advance shall bear interest for the
period commencing with the Drawdown Date thereof and ending on
the date on which such Base Rate Advance is paid in full or is
converted to a LIBOR Rate Advance from a Base Rate Advance at the
rate of one-half of one percent per annum (0.50%) plus the Base
Rate.
(b) Each LIBOR Rate Advance 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 of one and one-half percent (1.50%) per annum above the
LIBOR Rate determined for such Interest Period.
(c) The Borrower promises to pay interest on each
Advance in arrears on each Interest Payment Date with respect
thereto.
(d) Base Rate Advances and LIBOR Rate Advances may be
converted to Advances of the other Type as provided in Section 5.3.
Section 4.3. Stated Maturity. The Borrower promises to pay on the
Maturity Date and there shall become absolutely due and payable
on the Maturity Date, all principal of the Loan outstanding on
such date, together with any and all accrued and unpaid interest
thereon.
Section 4.4. Optional Prepayments. The Borrower shall have the
right, at its election, to prepay the outstanding amount of the
Loan, 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 Advances pursuant to this
Section 4.4 may be made only on the last day of the Interest Period
relating thereto except as otherwise required pursuant to Section 5.7.
The Borrower shall give the Agent, no later than 10:00 a.m.,
Boston time, at least five (5) Business Days prior written notice
of any prepayment pursuant to this Section 4.4, in each case specifying
the proposed date of payment of the Loan and the principal amount
to be paid.
Section 4.5. Partial Prepayments. Each partial prepayment of the
Loan under Section 4.4 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 Base
Rate Advances and then to the principal of LIBOR Rate Advances.
No amounts of the Loan prepaid under Section 4.4 may be reborrowed.
Except as otherwise expressly provided herein, all payments shall
first be applied to accrued but unpaid interest and then to
principal.
SECTION 5. GENERAL PROVISIONS
Section 5.1 Commitment Fee. The Borrower agrees to pay to BKB on
the Closing Date a commitment and loan structuring fee as
provided in the Agreement Regarding Fees between Borrower and BKB
(the "Agreement Regarding Fees") which shall be fully earned and
non-refundable when paid.
SECTION 5.2. INTENTIONALLY DELETED.
Section 5.3. Conversion Options.
(a) The Borrower may elect from time to time to
convert any outstanding Advance to an Advance of another Type and
such Advance shall thereafter bear interest as a Base Rate
Advance or a LIBOR Rate Advance, as applicable; provided that (i)
with respect to any such conversion of a LIBOR Rate Advance to a
Base Rate Advance, 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 Advance; (ii)
with respect to any such conversion of a Base Rate Advance to a
LIBOR Rate Advance, 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 Advance, the principal
amount of the Advance so converted shall be in a minimum
aggregate amount of $100,000.00 or an integral multiple of $1,000
in excess thereof and, after giving effect to the making of such
Advance, there shall be no more than five (5) LIBOR Rate Advances
outstanding at any one time; and (iii) no Advance may be
converted into a LIBOR Rate Advance when any Default or Event of
Default has occurred and is continuing. All or any part of the
outstanding Advances of any Type may be converted as provided
herein, subject to the foregoing limits. On the date on which
such conversion is being made, each Bank shall take, to the
extent it deems it necessary to do so, such action as is
necessary to transfer its Commitment Percentage of such Advance
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 Advance to a LIBOR Rate Advance shall
be irrevocable by the Borrower.
(b) Any Advance 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 5.3; provided that
no LIBOR Rate Advance 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 Advance 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 outstanding
Advance, such Advance shall be automatically converted to a Base
Rate Advance at the end of the applicable Interest Period.
Section 5.4 Funds for Payments.
(a) All payments of principal, interest, 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 in each case not later than 11:00 a.m. (Boston time)
on the day when due in immediately available funds in lawful
money of the United States.
(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 to deduct or
withhold 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
or the Agent, as the case may be, 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 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 5.5 Computations. All computations of interest on the
Loan 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", 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 Loan as reflected on the records of the Agent from
time to time shall be considered prima facie evidence of such
outstanding amount.
Section 5.6. Inability to Determine LIBOR Rate. In the event
that, prior to the commencement of any Interest Period relating
to any LIBOR Rate Advance, 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 Draw Request with respect to LIBOR
Rate Advances shall be automatically withdrawn and shall be
deemed a Draw Request for Base Rate Advances and (b) each LIBOR
Rate Advance will automatically, on the last day of the then
current Interest Period thereof, become a Base Rate Advance, and
the obligations of the Banks to make LIBOR Rate Advances shall be
suspended until the Agent determines in the exercise of its good
faith business judgment that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent shall so
notify the Borrower and the Banks.
Section 5.7. 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 Advances, 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 Advances or
convert Advances of another type to LIBOR Rate Advances shall
forthwith be suspended and (b) the LIBOR Rate Advances then
outstanding shall be converted automatically to Base Rate
Advances on the last day of each Interest Period applicable to
such LIBOR Rate Advances or within such earlier period as may be
required by law.
Section 5.8. Additional Interest. If any LIBOR Rate Advance or
any portion thereof is repaid or is converted to a Base Rate
Advance for any reason on a date which is prior to the last day
of the Interest Period applicable to such LIBOR Rate Advance, the
Borrower will pay to the Agent upon demand for the account of the
Banks in accordance with their respective Commitment Percentages,
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 Advance 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 Advance
(including any spread over such LIBOR Rate) 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 5.9. 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 or the Loan (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 Advances 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 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 Advances, such Bank's Commitment, or
any class of loans or commitments of which any of the Loans or
such Bank's 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 Advances or such Bank's 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 or any of the Advances, 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 5.10. Capital Adequacy. If after the date hereof any Bank
determines that (a) the adoption of or change in any law, rule,
regulation, guideline, directive or request (whether or not
having the force of law) regarding capital requirements for banks
or bank holding companies or any change in the interpretation,
application or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or 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
Advances 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 5.11. 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
Advances as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to
Banks of funds obtained by it in order to maintain its LIBOR Rate
Advances, or (b) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have
given) a Draw Request or a Conversion Request.
Section 5.12. Interest on Overdue Amounts; Late Charge. Overdue
principal and (to the extent permitted by applicable law)
interest on the Loan 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 (5.0%) above the Base Rate until such amount shall be
paid in full (after as well as before judgment), or if such rate
shall exceed the maximum rate permitted by law, then at the
maximum rate permitted by law (the "Default Rate"). 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 Loan or
any other amounts payable hereunder or under the Loan Documents,
which is not paid within ten days of the date when due.
Section 5.13. Certificate. A certificate, prepared in good faith
by a Bank consistent with such Bank's practice in calculating
such amounts, setting forth any amounts payable pursuant to Section 5.8,
Section 5.9, Section 5.10, Section 5.11 or Section 5.12 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 5.14. 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 circumstance, 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 6. COLLATERAL SECURITY AND THE GUARANTY
The Obligations shall be secured by a perfected first
priority mortgage lien and security interest in the Collateral,
whether now owned or hereafter acquired, pursuant to the terms of
the Security Documents to which the Borrower is a party. The
obligations shall also be guaranteed pursuant to the terms of the
Guaranty.
SECTION 7. CERTAIN RIGHTS OF THE BANKS
Section 7.1 Right to Retain the Construction Inspector. The Banks
acting through the Agent shall have the right to retain, at the
Borrower's cost and expense, the Construction Inspector to
perform the following services on behalf of the Banks:
(a) to review and advise the Agent and the Banks as to
the current status of the Project and the Project Budget;
(b) to review and advise the Agent and the Banks
whether in the opinion of the Construction Inspector, the Project
Budget accurately reflects all Project Costs;
(c) to review and advise the Agent and the Banks
whether, in the opinion of the Construction Inspector, the Plans
and Specifications are satisfactory for the intended purposes
thereof;
(d) to make periodic inspections (approximately at the
date of each Draw Request) for the purpose of assuring that
construction of the Improvements to date is in accordance with
the Plans and Specifications and to approve the Borrower's then
current Draw Request as being consistent with the Project Budget
and the Borrower's obligations under this Agreement, and to
advise the Agent and the Banks of the anticipated cost of and
time for completion of construction of the Improvements and the
adequacy of any Contingency Reserve;
(e) to review and advise the Agent and the Banks on
any proposed change orders or construction change directives; and
(f) to review the Construction Contract and
subcontracts, for the purpose of providing the Agent and the
Banks with an opinion as to the cost of construction to be
incurred to complete the Project, and also for the purpose of
assuring that all such subcontracts are for work required by the
Plans and Specifications to be performed.
The fees of the Construction Inspector shall be paid by the
Borrower forthwith upon billing therefor and expenses incurred by
the Banks or the Agent on account thereof shall be reimbursed to
the Banks or the Agent as the case may be forthwith upon request
therefor, but neither the Banks, the Agent nor the Construction
Inspector shall have any liability to the Borrower on account of
(i) the services performed by the Construction Inspector,
(ii) any neglect or failure on the part of the Construction
Inspector to properly perform its services, or (iii) any approval
by the Construction Inspector of construction of the
Improvements. Neither the Banks, the Agent nor the Construction
Inspector assumes any obligation to the Borrower or any other
Person concerning the quality of construction of the Improvements
or the absence therefrom of defects.
Section 7.2 Right to Obtain Appraisals. The Agent on behalf of
the Banks shall have the right to obtain from time to time, at
the Borrower's cost and expense, updated Appraisals of the
Project which will be ordered by the Agent, provided that so long
as no Default or Event of Default shall have occurred and be
continuing, the Borrower shall only be obligated to pay for the
costs and expenses associated with one such Appraisal during any
twenty-four (24) month period. The costs and expenses incurred
by the Agent in obtaining such Appraisals shall be paid by the
Borrower forthwith upon billing or request by the Agent for
reimbursement therefor.
Section 7.3 Charges Against Accounts. The Agent and the Banks
shall have the right, and the Borrower hereby irrevocably
authorizes the Agent and the Banks, to charge any account of the
Borrower with the Agent or any Bank without the further approval
of the Borrower, for (i) any installment of interest due under
the Notes, (ii) any costs or expenses incurred by the Agent or
the Banks which are to be paid or reimbursed by the Borrower
under the terms of this Agreement or any of the other Loan
Documents (including, without limiting the generality of the
foregoing, all Construction Inspector, Appraisal and reasonable
attorney's fees) or (iii) any other sums due to the Agent or the
Banks under the Notes, this Agreement or any of the other Loan
Documents, all to the extent that the same are not paid by the
respective due dates thereof.
SECTION 8. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and the
Banks as follows:
Section 8.1 Organization; Authority, Etc.
(a) Organization; Good Standing. The Borrower is a
Delaware limited partnership duly organized pursuant to a limited
partnership agreement dated as of February 27, 1998 and is
validly existing and in good standing under the laws of the State
of Delaware. Antelope Creek Apartments, L.P., is a California
limited partnership duly organized pursuant to a limited
partnership agreement dated January 31, 1997, and a certificate
of limited partnership filed on January 31, 1997, with the
Secretary of State of the State of California, and is validly
existing and in good standing under the laws of the State of
California. LSAC G.P. Corporation is the sole general partner of
Antelope Creek Apartments, L.P. and is a California corporation
duly organized pursuant to its articles of incorporation filed
with the Secretary of State of the State of California and is
validly existing and in good standing under the laws of the State
of California. Walden Development Corporation is a corporation
duly organized pursuant to its Certificate of Incorporation filed
on February 6, 1998 with the Secretary of State of the State of
Delaware and is validly existing and in good standing under the
laws of the State of Delaware. Walden is a Maryland corporation
duly organized pursuant to its Articles of Incorporation and
amendments thereto filed with the Maryland Secretary of State and
is validly existing and in good standing under the laws of the
State of Maryland. WDOP is a Delaware limited partnership duly
organized pursuant to a limited partnership agreement dated
August 12, 1997 and is validly existing and in good standing
under the laws of the State of Delaware. The Grupe Company is a
corporation duly organized pursuant to its amended and restated
articles of incorporation dated December 1, 1988 filed with the
Secretary of State of the State of California and is validly
existing and in good standing under the laws of the State of
California. Each of the Borrower, the General Partner and the
Guarantors (i) has all requisite power to own its property and
conduct its business as now conducted and as presently
contemplated, and (ii) is in good standing as a foreign entity
and is duly authorized to do business in the jurisdiction where
the Land is located and in each other jurisdiction where such
qualification is necessary except where a failure to be so
qualified in such other jurisdiction would not have a materially
adverse effect on its business, assets or financial condition.
Walden is a real estate investment trust in full compliance with
and entitled to the benefits of Section 856 of the Code.
(b) Subsidiaries. The Borrower and the General
Partner do not, and will not, have any Subsidiaries. Each of the
Subsidiaries of Walden and WDOP (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 Walden or WDOP, as applicable, or such Subsidiary.
(c) Authorization. The execution, delivery and
performance of this Agreement and the other Loan Documents to
which the Borrower, the General Partner or the Guarantors is or
is 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, award, 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
organizational or formation documents of, or any agreement or
other instrument binding upon, such Person or any of its
properties, (v) do not require the approval or consent of, or
filing with, any governmental agency or authority other than
those already obtained and the filing of the Security Deed, the
Assignment of Leases and the Financing Statements in the
appropriate public records with respect thereto, and (vi) except
as provided in the Loan Documents, 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 the
Borrower, the General Partner or the Guarantors is to become a
party will result in valid and legally binding obligations of
such Person enforceable against it 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 8.2 Title to Project and Other Properties.
(a) The Borrower holds good clear record and
marketable fee simple absolute title to the Land and the
Improvements, and owns the Personal Property, subject to no
rights of others, including any mortgages, leases, conditional
sale agreements, title retention agreements, liens or other
encumbrances, other than the permitted exceptions listed in the
Security Deed.
(b) The Borrower owns all of the assets reflected in
the balance sheet of the Borrower 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.
Section 8.3 Financial Statements. There has been furnished to the
Agent a balance sheet or financial statement of the Borrower, the
General Partner and each of the Guarantors, as of the applicable
Balance Sheet Date, and a statement of income for the fiscal year
then ended, certified by the chief financial officer of the
Borrower, the General Partner or the Guarantors, respectively.
Such balance sheets, financial statements and statements of
income have been prepared with respect to Borrower, General
Partner and The Grupe Company, using a federal income tax basis
of accounting consistently applied, and with respect to Walden
and WDOP, in accordance with generally accepted accounting
principles, and fairly present the financial condition of such
Person as at the close of business on the date thereof and the
results of operations for the fiscal year then ended. As of the
date of this Agreement, there are no liabilities or contingent
liabilities of the Borrower, the General Partner or any of the
Guarantors which are not disclosed in said balance sheets or
financial statements and the related notes thereto other than the
Obligations.
Section 8.4 No Material Changes, Etc. Since the Balance Sheet
Date, there has occurred no materially adverse change in the
financial condition or business of the Borrower, the General
Partner or the Guarantors as shown on or reflected in the balance
sheets or financial statements of such Person as of the Balance
Sheet Date, 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 8.5 Franchises, Patents, Copyrights, Etc. The Borrower,
the General Partner and the Guarantors possess all franchises,
patents, copyrights, trademarks, trade names, licenses and
permits, and rights in respect of the foregoing, adequate for the
conduct of its business substantially as now conducted or as it
is intended to be conducted with respect to the Project, without
known conflict with any rights of others. The Project is not
owned or operated under or by reference to any registered or
protected trademark, tradename, servicemark or logo.
Section 8.6 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 General Partner or
any of the Guarantors before any court, tribunal, arbitrator,
mediator or administrative agency or board that, if adversely
determined, might either in any case or in the aggregate,
adversely affect the properties, assets, financial condition or
business of such Person, including, without limitation, the
Project, 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, the
General Partner or the Guarantors to construct, use and occupy
the Improvements or to pay and perform the Obligations in the
manner contemplated by this Agreement and the other Loan
Documents.
Section 8.7 No Materially Adverse Contracts, Etc. None of the
Borrower, General Partner, 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, General Partner,
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 8.8 Compliance with Other Instruments, Laws, Etc. None of
the Borrower, the General Partner, the Guarantors or any of their
respective Subsidiaries is in violation of any provision of its
partnership documents, charter or other organizational documents
or 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 8.9 Tax Status. The Borrower, the General Partner, 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
any of them 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, (c) if a
partnership, limited partnership, limited liability partnership,
or limited liability company, has and will maintain partnership
tax classification under the Code, and (d) has set aside on their
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 8.10 No Event of Default. No Default or Event of Default
has occurred and is continuing.
Section 8.11 Holding Company and Investment Company Acts. None of
the Borrower, the General Partner, 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 8.12 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 in, any Collateral or any other assets or
property of the Borrower or any rights related thereto.
Section 8.13 Setoff, Etc. The Collateral and the Agent's rights
with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrower is the
owner of the Collateral free from any lien, security interest,
encumbrance and any other claim or demand.
Section 8.14 Certain Transactions. Except as set forth on
Schedule 8.14 hereto, none of the officers, trustees, directors,
partners or employees of the Borrower, General Partner or any of
the Guarantors is presently a party to any transaction with the
Borrower or the General Partner (other than for services as
employees, officers, directors, trustees and partners), 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 officer, trustee, director, partner or such employee
or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, trustee,
director, partner or any such employee has a substantial interest
or is an officer, director, trustee or partner.
Section 8.15 Employee Benefit Plans; Multiemployer Plans;
Guaranteed Pension Plans. Neither the Borrower nor any ERISA
Affiliate maintains or contributes to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan.
Section 8.16 Regulations U and X. No portion of the 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 8.17 Partners. Antelope Creek Apartments, L.P. is the sole
general partner of the Borrower and owns a 51% partnership
interest in Borrower. LSAC G.P. Corporation is the sole general
partner of Antelope Creek Apartments, L.P. and owns a 1% interest
in Antelope Creek Apartments, L.P. Walden Development
Corporation is the sole limited partner of the Borrower and owns
a 49% partnership interest in Borrower. WDOP owns all of the
stock of Walden Development Corporation.
Section 8.18 Availability of Utilities. All utility services
necessary and sufficient for the construction, development and
operation of the Project for its intended purposes are presently
and will at all times be, available to the boundaries of the Land
through dedicated public rights of way or through perpetual
private easements, approved by the Agent, with respect to which
the Security Deed creates a valid and enforceable first lien,
including, but not limited to, water supply, storm and sanitary
sewer, gas, electric, telephone and cable facilities, and
drainage. No such utility services are subject to any
moratorium, or would be subject to any threatened moratorium,
imposed by any authority having jurisdiction.
Section 8.19 Access. The rights of way for all roads necessary
for the full utilization of the Project for its intended purposes
have either been acquired by the appropriate Governmental
Authority or have been dedicated to public use and accepted by
such Governmental Authority, and all such roads have been
completed. All curb cuts, driveways and traffic signals shown on
the Plans and Specifications are existing or have been fully
approved by the appropriate Governmental Authority and funds are
available for the construction thereof and after completion
thereof, shall be maintained at all times for the Project.
Section 8.20 Condition of Project. Neither the Project nor any
part thereof is now damaged or injured as result of any fire,
explosion, accident, flood or other casualty or has been the
subject of any Taking, and no Taking is pending or to the
knowledge of the Borrower contemplated.
Section 8.21 Compliance with Requirements. The Plans and
Specifications and construction of the Improvements pursuant
thereto and the use and occupancy of the Project contemplated
thereby comply with, and will at all times comply with, all
Requirements. The Borrower will give all such notices to, and
take all such other actions with respect to, such Governmental
Authority as may be required under applicable Requirements to
construct the Improvements and to use, occupy and operate the
Project following the completion thereof.
Section 8.22 Project Approvals. Except as set forth on Schedule
8.22(a) hereto, the Borrower has obtained all Project Approvals.
All Project Approvals obtained by the Borrower are listed and
described on Schedule 8.22(b) hereto, have been validly issued
and are in full force and effect and the Project Approvals not
heretofore obtained by the Borrower will be obtained by the
Borrower in the ordinary course following completion of the
construction of the Improvements in accordance with the Plans and
Specifications. No Project Approvals will terminate, or become
void or voidable or terminable, upon any sale, transfer or other
disposition of the Project, including any transfer pursuant to
foreclosure sale under the Security Deed.
Section 8.23 Construction Contract. The Construction Contract is
in full force and effect and both the Borrower and the Contractor
is in full compliance with its obligations under the Construction
Contract. The work to be performed by the Contractor under the
Construction Contract is the work called for by the Plans and
Specifications, and all work required to complete the
Improvements in accordance with the Plans and Specifications is
provided for under the Construction Contract.
Section 8.24 Architect's Contract. The parties to the Architect's
Contract have fully performed and complied with their respective
obligations thereunder.
Section 8.25 Other Contracts. The Borrower has made no contract
or arrangement of any kind or type whatsoever (whether oral or
written, formal or informal), the performance of which by the
other party thereto could give rise to a lien or encumbrance on
the Project other than the Construction Contract and the
Architect's Contract other than with Agent's prior written
consent.
Section 8.26 Real Property Taxes; Special Assessments. There are
no unpaid or outstanding real estate or other taxes or
assessments on or against the Project or any part thereof which
are payable by the Borrower (except only real estate taxes not
yet due and payable). The Borrower has delivered to the Agent
true and correct copies of real estate tax bills for the Project
for the past fiscal tax year. No abatement proceedings are
pending with reference to any real estate taxes assessed against
the Project. There are no betterment assessments or other
special assessments presently pending with respect to any part of
the Project, and the Borrower has received no notice of any such
special assessment being contemplated.
Section 8.27 Violations. The Borrower has received no notice of,
and otherwise has no knowledge of, any violation of any
applicable Requirements, Project Approvals or other agreement
affecting the Borrower or the Real Estate.
Section 8.28 Plans and Specifications. The Borrower has furnished
the Agent with true and complete sets of the Plans and
Specifications. The Plans and Specifications so furnished to the
Agent comply (and the Improvements when constructed in accordance
with the Plans and Specifications will likewise comply) with all
Requirements, all Project Approvals, and all restrictions,
covenants, easements and other agreements affecting the Project,
and have been approved by the Contractor, the Borrower's
Architect, and such Governmental Authority as is required for
construction of the Improvements.
Section 8.29 Project Budget. The Project Budget accurately
reflects all Project Costs.
Section 8.30 Feasibility. Each of the Construction Schedule and
the Disbursement Schedule is realistic and feasible, and is
accurate to date.
Section 8.31 Insurance. The Borrower has not received any notice
from any insurer or its agent requiring performance of any work
with respect to the Real Estate or the Improvements or canceling
or threatening to cancel any policy of insurance, and the Project
complies with the requirements of the Borrower's and the
Contractor's insurance carriers, as applicable.
Section 8.32 Other Material Agreements; No Options. There are no
material agreements pertaining to or benefitting the Project or
the operation or maintenance thereof (including, without
limitation, purchase options) other than as described in this
Agreement, or otherwise disclosed in writing to the Agent by the
Borrower, and no Person has any right or option to acquire the
Project or any portion thereof or interest therein.
Section 8.33 Brokers. None of the Borrower, the General Partner
or the Guarantors has engaged or otherwise dealt with any broker,
finder or similar entity in connection with this Agreement or the
Loan contemplated hereunder.
Section 8.34 Management Agreement. The Borrower has delivered to
the Agent a true, correct and complete copy of the Management
Agreement providing for the management of the Project. Such
Management Agreement is subordinate to the terms of the Security
Documents.
Section 8.35 Tenants. As of the date hereof, there are no tenants
in possession or Persons having rights to occupy the Project or
any portion thereof.
Section 8.36 Construction of Improvements. Except as set forth on
Schedule 8.36 hereto, as of the date hereof, no construction of
the Improvements has been performed and no other work has
commenced at the Land. To the extent any work or construction
has been commenced prior to the date hereof, all such work and
construction has been performed in compliance with the Plans and
Specifications, the Requirements and the Project Approvals and
Schedule 8.36 attached hereto sets forth the identity of all
contractors, subcontractors, equipment suppliers, laborers,
mechanics, materialmen or other parties that may have a right to
claim a lien against the Project. Any and all amounts due and
payable to such Persons have been paid as of the date hereof or
will be paid from the proceeds of the initial Advance to be made
hereunder. As of the date hereof, the Borrower has not paid any
sums to the Contractor under the Construction Contract or to any
other Person on account of any work performed or to be performed
in connection with the construction of the Improvements.
Section 8.37 Loan Documents. All of the representations and
warranties made by or on behalf of the Borrower, the General
Partner or the Guarantors 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, the General Partner nor the Guarantors has
failed to disclose such information as is necessary to make such
representations and warranties not misleading.
Section 8.38 Solvency. As of the Closing Date and after giving
effect to the transactions contemplated by this Agreement and the
other Loan Documents, including the Loan to be made hereunder,
none of the Borrower, the General Partner or 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 the Guarantors are able to pay their respective
debts as they become due, and the Borrower and the Guarantors
have sufficient capital to carry on their respective businesses.
Section 8.39 Effect of Draw Request. Each Draw Request submitted
to the Agent as provided in Section 3.1 hereof shall constitute an
affirmation that, except to the extent of changes disclosed in
writing to Agent resulting from transactions contemplated or
permitted by the Loan Documents and any changes occurring in the
ordinary course of business that singly or in the aggregate are
not materially adverse, the representations and warranties
contained in Section 8 of this Agreement and in the other Loan Documents
remain true and correct as of the date thereof; and, except to
the extent of changes disclosed in writing to Agent prior to the
Drawdown Date of the requested Advance or any portion thereof,
resulting from transactions contemplated or permitted by the Loan
Documents and any changes occurring in the ordinary course of
business that singly or in the aggregate are not materially
adverse, shall constitute an affirmation that the same remain
true and correct on the Drawdown Date.
SECTION 9. AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as the Loan
is outstanding or the Banks have any obligation to make any
Advances:
Section 9.1 Punctual Payment. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on
the Loan and all other amounts provided for in the Notes, this
Agreement and the other Loan Documents to which the Borrower is a
party, all in accordance with the terms of the Notes, this
Agreement and such other Loan Documents.
Section 9.2 Commencement, Pursuit and Completion of Construction.
The Borrower will commence construction of the Improvements
within thirty (30) days after the date hereof. The Borrower will
diligently pursue construction of the Improvements in accordance
with the Construction Schedule, and will complete construction of
the Improvements on or before the Completion Date, all in
accordance with the Plans and Specifications, in full compliance
with all restrictions, covenants and easements affecting the
Project, all Requirements, and all Project Approvals, and with
all terms and conditions of the Loan Documents, without deviation
from the Plans and Specifications unless the Borrower obtains the
prior approval of the Majority Banks. Notwithstanding the
foregoing, but without limiting or affecting any provision in any
other Section of this Agreement, the Borrower may without the
prior consent of the Majority Banks authorize changes in the
Construction Contract through customary change orders or
construction change directives provided that (a) such changes
individually do not exceed $50,000.00 or in the aggregate with
all prior change orders do not exceed $150,000.00, (b) none of
such changes individually or in the aggregate will in the
determination of the Agent delay the completion of the Project
beyond the Completion Date, (c) none of such changes individually
or in the aggregate will materially affect the size, utilization,
appearance or value of the Improvements for the purposes
contemplated by the Plans and Specifications, and (d) the
Construction Inspector (or another architect or engineer
designated by the Agent) shall have certified to the Agent in
writing that such changes do not constitute a substantial change
in the Plans and Specifications and do not constitute a change in
the scope of the work under the Construction Contract. Borrower
shall promptly deliver to the Agent copies of all "change orders"
whether or not the prior consent of the Agent thereto is
required. The Borrower will pay all sums and perform all such
acts as may be necessary or appropriate to complete such
construction of the Improvements in accordance with the Plans and
Specifications and in full compliance with all restrictions,
covenants and easements affecting the Project, all Requirements
and all Project Approvals, and with all terms and conditions of
the Loan Documents, all of which shall be accomplished on or
before the Completion Date, free from any liens, claims or
assessments (actual or contingent) asserted against the Project
for any material, equipment, labor or other items furnished in
connection therewith. The Borrower will furnish evidence of
satisfactory compliance with this Section 9.2 to the Agent on or before
the Completion Date.
Section 9.3 Correction of Defects. The Borrower will promptly
correct or cause to be corrected all defects in the Improvements
or any departure from the Plans and Specifications not previously
approved by the Majority Banks. The Borrower agrees that any
Advance made by the Agent or the Banks, whether before or after
such defects or departures from the Plans and Specifications are
discovered by, or brought to the attention of, the Agent or the
Banks, shall not constitute a waiver of the Agents' and the
Banks' right to require compliance with this Section 9.3.
Section 9.4 Maintenance of Office. The Borrower will maintain its
chief executive office in Stockton, California, or at such other
place in the United States of America as the Borrower shall
designate upon prior written notice to the Agent, where notices,
presentations and demands to or upon the Borrower in respect of
the Loan Documents may be given or made.
Section 9.5 Records and Accounts. The Borrower will (a) keep
true and accurate records and books of account in which full,
true and correct entries will be made in accordance with federal
income tax accounting principles consistently applied, which
records and books will not be maintained on a consolidated basis
with those of any other Person, including, any affiliate of the
Borrower and (b) maintain adequate accounts and reserves for all
taxes (including income taxes), depreciation and amortization of
its properties, contingencies, and other reserves, all of which
accounts shall not be commingled with accounts of any other
Person, including any affiliate of the Borrower, and (c) in order
to assist the Agent and the Banks in monitoring the financial
condition of the Borrower and the Collateral, maintain, or cause
to be maintained, at the Agent all operating accounts and escrow
accounts of the Borrower, except as may be otherwise agreed by
the Agent in writing.
Section 9.6 Financial Statements, Certificates and Information.
The Borrower will deliver to the Agent and each of the Banks:
(a) as soon as practicable, but in any event not later
than one hundred and twenty (120) days after the end of each
fiscal year of the Borrower, the balance sheet of the Borrower at
the end of such year, and the related statement of income,
statement of retained earnings, changes in capital and statement
of 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 using a federal
income tax basis of accounting consistently applied, together
with the certification of the chief financial officer of the
General Partner that the information contained in such statements
fairly presents the financial position of the Borrower as of the
date thereof (provided that upon the request of the Agent, such
statements shall be accompanied by an auditor's report prepared
without qualification by an independent certified public
accountant acceptable to the Majority Banks);
(b) as soon as practicable, but in any event not later
than thirty (30) days after the end of each calendar month
(commencing with the first calendar month after the opening of
the Project), copies of the statement of income, statement of
retained earnings, changes in capital and statement of cash flows
for such month and the portion of the Borrower's fiscal year then
elapsed, a statement showing the aging of all receivables and
payables for the Project, all in reasonable detail and prepared
using a federal income tax basis of accounting consistently
applied, together with a certification by the principal financial
or accounting officer of the General Partner that the information
contained in such financial statements fairly presents the
financial position of the Borrower on the date thereof (subject
to year-end adjustments);
(c) contemporaneously with the delivery of the
financial statements referred to in clause (a) above, a statement
of all contingent liabilities of the Borrower which are not
reflected in such financial statements or referred to in the
notes thereto, and a statement of projected cash flows of the
Borrower for the current fiscal year, all in reasonable detail
and certified by the principal financial or accounting officer of
the General Partner;
(d) within fifteen (15) days after the end of each
calendar quarter, a leasing report setting forth the Borrower's
efforts to market and lease the then unleased space in the
Improvements and the results of such efforts;
(e) within fifteen (15) days after the end of each
calendar month (commencing after the date on which the
Improvements are occupied by any tenant under a Lease) a current
rent roll and summary thereof in form satisfactory to the Agent
as of the end of such month, together with a listing of each
tenant that has taken occupancy of the Improvements during such
month, stating the name of the tenant, the date of the occupancy
and the unit so occupied;
(f) promptly after they are filed with the Internal
Revenue Service, copies of all annual federal income tax returns
and amendments thereto of the Borrower and the General Partner;
(g) contemporaneously with the mailing thereof, copies
of all information of a financial nature having a material impact
on the Borrower or the Project sent to the partners of the
Borrower; and
(h) from time to time such other financial data and
information (including accountants' management letters) as the
Agent or the Majority Banks may reasonably request.
Section 9.7 Notices
(a) Defaults. The Borrower will promptly notify the
Agent in writing of the occurrence of any Default or Event of
Default, specifying the nature and existence of such Default or
Event of Default and what action the Borrower is taking or
proposes to take with respect thereto. 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 Partner or any of the Guarantors 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 Partner or such Guarantor, the
Borrower shall forthwith give written notice thereof to the
Agent, 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) of any violation of any
Environmental Law that the Borrower or the General Partner
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
(ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any
agency of potential environmental liability, or any federal,
state or local environmental agency or board, that in either case
involves the Project or has the potential to materially affect
the assets, liabilities, financial conditions or operations of
the Borrower or the General Partner or the Agent's liens or
security interests pursuant to the Security Documents.
(c) Notification of Claims Against Collateral. The
Borrower will, immediately upon becoming aware thereof, notify
the Agent in writing of any setoff, claims, withholdings or other
defenses to which any of the Collateral, or the Agent's rights
with respect to the Collateral, are subject.
(d) Notice of Nonpayment. The Borrower will
immediately notify the Agent in writing if the Borrower receives
any notice, whether oral or written, from any laborer,
subcontractor, materialman or supplier to the effect that such
laborer, subcontractor, materialman or supplier has not been paid
when due for any labor, equipment or materials furnished in
connection with the construction of the Improvements.
(e) Notice of Litigation and Judgments. The Borrower
will give notice to the Agent in writing within fifteen (15) days
of becoming aware of any litigation or proceedings threatened in
writing or any pending litigation and proceedings affecting the
Project or affecting the Borrower or the General Partner or any
of the Guarantors or to which any of such Persons is to become a
party involving an uninsured claim against any of such Persons
that could reasonably be expected to have a materially adverse
effect on such Person 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,
within ten (10) days of any judgment not covered by insurance,
final or otherwise, against the Borrower, the General Partner or
any of the Guarantors in an amount in excess of $100,000.00
Section 9.8 Existence; Maintenance of Properties. 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 Delaware limited
partnership. The Borrower will cause the General Partner 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. The Borrower
(a) will cause all of its properties used or useful in the
conduct of its business to be maintained and kept in first class
condition, repair and working order and supplied with all
necessary equipment, (b) will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower may be necessary
so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (c) will
continue to engage primarily in the businesses now conducted by
it and in related businesses.
Section 9.9 Insurance. The Borrower will obtain and maintain
insurance with respect to the Project as required by the Security
Deed. The Borrower will maintain with respect to its other
properties and business insurance with financially sound and
reputable insurers against such casualties and contingencies as
shall be in accordance with the general practices of businesses
engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such
periods as may be reasonable and prudent.
Section 9.10 Taxes.
(a) The Borrower will pay all taxes, assessments and
other governmental charges imposed upon it with respect to the
Project or imposed upon the Project at the time and in the manner
required by the Security Deed.
(b) The Borrower 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 its other real properties, sales and activities, or
any part thereof, or upon the income or profits therefrom, that
if unpaid might by law become a lien or charge upon any of its
property; provided that any such tax, assessment, charge or levy
with respect to properties other than the Project need not be
paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the
Borrower shall have set aside on its books adequate reserves with
respect thereto; and provided further that the Borrower will pay
all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien that may have
attached as security therefor. Nothing in this Section 9.10(b) shall
limit, negate or affect the provisions of Section 9.24(a) or (b) hereof.
Section 9.11 Inspection of Project, Other Properties and Books.
(a) The Borrower shall permit the Banks, through the
Agent or any representative designated by the Agent, and the
Construction Inspector, at the Borrower's expense, to visit and
inspect the Project and all materials to be used in the
construction thereof and will cooperate with the Agent and the
Construction Inspector during such inspections (including making
available working drawings of the Plans and Specifications);
provided that this provision shall not be deemed to impose on the
Banks, the Agent or the Construction Inspector any obligation to
undertake such inspections.
(b) The Borrower shall permit the Banks, through the
Agent or any representative designated by the Agent, at the
Borrower's expense, to obtain updated commercial finance
examinations of the books of account of the Borrower and the
General Partner (and to make copies thereof and extracts
therefrom) and to discuss the affairs, finances and accounts of
the Borrower or the General Partner 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.
Section 9.12 Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply with (a) the applicable laws
and regulations wherever its business is conducted, including all
Environmental Laws and all Requirements, (b) the provisions of
its partnership agreement, (c) all agreements and instruments by
which it or any of its properties may be bound, including the
Architect's Contract, the Construction Contract, and all
restrictions, covenants and easements affecting the Project,
(d) all applicable decrees, orders and judgments, and (e) 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, including all Project Approvals.
Section 9.13 Project Approvals. The Borrower will promptly obtain
all Project Approvals not heretofore obtained by the Borrower
(including those listed and described on Schedule 8.22(a) hereto
and any other Project Approvals which may hereafter become
required, necessary or desirable) and will furnish the Agent with
evidence that the Borrower has obtained such Project Approvals
promptly upon its request. The Borrower will give all such
notices to, and take all such other actions with respect to, such
Governmental Authority as may be required under applicable
Requirements to construct the Improvements and to use, occupy and
operate the Project following the completion of the construction
of the Improvements. The Borrower will also promptly obtain all
utility installations and connections required for the operation
and servicing of the Project for its intended purposes, and will
furnish the Agent with evidence thereof. The Borrower will duly
perform and comply with all of the terms and conditions of all
Project Approvals obtained at any time, including all Project
Approvals listed and described on Schedules 8.22(a) and 8.22(b)
hereto.
Section 9.14 Use of Proceeds. The Borrower will use the proceeds
of the Loan solely for the purpose of paying for Project Costs in
accordance with the Project Budget as the same may be revised
from time to time in accordance with the terms hereof.
Section 9.15 Project Costs. The Borrower will pay when due all
Project Costs in excess of the Loan Amount, regardless of the
amount.
Section 9.16 Insufficiency of Loan Proceeds. The Borrower will
deposit funds with the Agent for the benefit of the Banks as
follows: If at any time while the Loan is outstanding or the
Banks have any obligation to make Advances hereunder, the Agent
or the Majority Banks shall in their reasonable discretion
determine that the remaining undisbursed portion of the Loan,
together with the undisbursed balance of Required Equity Funds,
if any, and any other sums previously deposited by the Borrower
with the Agent in connection with the Loan, is or will be
insufficient to fully complete and equip the Improvements in
accordance with the Plans and Specifications, to operate and
carry the Project after completion of the Improvements until
payment in full of the Loan by the Borrower, to pay all other
Project Costs, to pay all interest accrued or to accrue on the
Loan during the term of the Loan from and after the date hereof,
and to pay all other sums due or to become due under the Loan
Documents (or as to any budget category or line item in the
Project Budget, if the undisbursed funds for such category or
line item are or will be insufficient to fully pay for the costs
attributed to such budget category or line item), regardless of
how such condition may be caused, the Borrower will, within ten
(10) Business Days after written notice of such determination
from the Agent, deposit with the Agent such sums of money in cash
as the Agent or the Majority Banks may reasonably require, in an
amount sufficient to remedy the condition described in such
notice, and sufficient to pay any liens for labor, equipment and
materials alleged to be due and payable at that time in
connection with the Improvements, and, at the Agent's or the
Majority Bank's option, no further Advances of the Loan shall be
made by the Banks until the provisions of this Section 9.16 have been
fully complied with. All such deposited sums shall stand as
additional security for the obligations and shall be disbursed by
the Agent on behalf of Banks in the same manner as Advances under
this Agreement before any further Advances of the Loan proceeds
shall be made. Neither the Agent nor the Banks shall have any
obligation to pay Borrower any interest with respect to the
deposited funds.
Section 9.17 Leases. The Borrower will take or cause to be taken
all steps within the power of the Borrower to market and lease
the leasable area of the Improvements to such tenants and upon
such terms and conditions as may be approved by the Agent, as
hereinafter provided. Any proposed standard form of lease to be
used by the Borrower in connection with the Improvements shall be
submitted to and approved by the Agent prior to its submission to
any proposed tenant, and the Borrower will make such amendments,
modifications or additions thereto as may be reasonably required
by the Agent. Borrower shall not, and shall not permit the
management company under the Management Agreement to become a
party to, or agree to come a party to, any Lease without the
prior approval of the Agent. Notwithstanding the foregoing,
following the Agent's approval of the standard form of Lease to
be used by Borrower for the Project, Borrower or the management
company under the Management Agreement may, without the prior
approval of the Agent, enter into Leases with individuals (as
opposed to corporations or any other entities) for a single
apartment unit in the ordinary course of business and in
accordance with sound and customary leasing practices for similar
properties in the Roseville, California area. Additionally,
Borrower shall not, and shall not permit the management company
under the Management Agreement to, amend, supplement or otherwise
modify, or terminate or cancel, or accept the surrender of, or
grant any concessions to or waive the performance of any
obligations of any tenant under, any Lease, without the prior
approval of the Agent. Notwithstanding anything herein to the
contrary, the Borrower or the management company under the
Management Agreement may amend, supplement or otherwise modify or
terminate or cancel, or accept the surrender of, or grant
concessions to or waive the performance of any obligations of a
tenant under any Lease with an individual for a single apartment
unit in the ordinary course of business and otherwise in a manner
consistent with sound and customary leasing and management
practices for similar properties in the Roseville, California
area. The Borrower shall not, directly or indirectly, cause or
permit to exist any condition which would result in the
termination or cancellation of, or which would relieve the
performance of any obligations of any tenant under, any Lease.
Section 9.18 Laborers, Subcontractors and Materialmen. The
Borrower will furnish to the Agent, upon request at any time, and
from time to time, affidavits listing all laborers, suppliers,
subcontractors, materialmen, and any other Persons who might or
could claim statutory or common law liens in excess of $50,000.00
and are furnishing or have furnished labor, equipment or material
to the Project or any part thereof, together with affidavits, or
other evidence satisfactory to the Agent, showing that such
parties have been paid (or will be paid from proceeds of the next
Advance) all amounts then due for labor, equipment and materials
furnished to the Project. The Borrower will also furnish to the
Agent, at any time and from time to time upon demand by the
Agent, lien waivers bearing a date not prior to the Drawdown Date
of the immediately preceding Draw Request and prepared on a form
satisfactory to the Agent from the Contractor and such
subcontractors, suppliers or materialmen as the Agent may
reasonably designate.
Section 9.19 Further Assurance of Title. The Borrower will
further assure title as follows: If at any time the Agent or the
Agent's counsel has reason to believe that any Advance is not
secured or will or may not be secured by the Security Deed as a
first lien or security interest on the Project, then the Borrower
shall, within ten (10) days after written notice from the Agent,
do all things and matters reasonably necessary to assure to the
satisfaction of the Agent and the Agent's counsel that any
Advance previously made hereunder or to be made hereunder is
secured or will be secured by the Security Deed as a first lien
or security interest on the Project, and the Agent, at its
option, may decline to make further Advances hereunder until the
Agent has received such assurance; but nothing in this Section 9.19
shall limit the Agent's right to require endorsements extending
the effective date of the Title Policy as herein set forth.
SECTION 9.20 INTENTIONALLY DELETED.
Section 9.21 Publicity. The Borrower will permit the Agent and
the Banks to obtain publicity in connection with the construction
of the Improvements through press releases and participation in
such events as ground breaking and opening ceremonies. The
Borrower will give the Agent and the Banks ample advance notice
of such events and will cooperate with and provide to the Agent
and the Banks as much assistance as possible in connection with
obtaining such publicity.
Section 9.22 Sign Regarding Construction Financing. At Agent's
option, Borrower shall erect promptly and maintain on a suitable
site on the Land a sign indicating that construction financing is
being provided by the Banks, such location and sign to be subject
to the approval of the Agent. Borrower further covenants and
agrees to prevent the destruction or removal of said sign without
the prior written approval of the Agent.
Section 9.23 Further Assurances.
(a) Regarding Construction. The Borrower will furnish
or cause to be furnished to the Agent all instruments, documents,
boundary surveys, footing or foundation surveys, certificates,
plans and specifications, title and other insurance, reports and
agreements and each and every other document and instrument
required to be furnished by the terms of this Agreement or the
other Loan Documents, all at the Borrower's expense.
(b) Regarding Preservation of Collateral. The
Borrower will execute and deliver to the Agent and the Banks such
further documents, instruments, assignments and other writings,
and will do such other acts necessary or desirable, to preserve
and protect the Collateral at any time securing or intended to
secure the Obligations, as the Agent may reasonably require.
(c) Regarding this Agreement. The Borrower will
cooperate with, and will do such further acts and execute such
further instruments and documents as the Agent shall reasonably
request to carry out to its satisfaction the transactions
contemplated by this Agreement and the other Loan Documents.
Section 9.24 Fundamental Changes of Borrower. The Borrower: (a)
does not own and will not own any encumbered asset other than (i)
the Project, and (ii) incidental personal property necessary for
the operation of the Project (which will only be encumbered by
liens in favor of the Agent); (b) is not engaged and will not
engage in any business other than the ownership, management and
operation of the Project; (c) will not enter into any contract or
agreement with any partner, principal or affiliate of the
Borrower or any affiliate of any partner of the Borrower except
upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an
arms length basis with third parties other than an affiliate; (d)
has not made and will not make any loans or advances to any third
party (including any affiliate); (e) is and will be solvent and
pay its debt from its assets as the same shall become due; (f)
has done or caused to be done and will do all things necessary to
preserve its existence, and will not, nor will any partner,
limited or general, or shareholder thereof, amend, modify or
otherwise change its partnership certificate, partnership
agreement, articles of incorporation or by laws in a manner which
adversely affects the Borrower's existence as a single purpose
entity; (g) will conduct and operate its business as presently
conducted and operated; (h) will maintain books and records and
bank accounts separate from those of its affiliates, including
its general partners; (i) will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct
from any other entity (including any affiliate thereof, including
any partner or any affiliate of any partner of the Borrower); (j)
will file its own tax returns; (k) will maintain adequate capital
for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated
business operations; (l) will not seek the dissolution or winding
up, in whole or in part, of the Borrower; (m) will not commingle
the funds and other assets of the Borrower with those of any
general partner, any affiliate or any other person; (n) has and
will maintain its assets in such a manner that it is not costly
or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate or any other person; and (o)
does not and will not hold itself out to be responsible for the
debts or obligations of any other person.
Section 9.25. Registered Servicemark. Without the prior written
consent of the Agent, such consent not to be unreasonably
withheld or delayed, the Project shall not be owned or operated
by the Borrower under any registered or protected trademark,
tradename, servicemark or logo. Without limiting the foregoing,
the Agent may condition its consent to the use of any of the
foregoing upon the granting to the Agent for the benefit of the
Banks of a perfected first priority security interest therein.
Section 9.26. ERISA. The Borrower will do, or cause to be done,
all things necessary to ensure that its underlying assets will
not be deemed to be "plan assets" within the meaning of the
regulations promulgated under ERISA at 29 CFR 2510.3-101 (the
"Plan Asset Regulations"). Borrower has certified to the Banks
that it shall conduct its affairs so as to constitute a "real
estate operating company" within the meaning of the Plan Asset
Regulations. Borrower has provided the Agent with a copy of such
certification.
Section 9.27. City Note; City Deed of Trust The Borrower does
hereby expressly assume the obligations of General Partner under
the City Note and the City Deed of Trust. The Borrower does
hereby also expressly acknowledge and agree (a) that, pursuant to
the Subordination Agreement, the lien and security title of the
City Deed of Trust as well as all of the City of Roseville's
rights and remedies under the City Deed of Trust in and to the
Project, the Leases, the rents, income and profits relating to
the Project and any insurance and/or condemnation proceeds
relating to the Project are subject and subordinate to the lien
and security title of the Security Deed and to all of the Agent's
and the Banks' rights and remedies under the Security Deed and
the other Loan Documents and to the Project; (b) neither
Borrower nor General Partner will modify or amend the City Note
or the City Deed of Trust without the prior written consent of
Agent; (c) that, as of the date hereof, no default exists under
the City Note or the City Deed of Trust; (d) that, as of the
date hereof, the unpaid principal balance of the indebtedness
evidenced by the City Note is $2,726,743.59; (e) that the City
Deed of Trust does not secure any indebtedness other than that
which is evidenced by the City Note; (f) that true, correct and
complete copies of the City Note and City Deed of Trust have been
delivered to Agent and that the City Note and the City Deed of
Trust have not been altered, modified, or amended, and are in
full force and effect according to their terms and conditions;
(g) that there are no other documents or instruments evidencing,
securing or relating to the indebtedness evidenced by the City
Note other than the City Note and the City Deed of Trust; (h)
in the event of a default of any nature under the terms and
conditions of the City Deed of Trust or under any other
instrument now or hereafter evidencing, securing or otherwise
relating to the indebtedness evidenced by the City Note, the
Borrower shall promptly deliver to Agent written notice of such
default, which notice shall specify in reasonable detail the
nature of such default and the action required to cure the same
and that Agent shall have the right, but not the obligation, at
any time to cure such default, and the execution of this
Agreement by the Borrower shall, and hereby does, constitute an
irrevocable authorization to advance proceeds of the Loan to cure
any such default; and (i) that in the event the Agent or the
Majority Banks shall determine in the exercise of their good
faith business judgment that cause exists to do so, the Banks may
make an Advance directly to the City of Roseville to pay and
satisfy in full, or in part, the City Note. The execution of
this Agreement by the Borrower shall and hereby does constitute
an irrevocable authorization to so advance proceeds of the Loan.
No further authorization from the Borrower shall be necessary to
warrant the direct advances to the City of Roseville as
contemplated herein and all such advances shall be secured by the
Security Deed and the other Security Documents as fully as if
made directly to the Borrower.
SECTION 10. NEGATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as the Loan
is outstanding or any of the Banks has any obligation to make any
Advances:
Section 10.1 Restriction on Change Orders. Except as permitted in
Section 9.2, the Borrower will not cause, permit or suffer to exist any
deviations from the Plans and Specifications and will not approve
or consent to any change order or construction change directive
without the prior approval of the Agent.
Section 10.2 Restrictions on Easements, Covenants and
Restrictions. The Borrower will not create or suffer to be
created or to exist any easement, right of way, restriction,
covenant, condition, license or other right in favor of any
Person which affects or might affect title to the Project or the
use and occupancy of the Project or any part thereof without (i)
submitting to the Agent the proposed instrument creating such
easement, right of way, covenant, condition, license or other
right, accompanied by a survey showing the exact proposed
location thereof and such other information as the Agent may
reasonably request, and (ii) obtaining the prior approval of the
Agent, such approval not to be unreasonably withheld or delayed.
Section 10.3 No Amendments, Terminations or Waivers.
(a) Except as permitted in Section 9.2, the Borrower will not
amend, supplement or otherwise modify, whether by change order or
otherwise, any of the terms and conditions of the Architect's
Contract or the Construction Contract without in each case the
prior approval of the Majority Banks. The Borrower shall enter
into no contracts of any kind relating to the development,
construction or operation of the Project other than (i) the
Construction Contract for the construction of Improvements to the
Project, and (ii) bona fide service contracts with unaffiliated
third parties terminable without cause upon thirty (30) days
prior written notice, without the prior written consent of the
Agent, such approval not to be unreasonably withheld or delayed.
(b) The Borrower will not, directly or indirectly,
terminate or cancel, or cause or permit to exist any condition
which would result in the termination or cancellation of, or
which would relieve the performance of any obligations of any
other party under, the Architect's Contract or the Construction
Contract.
(c) The Borrower will not, directly or indirectly,
waive or agree or consent to the waiver of, the performance of
any obligations of any other party under the Architect's Contract
or the Construction Contract.
Section 10.4 Restrictions on Indebtedness. The Borrower will not
create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Agent and the Banks arising
under any of the Loan Documents;
(b) current liabilities of the Borrower 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 to the extent that payment
therefor shall not at the time be required to be made in
accordance with the provisions of Section 9.10;
(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 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; and
(f) Indebtedness to the City of Roseville on account
of the City Note.
Section 10.5 Restrictions on Liens, Etc. The Borrower will not
(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 thirty (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) permit any liens or claims of lien of
warehousemen, mechanics, materialmen and other like liens and
claims of lien to exist against the Project without causing any
such lien or claim of lien to be released of record or bonded off
in the full amount of the lien plus any interest, costs or
penalties accruing thereon during the pendency of any suit
contesting the same within twenty (20) days after notice thereof
by the Agent to the Borrower; (f) sell, assign, pledge or
otherwise transfer or encumber any accounts, contract rights,
general intangibles, chattel paper or instruments, with or
without recourse; or (g) incur or maintain any obligation to any
holder of Indebtedness of the Borrower which prohibits the
creation or maintenance of any lien securing the Obligations
(collectively "Liens"); provided that the Borrower may create or
incur or suffer to be created or incurred or to exist:
(i) liens to secure taxes, assessments and other
governmental charges in respect of obligations not overdue;
(ii) liens to secure claims for labor, material or
supplies in respect of obligations not overdue to the extent
the same are not required to be released or bonded off
pursuant to this Agreement.
(iii) liens in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 10.4(d);
(iv) liens in favor of the Agent under the Loan
Documents; and
(v) other liens on the Project consisting of the
City Deed of Trust, to the extent, but only to the extent,
the same remains subordinate to the Security Deed, and
easements, rights of way, covenants and restrictions if and
to the extent the same have been approved by the Agent.
Section 10.6 Restrictions on Investments. The Borrower will not
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;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000; and
(c) 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 thereof that at the
time of purchase have been rated and the ratings for which are
not less than "P 1" if rated by Moody's Investors Services, Inc.,
and not less than "A 1" if rated by Standard and Poor's.
Section 10.7 Merger, Consolidation and Disposition of Assets.
(a) The Borrower will not become a party to any
merger, consolidation or other business combination, or agree to
or effect any asset acquisition or stock acquisition or other
acquisition of beneficial or legal ownership interests.
(b) Except as expressly provided herein, the Borrower
will not become a party to or agree to or effect any disposition
of the Project or any part thereof.
(c) The Borrower will not become a party to or agree
to effect any disposition of assets, other than assets not
included in the Project in the ordinary course of business.
Section 10.8 Sale and Leaseback. The Borrower will not enter into
any arrangement directly or indirectly whereby the Borrower shall
sell or transfer any property owned by it in order then or
thereafter to lease such property or lease other property that
the Borrower intends to use for substantially the same purpose as
the property being sold or transferred.
Section 10.9 Compliance with Environmental Laws. The Borrower
will not 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 Materials; (b) cause
or permit to be located on any of the Real Estate any underground
tank or other underground storage receptacle for Hazardous
Materials; (c) generate any Hazardous Materials on any of the
Real Estate except for de minimis quantities necessary for the
operation of the Project in the ordinary course of business in
full compliance with Environmental Laws; or (d) conduct any
activity at any Real Estate or use any Real Estate in any manner
so as to cause a Release.
Section 10.10 Distributions. The Borrower will not make any
Distributions.
Section 10.11 Restrictions on Partnership Transfers. The Borrower
will not cause or permit (a) the General Partner, or any general
partner, member or shareholder of any direct or indirect general
partner of Borrower, or (b) Walden Development Corporation, the
sole limited partner of Borrower, to assign, pledge, encumber,
mortgage, grant a security interest in, sell, transfer or
otherwise convey in any manner whatsoever, all or a portion of
any such partner's, member's or shareholder's interest in
Borrower, or to admit any new partners to the Borrower, without
the prior written consent of the Majority Banks, which consent
may be granted by the Majority Banks in their sole discretion;
provided, however, that subject to the full and complete
satisfaction of each and every condition set forth in (a)-(c) of
this Section 10.11 below, without the consent of the Majority Banks, an
entity designated by Walden (the "Designee") and reasonably
acceptable to Agent may acquire the entire general partnership
interest of Antelope Creek Apartments, L.P. in the Borrower (the
Borrower and each Guarantor hereby acknowledging that Agent shall
have no obligation approve the transfer of the General Partner's
interest in Borrower to any entity (A) that would cause Walden or
WDOP to become, directly or indirectly, (i) the general partner
of Borrower or (ii) liable for the Obligations other than
pursuant to the Guaranty executed by Walden and WDOP, or (B) that
may in any manner affect otherwise limit or the obligations of
Walden or WDOP under the Guaranty executed by Walden and WDOP):
(a) No Default or Event of Default shall have occurred
and be continuing;
(b) The Designee shall have executed an agreement in
form and substance satisfactory to the Agent assuming the
obligations of the General Partner under the Borrower's
partnership agreement and under the Loan Documents; and
(c) The Borrower, the Designee, Walden and WDOP shall
have executed such other agreements, acknowledgments and
ratifications as the Agent may reasonably request, each in form
and substance reasonably satisfactory to Agent.
The Agent and the Banks each acknowledge and agree that upon the
transfer of all of the General Partner's interest in Borrower to
the Designee in accordance with the terms and conditions of this
Section 10.11 (a) General Partner shall not be liable to Agent or any
Bank for any Obligation accruing after the date of such transfer
unless related to or arising out of any act or omission of
General Partner occurring prior to such transfer, (b) the
Guaranty executed by The Grupe Company shall terminate and be
returned to The Grupe Company, and (c) The Grupe Company shall be
released from any liability under the Indemnity Agreement on
account of any loss or damage incurred by any of the "Indemnified
Parties" (as defined in the Indemnity Agreement) as a result of
any occurrence arising after the date of such transfer.
Section 10.12 Improvement District; Covenants, Conditions and
Restrictions. Borrower shall not consent to, vote in favor of,
or directly or indirectly advocate or assist in the incorporation
of any part of the Project into any improvement or other district
without the prior written consent of the Agent in each instance.
Also, Borrower shall not, without the prior written consent of
the Agent in each instance, amend, modify or terminate any
Requirement or any covenants, conditions and restrictions which
Agent has approved, affecting any part of the Project.
SECTION 11. CONDITIONS TO INITIAL ADVANCE
The obligation of the Agent and the Banks to make the
initial Advance shall be subject to the satisfaction of the
following conditions precedent:
Section 11.1 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 the Note.
Section 11.2 Construction Documents. The Construction Contract
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 certified or a fully executed copy of
each such document. The Borrower's Architect and the Contractor
shall have duly executed and delivered to the Agent for the
benefit of the Banks a consent to the assignment of the
Architect's Contract and the Construction Contract, in form and
substance satisfactory to the Agent, and the Agent shall have
received a fully executed copy thereof.
Section 11.3 Subcontracts. The Borrower shall have delivered to
the Agent, and the Agent shall have approved, a list of all
subcontractors and materialmen who have been or, to the extent
identified by the Borrower, whose contract for supplying labor,
equipment or materials for the Project exceeds $25,000.00, a copy
of the standard form of subcontract to be used by the Contractor,
and correct and complete photocopies of all executed subcontracts
and contracts.
Section 11.4 Other Contracts. The Borrower shall have delivered
to the Agent correct and complete photocopies of all other
executed contracts with contractors, subcontractors, engineers or
consultants for the Project, and of all development, management,
brokerage, sales or leasing agreements for the Project.
Section 11.5 Certified Copies of Organization Documents. The
Agent shall have received from the Borrower, each of its direct
and indirect general partners and the Guarantors a copy,
certified as of a recent date by the Secretary of State of the
State of its organization, as applicable, to be true and
complete, of its partnership agreement and certificate or
articles of incorporation, as applicable, and any other of its
organization documents as in effect on such date of
certification, and as to the Borrower and the General Partner, a
certificate from the Secretary of State of the State of
California of their qualification to do business in the State of
California.
Section 11.6 Resolutions; Bylaws. All action necessary for the
valid execution, delivery and performance by the Borrower, each
of its direct and indirect general partners and the Guarantors of
this Agreement and the other Loan Documents to which it 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
Borrower, each of its direct and indirect general partners and
the Guarantors true copies of their respective bylaws (as
applicable) and the resolutions adopted by its partners or board
of directors, as applicable, authorizing the transactions
described herein, each certified by its general partners or
secretary as of a recent date to be true and complete.
Section 11.7 Incumbency Certificate; Authorized Signers. The
Agent shall have received from any direct or indirect general
partner of the Borrower that is a corporation and the Guarantors
an incumbency certificate, dated as of the Closing Date, signed
by a duly authorized officer of such Person, and giving the name
and bearing a specimen signature of each individual who shall be
authorized: (a) to sign, in the name and on behalf of the
Borrower, such general partner or such Guarantor, each of the
Loan Documents to which such Person is or is to become a party;
(b) in the case of the Borrower, to make Draw Requests; and (c)
to give notices and to take other action on its behalf under the
Loan Documents.
Section 11.8 Validity of Liens. The Security Documents shall be
effective to create in favor of the Agent a legal, valid and
enforceable first lien and security interest in the Collateral.
All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of the Agent to
protect and preserve such lien and security interest shall have
been duly effected. The Agent shall have received evidence
thereof in form and substance satisfactory to the Agent.
Section 11.9 Deliveries. The following items or documents shall
have been delivered to the Agent by the Borrower and shall be in
form and substance satisfactory to the Agent:
(a) Plans and Specifications. Two complete sets of
the Plans and Specifications and approval thereof by any
necessary Governmental Authority, with a certification from the
Borrower's Architect (or such other licensed professionals as
Agent in its discretion shall deem acceptable) that the
Improvements to be constructed comply with all Requirements and
Project Approvals and that the Construction Contract
satisfactorily provides for the construction of the Improvements.
(b) Title Policy. The Title Policy, together with
proof of payment of all fees and premiums for such policy and
true and accurate copies of all documents listed as exceptions
under such policy.
(c) Other Insurance. Duplicate originals or certified
copies of all policies of insurance required by the Security Deed
to be obtained and maintained by the Borrower during the
construction of the Improvements, and certificates of insurance
evidencing the insurance required by the Security Deed be
obtained and maintained by the Borrower and the Contractor.
(d) Evidence of Sufficiency of Funds. Evidence that
the proceeds of the Loan will be sufficient to cover all Project
Costs reasonably anticipated to be incurred to complete the
Improvements prior to Completion Date, to carry the Project
through the Maturity Date, and to satisfy the obligations of the
Borrower to the Agent and the Banks under this Agreement.
(e) Evidence of Access, Availability of Utilities,
Project Approvals. Evidence as to:
(i) the methods of access to and egress from the
Project, and nearby or adjoining public ways, meeting the
reasonable requirements of the Project and the status of
completion of any required improvements to such access;
(ii) the availability of water supply and storm and
sanitary sewer facilities meeting the reasonable
requirements of the Project;
(iii) the availability of all other required
utilities, in location and capacity sufficient to meet the
reasonable needs of the Project; and
(iv) the obtaining of all Project Approvals which
are required, necessary or desirable for the construction of
the Improvements and the access thereto, together with
copies of all such Project Approvals.
(f) Environmental Report. An environmental site
assessment report or reports of one or more qualified
environmental engineering or similar inspection firms approved by
the Agent, which report or reports shall indicate a condition of
the Land and any existing improvements thereon in compliance with
all Requirements and in all respects satisfactory to the Agent in
its sole discretion and upon which report or reports the Agent
and the Banks are expressly entitled to rely.
(g) Soils Report. A soils report for the Land
prepared by a soils engineer approved by the Agent, which report
shall indicate that, based upon actual surface and subsurface
examinations of the Land, the soils conditions are fully
satisfactory for the proposed construction and operation of the
Improvements in accordance with the Plans and Specifications.
(h) Survey. A Survey of the Land (and any existing
improvements thereon) and Surveyor's Certificate.
(i) Taxes. Evidence of payment of all real estate
taxes and municipal charges on the Land (and any existing
improvements thereon) which were due and payable prior to the
Closing Date.
(j) INTENTIONALLY DELETED.
(k) Draw Request. A Draw Request complying with the
provisions of Section 3.1 hereof.
(l) Form Lease. The standard form of Lease to be used
by the Borrower in connection with the Improvements in form and
substance satisfactory to the Agent.
(m) Subordination Agreement. A fully executed copy of
the Subordination Agreement.
Section 11.10 Construction Inspector Report. The Agent shall have
received a report or written confirmation from the Construction
Inspector that (a) the Construction Inspector has reviewed the
Plans and Specifications, (b) the Plans and Specifications have
been received, reviewed and approved by each Governmental
Authority to which the Plans and Specifications are required
under applicable Requirements to be submitted, (c) the
Construction Contract satisfactorily provides for the
construction of the Improvements, and (d) in the opinion of the
Construction Inspector, construction of the Improvements can be
completed on or before the Completion Date for an amount not
greater than the amount allocated for such purpose in the Project
Budget.
Section 11.11 Legal Opinions. The Agent shall have received
favorable opinions in form and substance satisfactory to the
Agent and the Agent's counsel, addressed to the Agent and the
Banks and dated as of the Closing Date, from counsel to the
Borrower, the General Partner, the Guarantors and such other
parties as the Agent may reasonably require as to such matters as
the Agent shall reasonably request (including without limitation
an opinion that the assets of the Borrower will not be
consolidated with the assets of any other entity or the General
Partner, in the event of bankruptcy or insolvency of such entity
or the General Partner).
Section 11.12 Lien Search. The Agent shall have received a
certification from Title Insurance Company or counsel
satisfactory to the Agent (which shall be updated from time to
time at the Borrower's expense upon request by the Agent) that a
search of the public records disclosed no conditional sales
contracts, security agreements, chattel mortgages, leases of
personalty, financing statements or title retention agreements
which affect the Collateral.
Section 11.13 Approval of Existing Work. The Agent shall have
received such items contemplated by Section 12.5 as the Agent may
require with respect to any work done to the Land or any
construction of the Improvements performed prior to the date
hereof, if any.
Section 11.14 Notices. All notices required by any Governmental
Authority under applicable Requirements to be filed prior to
commencement of construction of the Improvements shall have been
filed.
Section 11.15 Appraisal. The Agent shall have received and
approved an Appraisal, in form and substance satisfactory to the
Majority Banks, stating that the Project, assuming completion in
accordance with the Plans and Specifications, has an Appraised
Value of at least the Loan Amount.
Section 11.16 Commitment Fee. The Borrower shall have paid to the
Agent the commitment fee pursuant to Section 5.1.
Section 11.17 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 Drawdown Date of the initial Advance, and on the Drawdown
Date of the initial Advance, there shall exist no Default or
Event of Default.
Section 11.18 Representations and Warranties. The representations
of warranties made by the Borrower and the Guarantors in the Loan
Documents or otherwise made by or on behalf of the Borrower, the
General Partner or the Guarantors in connection therewith or
after the date thereof shall have been true and correct in all
respects when made and shall also be true and correct in all
respects on the Drawdown Date of the initial Advance.
Section 11.19 Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement
and the other Loan Documents shall be satisfactory to the Agent
and the Agent's 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
counsel may reasonably require.
Section 11.20. Other. The Agent shall have received such other
documents, instruments, certificates, opinions, assurances,
consents and approvals as the Agent or the Agent's counsel may
reasonably have requested.
SECTION 12. CONDITIONS OF SUBSEQUENT ADVANCES
The obligation of the Banks to make any Advance after the
initial Advance shall be subject to the satisfaction of the
following conditions precedent:
Section 12.1 Prior Conditions Satisfied. All conditions precedent
to the initial Advance and any prior Advance shall continue to be
satisfied as of the Drawdown Date of such subsequent Advance.
Section 12.2 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 Drawdown Date of such Advance, and on the Drawdown Date of
such Advance there shall exist no Default or Event of Default.
Section 12.3 Representations and Warranties. Each of 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 Partner or the Guarantors in
connection therewith after the date thereof shall have been true
and correct in all respects on the date when made and shall also
be true and correct in all material respects on the Drawdown Date
of such Advance (except to the extent of changes disclosed in
writing to Agent resulting from transactions contemplated or
permitted by the Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are
not materially adverse).
Section 12.4 No Damage or Taking. The Improvements shall not have
been injured or damaged by fire, explosion, accident, flood or
other casualty and neither the Improvements nor the Land shall be
affected by any condemnation proceeding, unless the Agent shall
have received insurance proceeds or condemnation award sufficient
in the judgment of the Agent to effect the satisfactory
restoration of the Improvements and to permit the completion
thereof on or prior to the Completion Date and the Borrower is
entitled otherwise to receive the net proceeds thereof pursuant
to the Security Deed.
Section 12.5 Receipt of the Agent. The Agent shall have received:
(a) Draw Request. A Draw Request complying with the
requirements hereof, including those set forth in Section 3.1 hereof;
(b) Endorsement to Title Policy. A CLTA Form 122
"date down" endorsement or its equivalent to the Title Policy
indicating no change in the state of title and containing no
survey exceptions not approved by the Agent, which endorsement
shall, expressly or by virtue of a proper "pending disbursements"
clause or endorsement in the Title Policy, increase the coverage
of the Title Policy to the aggregate amount of all proceeds of
the Loan advanced on or before the effective date of such
endorsement. Additionally, the Agent shall have received a CLTA
Form 102.5 endorsement or its equivalent to the Title Policy upon
completion of the foundation for the Project;
(c) Current Survey. An updated Survey if required by
the Title Insurance Company or the Agent after approval of the
initial survey. The Agent shall require updated surveys only to
show completed foundations and, upon completion, to show the
Improvements "as-built", unless the Agent shall reasonably
believe that there exists any encroachment, any matter which
might materially and adversely affect title to the Project, or
any material deviation from the Plans and Specifications, in
which event additional updated surveys may be required by the
Agent;
(d) Approval by Construction Inspector. Approval of
the Draw Request for such Advance by the Construction Inspector,
accompanied by a certificate or report from the Construction
Inspector to the effect that in its opinion, based on on-site
observations and submissions by the Contractor, the construction
of the Improvements to the date thereof was performed in a good
and workmanlike manner and in accordance with the Plans and
Specifications, stating the estimated total cost of construction
of the Improvements, stating the percentage of in-place
construction of the Improvements, and stating that the remaining
non-disbursed portion of the Loan and Required Equity Funds
allocated for such purpose in the Project Budget is adequate to
complete the construction of the Improvements;
(e) Contracts. Evidence that one hundred percent
(100%) of the cost of the remaining construction work is covered
by a firm fixed price or guaranteed maximum price contract or
subcontracts, or orders for the supplying of materials, with
contractors, subcontractors, materialmen or suppliers
satisfactory to the Agent.
Section 12.6 Release of Retainage. In addition to the conditions
hereinbefore set forth in this Section 12, the Banks' obligation to make
any Advance of Retainage shall, except as provided in Section 2.3, be
subject to receipt by the Agent, of the following:
(a) Project Approvals. Evidence satisfactory to the
Agent that the Borrower has obtained all Project Approvals from,
given all notices to, and taken all such other actions with
respect to, such Governmental Authority as may be required under
applicable Requirements for the permanent use and occupancy of
the Improvements for their intended uses, together with copies of
all such Project Approvals.
(b) Approval by Construction Inspector. Notification
from the Construction Inspector to the effect that the
Improvements have been completed in a good and workmanlike manner
in accordance with the Plans and Specifications.
(c) Final Survey. A final Survey acceptable to the
Agent showing the as-built location of the completed
Improvements.
(d) [INTENTIONALLY DELETED]
(e) Certificate of the Borrower's Design Professional.
A certificate of the Borrower's Architect or such other licensed
design professional(s) acceptable to Agent that the Improvements
have been completed in accordance with the Plans and
Specifications and that the Improvements comply with all
applicable Requirements and Project Approvals and are in all
respects ready for occupancy.
(f) Payment of Costs. Evidence satisfactory to the
Agent that all sums due in connection with the construction of
the Improvements have been paid in full (or will be paid out of
the funds requested to be advanced) and that no party claims or
has a right to claim any statutory or common law lien arising out
of the construction of the Improvements or the supplying of
labor, material, equipment and/or services in connection
therewith.
(g) Final Lien Waivers. Final unconditional lien
waivers in such form as may be permitted by applicable law to
remove or dissolve any unfiled lien claims, or such other form
satisfactory to the Agent, from each Contractor and such
suppliers, subcontractors and materialmen as may be reasonably
requested by the Agent, duly executed and notarized.
(h) Notice of Completion. Evidence satisfactory to
the Agent that a valid Notice of Completion for the Improvements
has been recorded in the appropriate public records.
(i) INTENTIONALLY DELETED.
(j) Warranties. Copies of the warranty issued by the
Contractor to the Borrower pursuant to the Construction Contract
and of all other warranties issued to the Borrower by
subcontractors and manufacturers for labor performed and
materials supplied in connection with the construction of the
Improvements.
(k) Insurance. Duplicate original or certified copies
of all policies of insurance required by the Security Deed to be
obtained and maintained by the Borrower following completion of
construction of the Improvements.
(l) Title Endorsement. An endorsement to the Title
Policy changing the effective date thereof to the date of the
satisfaction by the Borrower of the conditions set forth in this
Section 12.6 and insuring lien free completion of the Improvements,
which endorsement shall expressly or by virtue of a "pending
disbursements" clause increase the coverage of the Title Policy
to the aggregate amount of all Advances outstanding on the
effective date of such endorsement without additional exceptions
except for matters approved by the Agent.
SECTION 13. EVENTS OF DEFAULT AND REMEDIES
Section 13.1 Events of Default. 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) any failure by the Borrower to pay as and when due
and payable any interest on or principal of or other sum payable
under the Notes, whether on the Maturity Date or any accelerate
date of maturity or at any other date fixed for payment; or
(b) any failure by the Borrower to deposit with the
Agent any funds required by Section 9.16 hereof to be deposited with the
Agent, at the time and otherwise in accordance with Section 9.16; or
(c) any failure by the Borrower to pay as and when due
and payable any other sums to be paid by the Borrower to the
Agent or the Banks under this Agreement or any of the other Loan
Documents; or
(d) title to the Collateral is or becomes
unsatisfactory to the Majority Banks by reason of any lien,
charge, encumbrance, title condition or exception (including
without limitation, any mechanic's, materialman's or similar
statutory or common law lien or notice thereof), and such matter
causing title to be or become unsatisfactory is not cured or
removed (including by bonding) within twenty (20) days after
notice thereof from the Agent to the Borrower; or
(e) any refusal by the Title Insurance Company to
insure any Advance as being secured by the Security Deed as a
valid first lien and security interest on the Project and
continuance of such refusal for a period of twenty (20) days
after notice thereof by the Agent to the Borrower; or
(f) the Improvements are not completed by the
Completion Date or, in the reasonable judgment of the Majority
Banks, construction of the Improvements will not be completed by
the Completion Date; or
(g) the Project or any part thereof is injured by
fire, explosion, accident, flood or other casualty, unless the
Agent shall have received insurance proceeds sufficient in the
reasonable judgment of the Majority Banks to effect the
satisfactory restoration of the Project and to permit the
completion of the Improvements on or prior to the date that is
six (6) months prior to the Maturity Date and the Borrower is
otherwise entitled to receive the net insurance proceeds to
restore the Project as provided in the Security Deed; or
(h) the Project or any part thereof is subject to a
Taking either temporarily or permanently; or
(i) any cessation at any time in construction of the
Improvements for more than ten (10) consecutive days except for
strikes, acts of God, fire or other casualty, or other causes
entirely beyond the Borrower's control, or any cessation at any
time in construction of the Improvements for more than thirty
(30) consecutive days, regardless of the cause thereof; or
(j) any failure by the Borrower to duly observe or
perform any term, covenant, condition or agreement contained in
Section 9.9, 9.14, 9.20 or 10 hereof; or
(k) any Guarantor denies that such Guarantor has any
liability or obligations under the Guaranty or the Indemnity
Agreement, or shall notify the Agent or any Bank of such
Guarantor's intention to attempt to cancel or terminate the
Guaranty or the Indemnity Agreement, or shall fail to observe or
comply with any term, covenant, condition and agreement under the
Guaranty or the Indemnity Agreement; or
(l) any representation or warranty made or deemed to
be made by or on behalf of the Borrower, the General Partner or
any Guarantor in this Agreement or in any of the other Loan
Documents, or in any report, certificate, financial statement,
Draw Request, document or other instrument delivered pursuant to
or in connection with this Agreement, any Advance or any of the
other Loan Documents, shall prove to have been false or incorrect
in any material respect upon the date when made or deemed to be
made or repeated; or
(m) any dissolution, termination, partial or complete
liquidation, merger or consolidation of the Borrower, the General
Partner or any Guarantor, or any sale, transfer or other
disposition of all or substantially all of the assets of the
Borrower, the General Partner or any Guarantor, other than as
permitted under the terms of this Agreement or the applicable
Guaranty; or
(n) any suit or proceeding shall be filed against the
Borrower, the General Partner, any Guarantor or the Project 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 the
Guarantor to perform each and every one of their respective
obligations under and by virtue of the Loan Documents; or
(o) any failure by the Borrower to obtain any Project
Approvals, or the revocation or other invalidation of any Project
Approvals previously obtained; or
(p) Marshall B. Edwards, Mark S. Dillinger and the
members of the board of directors of Walden that are also
officers of Walden 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; or
(q) any change in the legal or beneficial ownership of
the Borrower, the General Partner, any general partner of any
direct or indirect partner of the Borrower or any Guarantor
except as permitted in this Agreement or the applicable Guaranty;
or
(r) any failure by the Borrower, the General Partner
or any Guarantor or any of their respective Subsidiaries to pay
at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received, or any failure
to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received 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; or
(s) the Borrower, the General Partner, any Guarantor
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 the Borrower, the General Partner or any Guarantor or
of any substantial part of the assets of any such Person,
including, without limitation, the Project, (ii) shall commence
any case or other proceeding relating to the Borrower, the
General Partner or any Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, composition,
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;
(t) a petition or application shall be filed for the
appointment of a trustee or other custodian, liquidator or
receiver of the Borrower, the General Partners or any Guarantor
or any of their respective Subsidiaries or any substantial part
of the assets of any such Person, including, without limitation,
the Project, or a case or other proceeding shall be commenced
against any such Person under any bankruptcy, reorganization,
arrangement, insolvency, composition, 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 sixty (60) days following the filing or
commencement thereof;
(u) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the
Borrower, the General Partner, any Guarantor 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;
(v) any uninsured final judgment shall be rendered
against the Borrower or the General Partner, or any uninsured
final judgment shall be rendered against any of the Guarantors
such that, with other outstanding uninsured final judgments
against such Persons, the amount of such uninsured final
judgments exceeds in the aggregate $1,000,000.00, and shall
remain in force, undischarged, unsatisfied and unstayed for more
than thirty (30) days, whether or not consecutive; or
(w) 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 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 the Borrower or the
Guarantor which is a party thereto or any of their respective
stockholders, partners or beneficiaries, 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; or
(x) the Borrower or the General Partner or any
Guarantor shall be indicted for a federal crime, a punishment for
which could include the forfeiture of any of its assets; or
(y) any failure by the Borrower, the General Partner
or the Guarantors to duly observe or perform any other term,
covenant, condition or agreement in this Agreement or in any of
the other Loan Documents (other than those specified above in
this Section 13.1); or
(z) Marshall B. Edwards shall cease to be the
President of, or Mark S. Dillinger shall cease to be the Chief
Financial 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
(aa) any "Event of Default", as defined in any of the
other Loan Documents, shall occur; or
(bb) without limiting Section 13.1(r) above, any "Event of
Default" (as defined in the Walden Revolving Credit Agreement)
occurs under the Walden Revolving Credit Agreement (the parties
hereto covenanting and agreeing, for the purposes of this
Agreement, that in the event the Walden Revolving Credit
Agreement or the other "Loan Documents" (as such term is defined
in the Walden Revolving Credit Agreement) shall terminate or no
longer be in full force and effect prior to the payment and
performance by the Borrower of all of the Obligations, the
provisions of the Walden Revolving Credit Agreement and such
"Loan Documents" shall for the purposes hereof continue in full
force and effect as if the same had not been terminated and the
Walden Revolving Credit Agreement and such "Loan Documents"
remained in full force and effect); or
(cc) the occurrence of any default or event of default
under the City Note or the City Deed of Trust; or
(dd) the occurrence of a default by any party under the
Management Agreement, or the termination of the Management
Agreement without the prior written consent of Agent;
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 13.1(s),
Section 13.1(t) or Section 13.1(u), 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 13.1A. Limitation of Cure Periods.
(a) Notwithstanding anything contained in Section 13.1 to the
contrary, (i) no Event of Default shall exist hereunder upon the
occurrence of any failure described in Section 13.1(a) or Section 13.1(b) or
Section 13.1(c), 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 13.1(y) 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 excluded from any provision of cure of
defaults contained in any of the other Loan Documents.
Section 13.2. Termination of Commitments. If any one or more
Events of Default specified in Section 13.1(s), Section 13.1(t) or
Section 13.1(u) 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 Advances 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 Advances to the Borrower. No termination
under this Section 13.2 shall relieve the Borrower, the General Partner
or the Guarantors of their respective obligations to the Banks
arising under this Agreement or the other Loan Documents.
Section 13.3 Completion of Project. If any one or more of the
Events of Default shall have occurred, and whether or not the
Agent or the Majority Banks shall have terminated the Banks'
obligations to make Advances and/or accelerated the maturity of
the Loan pursuant to this Agreement as provided above, the Agent,
if the construction of the Improvements has not been fully
completed, may cause the Project to be completed and may enter
upon and take possession of the Land, whether in person, by agent
or by court appointed receiver, and construct, equip and complete
the Project in accordance with the Plans and Specifications, with
such changes therein as the Majority Banks may, from time to
time, and in their sole discretion, deem appropriate. In
connection with any construction of the Project undertaken by the
Agent pursuant to the provisions of this Section 13.3, the Agent may:
(a) use any funds of the Borrower, including any
balance which may be held by the Agent as security or in escrow,
and any funds remaining unadvanced under the Loan;
(b) employ existing contractors, subcontractors,
agents, architects, engineers, and the like, or terminate the
same and employ others;
(c) employ security watchmen to protect the Project;
(d) make such additions, changes and corrections in
the Plans and Specifications as shall, in the judgment of the
Agent or the Majority Banks, be necessary or desirable;
(e) take over and use any and all Personal Property
contracted for or purchased by the Borrower, if appropriate, or
dispose of the same as the Agent or the Majority Banks see fit;
(f) execute all applications and certificates on
behalf of the Borrower which may be required by any Governmental
Authority or Requirements or contract documents or agreements;
(g) pay, settle or compromise all existing or future
bills and claims which are or may be liens against the Project,
or may be necessary for the completion of the Improvements or the
clearance of title to the Project;
(h) complete the marketing and leasing of leasable
space in the Improvements, enter into new Leases, and modify or
amend existing Leases, all as the Agent or the Majority Banks
shall deem to be necessary or desirable;
(i) prosecute and defend all actions and proceedings
in connection with the construction of the Improvements or in any
other way affecting the Land or the Improvements; and
(j) take such action hereunder, or refrain from acting
hereunder, as the Agent or the Majority Banks may, in their sole
and absolute discretion, from time to time determine, and without
any limitation whatsoever, to carry out the intent of this Section 13.3.
The Borrower shall be liable to the Agent and the Banks for all
costs paid or incurred for the construction, equipping and
completion of the Project, whether the same shall be paid or
incurred pursuant to the provisions of this Section 13.3 or otherwise,
and all payments made or liabilities incurred by the Agent and
the Banks hereunder of any kind whatsoever shall be deemed
Advances made to the Borrower under this Agreement and shall be
secured by the Security Deed and the other Security Documents.
To the extent that any costs so paid or incurred by the Agent or
the Banks, together with all other Advances made by the Agent and
the Banks hereunder, exceed the Loan Amount, the amount of such
excess costs shall be added to the Loan Amount, and the
Borrower's obligation to repay the same, together with interest
thereon at the Default Rate, shall be deemed to be evidenced by
this Agreement and secured by the Security Deed and the other
Security Documents. In the event the Agent takes possession of
the Project and assumes control of such construction as
aforesaid, (A) Agent shall not be obligated to continue such
construction longer than it shall see fit and may thereafter, at
any time, change any course of action undertaken by it or abandon
such construction and decline to make further payments for the
account of the Borrower whether or not the Project shall have
been completed, and (B) Agent shall not have assumed any
liability to Borrower or any other Person for completing the
Improvements or for the quality of any such construction. For
the purpose of this Section 13.3, the construction, equipping and
completion of the Project shall be deemed to include any action
necessary to cure any Event of Default by the Borrower under any
of the terms and provisions of any of the Loan Documents.
Section 13.4 Other Remedies. If any one or more of the Events of
Default shall have occurred, and whether or not the Agent or the
Majority Banks shall have terminated the Banks' obligations to
make Advances pursuant to Section 13.2 and/or accelerated the maturity
of the Loan pursuant to Section 13.1, the Agent may proceed to protect
and enforce the rights and remedies of the Agent and the Banks
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 as permitted by applicable law the obtaining
of the ex parte appointment of a receiver, and, if any amount
owed to the Agent or the Banks shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the Agent or the Banks.
No remedy conferred upon the Agent or the Banks or the holder of
any Note in this Agreement or in any of the other Loan Documents
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 thereunder or now or
hereafter existing at law or in equity or by statute or any other
provision of law.
Section 13.5 Distribution of Collateral Proceeds. In the event
that, following the occurrence or during the continuance of any
Default or Event of Default, the Agent receives any monies in
connection with the enforcement of any of the Security Documents,
or otherwise with respect to the realization upon any of the
Collateral, 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 respect of the
Collateral 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) in the event that any Bank shall have
wrongfully failed or refused to make an advance under Section 3.7 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 (ii) Obligations owing to the Banks with respect to each
type of Obligation such as interest, principal, fees and
expenses, 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 13.6 Power of Attorney. For the purposes of carrying out
the provisions and exercising the rights, remedies, powers and
privileges granted by or referred to in this Section 13, the Borrower
hereby irrevocably constitutes and appoints the Agent its true
and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and do and
perform any acts which are referred to in this Section 13, in the name
and on behalf of the Borrower. The power vested in such
attorney-in-fact is, and shall be deemed to be, coupled with an
interest and irrevocable.
Section 13.7 Waivers. The Borrower hereby waives to the extent
not prohibited by applicable law (a) all presentments, demands
for performance, notices of nonperformance (except to the extent
required by the provisions hereof or of any of the other Loan
Documents), protests and notices of dishonor, (b) any requirement
of diligence or promptness on the Agent's or the Bank's part in
the enforcement of their rights (but not fulfillment of its
obligations) under the provisions of this Agreement or any of the
other Loan Documents, and (c) any and all notices of every kind
and description which may be required to be given by any statute
or rule of law (other than those required to be delivered to the
Borrower pursuant to the Loan Documents) not and any defense of
any kind which the Borrower may now or hereafter have with
respect to its liability under this Agreement or under any of the
other Loan Documents.
SECTION 14. 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 the Bank 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 in the possession of such Bank may be
applied to or set off against the payment of the Obligations and
any and all other liabilities, direct, or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising, of the Borrower to such Bank. Each of the Banks agrees
with each other Bank not to exercise any such setoff rights
without the prior written consent of the Agent and that if such
Bank shall receive from 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 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 15. THE AGENT.
Section 15.1. 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 15.2. 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 15.3. 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, shall be liable for losses due to its willful
misconduct or gross negligence.
Section 15.4. 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, in the other Loan Documents, or in
any agreement, instrument, Draw Request or certificate delivered
in connection therewith 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 any Guarantor 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 any Guarantor 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, any of
their respective Subsidiaries or the value of or ability of the
Banks to realize upon any Collateral. 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 15.5. 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 Advance or (ii) to comply with the provisions of Section 14 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 Guarantor, whether on account of outstanding Advances,
interest, fees or otherwise, to the remaining nondelinquent Banks
for application to, and reduction of, their respective pro rata
shares of all outstanding Advances. 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 Advances. 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
Advances 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 Advances
have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing
such delinquency.
Section 15.6. Holders of Notes. Subject to the terms of Article
21, 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 15.7. 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 16), 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 15.8. Agent as Bank. In its individual capacity, any Bank
acting as Agent shall have the same obligations and the same
rights, powers and privileges in respect to its Commitment and
the Advances made by it, and as the holder of any of the Notes as
it would have were it not also the Agent.
Section 15.9. Resignation. The Agent may resign at any time by
giving 60 calendar 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 appointed and shall have accepted such
appointment within thirty (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 or removed 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. Upon any change
in the Agent under this Agreement, the resigning Agent shall
execute such assignments of and amendments to the Loan Documents
as may be necessary to substitute the successor Agent for the
resigning Agent.
Section 15.10. 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 16. 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 stamp or
intangibles taxes in connection with the Security Deed or the
other 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 title insurance
premiums and the reasonable fees, expenses and disbursements of
the Agent's counsel or any local 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 21.4), the making of each Advance
hereunder, and amendments, modifications, approvals, consents or
waivers hereto or hereunder, (d) the reasonable fees, expenses
and disbursements of the Agent (determined in good faith and in
accordance with the Agent's internal policies applicable
generally to its customers) incurred in connection with the
preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, and the making
of each Advance hereunder (including all , appraisal fees,
engineer's fees, charges for commercial finance examinations and
engineering and environmental reviews, all fees paid to the
Construction Inspector and surveyor fees), (e) all reasonable
out-of-pocket expenses, including reasonable attorneys' fees and
costs, which attorneys may be employees of the Agent or any Bank,
and the fees and costs of consultants, accountants, auctioneers,
receivers, brokers, property managers, appraisers, investment
bankers or other experts retained by the Agent in connection with
(i) the enforcement of or preservation of rights under any of the
Loan Documents against the Borrower, the General Partner or any
Guarantor 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 Bank's relationship with the
Borrower, the General Partner or the Guarantors, (f) all
reasonable fees, expenses and disbursements (including reasonable
attorney's fees and costs) incurred by BKB in connection with the
syndication of interests in the Loan by BKB, (g) all reasonable
costs, expenses and disbursements incurred by the Agent in
providing draw requests, documents, financial statements and
reports, or other information from time to time provided to the
Banks, and (h) all reasonable fees, expenses and disbursements of
the Agent incurred in connection with UCC searches, UCC filings,
title rundowns or title searches. The covenants of this Section 16
shall survive payment or satisfaction of payment of all amounts
owing with respect to the Note.
SECTION 17. INDEMNIFICATION
The Borrower agrees to indemnify and hold harmless the Agent
and each Bank 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
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 17 based upon any agreement, arrangement or action made or
taken, or alleged to have been made or taken by the Borrower, the
General Partner, the Guarantors or any of their respective
Subsidiaries, (b) any disbursement of the proceeds of any of the
Advances, (c) any condition of the Project whether related to the
quality of construction or otherwise, (d) any actual or proposed
use by the Borrower of the proceeds of any of the Advances, (e)
any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Borrower, the
General Partner, the Guarantors or any of their respective
Subsidiaries, (f) any actual or alleged violation of any
Requirements or Project Approvals, (g) the Borrower entering into
or performing this Agreement or any of the other Loan Documents
or (h) with respect to the Borrower and the General Partner and
their respective properties and assets, the violation by Borrower
or the General Partner of any Environmental Law, the Release or
threatened Release of any Hazardous Materials or any action,
suit, proceeding or investigation brought or threatened with
respect to any Hazardous Materials (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,
the Borrower shall not be obligated under this Section 17 to indemnify
any Person for liabilities arising from such Person's own gross
negligence or willful misconduct. In litigation, or the
preparation therefor, the Agent and the Banks 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. The
obligations of the Borrower under this Section 17 shall survive the
repayment of the Loan and shall continue in full force and effect
so long as the possibility of such claim, action or suit exists.
If, and to the extent that, the obligations of the Borrower under
this Section 17 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.
SECTION 18. LIABILITY OF THE AGENT AND THE BANKS
No action shall be commenced by the Borrower for any claim
against the Agent or any Bank under the terms of this Agreement
unless written notice thereof, specifically setting forth the
claim of the Borrower, shall have been given to such Person
within fifteen (15) days after the Borrower has acquired
knowledge of the occurrence of the event which the Borrower
alleges gave rise to such claim, and failure to give such notice
shall constitute a waiver of any such claim. The liability of
the Agent or any Bank to the Borrower for any breach of the terms
of this Agreement by such Person shall not exceed a sum equal to
the amount which such Person shall be determined to have failed
to advance in consequence of a breach by such Person of its
obligations under this Agreement, together with interest thereon
at the rate payable by the Borrower under the terms of the Note
for Advances which the Borrower is to receive hereunder, computed
from the date when the Advance should have been made by such
Person to the date when the Advance is, in fact, made by such
Person, and, upon the making of any such payment by such Person
to the Borrower, the same shall be treated as an Advance under
this Agreement, in the same fashion as any other Advance under
the terms of this Agreement. In no event shall the Agent or any
Bank be liable to the Borrower, or anyone claiming by, under or
through the Borrower, for any special, exemplary, punitive or
consequential damages, whatever the nature of the breach of the
terms of this Agreement by the Agent or any Bank, such damages
and claims therefor being expressly waived by the Borrower.
SECTION 19. RIGHTS OF THIRD PARTIES
All conditions to the performance of the obligations of the
Agent and the Banks under this Agreement, including the
obligation to make Advances, are imposed solely and exclusively
for the benefit of the Agent and the Banks and no other Person
shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that the
Agent and the Banks will refuse to make Advances in the absence
of strict compliance with any or all thereof and no other Person
shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in
whole or in part by the Agent and the Banks at any time if in
their sole discretion they deems it desirable to do so. In
particular, the Agent and the Banks make no representations and
assume no obligations as to third parties concerning the quality
of the construction by the Borrower of the Improvements or the
absence therefrom of defects.
SECTION 20. 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 in other papers delivered by or on behalf of
the Borrower, the General Partner, the Guarantors, or any of
their respective Subsidiaries pursuant hereto and thereto shall
be deemed to have been relied upon by the Agent and the Banks,
notwithstanding any investigation heretofore or hereafter made by
any of them, and shall survive the making by the Banks of the
Advances, 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 Advances.
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 Partner, 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 21. ASSIGNMENT AND PARTICIPATION.
Section 21.1. 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 Advances 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 Partner 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, (f) such assignment is subject to the terms of any
intercreditor agreement among the Banks and the Agent, and
(g) such assignee shall acquire an interest in the Loan of not
less than $5,000,000.00. 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 21.2, 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 Partner, and the Guarantors.
Section 21.2. 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 Loan 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 21.3. 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 (5) 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 reasonably 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 21.4. 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, the General Partner or the Guarantors
except the rights granted to the Banks pursuant to Section 14, (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 Partner 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 21.5. 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 21.6. 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 21.7. 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 22. 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 23. NOTICES
Each notice, demand, election or request provided for or
permitted to be given pursuant to this Agreement (hereinafter in
this Section 23 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 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:
Walden/Grupe Elk Grove, L.P.
c/o The Grupe Company
3255 W. March Lane, 4th Floor
Stockton, California 95219
Attn: Ms. Niem Dang
With a copy to:
Robin K. Minick, Esq.
Munsch Hardt Kopf Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
and to each other Bank which may hereafter become a party to the
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 the 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 24. 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 CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT
THE ADDRESS SPECIFIED IN SECTION 23 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 25. HEADINGS.
The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions
hereof.
SECTION 26. 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 27. 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 30.
SECTION 28. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.
THE BORROWER, THE AGENT AND THE BANKS EACH 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 28.
BORROWER ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW
THIS SECTION 28 WITH ITS LEGAL COUNSEL AND THAT BORROWER AGREES TO THE
FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.
SECTION 29. 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 30. 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; a change in the
manner of distribution of any payments to the Banks or the Agent;
the release of the Borrower or a Guarantor 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 30; 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 15 may not be amended
without the written consent of the Agent. 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 31. 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 32. 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 33. 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.
SECTION 34. REPLACEMENT OF NOTES.
Upon receipt of evidence reasonably satisfactory to the
Borrower of the loss, theft, destruction or mutilation of any
Note, and in the case of any such loss, theft or destruction,
upon delivery of an indemnity agreement reasonably satisfactory
to the Borrower or, in the case of any such mutilation, upon
surrender and cancellation of the applicable Note, the Borrower
will execute and deliver, in lieu thereof, a replacement Note,
identical in form and substance to the applicable Note and dated
as of the date of the applicable Note and upon such execution and
delivery all references in the Loan Documents to such Note shall
be deemed to refer to such replacement Note.
[Remainder of page intentionally left blank]
-79A-
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as a sealed instrument as of the date first set forth
above.
WALDEN/GRUPE ROSEVILLE, L.P., a
Delaware limited partnership
By: Antelope Creek Apartments,
L.P., a California limited
partnership, general partner
By: LSAC G.P. Corporation, a
California corporation,
general partner
By:___________________________
Name:________________________
Print or Type
Name
Title:__________________________
[SEAL]
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
BankBoston, N.A., individually and
as Agent
By: _______________________________
Jeffrey L. Warwick,
Director
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Jeffrey L. Warwick
Facsimile: 770/390-8434
and
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
Facsimile: 617/434-7108
I:\FINANCE\SECFIL~1\10-K-97\EX-10-26.WPD
3/11/98
<PAGE>
EXHIBIT A
Construction Schedule
EXHIBIT B
Disbursement Schedule
<PAGE>
EXHIBIT C
Plans and Specifications
<PAGE>
EXHIBIT D
Project Budget<PAGE>
EXHIBIT E
Borrower's Requisition
<PAGE>
EXHIBIT F
Contractor's Requisition Certificate
<PAGE>
EXHIBIT G
Borrower's Architect's Requisition Certificate
<PAGE>
EXHIBIT H
FORM OF NOTE
<PAGE>
SCHEDULE 1
BANKS AND COMMITMENTS
Name and Address Commitment Commitment
Percentage
BankBoston $25,835,450.00 100%
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
LIBOR Lending Office
100 Federal Street
Boston, Massachusetts 02110
Attn: Real Estate Division
<PAGE>
SCHEDULE 1.1
DESCRIPTION OF PHASES
<PAGE>
SCHEDULE 8.14
TRANSACTIONS WITH AFFILIATES
1. _____ shall serve as the manager of the Project.
SCHEDULE 8.22
PROJECT APPROVALS
SCHEDULE 8.36
SCHEDULE OF CONTRACTORS AND SUBCONTRACTORS
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.. . . . . . . . . .1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Rules of Interpretation. . . . . . . . . . . . . . . 14
SECTION 2. AGREEMENT TO MAKE ADVANCES; LIMITATIONS . . . . . . . . . 15
Section 2.1 Agreement to Make Advances. . . . . . . . . . . . . 15
Section 2.2 Project Budget. . . . . . . . . . . . . . . . . . . 15
Section 2.3 Amount of Advances. . . . . . . . . . . . . . . . . 15
Section 2.4 Quality of Work. . . . . . . . . . . . . . . . . . 16
Section 2.5 Cost Overruns and Savings. . . . . . . . . . . . . 16
Section 2.6 Contingency Reserve. . . . . . . . . . . . . . . . 17
Section 2.7 Development Fee; Land Equity . . . . . . . . . . . . 17
Section 2.8 Stored Materials. . . . . . . . . . . . . . . . . . 17
Section 2.9 Final Disbursement of Remaining Loan Proceeds . . . . 18
SECTION 3. MAKING THE ADVANCES . . . . . . . . . . . . . . . . . . . 18
Section 3.1 Draw Request. . . . . . . . . . . . . . . . . . . . 18
Section 3.2 Notice and Frequency of Advances. . . . . . . . . . 20
Section 3.3 Deposit of Funds Advanced. . . . . . . . . . . . . 20
Section 3.4 Advances to Contractor. . . . . . . . . . . . . . . 20
Section 3.5 Advances to Title Insurance Company or to Others. . 21
Section 3.6 Advances Do Not Constitute a Waiver. . . . . . . . 21
Section 3.7. Funds for Loans . . . . . . . . . . . . . . . . . . 21
Section 3.8 Interest Reserve. . . . . . . . . . . . . . . . . . 22
SECTION 4. THE NOTE; INTEREST; MATURITY AND PREPAYMENT . . . . . . . 22
Section 4.1 Notes.. . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.2. Interest on Advances. . . . . . . . . . . . . . . . 23
Section 4.3. Stated Maturity. . . . . . . . . . . . . . . . . . 23
Section 4.4. Optional Prepayments. . . . . . . . . . . . . . . 23
Section 4.5. Partial Prepayments. . . . . . . . . . . . . . . . 23
SECTION 5. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . 24
Section 5.1 Commitment Fee . . . . . . . . . . . . . . . . . . . 24
Section 5.2. INTENTIONALLY DELETED . . . . . . . . . . . . . . . 24
Section 5.3. Conversion Options. . . . . . . . . . . . . . . . . 24
Section 5.4 Funds for Payments . . . . . . . . . . . . . . . . . 25
Section 5.5 Computations. . . . . . . . . . . . . . . . . . . . 25
Section 5.6. Inability to Determine LIBOR Rate. . . . . . . . . 25
Section 5.7. Illegality. . . . . . . . . . . . . . . . . . . . 26
Section 5.8. Additional Interest. . . . . . . . . . . . . . . . 26
Section 5.9. Additional Costs, Etc. . . . . . . . . . . . . . . 26
Section 5.10. Capital Adequacy. . . . . . . . . . . . . . . . . 27
Section 5.11. Indemnity of Borrower. . . . . . . . . . . . . . 28
Section 5.12. Interest on Overdue Amounts; Late Charge. . . . . 28
Section 5.13. Certificate. . . . . . . . . . . . . . . . . . . 28
Section 5.14. Limitation on Interest. . . . . . . . . . . . . . 28
SECTION 6. COLLATERAL SECURITY AND THE GUARANTY. . . . . . . . . . . 29
SECTION 7. CERTAIN RIGHTS OF THE BANKS . . . . . . . . . . . . . . . 29
Section 7.1 Right to Retain the Construction Inspector. . . . . 29
Section 7.2 Right to Obtain Appraisals. . . . . . . . . . . . . 30
Section 7.3 Charges Against Accounts. . . . . . . . . . . . . . 30
SECTION 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 30
Section 8.1 Organization; Authority, Etc.. . . . . . . . . . . . 30
Section 8.2 Title to Project and Other Properties. . . . . . . . 32
Section 8.3 Financial Statements. . . . . . . . . . . . . . . . 32
Section 8.4 No Material Changes, Etc. . . . . . . . . . . . . . 32
Section 8.5 Franchises, Patents, Copyrights, Etc. . . . . . . . 32
Section 8.6 Litigation. . . . . . . . . . . . . . . . . . . . . 33
Section 8.7 No Materially Adverse Contracts, Etc. . . . . . . . 33
Section 8.8 Compliance with Other Instruments, Laws, Etc. . . . 33
Section 8.9 Tax Status. . . . . . . . . . . . . . . . . . . . . 33
Section 8.10 No Event of Default. . . . . . . . . . . . . . . . 34
Section 8.11 Holding Company and Investment Company Acts. . . . 34
Section 8.12 Absence of UCC Financing Statements, Etc. . . . . 34
Section 8.13 Setoff, Etc. . . . . . . . . . . . . . . . . . . . 34
Section 8.14 Certain Transactions. . . . . . . . . . . . . . . 34
Section 8.15 Employee Benefit Plans; Multiemployer Plans;
Guaranteed Pension Plans. . . . . . . . . . . . . . 34
Section 8.16 Regulations U and X. . . . . . . . . . . . . . . . 34
Section 8.17 Partners. . . . . . . . . . . . . . . . . . . . . . 35
Section 8.18 Availability of Utilities. . . . . . . . . . . . . 35
Section 8.19 Access. . . . . . . . . . . . . . . . . . . . . . 35
Section 8.20 Condition of Project. . . . . . . . . . . . . . . 35
Section 8.21 Compliance with Requirements. . . . . . . . . . . 35
Section 8.22 Project Approvals. . . . . . . . . . . . . . . . . 35
Section 8.23 Construction Contract. . . . . . . . . . . . . . . 36
Section 8.24 Architect's Contract. . . . . . . . . . . . . . . 36
Section 8.25 Other Contracts. . . . . . . . . . . . . . . . . . 36
Section 8.26 Real Property Taxes; Special Assessments. . . . . 36
Section 8.27 Violations. . . . . . . . . . . . . . . . . . . . 36
Section 8.28 Plans and Specifications. . . . . . . . . . . . . 36
Section 8.29 Project Budget. . . . . . . . . . . . . . . . . . 36
Section 8.30 Feasibility. . . . . . . . . . . . . . . . . . . . 36
Section 8.31 Insurance. . . . . . . . . . . . . . . . . . . . . 36
Section 8.32 Other Material Agreements; No Options. . . . . . . 37
Section 8.33 Brokers. . . . . . . . . . . . . . . . . . . . . . 37
Section 8.34 Management Agreement. . . . . . . . . . . . . . . 37
Section 8.35 Tenants. . . . . . . . . . . . . . . . . . . . . . 37
Section 8.36 Construction of Improvements. . . . . . . . . . . 37
Section 8.37 Loan Documents. . . . . . . . . . . . . . . . . . 37
Section 8.38 Solvency. . . . . . . . . . . . . . . . . . . . . 37
Section 8.39 Effect of Draw Request. . . . . . . . . . . . . . 38
SECTION 9. AFFIRMATIVE COVENANTS OF THE BORROWER . . . . . . . . . . 38
Section 9.1 Punctual Payment. . . . . . . . . . . . . . . . . . 38
Section 9.2 Commencement, Pursuit and Completion of Construction.38
Section 9.3 Correction of Defects. . . . . . . . . . . . . . . 39
Section 9.4 Maintenance of Office. . . . . . . . . . . . . . . 39
Section 9.5 Records and Accounts. . . . . . . . . . . . . . . . 39
Section 9.6 Financial Statements, Certificates and Information. 39
Section 9.7 Notices. . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.8 Existence; Maintenance of Properties. . . . . . . . 42
Section 9.9 Insurance. . . . . . . . . . . . . . . . . . . . . . 42
Section 9.10 Taxes.. . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.11 Inspection of Project, Other Properties and Books.. 43
Section 9.12 Compliance with Laws, Contracts, Licenses, and
Permits . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.13 Project Approvals. . . . . . . . . . . . . . . . . 43
Section 9.14 Use of Proceeds. . . . . . . . . . . . . . . . . . 43
Section 9.15 Project Costs. . . . . . . . . . . . . . . . . . . 44
Section 9.16 Insufficiency of Loan Proceeds. . . . . . . . . . 44
Section 9.17 Leases. . . . . . . . . . . . . . . . . . . . . . 44
Section 9.18 Laborers, Subcontractors and Materialmen. . . . . 45
Section 9.19 Further Assurance of Title. . . . . . . . . . . . 45
Section 9.20 INTENTIONALLY DELETED. . . . . . . . . . . . . . . 45
Section 9.21 Publicity. . . . . . . . . . . . . . . . . . . . . 45
Section 9.22 Sign Regarding Construction Financing. . . . . . . 46
Section 9.23 Further Assurances. . . . . . . . . . . . . . . . . 46
Section 9.24 Fundamental Changes of Borrower. . . . . . . . . . 46
Section 9.25. Registered Servicemark. . . . . . . . . . . . . . 47
Section 9.26. ERISA. . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.27. City Note; City Deed of Trust. . . . . . . . . . . 47
SECTION 10. NEGATIVE COVENANTS OF THE BORROWER . . . . . . . . . . . 48
Section 10.1 Restriction on Change Orders. . . . . . . . . . . 48
Section 10.2 Restrictions on Easements, Covenants and
Restrictions. . . . . . . . . . . . . . . . . . . . 48
Section 10.3 No Amendments, Terminations or Waivers. . . . . . . 48
Section 10.4 Restrictions on Indebtedness. . . . . . . . . . . 49
Section 10.5 Restrictions on Liens, Etc. . . . . . . . . . . . 49
Section 10.6 Restrictions on Investments. . . . . . . . . . . . 50
Section 10.7 Merger, Consolidation and Disposition of Assets.. . 51
Section 10.8 Sale and Leaseback. . . . . . . . . . . . . . . . 51
Section 10.9 Compliance with Environmental Laws. . . . . . . . 51
Section 10.10 Distributions. . . . . . . . . . . . . . . . . . 51
Section 10.11 Restrictions on Partnership Transfers. . . . . . 51
Section 10.12 Improvement District; Covenants, Conditions and
Restrictions . . . . . . . . . . . . . . . . . . . 52
SECTION 11. CONDITIONS TO INITIAL ADVANCE. . . . . . . . . . . . . . 52
Section 11.1 Loan Documents. . . . . . . . . . . . . . . . . . 52
Section 11.2 Construction Documents. . . . . . . . . . . . . . 52
Section 11.3 Subcontracts. . . . . . . . . . . . . . . . . . . 53
Section 11.4 Other Contracts. . . . . . . . . . . . . . . . . . 53
Section 11.5 Certified Copies of Organization Documents. . . . 53
Section 11.6 Resolutions; Bylaws. . . . . . . . . . . . . . . . 53
Section 11.7 Incumbency Certificate; Authorized Signers. . . . 53
Section 11.8 Validity of Liens. . . . . . . . . . . . . . . . . 54
Section 11.9 Deliveries. . . . . . . . . . . . . . . . . . . . 54
Section 11.10 Construction Inspector Report. . . . . . . . . . 55
Section 11.11 Legal Opinions. . . . . . . . . . . . . . . . . . 56
Section 11.12 Lien Search. . . . . . . . . . . . . . . . . . . 56
Section 11.13 Approval of Existing Work. . . . . . . . . . . . 56
Section 11.14 Notices. . . . . . . . . . . . . . . . . . . . . 56
Section 11.15 Appraisal. . . . . . . . . . . . . . . . . . . . 56
Section 11.16 Commitment Fee. . . . . . . . . . . . . . . . . . 56
Section 11.17 Performance; No Default. . . . . . . . . . . . . 56
Section 11.18 Representations and Warranties. . . . . . . . . . 56
Section 11.19 Proceedings and Documents. . . . . . . . . . . . 56
Section 11.20 Other. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 12. CONDITIONS OF SUBSEQUENT ADVANCES. . . . . . . . . . . . 57
Section 12.1 Prior Conditions Satisfied. . . . . . . . . . . . 57
Section 12.2 Performance; No Default. . . . . . . . . . . . . . 57
Section 12.3 Representations and Warranties. . . . . . . . . . 57
Section 12.4 No Damage or Taking. . . . . . . . . . . . . . . . 57
Section 12.5 Receipt of the Agent. . . . . . . . . . . . . . . 57
Section 12.6 Release of Retainage. . . . . . . . . . . . . . . 58
SECTION 13. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . 60
Section 13.1 Events of Default. . . . . . . . . . . . . . . . . 60
Section 13.2. Termination of Commitments . . . . . . . . . . . . 64
Section 13.3 Completion of Project. . . . . . . . . . . . . . . 64
Section 13.4 Other Remedies. . . . . . . . . . . . . . . . . . 66
Section 13.5 Distribution of Collateral Proceeds. . . . . . . . 66
Section 13.6 Power of Attorney. . . . . . . . . . . . . . . . . 67
Section 13.7 Waivers. . . . . . . . . . . . . . . . . . . . . . 67
SECTION 14. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 15. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . 68
Section 15.1. Authorization. . . . . . . . . . . . . . . . . . 68
Section 15.2. Employees and Agents. . . . . . . . . . . . . . . 68
Section 15.3. No Liability. . . . . . . . . . . . . . . . . . . 68
Section 15.4. No Representations. . . . . . . . . . . . . . . . 69
Section 15.5. Payments.. . . . . . . . . . . . . . . . . . . . . 69
Section 15.6. Holders of Notes. . . . . . . . . . . . . . . . . 70
Section 15.7. Indemnity. . . . . . . . . . . . . . . . . . . . 70
Section 15.8. Agent as Bank. . . . . . . . . . . . . . . . . . 70
Section 15.9. Resignation. . . . . . . . . . . . . . . . . . . 70
Section 15.10. Duties in the Case of Enforcement. . . . . . . . 71
SECTION 16. EXPENSES.. . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 17. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 72
SECTION 18. LIABILITY OF THE AGENT AND THE BANKS . . . . . . . . . . 73
SECTION 19. RIGHTS OF THIRD PARTIES. . . . . . . . . . . . . . . . . 73
SECTION 20. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . . 74
SECTION 21. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . 74
Section 21.1. Conditions to Assignment by Banks. . . . . . . . 74
Section 21.2. Register. . . . . . . . . . . . . . . . . . . . . 75
Section 21.3. New Notes. . . . . . . . . . . . . . . . . . . . 75
Section 21.4. Participations. . . . . . . . . . . . . . . . . . 75
Section 21.5. Pledge by Bank. . . . . . . . . . . . . . . . . . 76
Section 21.6. No Assignment by Borrower. . . . . . . . . . . . 76
Section 21.7. Disclosure. . . . . . . . . . . . . . . . . . . . 76
SECTION 22. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 23. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 24. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE . . . 77
SECTION 25. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 26. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 27. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . 78
SECTION 28. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS . . . . . 78
SECTION 29. DEALINGS WITH THE BORROWER . . . . . . . . . . . . . . . 79
SECTION 30. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . 79
SECTION 31. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 32. TIME OF THE ESSENCE. . . . . . . . . . . . . . . . . . . 80
SECTION 33. NO UNWRITTEN AGREEMENTS. . . . . . . . . . . . . . . . . 80
SECTION 34. REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . . . 80
EXHIBITS
A Construction Schedule
B Disbursement Schedule
C Plans and Specifications
D Project Budget
E Borrower Requisition
F Contractor's Requisition Certificate
G Borrower's Architect's Requisition Certificate
H Form of Note
SCHEDULES
Schedule 1 Banks and Commitments
Schedule 1.1 Description of Phases
Schedule 8.14 Transactions with Affiliates
Schedule 8.22 Project Approvals
Schedule 8.36 Schedule of Contractors and Subcontractors
CONSTRUCTION LOAN AGREEMENT
DATED AS OF FEBRUARY 27, 1998
among
WALDEN/GRUPE ROSEVILLE, L.P.,
and
BANKBOSTON, N.A.,
THE OTHER BANKS WHICH
ARE A PARTY TO THIS AGREEMENT,
and
THE OTHER BANKS WHICH MAY BECOME
PARTIES TO THIS AGREEMENT
and
BANKBOSTON, N.A.,
AS AGENT
FORWARD TREASURY LOCK AGREEMENT
WHEREAS, Walden Residential Properties, Inc. (the "Company")
wishes to enter into one or more transactions based upon current
interest rates and Smith Barney Capital Services Inc. ("SB") is
willing to enter into this Forward Treasury Lock Agreement, dated
as of August 29, 1997 to enable Company to do so.
WHEREAS, the parties have entered and/or anticipate entering
into one or more Forward Treasury Lock transactions and any
amendments thereto (each a "Transaction") that are or will be
governed by this Forward Treasury Lock Agreement, which shall
incorporate the terms of any Confirmation substantially in the form
of Exhibit A hereto, (collectively, the "Agreement").
NOW, THEREFORE, Company and SB hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
(a) "Determination Date" shall mean the day on which the price of
the Reference Treasury will be determined as set forth in a
Confirmation.
(b) "Notional Amount" shall mean that amount set forth in a
Confirmation.
(c) "Unwind Date" shall mean any day including the Determination
Date on which the parties agree to unwind all or part of an
existing Transaction.
(d) "Unwind Amount" shall mean in regard to a Transaction that
portion of the Notional Amount of an existing Transaction
which the parties agree to terminate.
(e) "Unwind Price" for the Reference Treasury on any Unwind Date
shall mean the latest "asked" price for the Reference
Treasury, expressed as a percentage, as determined by SB in it
good faith judgement.
(f) "Payment Amount" for each Transaction shall mean an amount
equal to the product of (i) the difference of the Reference
Price minus the Unwind Price for the Reference Treasury on the
Determination Date or on the Unwind Date, as the case may be,
multiplied by (ii) the Unwind Amount.
(g) "Reference Price" for the Reference Treasury shall mean that
price, expressed as a percentage, set forth in a Confirmation.
(h) "Reference Treasury" shall mean the United States Treasury
Bill or Note having the interest rate and maturity set forth
in a Confirmation.
(i) "Settlement Date" shall mean the day set forth in a
Confirmation.
(j) "Transaction Date" shall mean the date on which the parties
enter into a Transaction.
(k) "Business Day" shall mean a day in which the New York Stock
Exchange and commercial banks in New York City are open for
business.
2. The Transactions. On a Transaction Date the parties may, but
are not obligated to, enter into a Transaction by agreeing on such
day to a Reference Treasury, Notional Amount, Determination Date,
Settlement Date and a Reference Price. All Transactions are
entered into in reliance on the fact that this Forward Treasury
Lock Agreement and all Confirmations subject thereto form a single
agreement between the parties, and the parties would not otherwise
enter into any Transactions.
3. Payment. The parties hereto agree that for each Transaction
a payment shall be made on the Settlement Date specified for that
Transaction, such payment to equal the Payment Amount calculated
for the relevant Unwind or Determination Date. If such Payment
Amount is a positive number, SB shall pay such Payment Amount to
Company. If such Payment Amount is a negative number, Company
shall pay the absolute value of such Payment Amount to SB. The
payment to be made pursuant to this Section 3 shall be made not
later than 4:00 p.m. (New York City time) on the Settlement Date to
the account of the party entitled to receive such payment.
4. Transfer. Neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred by either
party without the prior written consent of the other party.
Provided, however that SB may without the consent of the Company,
assign its rights and obligations under this Agreement to any of
its affiliates so long as the obligations of any such assignee are
guaranteed by Smith Barney Holdings Inc.
5. Set-off. In addition to any rights of set-off a Party may
have as a matter of all or otherwise, upon the occurrence of an
Event of Default with respect to Party ("X") hereof, the other
Party ("Y") shall have the right (but shall not be obliged) without
prior notice to X or any other person to set off any obligation of
X owing to Y or any Affiliate of Y (whether or not arising under
this Agreement, whether or not matured, whether or not contingent
and regardless of the currency, place of payment or booking office
of the obligation) against any obligations of Y or any Affiliate of
Y owing to X (whether or not arising under this Agreement, whether
or not contingent and regardless of the currency, place of payment
or booking office of the obligation). If an obligation is
unascertained, Y may in good faith estimate that obligation and set
off in respect of the estimate, subject to the relevant Party
accounting to the other when the obligation is ascertained.
6. Netting. If on any date amounts would otherwise be payable in
the same currency, and in respect of any Transaction, by each party
to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have
been payable by one party exceeds the aggregate amount that would
otherwise have been payable by the other party, such obligations
shall be replaced by an obligation upon the party by whom the
larger aggregate amount would have been payable to pay to the other
party the excess of the larger aggregate amount over the smaller
aggregate amount.
7. Events of Default. The occurrence of any of the following
events with respect to a party which party shall be the Defaulting
Party.
(i) The failure to make payment on the Settlement Date; or
(ii) Any representation or warranty made in this Agreement shall
prove to have been false or misleading in any material respect
at the time it was made, given or reaffirmed; or
(iii) The failure to perform or comply with any other
obligation in this Agreement which failure shall continue
for 2 business days after written notice of such failure
has been sent to the Defaulting Party; or
(iv) (A) The initiation of any case, proceeding or other action (1)
under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization
or other relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to have itself
adjudicated as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution or compost or other relief under
bankruptcy or insolvency law with respect to it or its debts
or (2) which seeks appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for
all or any substantial part of its assets; (B) a general
assignment for the benefit of its creditors; (C) the
initiation of any case, proceeding or other action of a nature
referred to in clause (iv) (A) hereof which (1) results in the
entry of an order for relief or any such adjudication or
appointment with respect to the party or any of its assets or
(2) is not dismissed, stayed, discharged or bonded for a
period of 5 days; (D) the initiation of any case, proceeding
or other action seeking issuance of a warrant of attachment,
execution, or similar process against all or any substantial
part of its assets, which case, proceeding or other action
results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded
pending appeal within 30 days from the entry thereof; (E) a
party shall take any action in furtherance of, or indicating
its consent t, approval of, or acquiescence in, any of the
acts set forth in clauses (iv) (A) - (D) hereof; or (F) either
party shall generally not, or shall admit in writing its
inability to, pay its debts as they become due; or
(v) Any loan or other obligation in respect of borrowed money
(whether present or future, contingent or otherwise, as
principal or surety or otherwise) of a party in an amount, as
it applies to SB of not less than $25,000,000, and in an
amount of not less than $5,000,000 as it applies to the
Company, shall have become payable before the due date thereof
as a result of acceleration of maturity caused by the
occurrence of any event of default thereunder or if any other
such loan or obligation shall not be repaid when due, as
extended by any applicable grace period specified in the
contracts or agreements constituting such loan or obligation;
or
(vi) A party ("X"), consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets
to, another entity and the credit worthiness of the resulting,
surviving or transferee entity is materially weaker than that
of X, immediately prior to such action.
8. Remedies Upon Event of Default. Upon the occurrence and the
continuance of an Event of Default, the obligation of the Non-Defaulting
Party to make any payment contemplated by Section 3 of
this Agreement will terminate (it being understood that such
termination will not affect or suspend any payment or other
obligations of the Defaulting Party). The Non-Defaulting Party
may, upon notice to the Defaulting Party, terminate and liquidate
as soon as is commercially practicable all outstanding Transactions
in accordance with this Section 8. The Defaulting Party shall
immediately upon receipt of a determination by the Non-Defaulting
Party of its losses hereunder, pay to the Non-Defaulting Party an
amount determined by the Non-Defaulting Party that such party
reasonably in good faith believes to be its total losses and costs
in connection with this Agreement and terminated Transactions.
Such computation shall include any loss of bargain, cost of funding
or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, or
obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). In addition to the
foregoing, the Non-Defaulting Party may include in its
determination of its losses hereunder such losses and costs (or
gains) in respect of any payment or delivery required to have been
made on or before the relevant termination date The Defaulting
Party agrees to indemnify the Non-Defaulting Party from and against
any expenses it may incur (including legal fees and other expenses
of collection) it may incur as a result of any Default by such
party. The parties agree that the amounts recoverable pursuant to
this Section 8 are a reasonable pre-estimate of loss and are not a
penalty. Such amounts are payable as liquidated damages for the
loss of bargain and the loss of protection against future risk.
9. Representations. SB and Company as an inducement to enter
into this Agreement each represent and warrant as follows:
(i) It is validly organized and existing under the laws of the
jurisdiction of its incorporation.
(ii) Its execution, delivery and performance of this Agreement, are
within its corporate or organizational powers, have been and
remain duly authorized and do not conflict with any provision
of its articles or certificate of incorporation or by-laws (or
equivalent constituent documents) or any law, regulation,
rule, decree, order, judgement or contractual restriction
binding on or affecting it or its property or assets and will
not result in or require the creation of any lien, security
interest or other charge or encumbrance upon or with respect
to any of its assets or property;
(iii) This Agreement has been duly executed and delivered and
constitutes its valid and legally binding obligation
enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to
enforceability, to provisions of public order and to
equitable principles of general application (regardless
of whether enforcement is sought in a proceeding in
equity or at law);
(iv) All necessary covenants, authorizations, licenses and
approvals of, and registrations and declarations with, any
governmental authority, required in connection with its
execution, delivery and performance of this Agreement have
been obtained and remain in full force and effect (including
any exchange control licenses or exemptions), and all
conditions thereof have been duly complied with; and no other
action by, and no notice to or filing with, any governmental,
judicial or regulatory authority or body is required for such
execution, delivery or performance;
(v) No occurrence or condition with respect to such party which
constitutes an Event of Default (or which with the passage of
time or the giving of notice or both would constitute an Event
of Default) has occurred or would occur by reason of its
entering into or performing its obligations under this
Agreement;
(vi) The determination of proceedings (if any) pending or, insofar
as it is aware, threatened against it, at law or in equity, or
before any arbitrator, governmental instrumentality or any
other competent body, will not, in the aggregate, materially
impair its ability to perform, or render it unable to perform,
its obligations under the Agreement, and there is no
proceeding pending or threatened against such party which is
likely to affect the legality, validity or enforceability of
this Agreement; and
(vii) It shall, upon learning of the occurrence of any event or
the commencement of any condition that constitutes an
Event of Default with respect to it, promptly give the
other party notice of such event or condition.
10. No Reliance. In connection with the negotiation of, the
entering into, and the confirming of the execution of this
Agreement, any Credit Support Document to which it is a party, each
Transaction, and any other documentation relating to this Agreement
that it is required by this Agreement to deliver each party
acknowledges that: (i) the other party hereto or thereto is not
acting as a fiduciary or financial, investment, or commodity
trading advisor for it, (ii) it is not relying (for purposes of
making any investment decision or otherwise) upon any advice,
counsel or representations expressly set forth in this Agreement,
in such Credit Support Document, and in any Confirmation; (iii) the
other party hereto or thereto has not given to it (directly or
indirectly through any other person) any assurance or guaranty
whatsoever as to the merits (either legal, regulatory, tax,
financial, accounting or otherwise) of this Agreement, such Credit
Support Document, such Transaction or such other documentation (iv)
it has consulted with its own legal, regulatory, tax, business,
investment, financial and accounting advisors to the extent deemed
necessary, and it has made its own investment, hedging, and trading
decisions based upon its own judgment and upon any advice as it has
deemed necessary and not upon any view expressed by the other party
hereto or thereto; (v) it has determined that all trading decisions
have been the result of arm's length negotiations between the
parties; (vi) it is entering into this Agreement, such Credit
Support Document, such Transaction and such other documentation
with a full understanding of all of the terms, conditions and risks
hereof and thereof (economic and otherwise), and it is capable of
assuming and willing to assume (financially and otherwise) those
risks; (vii) that every Transaction subject to this Agreement is a
distinct obligation or Transaction between the parties whether
pursuant to this Agreement or otherwise and; (viii) it is a
sophisticated investor.
11. Entire Agreement. This Agreement, including Confirmation,
constitutes the entire agreement and understanding of the parties
with respect to the subject matter of this Agreement and supersedes
all oral statements and prior writings with respect thereto.
12. Waiver. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not operate as a
waiver, and a single or partial exercise of any right, power or
privilege will not preclude any subsequent or further exercise of
that right, power or privilege or the exercise of any other right,
power or privilege.
13. Notices. Notices hereunder shall given in writing as follows:
If to SB at: If to Company at:
Smith Barney Capital Services Inc. Walden
Residential Properties, Inc.
388 Greenwich Street 1 Lincoln Centre
New York, New York 10013 5400 LBJ Freeway,
Suite 400
Dallas, Texas 75240
Primary: Gino Petroni Primary: Mark
Dillinger
Telephone: (212) 723-5003 Telephone: (972)
788-0510
Fax: (212) 723-8769 Fax: (972) 934-9303
copy to: Timothy Lu copy to: _____________
Capital Markets _____________
Telephone: (212) 723-7668 Telephone: _____________
Fax: (212) 723-8798 Fax: _____________
Notice by facsimile shall be effective when confirmed by telephone
to the contact person designated above.
Each party may change the individuals designated for notice by
written notice delivered to the other prior to the effective date
of such change.
14. Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original.
15. Amendment. No amendment, modification, supplement or waiver
in respect of this Agreement will be effective unless in writing
and signed by each of the parties hereto.
16. Governing Law and Jurisdiction, Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the
law of the State of New York without reference to choice of law
rules. In any dispute involving or arising out of this agreement,
the parties agree to the jurisdiction of the United States District
Court for the Southern District of New York or the Supreme Court
of the State of New York in the Borough of Manhattan, and waive any
claim or defense that such forum is inconvenient. The parties
agree to waive their right to a trial by jury.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in New York, N.Y. by their duly authorized officers
as of the date specified on the first page of this Agreement.
Walden Residential Properties, Inc.
by: _____________________________
title: _____________________________
Smith Barney Capital Services Inc.
by: _____________________________
title: _____________________________
by: _____________________________
title: _____________________________
December 18, 1997
Walden Residential Properties, Inc.
Attn: Mark Dillinger
13601 Preston Rd., Suite 800W
Dallas, TX 75240
Fax: 972-934-9303
Phone: 972-788-0510
Re: Our Ref: 293-1604/05
We are pleased to confirm:-
Our Interest Rate Lock Agreement between BankBoston,
N.A. ("BBNA") and Walden Residential Properties, Inc.
("Walden") as specified herein:
Par Value: US$75,000,000.
Reference Security: Coupon: 5.750%
Maturity: 11/30/2002
Type: 5-year US Treasury Note.
Trade Date: December 17, 1997
Reference Price (Yield) 99.486235% (5.895 %)
Exercise Date: On any New York Business
Day, from December 17, 1997,
through 2:30 p.m.
EST on November 23, 1998.
Exercise Time: Between 8:00 a.m. and
2:30 p.m. EST.
Settlement Date: November 23, 1998.
Expiration Date: November 23, 1998 at 2:30
p.m. EST.
Exercise Notice: Orally by phoning Thomas
Corcoran or Ned Cataldo
(Tel: 617- 434-8634) to
be followed within 24
hours by written
confirmation.
Settlement: Upon receipt of the
Exercise Notice, BBNA
will, in good faith,
determine the price at
which the USD
75,000,000
face amount of the
Reference Security is
offered to BBNA (the
"Market Price") at such
time on the Exercise
Date for delivery on
the Settlement Date.
Payment Amounts: On the first New York Business Day
following the Exercise Date, Walden agrees to pay to or
receive from BBNA, an amount equal to the difference between
the Reference Price and the Market Price, divided by 100,
times the Par Value. In the case where this amount is a
positive amount BBNA will pay that amount to Walden, in the
case where this amount is a negative amount Walden will pay
that amount to BBNA.
Each party hereto hereby represents and warrants to the
other party hereto that, as of the Trade Date, it is duly
organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has the power
and authority to execute and deliver this Agreement, and
perform its obligations thereunder, and that it has taken all
necessary action for and has obtained all necessary consents
to its execution and delivery of this Agreement and the
performance of its obligations hereunder, and this Agreement
has been duly executed and delivered and constitutes its
legal, valid and binding obligation.
If with respect to either party (the "Defaulting Party")
(i) such party fails to pay any amount owing hereunder when
due and payable; or (ii) any representation or warranty made
by such party under this Agreement proves to have been
materially incorrect or misleading when made, then the other
party (the "Non-Defaulting Party") may, by notice to the
Defaulting Party, cause the early termination of this
Agreement.
This Agreement contains the entire agreement between the
parties relating to the subject matter hereof and supersedes
all oral statements and prior writings with respect thereto.
This Agreement may be terminated, modified or amended only by
an instrument in writing executed by the parties hereto. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns. The rights and obligations of each party hereto may
not be assigned or transferred without the prior written
consent of the other party hereto (such consent not to be
unreasonably withheld). Upon the occurrence of any default or
event of default in any obligation of Walden to BBNA, BBNA may
apply any and all amounts then due or thereafter becoming due
from BBNA to Walden hereunder directly to the payment of such
obligation to the BBNA.
THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE
OF NEW YORK AND SHALL BE CONSTRUED, AND THE RIGHTS AND
LIABILITIES OF THE PARTIES DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
By your acceptance hereof, you acknowledge that we have not
made, and you are not relying on any statements,
representations, promises or undertakings whatever that are
not contained herein.
Sincerely,
BANKBOSTON, N.A.
By: ____________________ By: ____________________
Name: Thomas P. Corcoran Name: James Mather
Title: Director Title: Managing Director
Please acknowledge your agreement to the foregoing by signing
below and faxing it to BankBoston, N.A., 100 Federal Street,
Boston, Massachusetts 02106, Attention: Mary Scherr,
Derivatives Operations, at Fax No.: 617-434-4284 (Tel.: 617-434-4405).
Such acknowledgment shall constitute your representation that
the person signing this Agreement is authorized to execute and
deliver this Agreement on your behalf and that this Agreement
constitutes your valid and binding obligation.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: ____________________
Name:
Title:
December 18, 1997
Walden Residential Properties, Inc.
Attn: Mark Dillinger
13601 Preston Rd., Suite 800W
Dallas, TX 75240
Fax: 972-934-9303
Phone: 972-788-0510
Re: Our Ref: 293-1606
We are pleased to confirm:-
Our Interest Rate Lock Agreement between BankBoston,
N.A. ("BBNA") and Walden Residential Properties, Inc.
("Walden") as specified herein:
Par Value: US$25,000,000.
Reference Security: Coupon: 6.125%
Maturity: 08/15/2007
Type: 10-year US Treasury Note.
Trade Date: December 17, 1997
Reference Price (Yield) 101.099173% (5.96 %)
Exercise Date: On any New York Business
Day, from December 17, 1997,
through 2:30 p.m.
EST on November 23, 1998.
Exercise Time: Between 8:00 a.m. and
2:30 p.m. EST.
Settlement Date: November 23, 1998.
Expiration Date: November 23, 1998 at 2:30
p.m. EST.
Exercise Notice: Orally by phoning Thomas
Corcoran or Ned Cataldo
(Tel: 617- 434-8634) to
be followed within 24
hours by written
confirmation.
Settlement: Upon receipt of the
Exercise Notice, BBNA
will, in good faith,
determine the price at
which the USD
25,000,000
face amount of the
Reference Security is
offered to BBNA (the
"Market Price") at such
time on the Exercise
Date for delivery on
the Settlement Date.
Payment Amounts: On the first New York Business Day
following the Exercise Date, Walden agrees to pay to or
receive from BBNA, an amount equal to the difference between
the Reference Price and the Market Price, divided by 100,
times the Par Value. In the case where this amount is a
positive amount BBNA will pay that amount to Walden, in the
case where this amount is a negative amount Walden will pay
that amount to BBNA.
Each party hereto hereby represents and warrants to the
other party hereto that, as of the Trade Date, it is duly
organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has the power
and authority to execute and deliver this Agreement, and
perform its obligations thereunder, and that it has taken all
necessary action for and has obtained all necessary consents
to its execution and delivery of this Agreement and the
performance of its obligations hereunder, and this Agreement
has been duly executed and delivered and constitutes its
legal, valid and binding obligation.
If with respect to either party (the "Defaulting Party")
(i) such party fails to pay any amount owing hereunder when
due and payable; or (ii) any representation or warranty made
by such party under this Agreement proves to have been
materially incorrect or misleading when made, then the other
party (the "Non-Defaulting Party") may, by notice to the
Defaulting Party, cause the early termination of this
Agreement.
This Agreement contains the entire agreement between the
parties relating to the subject matter hereof and supersedes
all oral statements and prior writings with respect thereto.
This Agreement may be terminated, modified or amended only by
an instrument in writing executed by the parties hereto. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns. The rights and obligations of each party hereto may
not be assigned or transferred without the prior written
consent of the other party hereto (such consent not to be
unreasonably withheld). Upon the occurrence of any default or
event of default in any obligation of Walden to BBNA, BBNA may
apply any and all amounts then due or thereafter becoming due
from BBNA to Walden hereunder directly to the payment of such
obligation to the BBNA.
THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE
OF NEW YORK AND SHALL BE CONSTRUED, AND THE RIGHTS AND
LIABILITIES OF THE PARTIES DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
By your acceptance hereof, you acknowledge that we have not
made, and you are not relying on any statements,
representations, promises or undertakings whatever that are
not contained herein.
Sincerely,
BANKBOSTON, N.A.
By: ____________________ By: ____________________
Name: Thomas P. Corcoran Name: James Mather
Title: Director Title: Managing Director
Please acknowledge your agreement to the foregoing by signing
below and faxing it to BankBoston, N.A., 100 Federal Street,
Boston, Massachusetts 02106, Attention: Mary Scherr,
Derivatives Operations, at Fax No.: 617-434-4284 (Tel.: 617-434-4405).
Such acknowledgment shall constitute your representation that
the person signing this Agreement is authorized to execute and
deliver this Agreement on your behalf and that this Agreement
constitutes your valid and binding obligation.
WALDEN RESIDENTIAL PROPERTIES, INC.
By: ____________________
Name:
Title:
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
February 9, 1994
Year Ended (Commencement
December 31, of Operations) to
--------------------------- December 31,
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before extraordinary item
and income allocated to minority
interests. . . . . . . . . . . . . . . $27,113 $19,122 $10,685 $ 5,356
Add:
Interest on indebtedness . . . . . . . 28,447 20,573 17,111 6,288
Amortization of deferred financing
costs. . . . . . . . . . . . . . . . 827 916 900 371
------- ------- ------- -------
Earnings. . . . . . . . . . . . . . $56,387 $40,611 $28,696 $12,015
======= ======= ======= =======
Fixed charges and preferred stock dividends:
Interest on indebtedness . . . . . . . $28,447 $20,573 $17,111 $ 6,288
Amortization of deferred financing
costs. . . . . . . . . . . . . . . . 827 916 900 371
------- ------- ------- -------
Fixed charges . . . . . . . . . . . 29,274 21,489 18,011 6,659
Add:
Preferred stock dividends (1) . . . 15,889 4,092 922 --
------- ------- ------- -------
Combined fixed charges and
preferred stock dividends . . . $45,163 $25,581 $18,933 $ 6,659
======= ======= ======= =======
Ratio of earnings to fixed charges . . . 1.93x 1.89x 1.59x 1.80x
Ratio of earnings to fixed charges and
preferred stock dividends. . . . . . . 1.25x 1.59x 1.52x 1.80x
</TABLE>
(1) Includes dividends on preferred stock and preferred
distributions to minority interest holders.
(2) Computation of the ratio of earnings to combined fixed charges
and preferred stock dividends has not been provided for the
periods prior to February 9, 1994 because the capital structure
has changed substantially since the Company's formation and such
information would be meaningless.
EXHIBIT 21.1
Exhibit 21.1
Page 1 of 3
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE OF SUBSIDIARIES OF THE COMPANY
AS OF DECEMBER 31, 1997
Percentage
Equity
Subsidiaries Ownership
- ------------ ----------
AOF, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 100%
(California)
AOF Newgen, L.P. . . . . . . . . . . . . . . . . . . . . . . 100%
(California)
Apartment Opportunity Fund, L.P. . . . . . . . . . . . . . . 100%
(California)
Chimney Trace Special Corp.. . . . . . . . . . . . . . . . . 100%
(Texas)
Colorado Club Partners, L.P. . . . . . . . . . . . . . . . . 100%
(California)
Concierge Management Corporation . . . . . . . . . . . . . . 100%
(Texas)
Concierge Realty and Finance Corporation . . . . . . . . . . 100%
(Texas)
Cornerstone Associates . . . . . . . . . . . . . . . . . . . 100%
(California)
Crossing & Meadows Corporation . . . . . . . . . . . . . . . 100%
(Texas)
Crossing & Meadows Partnership, Ltd. . . . . . . . . . . . . 100%
(Texas)
DMH 90 . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
(California)
Exhibit 21.1
Page 2 of 3
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE OF SUBSIDIARIES OF THE COMPANY - Continued
AS OF DECEMBER 31, 1997
Percentage
Equity
Subsidiaries Ownership
- ------------ ----------
Drever Construction Corporation, Inc.. . . . . . . . . . . . 100%
(California)
Drever/Monticello Investors, L.P.. . . . . . . . . . . . . . 100%
(California)
Drever Partners, Inc.. . . . . . . . . . . . . . . . . . . . 100%
(California)
Fullerton Portfolio Joint Venture. . . . . . . . . . . . . . 100%
(California)
Houston Portfolio Joint Venture II . . . . . . . . . . . . . 100%
(California)
Hunter's Ridge Partnership, Ltd. . . . . . . . . . . . . . . 100%
(Texas)
Newport Partnership, Ltd.. . . . . . . . . . . . . . . . . . 100%
(Texas)
Resident Profiles, Inc.. . . . . . . . . . . . . . . . . . . 100%
(Texas)
Towne Center Partnership, Ltd. . . . . . . . . . . . . . . . 100%
(Texas)
Walden AZ Corporation. . . . . . . . . . . . . . . . . . . . 100%
(Delaware)
Walden/Drever Operating Partnership, L.P.. . . . . . . . . . .38%
(Delaware)
Exhibit 21.1
Page 3 of 3
WALDEN RESIDENTIAL PROPERTIES, INC.
SCHEDULE OF SUBSIDIARIES OF THE COMPANY - Continued
AS OF DECEMBER 31, 1997
Percentage
Equity
Subsidiaries Ownership
- ------------ ----------
Walden Glen Corporation. . . . . . . . . . . . . . . . . . . 100%
(Delaware)
Walden Operating, Inc. . . . . . . . . . . . . . . . . . . . 100%
(Delaware)
Walden Residential Operating Partnership, L.P. . . . . . . . .88%
(Georgia)
Walden Residential Operating Partnership, L.P. . . . . . . . 100%
(Delaware)
Walden Special Corp. . . . . . . . . . . . . . . . . . . . . 100%
(Texas)
Walden Special Partners, Ltd.. . . . . . . . . . . . . . . . 100%
(Texas)
Walden "Utah" Properties, Ltd. . . . . . . . . . . . . . . . 100%
(Texas)
WDN Properties, Inc.. . . . . . . . . . . . . . . . . . . . 100%
(New York)
WDN Properties, Ltd. . . . . . . . . . . . . . . . . . . . . 100%
(Texas)
EXHIBIT 23.1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements on Form S-3 (Registrations Nos. 333-92328, 333-13809 and
333-34507) and on Form S-8 (Registration Nos. 333-22547 and 333-24247)
of Walden Residential Properties, Inc. of our report dated
March 25, 1998, appearing in this Annual Report on Form 10-K of
Walden Residential Properties, Inc. for the year ended December 31,
1997.
DELOITTE & TOUCHE LLP
Dallas, Texas
March 26, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 9,757 29,720
<SECURITIES> 0 0
<RECEIVABLES> 1,613 1,324
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 1,507,613 683,515
<DEPRECIATION> 74,584 41,707
<TOTAL-ASSETS> 1,469,472 689,714
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
57 58
<COMMON> 180 169
<OTHER-SE> 394,978 396,308
<TOTAL-LIABILITY-AND-EQUITY> 1,469,472 689,714
<SALES> 0 0
<TOTAL-REVENUES> 169,537 109,475
<CGS> 0 0
<TOTAL-COSTS> 73,288 47,560
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 28,447 20,573
<INCOME-PRETAX> 25,058 17,188
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 25,058 17,188
<DISCONTINUED> 0 0
<EXTRAORDINARY> (422) (1,848)
<CHANGES> 0 0
<NET-INCOME> 9,396 13,182
<EPS-PRIMARY> .53 .90
<EPS-DILUTED> .53 .89
</TABLE>
