SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number: 1-12590
GABLES RESIDENTIAL TRUST
(Exact name of Registrant as specified in its Charter)
MARYLAND 58-2077868
(State of Incorporation) (I.R.S. Employer Identification No.)
2859 Paces Ferry Road, Suite 1450
Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(770) 436 - 4600
(Registrant's telephone number, including area code)
N/A
(Former name, former address and formal fiscal year,
if changed since last report)
Common shares of beneficial interest, par value $0.01 per share,
20,247,341 shares
The number of shares outstanding of each of the registrant's
classes of common stock,
as of October 31, 1997
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past (90) days.
(1) (X) YES ( ) NO
(2) (X) YES ( ) NO
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Page-2
GABLES RESIDENTIAL TRUST
FORM 10 - Q INDEX
Part I - Financial Information Page
Item 1: Financial Statements
Consolidated Balance Sheets of Gables Residential Trust as 3
of September 30, 1997 and December 31, 1996.
Consolidated Statements of Operations of Gables Residential Trust 4
for the three months ended September 30, 1997 and 1996.
Consolidated Statements of Operations of Gables Residential Trust 5
for the nine months ended September 30, 1997 and 1996.
Consolidated Statements of Cash Flows of Gables Residential Trust 6
for the nine months ended September 30, 1997 and 1996.
Notes to Consolidated Financial Statements 7-10
Item 2: Management's Discussion and Analysis of Financial Condition 11-26
and Results of Operations
Part II - Other Information 27-28
Item 1: Legal Proceedings
Item 2: Changes in Securities
Item 3: Defaults Upon Senior Securities
Item 4: Submission of Matters to a Vote of Security Holders
Item 5: Other Information
Item 6: Exhibits and Reports on Form 8-K
Signature 29
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GABLES RESIDENTIAL TRUST
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS:
Real estate assets: (Note 7)
Land ............................................................. $135,759 $102,762
Buildings ........................................................ 742,848 558,569
Furniture, fixtures and equipment ................................ 57,587 45,830
Construction in progress ......................................... 53,663 74,690
Land held for future development ................................. 17,663 2,749
--------- ---------
Real estate assets before accumulated depreciation ............ 1,007,520 784,600
Less: accumulated depreciation .................................. (90,459) (74,903)
--------- ---------
Net real estate assets ......................................... 917,061 709,697
Cash and cash equivalents ........................................... 3,531 4,385
Restricted cash ..................................................... 6,726 8,430
Deferred charges, net ............................................... 4,392 5,412
Other assets, net ................................................... 11,695 31,736
-------- --------
Total assets ................................................... $943,405 $759,660
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes payable ....................................................... $440,728 $390,321
Accrued interest payable ............................................ 2,009 1,811
Common dividend payable (Note 8) .................................... 10,112 9,465
Preferred dividend payable .......................................... 424 0
Real estate taxes payable ........................................... 12,425 9,785
Accounts payable and accrued expenses - construction ................ 6,946 6,218
Accounts payable and accrued expenses - operating ................... 4,263 5,455
Security deposits ................................................... 2,329 1,968
-------- ---------
Total liabilities .............................................. 479,236 425,023
-------- ---------
Minority interest of unitholders in Operating Partnership ........... 54,584 53,143
-------- ---------
Shareholders' equity:
Preferred shares at $25.00 liquidation preference, $0.01 par value,
10,000,000 shares authorized, 4,600,000 shares issued and
outstanding at September 30, 1997 ............................... 115,000 --
Common shares, $0.01 par value, 100,000,000 shares authorized,
20,224,703 and 19,317,098 shares issued and outstanding at
September 30, 1997 and December 31, 1996, respectively .......... 202 193
Additional paid-in capital ........................................ 305,237 315,670
Deferred long-term compensation ................................... (743) 0
Accumulated earnings (deficit) .................................... (10,111) (34,369)
-------- --------
Total shareholders' equity ..................................... 409,585 281,494
-------- --------
Total liabilities and shareholders' equity ..................... $943,405 $759,660
======== ========
<FN>
The accompanying notes are an integral part of these balance sheets.
</FN>
</TABLE>
<PAGE>
Page-4
GABLES RESIDENTIAL TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1997 1996
---- ----
<S> <C> <C>
Rental revenues .................................................... $ 33,866 $ 28,315
Other property revenues ............................................ 1,749 1,543
-------- --------
Total property revenues ....................................... 35,615 29,858
-------- --------
Property management revenues ....................................... 753 966
Non-recurring Olympic revenues, net ................................ 0 670
Other .............................................................. 525 274
-------- --------
Total other revenues .......................................... 1,278 1,910
-------- --------
Total revenues ................................................ 36,893 31,768
-------- --------
Property operating and maintenance (exclusive of items shown
separately below) ............................................. 12,176 10,795
Depreciation and amortization ...................................... 6,266 5,076
Amortization of deferred financing costs ........................... 219 327
Property management - owned (Note 4) ............................... 876 732
Property management - third party (Note 4) ......................... 566 681
General and administrative ......................................... 840 842
Interest ........................................................... 5,906 6,304
Credit enhancement fees ............................................ 128 136
-------- --------
Total expenses ................................................ 26,977 24,893
-------- ---------
Income before equity in income of joint ventures and interest income 9,916 6,875
Equity in income of joint ventures ................................. 101 56
Interest income .................................................... 86 74
-------- --------
Income before gain on sale of real estate assets ................... 10,103 7,005
Gain on sale of real estate assets ................................. 491 0
-------- --------
Income before minority interest .................................... 10,594 7,005
Minority interest of unitholders in Operating Partnership .......... (1,359) (1,215)
-------- --------
Net income ......................................................... 9,235 5,790
Dividends to preferred shareholders ................................ (1,775) 0
-------- --------
Net income available to common shareholders ........................ $7,460 $5,790
======== ========
Weighted average number of common shares outstanding ............... 19,579 16,439
======== ========
Per Common Share Information (Note 6):
- -------------------------------------
Net income ......................................................... $0.38 $0.35
======== ========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
Page-5
GABLES RESIDENTIAL TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
---- ----
<S> <C> <C>
Rental revenues .................................................... $94,293 $75,773
Other property revenues ............................................ 4,612 3,873
------- -------
Total property revenues ....................................... 98,905 79,646
------- -------
Property management revenues ....................................... 2,299 2,931
Non-recurring Olympic revenues, net ................................ 0 900
Other .............................................................. 1,662 876
------- -------
Total other revenues .......................................... 3,961 4,707
------- -------
Total revenues ................................................ 102,866 84,353
------- -------
Property operating and maintenance (exclusive of items shown
separately below) ............................................. 34,707 28,108
Depreciation and amortization ...................................... 17,285 13,372
Amortization of deferred financing costs ........................... 722 994
Property management - owned (Note 4) ............................... 2,469 2,074
Property management - third party (Note 4) ......................... 1,733 2,169
General and administrative ......................................... 2,495 2,419
Interest ........................................................... 18,120 15,295
Credit enhancement fees ............................................ 385 439
------- -------
Total expenses ................................................ 77,916 64,870
------- -------
Income before equity in income of joint ventures and interest income 24,950 19,483
Equity in income of joint ventures ................................. 251 164
Interest income .................................................... 279 233
------- -------
Income before gain on sale of real estate assets ................... 25,480 19,880
Gain on sale of real estate assets ................................. 5,349 0
------- -------
Income before minority interest and extraordinary loss, net ........ 30,829 19,880
Minority interest of unitholders in Operating Partnership .......... (4,478) (3,458)
------- -------
Income before extraordinary loss, net .............................. 26,351 16,422
Extraordinary loss, net of minority interest (Note 5) .............. (602) (520)
------- -------
Net income ......................................................... 25,749 15,902
Dividends to preferred shareholders ................................ (1,775) 0
------- -------
Net income available to common shareholders ........................ $23,974 $15,902
======= =======
Weighted average number of common shares outstanding ............... 19,438 15,944
======= =======
Per Common Share Information (Note 6):
Income before extraordinary loss, net .............................. $1.26 $1.03
======= =======
Net income ......................................................... $1.23 $1.00
======= =======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
Page-6
GABLES RESIDENTIAL TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- ------------------------------------
Net income ....................................................... $ 25,749 $ 15,902
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ................................. 18,007 14,366
Equity in income of joint ventures ............................ (251) (164)
Minority interest of unitholders in Operating Partnership ..... 4,478 3,458
Gain on sale of real estate assets ............................ (5,349) 0
Long-term compensation expense ................................ 306 306
Extraordinary loss, net of minority interest .................. 602 520
Change in operating assets and liabilities:
Restricted cash ............................................. 2,217 (1,518)
Other assets ................................................ (1,249) (595)
Other liabilities, net ...................................... 2,415 4,802
------- -------
Net cash provided by operating activities .............. 46,925 37,077
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
- ------------------------------------
Purchase and construction of real estate assets .................. (206,744) (173,228)
Net proceeds from sale of real estate assets ..................... 13,174 3,968
Long-term land lease payments .................................... (1,000) (1,500)
Distributions received from joint ventures ....................... 323 254
------- -------
Net cash used in investing activities ....................... (194,247) (170,506)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
- ------------------------------------
Proceeds from common share offerings, net of issuance costs ...... 18,698 93,484
Proceeds from preferred share offerings, net of issuance costs ... 111,054 0
Proceeds from the exercise of share options ...................... 2,132 787
Share Builder Plan contributions ................................. 34 20
Payments of deferred financing costs ............................. (315) (1,278)
Notes payable proceeds ........................................... 183,212 206,143
Notes payable repayments ......................................... (132,805) (117,529)
Principal escrow deposits ........................................ (513) (576)
Preferred dividends paid ......................................... (1,351) 0
Common dividends paid ($1.47 and $1.44 per share, respectively) .. (28,491) (22,739)
Common distributions paid ($1.47 and $1.44 per Unit, respectively) (5,187) (4,767)
------- -------
Net cash provided by financing activities ................... 146,468 153,545
------- -------
Net change in cash and cash equivalents .......................... (854) 20,116
Cash and cash equivalents, beginning of period ................... 4,385 8,529
------- -------
Cash and cash equivalents, end of period ......................... $3,531 $28,645
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest ...................................... $21,766 $17,970
Interest capitalized ........................................ 3,844 3,387
------- -------
Cash paid for interest, net of amounts capitalized .......... $17,922 $14,583
======= =======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
Page-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(Unaudited and Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND FORMATION OF THE COMPANY
Gables Residential Trust is a self-administered and self-managed real estate
investment trust (a "REIT") formed in 1993 under Maryland law to continue and to
expand the multifamily apartment community management, development,
construction, and acquisition operations of its privately owned predecessor
organization. The term "Gables Residential Group" as used herein refers to the
privately owned predecessor organization prior to the completion of the
Company's initial public offering on January 26, 1994 (the "IPO") and the
concurrent completion of the various transactions that occurred simultaneously
therewith (the "Formation Transactions"). The term "Company" or "Gables" as used
herein means Gables Residential Trust and its subsidiaries on a consolidated
basis (including Gables Realty Limited Partnership and its subsidiaries), or,
where the context so requires, Gables Residential Trust only, and, as the
context may require, their predecessors. Gables engages in the multifamily
apartment community management, development, construction, and acquisition
businesses, including the provision of related brokerage and corporate rental
housing services. Substantially all of these businesses are conducted through
Gables Realty Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"). Through its ownership of Gables GP, Inc. ("GGPI"), a
Texas corporation and wholly-owned subsidiary of the Company that is the sole
general partner of the Operating Partnership, and its ownership of a direct
limited partnership interest in the Operating Partnership, the Company was an
84.8% economic owner of the Operating Partnership at September 30, 1997
(excluding the Company's direct or indirect ownership of 100% of the Operating
Partnership's Series A Preferred Units). This structure is commonly referred to
as an umbrella partnership REIT or "UPREIT". Gables' third party management
businesses are conducted through two subsidiaries of the Operating Partnership,
Central Apartment Management, Inc., a Texas corporation, and East Apartment
Management, Inc., a Georgia corporation (each, a "Management Company").
As of September 30, 1997, Gables owned 57 completed multifamily apartment
communities comprising 17,237 apartment homes, of which 34 were developed and 23
were acquired by Gables, and an indirect 25% general partner interest in two
apartment communities developed by Gables comprising 663 apartment homes. One of
the completed communities comprising 273 apartment homes was in the lease-up
stage at September 30, 1997. Gables also owns six multifamily apartment
communities, expected to comprise 1,693 apartment homes, that are currently
under development. In October, 1997, Gables acquired an existing apartment
community comprising 295 apartment homes. Gables is pursuing other acquisition
and development opportunities in the ordinary course of business which have not
yet been, or may never be, put under contract.
As of September 30, 1997, Gables owned parcels of land for the future
development of six apartment communities expected to comprise an estimated 1,573
apartment homes. In October, 1997, Gables acquired a parcel of land for the
future development of an apartment community expected to comprise an estimated
204 apartment homes. Additionally, Gables has contracts or options to acquire
additional parcels of land. There can be no assurance that Gables will acquire
these land parcels, however it is Gables' intent to develop an apartment
community on each such land parcel, if purchased.
Pursuant to the Company's Amended and Restated Declaration of Trust, the Company
is authorized to issue 100,000,000 common shares, 10,000,000 preferred shares,
and 51,000,000 excess shares, all of which have a par value of $0.01 per share.
To date, no excess shares have been issued.
<PAGE>
Page-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(Unaudited and Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
2. SECONDARY OFFERINGS AND ISSUANCES OF OPERATING PARTNERSHIP UNITS
Secondary Common Share Offerings -
- --------------------------------
Since the IPO, the Company has had the following common share offerings:
Closing Date Shares Issued Net Proceeds
------------ ------------- ------------
October 7, 1994 444,500 $ 9,876
--------- -------
October 31, 1995 4,600,000 $94,364
--------- -------
March 25, 1996 879,068 $20,630
September 17, 1996 1,725,000 $38,600
September 27, 1996 1,435,000 $34,254
--------- -------
1996 Totals 4,039,068 $93,484
========= =======
September 16, 1997 737,040 $18,698
--------- -------
The proceeds from these offerings were generally used (i) to reduce outstanding
indebtedness under interim financing vehicles utilized to fund Gables'
development and acquisition activities and (ii) for general working capital
purposes including funding of future development and acquisition activities.
Preferred Share Offering -
- ------------------------
On July 24, 1997, the Company issued 4,600,000 shares of 8.30% Series A
Cumulative Redeemable Preferred Shares (liquidation preference $25.00 per
share). The net proceeds from this offering of approximately $111 million were
used to reduce outstanding indebtedness under the interim financing vehicles
discussed above.
Issuances of Operating Partnership Units -
- ----------------------------------------
On December 5, 1995, Gables acquired a parcel of land for the development of an
apartment community, financed in part through the issuance of 111,074 minority
units of limited partnership interest in the Operating Partnership ("Units"). On
July 26, 1996, Gables acquired an apartment community comprising 500 apartment
homes, financed in part through the issuance of 243,787 Units. On August 21,
1997, Gables acquired an apartment community comprising 82 apartment homes,
financed in part through the issuance of 94,869 Units. On October 17, 1997,
Gables acquired an apartment community comprising 295 apartment homes, financed
in part through the issuance of 453,272 Units.
3. BASIS OF PRESENTATION
The accompanying consolidated financial statements of Gables Residential Trust
include the consolidated accounts of Gables Residential Trust and its
subsidiaries (including Gables Realty Limited Partnership and its subsidiaries).
As a result of the structure of the business combination, certain partners and
owners of the entities in Gables Residential Group received common shares of the
Company and/or Units in the Operating Partnership. Pursuant to the terms of the
partnership agreement of the Operating Partnership, as of January 26, 1995, the
Operating Partnership became obligated to redeem Units at a unitholder's request
for cash equal to the fair market value of a common share of the Company at the
time of such redemption, provided that the Company at its option may elect to
acquire any such Unit presented for redemption for one common share of the
Company. The Company currently
<PAGE>
Page-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(Unaudited and Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
intends to acquire such Units for common shares of the Company rather than to
cause the Operating Partnership to redeem such Units for cash. Purchase
accounting was applied to the acquisition of all non-controlled interests. The
acquisition of all other interests was accounted for as a reorganization of
entities under common control and, accordingly, was reflected at historical cost
in a manner similar to that in pooling of interests accounting.
All significant intercompany accounts and transactions have been eliminated in
consolidation. The consolidated financial statements of Gables Residential Trust
have been adjusted for the minority interest of unitholders in the Operating
Partnership. Because Units, if presented for redemption, are likely to be
exchanged for the common shares of the Company on a one-for-one basis, minority
interest of unitholders in the Operating Partnership is calculated based on the
weighted average of common shares and Units outstanding during the applicable
period.
The accompanying interim unaudited financial statements have been prepared by
Gables' management in accordance with generally accepted accounting principles
("GAAP") for interim financial information and in conjunction with the rules and
regulations of the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normally recurring adjustments) considered necessary for a fair
presentation for these interim periods have been included. The results of
operations for the interim period ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the full year. These
financial statements should be read in conjunction with the financial statements
of Gables Residential Trust and Gables Residential Group and notes thereto,
included in the Gables Residential Trust Form 10-K for the year ended December
31, 1996.
4. PROPERTY MANAGEMENT EXPENSES
Gables manages its owned properties, as well as properties owned by third
parties for which Gables provides management services for a fee. Property
management expenses have been allocated between owned and third party properties
in the accompanying statements of operations based on the proportionate number
of owned and third party apartment homes managed by Gables during the applicable
periods.
5. EXTRAORDINARY LOSS, NET
Extraordinary loss, net for the nine months ended September 30, 1997 represents
(i) the write-off of unamortized deferred financing costs and prepaid credit
enhancement fees associated with the defeasance of the tax-exempt bond financing
encumbering the Club Candlewood property that was sold in January, 1997 and (ii)
the write-off of unamortized deferred financing costs associated with the
February 28, 1997 retirement of a conventional mortgage note payable that was
scheduled to mature on September 1, 1997. The extraordinary loss totaling $712
is presented net of the $110 portion of the loss attributable to the minority
interest unitholders.
Extraordinary loss, net of $520 for the nine months September 30, 1996
represents the write-off of unamortized deferred financing costs totaling $631
associated with the early retirement of the Company's original $175 million
secured revolving credit facility (the "Original Credit Facility"), net of the
$111 portion of the loss attributable to the minority interest unitholders. The
Original Credit Facility, which was scheduled to mature in January, 1997, was
refinanced in March, 1996 with a new $175 million unsecured revolving credit
facility (the "New Credit Facility").
6. PER SHARE INFORMATION
Quarterly per share information has been computed based upon the weighted
average number of shares outstanding during the relevant period. The impact of
outstanding share options was less than 3% dilutive in both 1997 and 1996 and,
therefore, the impact on primary earnings per share ("EPS") has not been shown.
In February, 1997, the
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Page-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(Unaudited and Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 128 (FAS 128) "Earnings per Share," which becomes effective for
periods ending after December 15, 1997. FAS 128 will require dual presentation
of basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and will require restatement of all prior period
EPS data presented. The impact of FAS 128 on Gables' EPS information disclosed
in the accompanying financial statements is not material.
7. REAL ESTATE ASSETS
Real estate assets, before accumulated depreciation, are as follows:
September 30, 1997 December 31, 1996
Basis Units Basis Units
----- ----- ----- -----
Completed properties $936,194 17,237 $707,161 14,581
Properties under development 53,663 1,693 74,690 2,284
Land held for future development 17,663 1,573 2,749 648
------ ------ -------- ------
Total (a) $1,007,520 20,503 $784,600 17,513
========== ====== ======== ======
(a) Excludes (i) costs and units attributable to Arbors of Harbortown JV and
Metropolitan Apartments JV as Gables' 25% general partner interests in
these joint ventures are accounted for on the equity method of accounting
and (ii) costs of approximately $4,600 for two prepaid long-term land
leases which are included in other assets in the accompanying balance
sheets.
The change in real estate assets from December 31, 1996 to September 30, 1997
consisted of the following:
Balance at December 31, 1996 $784,600
Acquisitions, including renovation expenditures 157,229
Sale of real estate assets (9,147)
Development costs incurred, including related land acquisitions 71,409
Capital expenditures for completed properties 3,429
---------
Balance at September 30, 1997 $1,007,520
==========
As discussed in Note 3, purchase accounting was applied to the acquisition of
all non-controlled interests in connection with the IPO and Formation
Transactions. The increase in basis related to such acquisition was $48,090 and
was allocated to the respective property's land and building accounts. The
acquisition of all other interests was accounted for as a reorganization of
entities under common control, and accordingly was reflected at historical cost.
8. DECLARATION OF COMMON SHARE DIVIDEND
On August 19, 1997, the Operating Partnership committed to distribute $0.50 per
Unit with respect to the period July 1, 1997 through September 30, 1997 to
unitholders of record on September 30, 1997. As a result, the Company
simultaneously declared a dividend payable to common shareholders of record on
September 30, 1997 and accrued a dividend payable as of September 30, 1997 of
$0.50 per common share or $10,112. The remaining distribution from the Operating
Partnership in the amount of $1,812 was accrued to minority interest unitholders
in the Operating Partnership. The total distribution of $11,924 was paid on
October 15, 1997.
<PAGE>
Page-11
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
Gables is a self-administered and self-managed real estate investment trust
("REIT") focused within the multifamily industry in the Southeastern and
Southwestern United States. Gables' operating performance relies predominantly
on net operating income from its apartment communities. Gables' net operating
income is influenced by operating expenses and rental revenues, which are
affected by the supply and demand dynamics within Gables' markets. Gables'
performance is also affected by the general availability and cost of capital and
by its ability to develop and to acquire additional apartment communities with
returns in excess of its blended cost of equity and debt capital.
Gables owns apartment communities in seven core cities in Georgia, Texas and
Tennessee. Gables recently entered an eighth market, Orlando, Florida, through
an association with a subsidiary of the Walt Disney Company and, in connection
therewith, currently has two communities under development in Orlando. Within
each city, Gables targets specific submarkets for investment. These submarkets
are generally characterized by their proximity to local employment centers,
retail and entertainment venues and traffic arteries. Gables believes
demographic trends (including job, population and household growth) in its
markets in recent years have generally led to favorable demand and supply
dynamics for multifamily communities. However, during any given time period
these demand and supply dynamics may be less favorable in certain of Gables'
markets depending on conditions influencing the specific market. Portfolio wide
occupancy levels have remained high and portfolio wide rental rates have
continued to increase during each of the last several years. Gables expects
portfolio wide rental expenses to increase at a rate slightly ahead of
inflation, and to approximate the increase in property revenues, for the coming
twelve months.
As a result of the aforementioned generally favorable market conditions,
management has been successful in growing the income of the stabilized
properties as well as growing earnings via a combination of new development and
acquisition. Management's extensive experience in new development (including
site selection, zoning, construction and lease-up) and in-depth local presence
affords Gables the opportunity to acquire land and develop new Class A
multifamily communities. In select markets and in certain real estate cycles,
management believes better returns can be generated from new development than
from acquisitions of comparable properties. During other real estate cycles or
in select markets, management will pursue the acquisition of existing apartment
communities, specifically when the returns on investment and the potential for
growth in net operating income are attractive. Additionally, Gables has been
able to acquire distressed or under-managed apartment communities which, through
strategic renovation and repositioning, have generally resulted in superior
returns when compared to traditional acquisitions and new developments.
Management believes Gables' ability to compete with other companies is
significantly enhanced by its in-depth local presence and the strength of its
management, development, acquisition, and construction personnel. In certain
situations, management's evaluation of the growth prospects for a specific asset
may result in a determination to dispose of the asset. In this event, management
would intend to sell the asset and utilize the net proceeds from any such sale
to invest in new assets which are expected to have better growth prospects or to
reduce indebtedness. Gables maintains staffing levels sufficient to meet the
existing construction, acquisition, and leasing activities. If market conditions
warrant, management would anticipate adjusting staffing levels to mitigate a
negative impact on results of operations.
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the accompanying consolidated
financial statements and the notes thereto. This Report on Form 10-Q contains
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. Actual results or developments could differ materially from those
projected in such statements as a result of certain factors set forth in the
section entitled "Certain Factors Affecting Future Operating Results" on Page 25
of this Form 10-Q and elsewhere in this report.
<PAGE>
Page-12
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Formation of Gables and Initial Public Offering
- -----------------------------------------------
Gables Residential Trust was formed in 1993 under Maryland law to continue and
to expand the multifamily apartment community management, development,
construction, and acquisition operations of its privately owned predecessor
organization. The term "Gables Residential Group" as used herein refers to the
privately owned predecessor organization prior to the completion of the
Company's initial public offering in January, 1994 (the "IPO"), and the
concurrent completion of the various transactions that occurred therewith (the
"Formation Transactions"). The term "Company" or "Gables" as used herein means
Gables Residential Trust and its subsidiaries on a consolidated basis (including
Gables Realty Limited Partnership and its subsidiaries), or, where the context
so requires, Gables Residential Trust only, and, as the context may require,
their predecessors. At the completion of the IPO on January 26, 1994, Gables
sold 9,430,000 common shares (including 1,230,000 shares as a result of the
exercise of an over-allotment option by the underwriters) at a price to the
public of $22.50 per share. The net proceeds to Gables from such sale totaled
approximately $190 million, the majority of which were used to reduce
indebtedness and to purchase minority interests in certain property
partnerships.
SECONDARY OFFERINGS AND ISSUANCES OF OPERATING PARTNERSHIP UNITS
Secondary Common Share Offerings -
- --------------------------------
Since the IPO, the Company has had the following common share offerings:
Closing Date Shares Issued Net Proceeds
------------ ------------- ------------
October 7, 1994 444,500 $ 9,876
--------- -------
October 31, 1995 4,600,000 $94,364
--------- -------
March 25, 1996 879,068 $20,630
September 17, 1996 1,725,000 $38,600
September 27, 1996 1,435,000 $34,254
--------- -------
1996 Totals 4,039,068 $93,484
========= =======
September 16, 1997 737,040 $18,698
--------- -------
The proceeds from these offerings were generally used (i) to reduce outstanding
indebtedness under interim financing vehicles utilized to fund Gables'
development and acquisition activities and (ii) for general working capital
purposes including funding of future development and acquisition activities.
Preferred Share Offering -
- ------------------------
On July 24, 1997, the Company issued 4,600,000 shares of 8.30% Series A
Cumulative Redeemable Preferred Shares (liquidation preference $25.00 per share)
(the "Series A Preferred Shares"). The net proceeds from this offering of
approximately $111 million were used to reduce outstanding indebtedness under
the interim financing vehicles discussed above.
Issuances of Operating Partnership Units -
- ----------------------------------------
On December 5, 1995, Gables acquired a parcel of land for the development of an
apartment community, financed in part through the issuance of 111,074 minority
units of limited partnership interest in the Operating Partnership
<PAGE>
Page-13
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
"Units"). On July 26, 1996, Gables acquired an apartment community comprising
500 apartment homes, financed in part through the issuance of 243,787 Units. On
August 21, 1997, Gables acquired an apartment community comprising 82 apartment
homes, financed in part through the issuance of 94,869 Units. On October 17,
1997, Gables acquired an apartment community comprising 295 apartment homes,
financed in part through the issuance of 453,272 Units.
Results of Operations
- ---------------------
COMPARISON OF OPERATING RESULTS OF GABLES FOR THE THREE MONTHS ENDED SEPTEMBER
30, 1997 (THE "1997 PERIOD") TO THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (THE
"1996 PERIOD").
Gables' net income is generated primarily from the operation of its apartment
communities. For purposes of evaluating comparative operating performance,
Gables categorizes its operating communities based on the period each community
reaches stabilized occupancy. A community is considered by Gables to have
achieved stabilized occupancy on the earlier to occur of (i) attainment of 93%
physical occupancy or (ii) one year after completion of construction. The
operating performance for all of Gables' apartment communities combined for the
three months ended September 30, 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------- ----------- -------------- ------------
$ %
1997 1996 Change Change
---------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
Rental and other revenue:
Same store communities (1) .............................................. $ 26,670 $ 25,825 $ 845 3.3%
Communities stabilized during the 1997 Period,
but not during the 1996 Period (2) .................................... 3,406 2,373 1,033 43.5%
Development and lease-up communities (3) ................................ 1,444 0 1,444 --
Acquired communities (4) ................................................ 4,095 886 3,209 362.2%
Sold communities (5) .................................................... 0 774 -774 -100.0%
-------- -------- -------- ---------
Total property revenues ................................................. $ 35,615 $ 29,858 $ 5,757 19.3%
-------- -------- -------- ---------
Property operating and maintenance expense (exclusive of depreciation and
amortization):
Same store communities (1) .............................................. $ 9,423 $ 9,385 $ 38 0.4%
Communities stabilized during the 1997 Period, but not during the 1996
Period(2)............................................................. 1,149 849 300 35.3%
Development and lease-up communities (3) ................................ 356 0 356 ---
Acquired communities (4) ................................................ 1,248 213 1,035 485.9%
Sold communities (5) .................................................... 0 348 - 348 -100.0%
-------- -------- -------- ---------
Total specified expenses ................................................ $ 12,176 $ 10,795 $ 1,381 12.8%
-------- -------- -------- ---------
Revenues in excess of specified expenses ................................ $ 23,439 $ 19,063 $ 4,376 23.0%
======== ======== ======== =========
Revenues in excess of specified expenses as a percentage of total
property revenues ....................................................... 65.8% 63.8% -- 2.0%
========= ======== ======== =========
<FN>
(1) Communities which were owned and fully stabilized throughout both the 1997
Period and 1996 Period.
(2) Communities which were completed and fully stabilized during all of the
1997 Period, but were not completed and fully stabilized during all of the
1996 Period.
(3) Communities in the development/lease-up phase which were not fully
stabilized during all or any of the 1997 Period.
(4) Communities which were acquired subsequent to July 1, 1996.
(5) Communities which were sold subsequent to July 1, 1996.
</FN>
</TABLE>
<PAGE>
Page-14
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Total property revenues increased $5,757, or 19.3%, from $29,858 to $35,615 due
primarily to increases in the number of apartment homes resulting from the
development and acquisition of additional communities and to increases in rental
rates on communities stabilized throughout both periods ("same store"). Below is
additional information regarding the increases in total property revenues for
three of the five community categories presented in the preceding table:
Same store communities:
<TABLE>
<CAPTION>
Percent
Increase Increase
(Decrease) (Decrease) Increase
Number of in Total in Total Occupancy (Decrease)
Number of Apartment Percent Property Property During the in
Market Properties Homes of Total Revenues Revenues 1997 Period Occupancy
------ ---------- ----- -------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Houston 14 5,045 40.4% $568 5.4% 94.8% - 0.5%
Atlanta 12 3,470 27.7% 110 1.6% 94.9% - 0.6%
Dallas 5 1,277 10.2% 44 1.6% 93.9% - 0.8%
Nashville 4 1,166 9.3% - 4 - 0.2% 96.0% - 0.2%
San Antonio 2 544 4.4% 76 6.8% 95.0% 3.7%
Austin 2 532 4.3% 44 3.3% 94.5% - 0.4%
Memphis 1 464 3.7% 7 0.9% 95.7% 1.3%
----- ------ ------ ------ ------ ------- -------
40 12,498 100.0% $845 3.3% 94.9% - 0.3%
===== ====== ====== ====== ====== ======= =======
</TABLE>
Communities stabilized during the 1997 Period but not during the 1996 Period:
Increase
(Decrease)
Number of in Total Occupancy
Number of Apartment Percent Property During the
Market Properties Homes of Total Revenues 1997 Period
- ------ ---------- ----- -------- -------- -----------
Atlanta 2 647 45.0% $ -166 91.5%
Memphis 2 490 34.1% 911 96.0%
Dallas 1 300 20.9% 288 92.2%
------ ----- ------- ------ -------
5 1,437 100.0% $1,033 93.1%
====== ===== ======= ====== =======
Development and lease-up communities:
Increase
Number of in Total Occupancy
Number of Apartment Percent Property During the
Market Properties Homes of Total Revenues 1997 Period
- ------ ---------- ----- -------- -------- -----------
Atlanta 2 599 68.7% $ 851 50.4%
Austin 1 273 31.3% 593 65.3%
----- ------ ------ ------ -------
3 872 100.0% $1,444 55.7%
===== ====== ====== ====== =======
<PAGE>
Page-15
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Other revenues decreased $632, or 33.1%, from $1,910 to $1,278 due to (i) $670
of non-recurring net revenues generated from certain corporate apartment home
leases entered into in connection with the 1996 Olympic games held in Atlanta
and (ii) a decrease in property management revenues of $213, or 22.0%, from $966
to $753 resulting from a net decrease of properties managed by Gables for third
parties primarily due to these properties being sold by the owners. Such
decreases were offset in part by an increase in revenues in the 1997 Period
related to the provision of certain ancillary services.
Property operating and maintenance expense (exclusive of depreciation and
amortization) increased $1,381, or 12.8%, from $10,795 to $12,176 due to an
increase in apartment homes resulting from the development and acquisition of
additional communities and an increase in property operating and maintenance
expense for same store communities of 0.4%. The same store increase in operating
expenses represents inflationary increases in expenses offset by decreases in
certain landscape, utilities and maintenance costs. Gables anticipates that
property operating and maintenance expense for same store communities will
generally increase at a rate slightly ahead of inflation for the coming twelve
months.
Depreciation and amortization expense increased $1,190, or 23.4%, from $5,076 to
$6,266 due primarily to the completion of newly developed communities and
acquisition of other communities.
Property management expense for owned communities and third party properties on
a combined basis increased $29, or 2.1%, from $1,413 to $1,442 due primarily to
inflationary increases in expenses, offset in part by certain non-recurring
expense savings in the 1997 Period. Gables allocates property management
expenses to both owned communities and third party properties based on
the proportionate share of total apartment homes and units managed.
General and administrative expense decreased $2, or 0.2%, from $842 to $840 due
primarily to certain expense reductions generated in the 1997 Period, offset by
certain non-recurring expenses incurred in the 1997 Period.
Interest expense decreased $398, or 6.3%, from $6,304 to $5,906 due to a
decrease in the outstanding debt resulting from the offerings the Company has
consummated between periods, the proceeds of which have been primarily used to
reduce indebtedness. These decreases in interest expense have been offset in
part by an increase in operating debt associated with newly developed or
acquired communities in addition to communities currently in the lease-up phase.
Gain on sale of real estate in the 1997 Period of $491 represents the gain
generated in connection with the July, 1997 sale of 2 acres of Gables' 12-acre
Gables Colonnade Phase II land parcel.
Net income available to common shareholders increased $1,670, or 28.8%, from
$5,790 to $7,460 primarily due to the reasons discussed above.
<PAGE>
Page-16
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Results of Operations
- ---------------------
COMPARISON OF OPERATING RESULTS OF GABLES FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1997 (THE "1997 PERIOD") TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (THE
"1996 PERIOD").
Gables' net income is generated primarily from the operation of its apartment
communities. For purposes of evaluating comparative operating performance,
Gables categorizes its operating communities based on the period each community
reaches stabilized occupancy. A community is considered by Gables to have
achieved stabilized occupancy on the earlier to occur of (i) attainment of 93%
physical occupancy or (ii) one year after completion of construction. The
operating performance for all of Gables' apartment communities combined for the
nine months ended September 30, 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------- ----------- --------- ----------
$ %
1997 1996 Change Change
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Rental and other revenue:
Same store communities (1) ............................................... $ 55,167 $ 53,990 $ 1,177 2.2%
Communities stabilized during the 1997 Period,
but not during the 1996 Period (2) ................................ 15,561 14,153 1,408 9.9%
Development and lease-up communities (3) ................................. 8,580 2,581 5,999 232.4%
Acquired communities (4) ................................................. 19,420 6,355 13,065 205.6%
Sold communities (5) ..................................................... 177 2,567 - 2,390 - 93.1%
-------- -------- -------- --------
Total property revenues .................................................. $ 98,905 $ 79,646 $ 19,259 24.2%
-------- -------- -------- --------
Property operating and maintenance expense (exclusive of depreciation and
amortization):
Same store communities (1) ............................................... $ 20,058 $ 19,341 $ 717 3.7%
Communities stabilized during the 1997 Period,
but not during the 1996 Period (2)................................... 4,787 4,495 292 6.5%
Development and lease-up communities (3) ................................. 3,226 879 2,347 267.0%
Acquired communities (4) ................................................. 6,521 2,250 4,271 189.8%
Sold communities (5) ..................................................... 115 1,143 - 1,028 - 89.9%
-------- -------- -------- -------
Total specified expenses ................................................. $ 34,707 $ 28,108 $ 6,599 23.5%
-------- -------- -------- -------
Revenues in excess of specified expenses ................................. $ 64,198 $ 51,538 $ 12,660 24.6%
======== ======== ======== =======
Revenues in excess of specified expenses as a percentage of total property
revenues.................................................................. 64.9% 64.7% -- 0.2%
======== ======== ======== =======
<FN>
(1) Communities which were owned and fully stabilized throughout both the 1997
Period and 1996 Period.
(2) Communities which were completed and fully stabilized during all of the
1997 Period, but were not completed and fully stabilized during all of the
1996 Period.
(3) Communities in the development/lease-up phase which were not fully
stabilized during all or any of the 1997 Period.
(4) Communities which were acquired subsequent to January 1, 1996.
(5) Communities which were sold subsequent to January 1, 1996.
</FN>
</TABLE>
<PAGE>
Page-17
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Total property revenues increased $19,259, or 24.2%, from $79,646 to $98,905 due
primarily to increases in the number of apartment homes resulting from the
development and acquisition of additional communities and to increases in rental
rates on communities stabilized throughout both periods ("same store"). Below is
additional information regarding the increases in total property revenues for
three of the five community categories presented in the preceding table:
Same store communities:
<TABLE>
<CAPTION>
Percent
Increase Increase
(Decrease) (Decrease) Increase
Number of in Total in Total Occupancy (Decrease)
Number of Apartment Percent Property Property During the in
Market Properties Homes of Total Revenues Revenues 1997 Period Occupancy
------ ---------- ----- -------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Houston 10 3,512 37% $659 3.4% 94.3% - 0.7%
Atlanta 11 3,159 33% 416 2.2% 94.5% - 0.5%
Dallas 4 1,089 12% 114 1.8% 93.9% - 0.1%
Nashville 3 912 10% 25 0.5% 96.0% 0.1%
Memphis 1 464 5% -30 -1.2% 94.0% -2.2%
Austin 1 276 3% -7 -0.4% 92.6% 0.6%
------ ------ ------- ------ ------- ------ -------
30 9,412 100% $1,177 2.2% 94.4% - 0.5%
====== ====== ======= ====== ======= ====== =======
</TABLE>
Communities stabilized during the 1997 Period but not during the 1996 Period:
Increase
(Decrease)
Number of in Total Occupancy
Number of Apartment Percent Property During the
Market Properties Homes of Total Revenues 1997 Period
------ ---------- ----- -------- -------- -----------
Atlanta 2 695 32% $- 83 94.3%
San Antonio 2 544 25% 423 92.8%
Austin 1 256 12% 291 95.6%
Nashville 1 254 12% 331 95.8%
Houston 1 246 11% 163 94.8%
Dallas 1 188 8% 283 94.1%
----- ----- ------ ------ ------
8 2,183 100% $1,408 94.4%
===== ===== ====== ====== ======
Development and lease-up communities:
Increase
Number of in Total Occupancy
Number of Apartment Percent Property During the
Market Properties Homes of Total Revenues 1997 Period
------ ---------- ----- -------- -------- -----------
Atlanta 3 862 45% $1,284 43.7%
Memphis 2 490 25% 2,600 81.3%
Dallas 1 300 16% 1,227 85.8%
Austin 1 273 14% 888 36.7%
----- ----- ----- ------ -------
7 1,925 100% $5,999 58.0%
===== ===== ===== ====== =======
<PAGE>
Page-18
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Other revenues decreased $746, or 15.8%, from $4,707 to $3,961 due to (i) $900
of non-recurring net revenues generated from certain corporate apartment home
leases entered into in connection with the 1996 Olympic games held in Atlanta
and (ii) a decrease in property management revenues of $632, or 21.6%, from
$2,931 to $2,299 resulting from a net decrease of properties managed by Gables
for third parties primarily due to these properties being sold by the owners.
Such decreases were offset in part by an increase in revenues in the 1997 Period
related to the provision of certain ancillary services.
Property operating and maintenance expense (exclusive of depreciation and
amortization) increased $6,599, or 23.5%, from $28,108 to $34,707 due to an
increase in apartment homes resulting from the development and acquisition of
additional communities and an increase in property operating and maintenance
expense for same store communities of 3.7%. The same store increase in operating
expenses represents inflationary increases in expenses and increased marketing
and redecorating expenses in certain of Gables' markets. Such same store
increases have been offset in part by certain decreases in landscape and
utilities costs. Gables anticipates that property operating and maintenance
expense for same store communities will generally increase at a rate slightly
ahead of inflation for the coming twelve months.
Depreciation and amortization expense increased $3,913, or 29.3%, from $13,372
to $17,285 due primarily to the completion of newly developed communities and
acquisition of other communities.
Property management expense for owned communities and third party properties on
a combined basis decreased $41, or 1.0%, from $4,243 to $4,202 due primarily to
certain non-recurring expense savings in the 1997 Period, offset in part by
inflationary increases in expenses. Gables allocates property management
expenses to both owned communities and third party properties based on the
proportionate share of total apartment homes and units managed.
General and administrative expense increased $76, or 3.1%, from $2,419 to $2,495
due primarily to inflationary increases in expenses.
Interest expense increased $2,825, or 18.5%, from $15,295 to $18,120 due to an
increase in operating debt associated with newly developed or acquired
communities in addition to communities currently in the lease-up phase. These
increases in interest expense have been offset in part as a result of the
offerings the Company has consummated between periods, the proceeds of which
have been primarily used to reduce indebtedness.
Gain on sale of real estate assets of $5,349 in the 1997 Period represents the
gain generated in connection with (i) the January, 1997 sale of Club Candlewood,
a community comprised of 486 apartment homes and (ii) the July, 1997 sale of 2
acres of Gables' 12-acre Gables Colonnade Phase II land parcel.
Extraordinary loss, net in the 1997 Period represents (i) the write-off of
unamortized deferred financing costs and prepaid credit enhancement fees
associated with the defeasance of the tax-exempt bond financing encumbering the
Club Candlewood property that was sold in January, 1997 and (ii) the write-off
of unamortized deferred financing costs associated with the February 28, 1997
retirement of a conventional mortgage note payable that was scheduled to mature
on September 1, 1997. The extraordinary loss totaling $712 is presented net of
the $110 portion of the loss attributable to the minority interest unitholders
in the Operating Partnership.
Net income available to common shareholders increased $8,072, or 50.8%, from
$15,902 to $23,974 primarily due to the reasons discussed above.
<PAGE>
Page-19
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
- -------------------------------
Gables' net cash provided by operating activities increased from $37,077 for the
nine months ended September 30, 1996 to $46,925 for the nine months ended
September 30, 1997, due to (i) an increase of $9,154 in income before certain
non-cash items including depreciation, amortization, equity in income of joint
ventures, minority interest of unitholders in Operating Partnership, gain on
sale of real estate assets, long-term compensation expense and net extraordinary
losses and (ii) the change in restricted cash between periods of $3,735. Such
increases were offset in part by (i) the change in other assets between periods
of $654 and (ii) the change in other liabilities between periods of $2,387.
Gables' net cash used in investing activities increased from $170,506 for the
nine months ended September 30, 1996 to $194,247 for the nine months ended
September 30, 1997, due primarily to increased development and acquisition
activities in 1997 when compared to 1996, offset in part by increased net
proceeds from the sale of real estate assets in 1997 when compared to 1996.
During the nine months ended September 30, 1997, Gables expended approximately
$70.2 million related to development expenditures, including related land
acquisitions; approximately $130.9 million for the acquisition of existing
apartment communities; approximately $3.4 million related to capital
expenditures for operating apartment communities; and approximately $2.2 million
related to renovation expenditures.
Gables' net cash provided by financing activities decreased from $153,545 for
the nine months ended September 30, 1996 to $146,468 for the nine months ended
September 30, 1997, due primarily to (i) $21.4 million of borrowings on
September 30, 1996 that were used to fund a real estate investment on October 1,
1996 offset by (ii) increased development and acquisition expenditures during
the 1997 Period when compared to 1996. During the nine months ended September
30, 1997, Gables had net borrowings of $50.4 million which were used in
conjunction with $129.7 million of proceeds from the common and preferred share
offerings primarily to fund Gables' development and acquisition activities
discussed previously. These proceeds from financing activities were offset in
part by the payment of dividends and distributions totaling approximately $35.0
million.
Gables elected to be taxed as a REIT under Section 856 through 860 of the
Internal Revenue Code of 1986, as amended, commencing with its taxable year
ended December 31, 1994. REITs are subject to a number of organizational and
operational requirements, including a requirement that they currently distribute
95% of their ordinary taxable income. Provided Gables maintains its
qualification as a REIT, the Company generally will not be subject to Federal
income tax on distributed net income.
As of September 30, 1997, Gables had total indebtedness of $440,728, cash and
cash equivalents of $3,531 and principal escrow deposits reflected in restricted
cash of $1,727. Gables' indebtedness includes $96,440 in conventional fixed-rate
mortgage notes payable secured by individual properties, $118,602 in
conventional fixed-rate unsecured notes payable, a $40,000 unsecured term loan,
$105,080 in tax-exempt bond indebtedness and $80,606 in borrowings outstanding
under its Credit Facilities. Gables' indebtedness has an average of 6.8 years to
maturity at September 30, 1997. Excluding monthly principal amortization
payments, over the next five years Gables has the following scheduled debt
maturities for indebtedness outstanding at September 30, 1997:
1997 $ 0
1998 15,606
1999 0
2000 65,000
2001 40,000
<PAGE>
Page-20
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
The debt maturities in 1998 of $15,606 relate to outstanding indebtedness under
the $20 Million Credit Facility which will be extended pursuant to Gables'
unlimited one-year extension options. The debt maturities in 2000 of $65,000
relate to outstanding indebtedness under the $175 Million Credit Facility which
has two remaining one-year extension options.
Gables' dividends through the third quarter of 1997 have been paid from cash
provided by operating activities. Gables anticipates that dividends will
continue to be paid on a quarterly basis from cash provided by operating
activities.
In October, 1997, Gables acquired an apartment community comprising 295
apartment homes and a parcel of land for the future development of an apartment
community expected to comprise an estimated 204 apartment homes. The acquisition
costs totaling approximately $24 million were funded primarily through
borrowings under Gables' Credit Facilities and the issuance of 453,272 Units.
Gables has met and expects to continue to meet its short-term liquidity
requirements generally through net cash provided by operations. Gables' net cash
provided by operations has been adequate and Gables believes that it will
continue to be adequate to meet both operating requirements and payment of
dividends in accordance with REIT requirements. The budgeted expenditures for
improvements and renovations to the communities, in addition to monthly
principal amortization payments, are also expected to be funded from net cash
provided by operations. Gables anticipates construction and development
activities and land purchases will be initially funded primarily through
borrowings under its Credit Facilities described below.
Gables expects to meet certain of its long-term liquidity requirements, such as
scheduled debt maturities, repayment of short-term financing of construction and
development activities and possible property acquisitions, through long-term
secured and unsecured borrowings and the issuance of debt securities or
additional equity securities or through the disposition of assets which, in
management's evaluation, may no longer meet Gables' investment requirements.
$175 Million Credit Facility
- ----------------------------
In conjunction with the IPO, Gables closed a $175 million three-year revolving
credit facility (the "Original Credit Facility") which had an initial maturity
of January, 1997. In March, 1996, Gables closed a new $175 million unsecured
revolving credit facility (the "New Credit Facility" or "$175 Million Credit
Facility") that replaced the Original Credit Facility. Although the New Credit
Facility is unsecured, there were certain designated real estate assets that had
escrowed mortgages that were released promptly after the attainment of implied
senior unsecured debt ratings of BBB from Standard and Poor's and Baa2 from
Moody's Investors Service (the "Credit Ratings"). The New Credit Facility has an
initial term of three years and three one-year extension options. Gables has
exercised the first of its one-year extension options resulting in a maturity
date for the facility of March, 2000.
Borrowings bore interest at LIBOR plus 1.50% (reduced from 1.65% in November,
1996) through April, 1997. In April, 1997, Gables' borrowing costs under the
facility were reduced to LIBOR plus 1.10% in connection with the attainment of
the Credit Ratings. In August, 1997, Gables' borrowing costs were renegotiated
and were reduced to LIBOR plus 0.80%. Additionally, a competitive bid option was
added for up to 50% of the $175 million commitment.
Gables' availability under the facility is limited to the lesser of the total
$175 million commitment or the borrowing base. The borrowing base available
under the facility is currently based on the value of Gables' unencumbered real
estate assets as compared to the amount of Gables' unsecured indebtedness. As of
September 30, 1997, Gables had $65.0 million in borrowings outstanding under the
facility and, therefore, had $110.0 million of remaining capacity on the $175
million available commitment.
<PAGE>
Page-21
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
$20 Million Credit Facility
- ---------------------------
In November, 1996, Gables closed an unsecured revolving credit facility that
currently provides for up to $20 million in borrowings. This facility has an
initial term of one year and has unlimited one-year extension options. Gables
has exercised the first of its one-year extension options resulting in a
maturity date for the facility of October, 1998. Borrowings bore interest under
this facility at LIBOR plus 1.50% through April, 1997. In April, 1997, Gables'
borrowing costs were reduced to LIBOR plus 1.10% in connection with the
attainment of the Credit Ratings. In August, 1997, Gables' borrowing costs were
renegotiated and were reduced to LIBOR plus 0.80%. As of September 30, 1997,
Gables had approximately $15.6 million in borrowings outstanding under this
facility.
Restrictive Covenants
- ---------------------
Certain of Gables' debt agreements contain customary representations, covenants
and events of default, including covenants which restrict the ability of the
Operating Partnership to make distributions in excess of stated amounts, which
in turn restricts the discretion of the Company to declare and pay dividends. In
general, during any fiscal year the Operating Partnership may only distribute up
to 95% of the Operating Partnership's consolidated income available for
distribution (as defined in the related agreement) exclusive of distributions of
capital gains for such year. The applicable debt agreements contain exceptions
to these limitations to allow the Operating Partnership to make any
distributions necessary to allow the Company to maintain its status as a REIT.
Gables does not anticipate that this provision will adversely effect the ability
of the Operating Partnership to make distributions or the Company to declare
dividends, as currently anticipated.
<PAGE>
Page-22
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
COMPLETED COMMUNITIES IN LEASE-UP AND DEVELOPMENT
COMMUNITIES AT SEPTEMBER 30, 1997
Gables' current developments and lease-up activities for communities that had
not reached stabilized occupancy as of September 30, 1997 are summarized below:
<TABLE>
<CAPTION>
Actual / Actual / Actual / Actual /
Estimated Total Estimated Estimated Estimated Estimated
Number of Budgeted Percent Quarter Quarter of Quarter Quarter of
Apartment Cost Construction Percent Percent Construction Initial Construction Stabilized
Community Homes (millions) Complete Leased Occupied Commenced Occupancy Ended Occupancy
- --------- ----- ---------- --------- ------ -------- --------- --------- ----- ---------
(A) (B)
COMPLETED COMMUNITIES IN LEASE-UP
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Austin, TX
- ----------
Gables Central Park ... 273 $19.6 100% 84% 81% 2 Q 1996 1 Q 1997 3 Q 1997 4 Q 1997
===== ======
DEVELOPMENT COMMUNITIES
Atlanta, GA
- -----------
Gables at Sugarloaf ... 386 28.7 14% -- -- 2 Q 1997 1 Q 1998 1 Q 1999 2 Q 1999
Roswell Gables II ..... 284 21.7 98% 68% 59% 2 Q 1996 2 Q 1997 4 Q 1997 1 Q 1998
Austin, TX
- ----------
Gables Bluffstone ..... 256 20.1 52% -- -- 1 Q 1997 1 Q 1998 3 Q 1998 4 Q 1998
Houston, TX
- -----------
Gables New Territory .. 256 14.7 6% -- -- 3 Q 1997 2 Q 1998 4 Q 1998 1 Q 1999
Orlando, FL
- -----------
Gables Commons ........ 280 21.7 22% -- -- 2 Q 1997 1 Q 1998 4 Q 1998 1 Q 1999
Gables Celebration .... 231 21.8 5% -- -- 3 Q 1997 2 Q 1998 4 Q 1998 4 Q 1998
----- ------
Totals .............. 1,693 $128.7
===== ======
<FN>
The following is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of
1934, as amended. The projections and estimates contained in the table above are
forward-looking statements. These forward-looking statements involve risks and
uncertainties and actual results may differ materially from those projected in
such statements. Risks associated with Gables' development, construction, and
lease-up activities, which could impact the forward-looking statements made,
include: development opportunities may be abandoned; construction costs of a
community may exceed original estimates, possibly making the community
uneconomical; and construction and lease-up may not be completed on schedule,
resulting in increased debt service and construction costs.
(A) Total Budgeted Cost includes all capitalized costs incurred and projected
to be incurred to develop the respective community presented in accordance
with generally accepted accounting principles, including land acquisition
costs, construction costs, real estate taxes, interest and loan fees,
permits, professional fees, allocated development overhead, and other
regulatory fees.
(B) Stabilized occupancy is defined as the earlier to occur of (i) 93% physical
occupancy or (ii) one year after completion of construction.
</FN>
</TABLE>
<PAGE>
Page-23
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
STABILIZED APARTMENT COMMUNITIES AT SEPTEMBER 30, 1997
Scheduled Rent Per
------------------
Number of Percent of Square
Community Homes Total Occupancy Unit Foot
- --------- ----- ----- --------- ---- ----
Houston, TX
- -----------
Baybrook Village ............... 776 97% $ 562 $ 0.70
Gables Bradford Place .......... 372 98% 711 0.83
Gables Bradford Pointe ......... 360 95% 627 0.82
Gables Champions ............... 404 97% 742 0.82
Gables CityPlaza ............... 246 96% 844 0.96
Gables Cityscape ............... 252 96% 892 1.05
Gables CityWalk/Waterford Square 317 95% 893 1.11
Gables Edgewater ............... 292 97% 815 0.92
Gables Meyer Park .............. 345 98% 845 0.98
Gables of First Colony ......... 324 98% 897 0.90
Gables Piney Point ............. 246 93% 907 0.98
Gables Pin Oak Green ........... 582 94% 944 0.93
Gables Pin Oak Park ............ 477 97% 970 0.95
Gables River Oaks .............. 228 98% 1,312 1.08
Metropolitan Uptown(JV)......... 318 92% 986 1.08
Rivercrest ..................... 140 100% 706 0.84
Westhollow Park ................ 412 95% 578 0.64
------ ------ ------ ----- ----
6,091 34.6% 96% 812 0.90
Atlanta, GA
- -----------
Briarcliff Gables .............. 104 100% 1,081 0.87
Buckhead Gables ................ 162 100% 783 1.03
Dunwoody Gables ................ 311 98% 789 0.84
Gables Cinnamon Ridge .......... 200 96% 637 0.66
Gables Cityscape ............... 192 98% 805 0.97
Gables Northcliff .............. 82 96% 1,097 0.70
Gables Over Peachtree .......... 263 92% 984 1.08
Gables Vinings ................. 315 95% 912 0.85
Gables Walk .................... 310 96% 957 0.81
Gables Wood Arbor .............. 140 96% 683 0.75
Gables Wood Crossing ........... 268 99% 734 0.77
Gables Wood Glen ............... 380 95% 653 0.66
Gables Wood Knoll .............. 312 95% 680 0.68
Gables Wood Mill ............... 438 97% 777 0.84
Lakes at Indian Creek .......... 603 95% 563 0.62
Roswell Gables I ............... 384 98% 760 0.70
Spalding Gables ................ 252 98% 839 0.85
Wildwood Gables ................ 546 98% 808 0.71
------ ------ ----- ----- ----
5,262 29.8% 96% 775 0.77
Dallas, TX
- ----------
Arborstone ..................... 536 95% 478 0.67
Gables at Pearl Street ......... 108 92% 1,390 1.28
Gables CityPlace ............... 232 98% 1,344 1.28
Gables Green Oaks .............. 300 93% 822 0.86
Gables Mirabella ............... 126 92% 1,190 1.31
Gables Preston ................. 126 85% 1,045 0.95
Gables Spring Park ............. 188 95% 949 0.90
Gables Turtle Creek ............ 150 87% 1,269 1.26
Gables Valley Ranch ............ 319 97% 927 0.91
------ ------ ----- ----- ----
2,085 11.8% 94% 916 0.98
Memphis, TN
- -----------
Arbors of Harbortown (JV)....... 345 99% 814 0.82
Gables Cordova ................. 464 97% 661 0.71
Gables Germantown .............. 252 97% 906 0.78
Gables Quail Ridge ............. 238 98% 794 0.67
Gables Stonebridge ............. 500 96% 634 0.72
------ ------ ----- ----- ----
1,799 10.2% 97% 735 0.74
Nashville, TN
- -------------
Brentwood Gables ............... 254 98% 884 0.78
Gables Hendersonville .......... 364 96% 652 0.69
Gables Hickory Hollow I ....... 272 97% 631 0.69
Gables Hickory Hollow II ....... 276 97% 631 0.67
------ ------ ----- ----- ----
1,166 6.6% 97% 692 0.71
Austin, TX
- ----------
Gables Great Hills ............. 276 93% 782 0.94
Gables Park Mesa ............... 148 96% 1,092 1.00
Gables Town Lake ............... 256 98% 1,077 1.15
------ ------ ----- ----- ----
680 3.9% 96% 960 1.04
San Antonio, TX
- ---------------
Gables Colonnade I ............. 312 96% 784 0.86
Gables Wall Street ............. 232 95% 799 0.84
------ ------ ----- ----- ----
544 3.1% 95% 790 0.85
TOTALS ...................... 17,627 100.0% 96% $802 $0.84
====== ====== ===== ===== ====
<PAGE>
Page-24
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -----------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
PORTFOLIO INDEBTEDNESS SUMMARY AND INTEREST RATE PROTECTION AGREEMENT SUMMARY
A summary of Gables' portfolio indebtedness and interest rate protection
agreements as of September 30, 1997 follows:
<TABLE>
<CAPTION>
PORTFOLIO INDEBTEDNESS SUMMARY
Percentage Interest Total Years to
Type of Indebtedness Balance of Total Rate (A) Rate (B) Maturity
- -------------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Secured conventional fixed-rate ..... $ 96,440 21.9% 8.14% 8.14% 10.09
Unsecured conventional fixed-rate (C) 158,602 36.0% 7.78% 7.78% 6.20
Tax-exempt fixed-rate ............... 60,150 13.6% 6.50% 6.62% 10.92
-------- ------- ------ ------- -------
Total fixed-rate ............... $315,192 71.5% 7.65% 7.67% 8.29
-------- ------- ------ ------- -------
Tax-exempt variable-rate ............ $ 44,930 10.2% 4.15% 5.10% 4.92
-------- ------- ------ ------- -------
Unsecured credit facilities ......... $ 80,606 18.3% 6.22% 6.22% 2.21
-------- ------- ------ ------- -------
Total portfolio debt (D), (E) ....... $440,728 100.0% 7.03% 7.14% 6.84
======== ======= ====== ======= =======
<FN>
(A) Interest Rate represents the weighted average interest rate incurred on the
indebtedness, exclusive of deferred financing cost amortization and credit
enhancement fees, as applicable.
(B) Total Rate represents the Interest Rate (A) plus credit enhancement fees,
as applicable.
(C) Unsecured conventional fixed-rate debt includes $40,000 of financing which
bears interest at LIBOR plus a spread of 0.80%. Such financing is
effectively fixed at an all-in rate of 6.15% after the application of
$40,000 of the $44,530 interest rate cap and swap arrangements described
below.
(D) Interest associated with construction activities is capitalized as a cost
of development and does not impact current earnings. The qualifying
construction expenditures at September 30, 1997 for purposes of interest
capitalization were $58,603.
(E) Excludes $16.4 million of tax-exempt bonds and $17.0 million of outstanding
conventional indebtedness related to joint ventures in which Gables owns a
25% interest.
</FN>
</TABLE>
INTEREST RATE PROTECTION AGREEMENT SUMMARY
Notional Strike/Swap/ Effective Termination
Description of Agreement Amount Lock Price Date Date
- ------------------------ ------ ---------- ---- ----
LIBOR, 30-day - "Rate Cap" $44,530 6.25% (F) 01/27/94 01/30/99
LIBOR, 30-day - "Rate Swap" $44,530 5.35% (F) 08/30/96 08/30/99(G)
LIBOR, 30-day - "Rate Cap" $50,000 6.45% (F) 01/30/97 12/31/97
LIBOR, 30-day - "Rate Swap" $25,000 5.76% (F) 02/27/98 02/28/00(H)
Treasury,7-year - "Treasury Lock" $75,000 6.10% 09/22/97 12/19/97
(F)The 30-day LIBOR rate in effect at month-end was 5.66%.
(G) This arrangement is a knock-out swap agreement which fixes Gables'
underlying 30-day LIBOR rate at 5.35%. The swap terminates upon the earlier
to occur of (i) the termination date or (ii) a rate reset date on which the
30-day LIBOR rate is 6.26% or higher.
(H) This arrangement is a knock-out swap agreement which fixes Gables'
underlying 30-day LIBOR rate at 5.76%. The swap terminates upon the earlier
to occur of (i) the termination date or (ii) a rate reset date on which the
30-day LIBOR rate is 6.70% or higher.
<PAGE>
Page-25
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
Book Value of Assets and Equity
- -------------------------------
The application of historical cost accounting in accordance with GAAP for
Gables' UPREIT structure results in an understatement of total assets and equity
compared to the amounts that would be recorded via the application of purchase
accounting in accordance with GAAP had Gables not been organized as an UPREIT.
Management believes it is imperative to understand this difference when
evaluating the book value of assets and equity. The understatement of basis
related to this difference in organizational structure at September 30, 1997 is
$112,494, exclusive of the effect of depreciation. Accordingly, on a pro forma
basis, the real estate assets before accumulated depreciation, total assets and
total equity plus minority interest as of September 30, 1997 would be
$1,120,014, $1,055,899, and $576,663, respectively, if such $112,494 value was
reflected.
Inflation
- ---------
Substantially all of Gables' leases at the communities are for a term of one
year or less, which may enable Gables to seek increased rents upon renewal of
existing leases or commencement of new leases in times of rising prices. The
short-term nature of these leases generally serves to lessen the impact of cost
increases arising from inflation.
Certain Factors Affecting Future Operating Results
- --------------------------------------------------
This Report on Form 10-Q contains 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. Actual results or developments
could differ materially from those projected in such statements. Certain factors
that might cause such a difference include, but are not limited to, the
following: development opportunities may be abandoned; construction costs of a
community may exceed original estimates; construction and lease-up may not be
completed on schedule, resulting in increased debt service expense and
construction costs and reduced rental revenues; occupancy rates and rents may be
adversely affected by local economic and market conditions; financing may not be
available on favorable terms; Gables' cash flow may be insufficient to meet
required payments of principal and interest; and existing indebtedness may not
be able to be refinanced or the terms of such refinancing may not be as
favorable as the terms of existing indebtedness.
SUPPLEMENTAL DISCUSSION - Funds From Operations and
Adjusted Funds From Operations
- ------------------------------
Gables considers funds from operations ("FFO") to be a useful performance
measure of the operating performance of an equity REIT because, together with
net income and cash flows, FFO provides investors with an additional basis to
evaluate the ability of a REIT to incur and service debt and to fund
acquisitions and other capital expenditures. Gables believes that in order to
facilitate a clear understanding of its operating results, FFO should be
examined in conjunction with net income as presented in the financial statements
and data included elsewhere in this report. Gables computes FFO in accordance
with standards established by the National Association of Real Estate Investment
Trusts ("NAREIT"). FFO as defined by NAREIT represents net income (loss)
determined in accordance with GAAP, excluding gains or losses from sales of
assets or debt restructuring, plus certain non-cash items, primarily real estate
depreciation, and after adjustments for unconsolidated partnerships and joint
ventures. FFO presented herein is not necessarily comparable to FFO presented by
other real estate companies due to the fact that not all real estate companies
use the same definition. However, Gables' FFO is comparable to the FFO of real
estate companies that use the NAREIT definition. Adjusted funds from operations
("AFFO") is defined as FFO less capital expenditures funded by operations. FFO
and AFFO should not be considered as alternatives to net income as indicators of
Gables' operating performance or as alternatives to cash flows as measures of
liquidity. FFO does not measure whether cash flow is sufficient to fund all of
Gables' cash needs including principal amortization, capital expenditures, and
distributions to shareholders and unitholders. Additionally, FFO does not
represent cash flows from operating, investing or financing activities as
defined by GAAP. Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources'
for a discussion of Gables' cash needs and cash flows.
<PAGE>
Page-26
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
(Dollars in Thousands, Except Per Share Amounts)
- --------------------------------------------------------------------------------
RECONCILIATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
A reconciliation of funds from operations and adjusted funds from operations
follows:
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30 September 30
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
RECONCILIATION:
<S> <C> <C> <C> <C>
Net income available to common shareholders ............. $7,460 $5,790 $23,974 $15,902
Extraordinary loss, net of minority interest ............ 0 0 602 520
Minority interest of unitholders in Operating Partnership 1,359 1,215 4,478 3,458
Gain on sale of real estate assets ...................... (491) 0 (5,349) 0
Real estate asset depreciation:
Wholly-owned real estate assets ...................... 6,139 4,976 16,925 13,071
Joint venture real estate assets ..................... 56 55 167 163
------ ------ ------ ------
Total ......................................... 6,195 5,031 17,092 13,234
------ ------ ------ ------
Funds from operations ................................... $14,523 $12,036 $40,797 $33,114
------ ------ ------ ------
Capital expenditures for operating apartments:
Carpet ................................................ 528 359 1,300 867
Roofing ............................................... 31 69 136 184
Exterior painting ..................................... 168 25 224 111
Appliances ............................................ 51 34 136 84
Other additions/improvements .......................... 591 508 1,633 1,562
------ ------ ------ ------
Total ............................................... 1,369 995 3,429 2,808
------ ------ ------ ------
Adjusted funds from operations .......................... $13,154 $11,041 $37,368 $30,306
====== ====== ====== ======
</TABLE>
<PAGE>
Page-27
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
None
Item 2: Changes in Securities
On October 20, 1997, the Company issued to a limited partner of the
Operating Partnership 20,000 common shares (valued at approximately
532,500 at the time of issuance) in exchange for 20,000 Units. Such
shares were issued in reliance on an exemption from registration under
Section 4 (2) of the Securities Act and the rules and regulations
promulgated thereunder.
Item 3: Defaults Upon Senior Securities
None
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 First Amendment to Conversion and Note Agreement effective
December 30, 1996 by and among Gables Realty Limited Partnership,
Gables-Tennessee Properties, Gables Residential Trust and
Teachers Insurance and Annuity Association of America.
10.2 Second Amendment to Conversion and Note Agreement effective
August 13, 1997 by and among Gables Realty Limited Partnership,
Gables-Tennessee Properties, Gables Residential Trust and
Teachers Insurance and Annuity Association of America .
10.3 Unsecured Note No. 1 for $86,346,000 dated August 13, 1997
between Gables Realty Limited Partnership, Gables-Tennessee
Properties and Teachers Insurance and Annuity Association of
America.
10.4 Unsecured Note No. 2 for $29,681,000 dated August 13, 1997
between Gables Realty Limited Partnership, Gables-Tennessee
Properties and Teachers Insurance and Annuity Association of
America.
10.5 First Amendment to the $40,000,000 Term Loan Credit Agreement
dated as of August 5, 1997 among Gables Realty Limited
Partnership and Wachovia Bank of Georgia, N.A.
10.6 $175,000,000 Amended and Restated Credit Agreement dated as of
August 5, 1997 by and among Gables Realty Limited Partnership (as
Borrower) and Wachovia Bank, N.A., First Union National Bank,
Guaranty Federal Bank, F.S.B., AmSouth Bank of Alabama and
Commerzbank AG, Atlanta Agency (collectively, as lenders) and
Wachovia Bank, N.A. (as Agent).
10.7 Interest rate protection agreement (notional amount of
$25,000,000) between Gables Realty Limited Partnership and First
Union National Bank of Georgia, dated as of May 23, 1997.
<PAGE>
Page-28
10.8 $45,820,180 Letter of Credit Facility Reimbursement Agreement
dated as of October 1, 1997 by and among Gables Realty Limited
Partnership (as Borrower), and Wachovia Bank, N.A., Guaranty
Federal Bank, F.S.B and AmSouth Bank of Alabama (as Lenders) and
Wachovia Bank, N.A. (as Agent).
10.9 Forward Treasury Lock Agreement (notional amount of $75,000,000)
between Gables Realty Limited Partnership and J.P. Morgan
Securities, Inc., dated as of September 22, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
(i) A Form 8-K dated July 24, 1997 was filed with the Securities and
Exchange Commission with (a) the underwriting agreement executed
in connection with the Company's issuance of 8.30% Series A
Cumulative Redeemable Preferred Shares (the "Preferred Shares")
and (b) the Articles Supplementary to the Company's Amended and
Restated Declaration of Trust creating the series of Preferred
Shares.
(ii) A Form 8-K dated September 9, 1997 was filed with the Securities
and Exchange Commission with the required financial information
regarding the acquisition of two apartment communities.
(iii)A Form 8-K dated September 16, 1997 was filed with the
Securities and Exchange Commission with the underwriting
agreement executed in connection with the Company's common share
offering that closed September 16, 1997.
<PAGE>
Page-29
SIGNATURE
Pursuant to the requirements 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.
Date: November 10, 1997 GABLES RESIDENTIAL TRUST
/s/ Marvin R. Banks, Jr.
------------------------
Marvin R. Banks, Jr.
Senior Vice President and Chief
Financial Officer
(Authorized Officer of the Registrant
and Principal Financial Officer)
FIRST AMENDMENT TO
CONVERSION AND NOTE AGREEMENT
This FIRST AMENDMENT TO CONVERSION AND NOTE AGREEMENT (this "Amendment") dated
as of December 30, 1996, among GABLES REALTY LIMITED PARTNERSHIP, a Delaware
limited partnership ("GRLP"), GABLES - TENNESSEE PROPERTIES, a Tennessee general
partnership ("GTP," and collectively with GRLP, "Borrower"), GABLES RESIDENTIAL
TRUST, a Maryland real estate investment trust (the "Company"), and TEACHERS
INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation ("Lender");
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Application and Commitment Agreement
dated June 14, 1995 (as amended from time to time, the "Commitment"), Lender has
agreed to make certain loans to Borrower subject to the terms and conditions set
forth in the Commitment (collectively, the "Loan");
WHEREAS, Borrower and Lender have entered into that certain Loan Agreement dated
December 29, 1995, with respect to the Loan (the "Loan Agreement");
WHEREAS, Borrower, Company and Lender have entered into that certain Conversion
and Note Loan Agreement dated December 29, 1995, with respect to the Loan (the
"Conversion Agreement");
WHEREAS, GRLP has executed and delivered to Lender two or more promissory notes
(collectively, "Note No.1"), dated December 29, 1995, in the aggregate amount of
$90,204,000 (the "First Disbursement"), which First Disbursement is secured by
first priority liens on those certain apartment projects commonly known as
Gables Great Hills, Austin, Texas ("Community A"), Gables Meyer Park, Houston,
Texas ("Community B"), Wall Street Gables, San Antonio, Texas ("Community C"),
Spalding Gables, Atlanta, Georgia ("Community D"), Roswell Gables, Atlanta,
Georgia ("Community E") and Dunwoody Gables, Atlanta, Georgia ("Community I");
WHEREAS, pursuant to the terms of the Loan Agreement, GTP has executed and
delivered to Lender a promissory note dated June 6, 1996 ("Note No. 2"), in the
aggregate amount of $13,481,000 (the "Second Disbursement"), which sum is
secured in part by a first priority lien on that certain apartment project and
commonly known as Brentwood Gables, Brentwood, Tennessee ("Community H");
WHEREAS, in accordance with the provisions and conditions of the Commitment and
the Loan Agreement, Lender exercised its option not to advance that portion of
the Loan in connection with those certain apartment projects commonly known as
Germantown Gables, Germantown, Tennessee ("Community F") and Gables at Daybreak,
Bartlett, Tennessee ("Proposed Community G");
WHEREAS, in lieu of the disbursement of that portion of the Loan secured in part
by Community F and Proposed Community G, Borrower has requested, and Lender has
agreed, that upon compliance with the terms of the Commitment and the Loan
Agreement, GRLP will execute and deliver to Lender a promissory note ("Note
No.3"), in the sum of $12,342,000.00 (the "Third Disbursement"), which Third
Disbursement will be secured in part by a first priority lien on that certain
apartment project commonly known as Gables Town Lake, Austin, Texas ("Community
G");
WHEREAS, upon the funding of the Third Disbursement, the total outstanding Loan
will be $116,027,000.00;
WHEREAS, Borrower and Lender desire to modify the Conversion Agreement to
reflect the deletion of Community F and Proposed Community G as collateral for
the Loan, the modification of the amount of the Third Disbursement and the total
amount of the Loan, and the substitution of Community G for Proposed Community G
as collateral for the Third Disbursement and the Loan;
NOW THEREFORE, the parties hereto hereby agree as follows:
1. The amount of the Commitment is hereby capped at $116,027,000.00, which is
the aggregate principal amount of the Loan outstanding on the date hereof.
2. The sixth paragraph of the Conversion Agreement, which paragraph begins on
page 1 of the Conversion Agreement and reads as follows:
WHEREAS, pursuant to the terms of the Loan Agreement, GTP will execute and
deliver to Lender one or more promissory notes (collectively, "Note No. 3"), in
the aggregate amount of $27,004,000 (the "Third Disbursement"), which sum (or
some lesser amount) will be advanced by Lender to Borrower no later than
September 30, 1996, upon compliance by Borrower with the terms and conditions of
the Loan Agreement, which Third Disbursement will be secured in part by first
priority liens on those certain apartment projects commonly known as Germantown
Gables, Germantown, Tennessee ("Community F") and Gables at Daybreak, Bartlett,
Tennessee ("Community G");
is hereby deleted in its entirety, and substituted in lieu thereof is the
following new paragraph:
WHEREAS, upon compliance with the terms of the Loan Agreement, GTP will
execute and deliver to Lender a promissory note ("Note No. 3"), in the aggregate
amount of $12,342,000 (the "Third Disbursement"), which Third Disbursement will
be secured in part by first a priority lien on that certain apartment project
commonly known as Gables Town Lake, Austin, Texas ("Community ");
3. Section 2.01 of the Conversion Agreement, which section reads as follows:
Subject to and upon compliance with the provisions of this Agreement,
Borrower may, at its option, exercisable upon not less than ninety (90) days'
prior written notice to Lender, convert the Loan into an unsecured joint and
several obligation of Borrower to be evidenced by an unsecured note in the
aggregate amount of the then outstanding principal balances of those portions of
the Mortgage Notes allocated to Communities A, C, D, E, F, G and I ("Unsecured
Note No.1"), and an unsecured note in the aggregate amount of the then
outstanding principal balances of those portions of the Mortgage Notes allocated
to Communities B and H ("Unsecured Note No.2") (collectively, the "Unsecured
Notes"). The date on which such conversion (the "Conversion") shall become
effective, which shall be the first day of a calendar month, is hereinafter
referred to as the "Conversion Date." If such conversion does not become
effective due to the failure of Borrower to satisfy any condition precedent set
forth in Section 2.02 of this Agreement, Borrower shall not be precluded thereby
from subsequently attempting to exercise its Conversion Option in accordance
with this Article Two unless such failure is not susceptible of cure.
is hereby deleted in its entirety, and substituted in lieu thereof is the
following new section:
Subject to and upon compliance with the provisions of this Agreement,
Borrower may, at its option, exercisable upon not less than ninety (90) days'
prior written notice to Lender, convert the Loan into an unsecured joint and
several obligation of Borrower to be evidenced by an unsecured note in the
aggregate amount of the then outstanding principal balances of those portions of
the Mortgage Notes allocated to Communities A, C, D, E, G and I ("Unsecured Note
No. 1"), and an unsecured note in the aggregate amount of the then outstanding
principal balances of those portions of the Mortgage Notes allocated to
Communities B and H ("Unsecured Note No.2") (collectively, the "Unsecured
Notes"). The date on which such conversion (the "Conversion") shall become
effective, which shall be the first day of a calendar month, is hereinafter
referred to as the "Conversion Date." If such conversion does not become
effective due to the failure of Borrower to satisfy any condition precedent set
forth in Section 2.02 of this Agreement, Borrower shall not be precluded thereby
from subsequently attempting to exercise its Conversion Option in accordance
with this Article Two unless such failure is not susceptible of cure.
4. Paragraph (e) of Section 2.02 of the Conversion Agreement, which paragraph
reads as follows:
(e) On the Conversion Date, Borrower shall have executed and delivered to
Lender Unsecured Note No.1 in the aggregate amount of the then outstanding
principal balances of those portions of the Mortgage Notes allocated to
Communities A, C, D, E, F, G and I and Unsecured Note No.2 in the aggregate
amount of the then outstanding principal balances of those portions of the
Mortgage Notes allocated to Communities B and H, substantially in the form of
Exhibit B and Exhibit C hereto, respectively, appropriately completed.
is hereby deleted in its entirety, and substituted in lieu thereof is the
following new paragraph:
(e) On the Conversion Date, Borrower shall have executed and delivered to
Lender Unsecured Note No.1 in the aggregate amount of the then outstanding
principal balances of those portions of the Mortgage Notes allocated to
Communities A, C, D, E, G and I and Unsecured Note No.2 in the aggregate amount
of the then outstanding principal balances of those portions of the Mortgage
Notes allocated to Communities B and H, substantially in the form of Exhibit B
and Exhibit C hereto, respectively, appropriately completed.
5. GOVERNING LAW -This Amendment shall be governed and construed in accordance
with, and the rights of the parties shall be governed by, the laws of the
State of Georgia excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction
other than such State.
6. EXECUTION IN COUNTERPARTS - This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all, of the parties hereto.
7. SUCCESSORS AND ASSIGNS - All covenants and other agreements contained in
this Amendment by or on behalf of any of the parties hereto bind and inure
to the benefit of their respective successors and assigns whether so
expressed or not.
8. NO NOVATION - Except as amended by this Amendment, the provisions of the
Conversion Agreement remain in full force and effect in accordance with
their original tenor, and Borrower hereby ratifies and confirms each and
every provision of the Conversion Agreement, as amended by this Amendment.
This instrument constitutes an amendment to the Conversion Agreement and is
not a novation. The execution of this instrument does not and shall not
constitute a waiver of any rights or remedies to which Lender is entitled
pursuant to the Conversion Agreement, as amended by this Amendment, or any
other instrument or document evidencing, securing or otherwise relating to
the Loan.
9. REFERENCES TO CONVERSION AGREEMENT - Each reference to "the Agreement" or
"the Conversion Agreement" or words of similar import in the Conversion
Agreement or the other Loan Documents (as defined in the Conversion
Agreement), shall be deemed, unless the context otherwise requires, to be a
reference to the Conversion Agreement, as amended, supplemented and
otherwise modified hereby, and as the same may hereafter be amended,
supplemented or otherwise modified.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
BORROWER:
GABLES REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By:Gables GP, Inc., a Texas corporation, its sole
general partner
By: /s/ Marcus E. Bromley
-------------------------
Name: Marcus E. Bromley
-------------------------
Title: CEO
-------------------------
GABLES-TENNESSEE PROPERTIES,
a Tennessee general partnership
By: Gables GP, Inc., a Texas corporation,
a general partner
By: /s/ Marcus E. Bromley
-------------------------
Name: Marcus E. Bromley
-------------------------
Title: CEO
-------------------------
COMPANY:
GABLES RESIDENTIAL TRUST, a Maryland REIT
By: /s/ Marcus E. Bromley
---------------------------
Name: Marcus E. Bromley
---------------------------
Title: CEO
---------------------------
LENDER:
TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA
By: /s/ Matthew T. Murphy
-------------------------
Name: Matthew T. Murphy
-------------------------
Title: Director
-------------------------
SECOND AMENDMENT TO CONVERSION
AND NOTE AGREEMENT
THIS SECOND AMENDMENT TO CONVERSION AND NOTE AGREEMENT ('Second Amendment") is
made and entered into effective as of August 13, 1997, by and among GABLES
REALTY LIMITED PARTNERSHIP, a Delaware limited partnership ("GRLP"),
GABLES-TENNESSEE PROPERTIES, a Tennessee general partnership ("GTP"), (GRLP and
GTP being sometimes collectively referred to herein as "Borrower"), GABLES
RESIDENTIAL TRUST, a Maryland real estate investment trust (the "Company") and
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation
("Lender").
RECITALS:
Reference is here made to that certain Conversion and Note Agreement dated as of
December 29, 1995 by and among GRLP, GTP, the Company, and the Lender, as
amended by that certain First Amendment to Conversion and Note Agreement dated
as of December 30, 1996 (as so amended, the "Existing Agreement"). Words with
initial capital letters used but not defined herein shall have the respective
meanings ascribed to them in the Existing Agreement.
The Loan has been fully dispersed and Borrower intends to proceed with the
exercise of the Conversion Option. Company requested certain changes to the
Existing Agreement and, subject to the terms and provisions hereof, Lender has
agreed to said changes. Borrower, Company and Lender execute and deliver this
Second Amendment to effectuate their agreement and understandings.
AGREEMENTS:
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
contained herein and in the Existing Agreement, Borrower, Company, and Lender
hereby agree as follows:
1. Section 4.01(k) of the Existing Agreement is hereby amended by deleting the
text thereof in its entirety and substituting therefor the following:
"(k) Assets of Company. The Company's only assets (other than cash held for
distribution) shall, subject to the provisions of this subparagraph (k), at all
times remain its ownership interest in Borrower, its indirect ownership interest
in assets held by Borrower or a wholly owned Subsidiary of Borrower, its
existing 100% ownership interest in Candle Creek, Inc., a Georgia corporation
(now known as GRT Villas Gen Par, Inc.), its 100% ownership interest in
Candlewood Gen Par, Inc., its 100% ownership interest of Gables GP, Inc., and
its one percent (1%) interests (held through Gables GP, Inc.) in Pin Oak Green
and Pin Oak Apartments, respectively (each a Texas general partnership). Except
as provided below in this subparagraph (k), all assets acquired, owned or held
after the date of this Agreement shall be held by Borrower, or by a wholly owned
Subsidiary of Borrower. Each Partnership shall at all times remain a
Consolidated Subsidiary of the Company. GRLP shall at all times retain at least
a 99% general partnership interest in GTP. The Company shall have the right to
acquire other assets (i.e. other than those listed in the first sentence of this
subparagraph (k)) provided that the Total Book Capitalization of the Company
shall not, either before or after giving effect to such acquisition, exceed 120%
of the Total Book Capitalization of the Borrower."
2. The parties hereto acknowledge and agree that, notwithstanding the
provisions of Section 2.01 of the Existing Loan Agreement, which among other
things require that the Conversion Date shall be the first day of a calendar
month, in accordance with Borrower's request the Conversion Date shall instead
occur as soon as practicable after the conditions precedent set forth in Section
2.02 of the Existing Agreement have been satisfied. Borrower has further
requested that the Conversion Date not be delayed until the completion of
documentation and recordation of the release of the mortgages, assignments and
security interests securing the Loan, and Borrower has assumed responsibility
for preparing and recording such documentation. Accordingly, the occurrence of
the Conversion Date prior to the completion of such matters shall not constitute
a breach of any obligation of Lender in connection with such matters, provided
that Lender shall continue to cooperate reasonably with Borrower in connection
with such matters.
3. Except as amended hereby, the Existing Agreement shall remain in full
force and effect. The Existing Agreement, as amended by this Second Amendment,
and all rights, powers, and remedies created thereby or thereunder is hereby
ratified and confirmed in all respects. This Second Amendment shall be governed
by and construed in accordance with the laws of the State of Georgia excluding
choice of law principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state. This Second
Amendment may be executed in multiple counterparts by the parties hereto, each
of which when so executed and delivered shall constitute an original, but all
such counterparts taken together constituting one and the same instrument.
GABLES REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Gables GP, Inc., a Texas corporation,
its general partner
By: /s/ Marvin R. Banks, Jr.
----------------------------
Name: Marvin R. Banks, Jr.
---------------------------
Title: Vice President
---------------------------
GABLES-TENNESSEE PROPERTIES,
a Tennessee general partnership
By: Gables GP, Inc., a Texas corporation,
its general partner
By: /s/ Marvin R. Banks
---------------------------
Name: Marvin R. Banks, Jr.
---------------------------
Title: Vice President
--------------------------
GABLES RESIDENTIAL TRUST, a Maryland REIT
By: /s/ Marvin R. Banks, Jr.
----------------------------
Name: Marvin R. Banks, Jr.
---------------------------
Title: Vice President
---------------------------
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Kevin J. Riordan
-----------------------------
Name: Kevin J. Riordan
-----------------------------
Title: Director
------------------------
UNSECURED NOTE NO.1
$86,346,000.00 Atlanta, Georgia
August 13, 1997
PPN 36241# AA7
FOR VALUE RECEIVED, the undersigned, GABLES REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership (herein, together with its successors and assigns,
"GRLP"), and GABLES - TENNESSEE PROPERTIES, a Tennessee general partnership
(herein, together with its successors and assigns, "GTP," and collectively with
GRLP, "Maker"), each having an address at 2859 Paces Ferry Road, Suite 1450,
Atlanta, Georgia 30339, jointly and severally promise to pay to the order of
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (herein, together with its
successors and assigns, "Holder") during regular business hours at its offices
at 730 Third Avenue, New York, New York 10017, or at such other place as may be
designated from time to time in writing by Holder, the principal sum of
EIGHTY-SIX MILLION THREE HUNDRED FORTY-SIX THOUSAND AND NO/1OO DOLLARS
($86,346,000.00), together with interest at the rate of 8.30% per annum thereon
or on so much thereof as is from time to time outstanding and unpaid (the
"Coupon Interest Rate"), in the manner hereinafter more specifically set forth,
in lawful money of the United States of America which will at that time be
deemed to be legal tender in payment of all debts and dues, public and private,
such principal and interest to be paid in installments as follows:
1. Accrued and unpaid interest only on the unpaid principal balance at the
Coupon Interest Rate shall be due and payable on the first day of each
month after the date hereof to and including January 1, 1998.
2. Principal and accrued interest in the amount of $651,725.22 shall be due
and payable on February 1, 1998, and on the first day of each month
thereafter to and including December 1, 2002.
3. On December 31, 2002 (the "Maturity Date"), the entire unpaid principal
balance together with accrued and unpaid interest and all other sums due
hereunder and under the Conversion and Note Agreement (as hereinafter
defined) shall be due and payable.
Maker acknowledges that the monthly installments of principal and interest
provided in Paragraph 2 above will not fully repay the principal of this Note
and that a balloon payment of the entire unpaid principal balance, together with
accrued and unpaid interest thereon, will be due on the Maturity Date. Holder
has made no agreement to make financing available to Maker in connection with
such balloon payment.
The indebtedness evidenced by this Note may not be prepaid, in whole or in part,
except on the terms and conditions and in the amounts and with the premiums, if
any, set forth in the Conversion and Note Agreement.
This Note is one of two Unsecured Notes of the Maker in the aggregate principal
amount of $116,027,000.00 issued under and pursuant to the Conversion and Note
Agreement dated as of December 29, 1995, as amended (the "Conversion and Note
Agreement") and entered into by GRLP, GTP, Gables Residential Trust, a Maryland
real estate investment trust (the "Company"), and Holder, and the holder of this
Note is entitled to all the benefits provided for thereby or referred to
therein, to which Conversion and Note Agreement reference is hereby made for the
statement thereof.
Upon the occurrence of an Event of Default (as defined in the Conversion and
Note Agreement), the entire principal balance of this Note together with accrued
interest and all other sums due under the Conversion and Note Agreement will
become or may be declared to be immediately due and payable, without any notice
or demand whatsoever, notice of exercise of such option being waived by Maker.
Holder's failure to exercise its option to accelerate will not constitute a
waiver of the right to exercise such option at a later date (provided the Event
of Default continues) or upon the occurrence of a subsequent Event of Default.
Maker hereby waives and renounces for itself, and all its successors and
assigns, all right to the benefit of any moratorium, reinstatement, forbearance,
stay and extension now provided, or which hereafter may be provided, by the
Constitution and laws of the United States of America and of any state thereof,
as to itself and in and to all of its property, real and personal, against the
enforcement and collection of the obligations evidenced by this Note.
In the event of an Event of Default under the Conversion and Note Agreement and
upon acceleration of the entire indebtedness evidenced hereby, interest will
accrue thereafter on the unpaid principal balance of this Note at the rate of
five percent (5%) per annum plus the Coupon Interest Rate.
In addition to the foregoing, if Maker shall fail to timely make any payment of
interest or principal beyond any grace period provided in the Conversion and
Note Agreement, time being of the essence, including payments due on maturity,
then a late charge by way of damages will be immediately due and payable. Maker
recognizes that a default by Maker in making the payments under this Note and
under the Conversion and Note Agreement on or before the due date thereof will
result in Holder incurring additional expense in servicing the loan evidenced by
this Note and the other Unsecured Note outstanding under the Conversion and Note
Agreement, in a loss to Holder of the use of the money due and in frustration to
Holder in meeting its loan commitments. Maker agrees that if, for any reason,
Maker fails to pay the amounts due under this Note or under the Conversion and
Note Agreement on or before the due date thereof and such failure continues
beyond any such grace period, Holder will be entitled to damages for the
detriment caused thereby, but that it is extremely difficult and impractical to
ascertain the extent of such damages. Maker therefore agrees that a sum equal to
five cents ($.05) for each dollar ($1.00) of each payment which becomes and
remains delinquent is a reasonable estimate of the damages to Holder, which sum
Maker agrees to pay on demand.
If any suit or action is instituted to collect this Note or any part thereof, or
if it is placed in the hands of an attorney for collection, Maker promises and
agrees to pay reasonable attorneys' fees, court costs and fees of Holder or any
agent of Holder.
Maker and all endorsers or guarantors hereof and all others who may become
liable for all or any part of this obligation agree hereby to be jointly and
severally bound, and they jointly and severally waive and renounce, to the
extent permitted by law, demand, protest, notice of nonpayment (other than for
such notices as are expressly set forth in the Conversion and Note Agreement)
and any and all lack of diligence or delays in collection or enforcement
thereof, and expressly consent to any extension of time, release of any party
liable for this obligation, or any other indulgence or forbearance whatsoever.
Any such extension, release, indulgence or forbearance may be made without
notice to such party and without in any way affecting the liability of such
party.
Presentment for payment, demand, protest and notice of demand, notice of
dishonor and notice of non-payment, and all other notices not expressly provided
for herein or in the Conversion and Note Agreement, are hereby waived by Maker.
No failure to accelerate the debt evidenced hereby by reason of an Event of
Default, acceptance of a past due installment, or indulgence granted from time
to time will be construed (i) as a novation of this Note or as a reinstatement
of the indebtedness evidenced hereby or as a waiver of such right of
acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or of any other right granted hereunder by the laws of the
State of Georgia. Maker hereby expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing. No
extension of time for the payment of this Note or any installment due hereunder,
made by agreement with any person now or hereafter liable for the payment of
this Note, will operate to release, discharge, modify, change or affect the
original liability, if any, of Maker under this Note, either in whole or in
part. This Note may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
Notwithstanding any provision herein or in the Conversion and Note Agreement to
the contrary, it is not the intention of Holder to charge or collect, nor shall
there at any time be charged or become due and payable hereunder, any interest
(whether based on the Coupon Interest Rate or otherwise) which would result in a
rate of interest being charged which is in excess of the maximum rate, if any,
now permitted by law for this transaction to be charged; and in the event that
any sum in excess of the maximum rate of interest is paid or charged, the same
shall be deemed to have been a prepayment of principal (which prepayment shall
be permitted, and be without Prepayment Premium or penalty) when paid, and all
payments made thereafter shall be appropriately applied to interest and
principal to give such effect to the maximum rate permitted by law, and after
such application, any excess payment shall be immediately refunded to Maker.
If during the term of this Note the maximum rate of interest, if any, now
permitted by law for this transaction to be charged should be increased, then
for so long as such increase is in effect, the applicable maximum rate permitted
to be charged as referred to in the paragraph immediately preceding will be
deemed to be such increased rate. If such maximum rate of interest, if any, now
permitted by law to be charged for this transaction should be deleted so that
there would be no such maximum rate, then for purposes of this Note there will
thereafter be no maximum rate limiting the amount that can be charged.
This Note is intended as a contract under, and will be construed and enforced in
accordance with, the laws of the State of Georgia or the laws of the United
States of America, when and where applicable (including, without limitation, any
federal usury ceiling or other federal law preempting state usury laws, which
law, from time to time, may be applicable to the indebtedness evidenced hereby),
as Holder may elect.
As used herein, the terms "Maker" and "Holder" will be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action by the parties or by the operation of law.
Any and all notices, demands or requests provided for or permitted to be given
pursuant to this Note will be given in the manner described in Section 7.02 of
the Conversion and Note Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Note as
of the date first above written.
MAKER:
GABLES REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Gables GP, Inc., a Texas corporation,
its sole general partner
By: /s/ Marvin R. Banks, Jr.
----------------------------
Name: Marvin R. Banks, Jr.
----------------------------
Title: Vice President
----------------------------
GABLES - TENNESSEE PROPERTIES, a
Tennessee general partnership
By: Gables GP, Inc., a Texas corporation,
a general partner
By: /s/ Marvin R. Banks, Jr
----------------------------
Name: Marvin R. Banks, Jr.
----------------------------
Title: Vice President
----------------------------
UNSECURED NOTE NO.2
$29,681,000.00
Atlanta, Georgia
August 13, 1997 PPN 36241#
FOR VALUE RECEIVED, the undersigned, GABLES REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership (herein, together with its successors and assigns,
"GRLP'), and GABLES - TENNESSEE PROPERTIES, a Tennessee general partnership
(herein, together with its successors and assigns, "GTP", and collectively with
GRLP, "Maker"), each having an address at 2859 Paces Ferry Road, Suite 1450,
Atlanta, Georgia 30339, jointly and severally promise to pay to the order of
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (herein, together with its
successors and assigns, "Holder") during regular business hours at its offices
at 730 Third Avenue, New York, New York 10017, or at such other place as may be
designated from time to time in writing by Holder, the principal sum of
TWENTY-NINE MILLION SIX HUNDRED EIGHTY-ONE THOUSAND AND NO/100 DOLLARS
($29,681,000.00), together with interest at the rate of 8.6168% per annum
thereon or on so much thereof as is from time to time outstanding and unpaid
(the "Coupon Interest Rate"), in the manner hereinafter more specifically set
forth, in lawful money of the United States of America which will at that time
be deemed to be legal tender in payment of all debts and dues, public and
private, such principal and interest to be paid in installments as follows:
1. Accrued and unpaid interest only on the unpaid principal balance at the
Coupon Interest Rate shall be due and payable on the first day of each
month after the date hereof to and including January 1, 1998.
2. Principal and accrued interest in the amount of $230,683.21 shall be due
and payable on February 1, 1998, and on the first day of each month
thereafter to and including December 1, 2007.
3. On December 31, 2007 (the "Maturity Date"), the entire unpaid principal
balance together with accrued and unpaid interest and all other sums due
hereunder and under the Conversion and Note Agreement (as hereinafter
defined) shall be due and payable.
Maker acknowledges that the monthly installments of principal and interest
provided in Paragraph 2 above will not fully repay the principal of this Note
and that a balloon payment of the entire unpaid principal balance, together with
accrued and unpaid interest thereon, will be due on the Maturity Date. Holder
has made no agreement to make financing available to Maker in connection with
such balloon payment.
The indebtedness evidenced by this Note may not be prepaid, in whole or in part,
except on the terms and conditions and in the amounts and with the premiums, if
any, set forth in the Conversion and Note Agreement.
This Note is one of two Unsecured Notes of the Maker in the aggregate principal
amount of $116,027,000.00 issued under and pursuant to the Conversion and Note
Agreement dated as of December 29, 1995, as amended (the "Conversion and Note
Agreement") and entered into by GRLP, GTP, Gables Residential Trust, a Maryland
real estate investment trust (the "Company"), and Holder, and the holder of this
Note is entitled to all the benefits provided for thereby or referred to
therein, to which Conversion and Note Agreement reference is hereby made for the
statement thereof.
Upon the occurrence of an Event of Default (as defined in the Conversion and
Note Agreement), the entire principal balance of this Note together with accrued
interest and all other sums due under the Conversion and Note Agreement will
become or may be declared to be immediately due and payable, without any notice
or demand whatsoever, notice of exercise of such option being waived by Maker.
Holder's failure to exercise its option to accelerate will not constitute a
waiver of the right to exercise such option at a later date (provided the Event
of Default continues) or upon the occurrence of a subsequent Event of Default.
Maker hereby waives and renounces for itself, and all its successors and
assigns, all right to the benefit of any moratorium, reinstatement, forbearance,
stay and extension now provided, or which hereafter may be provided, by the
Constitution and laws of the United States of America and of any state thereof,
as to itself and in and to all of its property, real and personal, against the
enforcement and collection of the obligations evidenced by this Note.
In the event of an Event of Default under the Conversion and Note Agreement and
upon acceleration of the entire indebtedness evidenced hereby, interest will
accrue thereafter on the unpaid principal balance of this Note at the rate of
five percent (5%) per annum plus the Coupon Interest Rate.
In addition to the foregoing, if Maker shall fail to timely make any payment of
interest or principal beyond any grace period provided in the Conversion and
Note Agreement, time being of the essence, including payments due on maturity,
then a late charge by way of damages will be immediately due and payable. Maker
recognizes that a default by Maker in making the payments under this Note and
under the Conversion and Note Agreement on or before the due date thereof will
result in Holder incurring additional expense in servicing the loan evidenced by
this Note and the other Unsecured Note outstanding under the Conversion and Note
Agreement, in a loss to Holder of the use of the money due and in frustration to
Holder in meeting its loan commitments. Maker agrees that if, for any reason,
Maker fails to pay the amounts due under this Note or under the Conversion and
Note Agreement on or before the due date thereof and such failure continues
beyond any such grace period, Holder will be entitled to damages for the
detriment caused thereby, but that it is extremely difficult and impractical to
ascertain the extent of such damages. Maker therefore agrees that a sum equal to
five cents ($.05) for each dollar ($1.00) of each payment which becomes and
remains delinquent is a reasonable estimate of the damages to Holder, which sum
Maker agrees to pay on demand.
If any suit or action is instituted to collect this Note or any part thereof, or
if it is placed in the hands of an attorney for collection, Maker promises and
agrees to pay reasonable attorneys' fees, court costs and fees of Holder or any
agent of Holder.
Maker and all endorsers or guarantors hereof and all others who may become
liable for all or any part of this obligation agree hereby to be jointly and
severally bound, and they jointly and severally waive and renounce, to the
extent permitted by law, demand, protest, notice of nonpayment (other than for
such notices as are expressly set forth in the Conversion and Note Agreement)
and any and all lack of diligence or delays in collection or enforcement
thereof, and expressly consent to any extension of time, release of any party
liable for this obligation, or any other indulgence or forbearance whatsoever.
Any such extension, release, indulgence or forbearance may be made without
notice to such party and without in any way affecting the liability of such
party.
Presentment for payment, demand, protest and notice of demand, notice of
dishonor and notice of non-payment, and all other notices not expressly provided
for herein or in the Conversion and Note Agreement, are hereby waived by Maker.
No failure to accelerate the debt evidenced hereby by reason of an Event of
Default, acceptance of a past due installment, or indulgence granted from time
to time will be construed (i) as a novation of this Note or as a reinstatement
of the indebtedness evidenced hereby or as a waiver of such right of
acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or of any other right granted hereunder by the laws of the
State of Georgia. Maker hereby expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing. No
extension of time for the payment of this Note or any installment due hereunder,
made by agreement with any person now or hereafter liable for the payment of
this Note, will operate to release, discharge, modify, change or affect the
original liability, if any, of Maker under this Note, either in whole or in
part. This Note may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
Notwithstanding any provision herein or in the Conversion and Note Agreement to
the contrary, it is not the intention of Holder to charge or collect, nor shall
there at any time be charged or become due and payable hereunder, any interest
(whether based on the Coupon Interest Rate or otherwise) which would result in a
rate of interest being charged which is in excess of the maximum rate, if any,
now permitted by law for this transaction to be charged; and in the event that
any sum in excess of the maximum rate of interest is paid or charged, the same
shall be deemed to have been a prepayment of principal (which prepayment shall
be permitted, and be without Prepayment Premium or penalty) when paid, and all
payments made thereafter shall be appropriately applied to interest and
principal to give such effect to the maximum rate permitted by law, and after
such application, any excess payment shall be immediately refunded to Maker.
If during the term of this Note the maximum rate of interest, if any, now
permitted by law for this transaction to be charged should be increased, then
for so long as such increase is in effect, the applicable maximum rate permitted
to be charged as referred to in the paragraph immediately preceding will be
deemed to be such increased rate. If such maximum rate of interest, if any, now
permitted by law to be charged for this transaction should be deleted so that
there would be no such maximum rate, then for purposes of this Note there will
thereafter be no maximum rate limiting the amount that can be charged.
This Note is intended as a contract under, and will be construed and enforced in
accordance with, the laws of the State of Georgia or the laws of the United
States of America, when and where applicable (including, without limitation, any
federal usury ceiling or other federal law preempting state usury laws, which
law, from time to time, may be applicable to the indebtedness evidenced hereby),
as Holder may elect.
As used herein, the terms "Maker" and "Holder" will be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action by the parties or by the operation of law.
Any and all notices, demands or requests provided for or permitted to be given
pursuant to this Note will be given in the manner described in Section 7.02 of
the Conversion and Note Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Note as
of the date first above written.
MAKER:
GABLES REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Gables GP, Inc., a Texas corporation,
its sole general partner
By: /s/ Marvin R. Banks, Jr.
-------------------------
Name: Marvin R. Banks, Jr.
-------------------------
Title: Vice President
-------------------------
GABLES - TENNESSEE PROPERTIES, a
Tennessee general partnership
By: Gables GP, Inc., a Texas corporation,
a general partner
By: /s/ Marvin R. Banks, Jr.
-------------------------
Name: Marvin R. Banks, Jr.
-------------------------
Title: Vice President
-------------------------
FIRST AMENDMENT TO TERM LOAN
THIS FIRST AMENDMENT TO TERM LOAN (this "First Amendment") is dated as of the
5th day of August, 1997 among GABLES REALTY LIMITED PARTNERSHIP (the
"Borrower"), WACHOVIA BANK, N.A., as Agent (the "Agent"), and WACHOVIA BANK,
N.A., (the "Bank');
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and the Bank executed and delivered that
certain Term Loan, dated as of the 15th day of November, 1996 (the "Credit
Agreement");
WHEREAS, the Borrower has requested and the Agent and the Bank have agreed to
certain amendments to the Credit Agreement, subject to the terms and conditions
hereof;
NOW, THEREFORE, for and in consideration of the above premises and other good
and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged by the parties hereto, the Borrower, the Agent and the Bank hereby
covenant and agree as follows:
1. Definitions. Unless otherwise specifically defined herein, each term used
herein which is defined in the Credit Agreement shall have the meaning
assigned to such term in the Credit Agreement. Each reference to "hereof",
"hereunder", "herein" and "hereby" and each other similar reference and
each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall from and after the date hereof
refer to the Credit Agreement as amended hereby.
2. Amendments.
2.1. Amendment to Section 2.05. Section 2.05 of the Credit Agreement is hereby
amended by deleting such Section in its entirety and by substituting
therefor the following:
SECTION 2.05. Interest Rates. (a) "Applicable Margin" means (i) for the period
commencing on the Closing Date to and including the first Performance Pricing
Determination Date, (x) for any Base Rate Loan, (0.25)%, and (y) for any
Euro-Dollar Loan, 0.80%; and (ii) from and after the first Performance Pricing
Determination Date, (x) for any Base Rate Loan, (0.25)% and (y) for each
Euro-Dollar Loan, the percentage determined on each Performance Pricing
Determination Date by reference to the table set forth below as to such type
of Loan and the Debt Rating for the quarterly or annual period ending
immediately prior to such Performance Pricing Determination Date; provided,
that (i) if there is no Debt Rating, the Applicable Margin for the Euro Dollar
Loans shall be based upon Level IV of the table if there is no Debt Rating, the
Applicable Margin for the Euro-Dollar Loans shall be based upon Level IV of the
table below, and (ii) for Euro-Dollar Loans in effect under the Original
Agreement on the Closing Date, the Applicable Margin in effect under the
Original Agreement shall continue to apply thereto for the remainder of the
Interest Period with respect thereto.
Level I Level II Level III Level IV
Debt BBB+ BBB BBB- less than BBB-
Rating or or or or
Baal Baa2 Baa3 less than Baa3
Applicable 0.675 0.80 0.95 1.15
Margin
In determining the amounts to be paid by the Borrower pursuant to Sections
2.05(b), and 2.06(a), the Borrower and the Bank shall refer to the Borrower's
Debt Rating from time to time. For purposes hereof, "Performance Pricing
Determination Date" shall mean each date on which the Debt Rating changes. Each
change in interest and fees as a result of a change in Debt Rating shall be
effective only for Loans (including Refunding Loans) which are made on or after
the relevant Performance Pricing Determination Date. All determinations
hereunder shall be made by the Agent unless the Bank or the Borrower shall
object to any such determination. The Borrower shall promptly notify the Agent
of any change in the Debt Rating.
(b) Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the Base Rate for such day less the Applicable
Margin. Such interest shall be payable for each Interest Period on the last day
thereof. Any overdue principal of and, to the extent permitted by applicable
law, overdue interest on any Base Rate Loan shall bear interest, payable upon
demand, for each day until paid at a rate per annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of the Applicable Margin plus the applicable Adjusted London
Interbank Offered Rate for such Interest Period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 1 month, at intervals of 1 month after the first day thereof. Any
overdue principal of and, to the extent permitted by law, overdue interest on
any Euro-Dollar Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any Interest Period
means a rate per annum equal to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan means for
the Interest Period of such Euro-Dollar Loan, the rate per annum determined on
the basis of the offered rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan offered for a term
comparable to such Interest Period, which rates appear on Telerate Page 3750
effective as of 11:00 A.M., London time, 2 Euro-Dollar Business Days prior to
the first day of such Interest Period, provided that if no such offered rates
appear on such page, the "London Interbank Offered Rate" for such Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher 1/100th of 1%) of rates quoted by not less than 2 major banks in New York
City, selected by the Agent, at approximately 10:00 A.M., New York City time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered by leading European banks for a period comparable to
such Interest Period in an amount equal or comparable to the principal amount of
such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as
a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement for a member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(d) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the Borrower and the Bank by
telecopier of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(e) After the occurrence and during the continuance of an Event of Default,
the principal amount of the Loans (and, to the extent permitted by applicable
law, all accrued interest thereon) may, at the election of the Bank, bear
interest at the Default Rate.
(f) Each Money Market Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Money Market Loan is made until
it becomes due, at a rate per annum equal to the applicable Money Market Rate
set forth in the relevant Money Market Quote. Such interest shall be payable on
the Stated Maturity Date thereof, and, if the Stated Maturity Date occurs more
than 90 days after the date of the relevant Money Market Loan, at intervals of
90 days after the first day thereof. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
2.2. Amendment to Section 9.01. Section 9.01 of the Credit Agreement is hereby
amended by deleting the first sentence of such Section in its entirety and
by substituting therefor the following:
SECTION 9.01. Notices. All notices, requests and other communications to either
party hereunder shall be in writing (including telecopier or similar writing)
and shall be given (i) to Lender and Agent, as Wachovia Bank, N.A., and (ii) to
Borrower, at the respective addresses and telecopier numbers set forth on the
signature pages hereof or at such other address or telecopier number as either
party may hereafter specify for the purpose of notice to the other party.
3. Restatement of Representations and Warranties. The Borrower hereby restates
and renews each and every representation and warranty heretofore made by it
in the Credit Agreement and the other Loan Documents as fully as if made on
the date hereof and with specific reference to this First Amendment and all
other loan documents executed and/or delivered in connection herewith.
4. Effect of Amendment. Except as set forth expressly hereinabove, all terms
of the Credit Agreement and the other Loan Documents shall be and remain in
full force and effect, and shall constitute the legal, valid, binding and
enforceable obligations of the Borrower. The amendments contained herein
shall be deemed to have prospective application only, unless otherwise
specifically stated herein.
5. Ratification. The Borrower hereby restates, ratifies and reaffirms each and
every term, covenant and condition set forth in the Credit Agreement and
the other Loan Documents effective as of the date hereof.
6. Counterparts. This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and
the same instrument.
7. Section References. Section titles and references used in this First
Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto
evidenced hereby.
8. No Default. To induce the Agent and the Bank to enter into this First
Amendment and to continue to make advances pursuant to the Credit
Agreement, the Borrower hereby acknowledges and agrees that, as of the date
hereof, and after giving effect to the terms hereof, there exists (i) no
Default or Event of Default and (ii) no right of offset, defense,
counterclaim, claim or objection in favor of the Borrower arising out of or
with respect to any of the Loans or other obligations of the Borrower owed
to the Bank under the Credit Agreement.
9. Further Assurances. The Borrower agrees to take such further actions as the
Agent and the Bank shall reasonably request in connection herewith to
evidence the amendments herein contained to the Borrower.
10. Governing Law. This First Amendment shall be governed by and construed and
interpreted in accordance with, the laws of the State of Georgia.
11. Conditions Precedent. This First Amendment shall become effective only upon
execution and delivery (i) of this First Amendment by each of the parties
hereto, and (ii) of the Consent and Reaffirmation of Guarantors at the end
hereof by each of the Guarantors.
IN WITNESS WHEREOF, the Borrower, the Agent and the Bank have caused this
First Amendment to be duly executed, under seal, by its duly authorized officer
as of the day and year first above written.
GABLES REALTY LIMITED PARTNERSHIP,
By: Gables GP, Inc.,
its sole general partner
By: /s/ Marvin R. Banks, Jr.
-----------------------------
Name: Marvin R. Banks, Jr.
-----------------------------
Title: Vice President
-----------------------------
WACHOVIA BANK, N.A.
as Agent and as a Bank
By: /s/ Mary F. Hughes
----------------------------
Name: Mary F. Hughes
----------------------------
Title: Vice President
-------------------------
CONSENT AND REAFFIRMATION OF GUARANTORS
Each of the undersigned (i) acknowledges receipt of the foregoing Amended and
Restated Credit Agreement (the "Replacement Agreement"), (ii) consents to the
execution and delivery of the Replacement Agreement by the parties thereto and
(iii) reaffirms all of its obligations and covenants under the Guaranty
Agreement dated as of November 15, 1996 executed by it, and agrees that none of
such obligations and covenants shall be affected by the execution and delivery
of the Replacement Agreement. In addition, (a) the General Partner certifies
that it is authorized to execute the Replacement Agreement on behalf of the
Borrower and to bind the Borrower thereby, that it is authorized to execute this
Consent and Reaffirmation of Guarantors on behalf of Gables-Tennessee Properties
and to bind Gables-Tennessee Properties hereby, that since November 15, 1996,
there has been no amendment to the Borrower's Certificate of Limited
Partnership, the Borrower's Partnership Agreement, the General Partner's
Certificate of Incorporation or the General Partner's Bylaws, and that each of
such documents, as in effect on November 15, 1996, continues in full force and
effect as of the date hereof and that since November 15, 1996, there has been no
amendment to its Partnership Agreement and that its Partnership Agreement, as in
effect on November 15, 1996 continues in full force and effect as of the date
hereof, except that the Partnership Agreement was amended on July 24, 1997, to
create preferred units in response to an issuance of preferred shares, and to
make other changes relating thereto; and (b) GBP hereby certifies that since
November 15, 1996, there has been no amendment to its Declaration of Trust or
its Bylaws, except as indicated in the Secretary's Certificate to the Agent, and
that each of such documents, as in effect on November 15, 1996, and as amended
as indicated in such Secretary's Certificate, continues in full force and effect
as of the date hereof.
This Consent and Reaffirmation may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
GABLES GP, INC.
By: /s/ Marvin R. Banks, Jr.
----------------------------
Marvin R. Banks, Jr.
----------------------------
Vice President
----------------------------
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
-----------------------------
Name: Marvin R. Banks, Jr.
-----------------------------
Title: Vice President
-----------------------------
GABLES-TENNESSEE PROPERTIES
By: Gables GP, Inc., its general partner
By: /s/ Marvin R. Banks, Jr.
-----------------------------
Name: Marvin R. Banks, Jr.
-----------------------------
Title: Vice President
-----------------------------
$175,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
August 5, 1997
among
GABLES REALTY LIMITED PARTNERSHIP
The Banks Listed Herein
and
WACHOVIA BANK, N.A.,
as Agent
TABLE OF CONTENTS
AMENDED AND RESTATED CREDIT AGREEMENT
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions......................................................1
SECTION 1.02. Accounting Terms and Determinations.............................18
SECTION 1.03. References......................................................18
SECTION 1.04. Use of Defined Terms............................................18
SECTION 1.05. Terminology.....................................................19
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend.............................................19
SECTION 2.02. Method of Borrowing.............................................19
SECTION 2.02A. Money Market Loans.............................................21
SECTION 2.03. Notes...........................................................25
SECTION 2.04. Maturity of Loans...............................................26
SECTION 2.05. Interest Rates..................................................27
SECTION 2.06. Fees............................................................29
SECTION 2.07. Optional Termination or Reduction of
Commitments.................................................30
SECTION 2.08. Mandatory Reduction and Termination of
Commitments.................................................30
SECTION 2.09. Optional Prepayments............................................31
SECTION 2.10. Mandatory Prepayments...........................................31
SECTION 2.11. General Provisions as to Payments...............................32
SECTION 2.12. Computation of Interest and Fees................................33
ARTICLE III.
LETTER OF CREDIT FACILITY
SECTION 3.01 Obligation to Issue.........................................33
SECTION 3.02 Types and Amounts...........................................34
SECTION 3.03 Conditions..................................................34
SECTION 3.04 Issuance of Letters of Credit...............................34
SECTION 3.05 Reimbursement Obligations; Duties of the Issuing Bank......36
SECTION 3.06 Participations..............................................37
SECTION 3.07 Payment of Reimbursement Obligations........................39
SECTION 3.08 Compensation for Letters of Credit and Agent
Reporting Requirements..................................40
SECTION 3.09 Indemnification; Exoneration................................40
SECTION 3.10 Credit Yield Protection; Capital Adequacy...................41
SECTION 3.11 Termination of Letter of Credit Facility....................44
ARTICLE IV
CONDITIONS TO BORROWINGS
SECTION 4.01. Conditions to First Borrowing...................................44
SECTION 4.02. Conditions to All Borrowings....................................46
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Partnership or Corporate Existence and Power....................47
SECTION 5.02. Partnership or Corporate and Governmental Authorization;
No Contravention..........................................47
SECTION 5.03. Binding Effect..................................................48
SECTION 5.04. Financial and Property Information..............................48
SECTION 5.05. No Litigation...................................................48
SECTION 5.06. Compliance with ERISA...........................................49
SECTION 5.07. Compliance with Laws; Payment of Taxes..........................49
SECTION 5.08. Subsidiaries....................................................49
SECTION 5.09. Investment Company Act..........................................49
SECTION 5.10. Public Utility Holding Company Act..............................49
SECTION 5.11. Ownership of Property...........................................50
SECTION 5.12. No Default......................................................50
SECTION 5.13. Full Disclosure.................................................50
SECTION 5.14. Environmental Matters...........................................50
SECTION 5.15. Partner Interests and Capital Stock.............................51
SECTION 5.16. Margin Stock....................................................51
SECTION 5.17. Insolvency......................................................51
SECTION 5.18. Insurance.......................................................52
SECTION 5.19. Estate Investment Trust.........................................52
ARTICLE VI
COVENANTS
SECTION 6.01. Information.....................................................52
SECTION 6.02. Inspection of Property, Books and Records.......................54
SECTION 6.03. Total Secured Debt..............................................55
SECTION 6.04. Ratio of Total Debt to Total Assets Value.......................55
SECTION 6.05. Interest Coverage...............................................55
SECTION 6.06. Restricted Payments.............................................55
SECTION 6.07. Loans or Advances...............................................55
SECTION 6.08. Purchases of Stock by Guarantors................................55
SECTION 6.09. Investments.....................................................56
SECTION 6.10. Dissolution.....................................................56
SECTION 6.11. Consolidations, Mergers and Sales of Assets.....................57
SECTION 6.12. Use of Proceeds.................................................58
SECTION 6.13. Compliance with Laws; Payment of Taxes..........................58
SECTION 6.14. Insurance.......................................................58
SECTION 6.15. Change in Fiscal Year...........................................58
SECTION 6.16. Maintenance of Property; Principal Business.....................59
SECTION 6.17. Environmental Notices...........................................59
SECTION 6.18. Environmental Matters...........................................59
SECTION 6.19. Environmental Release...........................................59
SECTION 6.20. Transactions with Affiliates....................................59
SECTION 6.21. Amendment of Other Agreements...................................59
SECTION 6.22. Qualification as a Real Estate Investment Trust;
General Partner...........................................60
<PAGE>
SECTION 6.23. Significant Subsidiaries to be Guarantors;
Election to Become Guarantor..............................60
SECTION 6.24. Certain Provisions Regarding Eligible
Properties................................................60
SECTION 6.25 Restrictions of Certain Additional Guarantees...................60
SECTION 6.26 Maintenance of Existence........................................60
SECTION 6.27 Ratio of Total Unencumbered Assets Value to
Unsecured Funded Debt.....................................61
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default...............................................61
SECTION 7.02. Notice of Default...............................................64
ARTICLE VIII
THE AGENT
SECTION 8.01. Appointment; Powers and Immunities..............................64
SECTION 8.02. Reliance by Agent...............................................65
SECTION 8.03. Defaults........................................................65
SECTION 8.04. Rights of Agent and its Affiliates as a Bank....................66
SECTION 8.05. Indemnification.................................................66
SECTION 8.06 Consequential Damages...........................................66
SECTION 8.07. Payee of Note Treated as Owner..................................66
SECTION 8.08. Nonreliance on Agent and Other Banks............................67
SECTION 8.09. Failure to Act..................................................67
SECTION 8.10. Resignation or Removal of Agent.................................67
SECTION 8.11 Agent's Right to Replace Non-Qualifying Bank.....................68
ARTICLE IX
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 9.01. Basis for Determining Interest Rate Inadequate or Unfair........69
SECTION 9.02. Illegality......................................................70
SECTION 9.03. Increased Cost and Reduced Return...............................70
SECTION 9.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans......71
SECTION 9.05. Compensation....................................................72
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices........................................................73
SECTION 10.02. No Waivers.....................................................73
SECTION 10.03. Expenses; Documentary Taxes....................................73
SECTION 10.04. Indemnification................................................73
SECTION 10.05. Sharing of Setoffs.............................................74
SECTION 10.06. Amendments and Waivers.........................................75
SECTION 10.07. No Margin Stock Collateral.....................................75
SECTION 10.08. Successors and Assigns.........................................76
SECTION 10.09. Confidentiality................................................78
SECTION 10.10. Representation by Banks........................................78
SECTION 10.11. Obligations Several............................................79
SECTION 10.12. Georgia Law....................................................79
SECTION 10.13. Severability...................................................79
SECTION 10.14. Interest.......................................................79
SECTION 10.15. Interpretation.................................................80
SECTION 10.16. Waiver of Jury Trial; Consent to Jurisdiction..................80
SECTION 10.17. Counterparts...................................................80
SECTION 10.18. Source of Funds -- ERISA.......................................81
SECTION 10.19. Entire Agreement...............................................81
SECTION 10.20. More Restrictive Agreements....................................81
EXHIBIT A-1 Form of Syndicated Loan Note
EXHIBIT A-2 Form of Money Market Loan Note
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H Form of Officer's Certificate
EXHIBIT I Form of Notice of Letter of Credit
EXHIBIT J Form of Borrowing Base Certificate
EXHIBIT K Form of Guaranty
EXHIBIT L Form of Contribution Agreement
EXHIBIT M Form of Money Market Quote Request
EXHIBIT N Form of Money Market Quote
Schedule 5.08 Subsidiaries
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 5, 1997 among
GABLES REALTY LIMITED PARTNERSHIP, the BANKS listed on the signature pages
hereof and WACHOVIA BANK, N.A., as Agent.
The parties hereto agree as follows:
This Amended and Restated Credit Agreement is an amendment and restatement
of the $175,000,000 Credit Agreement by and among the Borrower, Wachovia Bank of
Georgia, N.A. (now known as Wachovia Bank, N.A.), First Union National Bank of
Georgia (now known as First Union National Bank), Guaranty Federal Bank, F.S.B.,
AmSouth Bank and Commerzbank AG, Atlanta Agency, and Wachovia Bank of Georgia,
N.A., as the Administrative Agent, dated as of March 28, 1996, as amended prior
to the date hereof by First Amendment to Credit Agreement dated as of November
22, 1996 and Second Amendment to Credit Agreement dated as of March 19, 1997
(the "Original Agreement"), which is superseded hereby.
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The terms as defined in this Section 1.01 shall, for
all purposes of this Agreement and any amendment hereto (except as herein
otherwise expressly provided or unless the context otherwise requires), have the
meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Affiliate" of any relevant Person means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the relevant Person (a
"Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank, N.A., a national banking association organized
under the laws of the United States of America, in its capacity as agent for the
Banks hereunder, and its successors and permitted assigns in such capacity.
"Agent's Letter Agreement" means that certain letter agreement, dated as of June
24, 1997 between the Borrower and the Agent, but only as it relates to certain
fees from time to time payable by the Borrower to the Agent.
"Agreement" means this Credit Agreement, together with all amendments and
supplements hereto.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Assignee" has the meaning set forth in Section 10.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance executed in
accordance with Section 10.08(c) in the form attached hereto as Exhibit D.
"Authority" has the meaning set forth in Section 9.02.
"Bank" means each bank listed on the signature pages hereof as having a
Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate per annum equal
to the higher as of such day of (i) the Prime Rate, or (ii) three quarters of
one percent above the Federal Funds Rate. For purposes of determining the Base
Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear interest at a rate based
upon the Base Rate, and is to be made as a Base Rate Loan pursuant to the
applicable Notice of Borrowing, Section 2.02(f), or Article VIII, as applicable.
"Bond Related Mortgage" means a Mortgage on Eligible Property which is granted
(i) to an institutional trustee with respect to revenue bonds or similar
instruments, to which trustee a standby letter of credit is issued as credit
enhancement for such revenue bonds or similar instruments, (ii) to secure
obligations which are payable with the proceeds of a draw under such letter of
credit.
"Borrower" means Gables Realty Limited Partnership, a Delaware limited
partnership, and its successors and its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Syndicated Loans or Money
Market Loans. A Borrowing is a "Syndicated Borrowing" if such Loans are
Syndicated Loans, a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans
and a "Money Market Borrowing" if such Loans are Money Market Loans.
"Borrowing Base" means the sum of each of the following, as determined by
reference to the most recent Borrowing Base Certificate furnished pursuant to
Section 4.01(h) or Section 6.01(h), as applicable:
(i) an amount equal to the product of: (x) 7.22222; times (y) the Net Operating
Income for the 12 month period ending on the last day of the month just
ended prior to the date of determination, from each Eligible Property which
either was on average at least 90% Economically Occupied during, or with
respect to which the Construction Period Termination Date occurred prior to
the commencement of, such 12 month period; provided, that if an Eligible
Property satisfies the criteria set forth in both this clause (i) and in
clause (ii) below, it shall be included in the calculations only in this
clause (i); plus
(ii) an amount equal to the product of: (x) 28.88889; times (y) the Net
Operating Income for the 3 month period ending on the last day of the month
just ended prior to the date of determination, from each Eligible Property
with respect to which the Construction Period Termination Date did not
occur prior to the commencement of the 12 month period ending on the last
day of the month just ended prior to the date of determination; plus
(iii)an amount equal to the lesser of: (x) 50% of the aggregate amount of cash
expenditures (including indirect costs internally allocated in accordance
with GAAP) as of the last day of the month just ended prior to the date of
determination on all Eligible Properties which consist of Properties as to
which the Construction Period Termination Date has not occurred as of such
last day of the month just ended (provided, that no more than an aggregate
of $5,000,000 for all Eligible Properties shall be included for land on
which construction has not commenced); and (y) $50,000,000; less
(iv) the aggregate amount of all outstanding unsecured Consolidated Debt
including standby letters of credit, other than the outstanding balance
under this Agreement.
"Borrowing Base Certificate" means a certificate substantially in the form of
Exhibit J, duly executed by the chief financial officer of the General Partner,
setting forth in reasonable detail the calculations for each component of the
Borrowing Base, and certifying availability of funds sufficient to complete all
Eligible Properties then under construction.
"Capital Stock" means any nonredeemable capital stock or shares of beneficial
ownership of GBP or any Consolidated Subsidiary (to the extent issued to a
Person other than GBP), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C.9601 et.
seq. and its implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation and
Liability Inventory System established pursuant to CERCLA.
"Change in Control" shall mean the occurrence of any of the following: (i)more
than 50% of the outstanding voting common stock of GBP is owned, directly or
indirectly, by less than 6 "individuals" (as provided in Section 542(a)(2) of
the Code); or (ii) a majority of the Persons comprising the Board of Directors
of GBP shall during any 12 month period cease to serve on the Board of Directors
of GBP for any reason other than disability or death; or (iii) the Borrower or
any Guarantor shall fail to maintain their current partnership or corporate
status; or (iv) GBP shall fail to own at least 65% of the partnership interests
in the Borrower; or (v) the Borrower shall fail to own at least 99% of the
partnership interests in Gable-Tennessee Properties and Candlewood-Indian Creek,
L.P.
"Change of Law" shall have the meaning set forth in Section 9.02.
"Closing Certificate" has the meaning set forth in Section 4.01(e).
"Closing Date" means August 5, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
Federal tax code.
"Commitment" means, with respect to each Bank, (i) the amount set forth opposite
the name of such Bank on the signature pages hereof, and (ii) as to any Bank
which enters into any Assignment and Acceptance (whether as transferor Bank or
as Assignee thereunder), the amount of such Bank's Commitment after giving
effect to such Assignment and Acceptance, in each case as such amount may be
reduced from time to time pursuant to Sections 2.07 and 2.08.
"Compliance Certificate" has the meaning set forth in Section 6.01(c).
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Income Available for Debt Service" shall mean, calculated on a
consolidated basis, the sum of the Borrower's and its Subsidiaries': (i) net
income before minority interests and extraordinary items in accordance with
GAAP, plus (ii)depreciation and amortization, plus (iii) losses from sales or
joint ventures, plus (iv) increases in deferred taxes and other non-cash items,
minus (v) gains from sales or joint ventures, minus (vi) decreases in deferred
taxes and other non-cash items, plus (vii) interest expense and letter of credit
fees on tax exempt bonds and plus (viii) taxes (excluding ad valorem taxes).
"Consolidated Income Available for Distribution" means, in any calendar year,
the sum of the following for such calendar year, calculated on a consolidated
basis for the Borrower and its Subsidiaries: (i) Consolidated Income Available
for Debt Service, less (ii) interest expense and letter of credit fees on tax
exempt bonds (including fees payable with respect to the Letters of Credit
pursuant to Section 3.08), and less (iii) taxes (excluding ad valorem taxes and
taxes on gains described in clause (v) of the definition of Consolidated Income
Available for Debt Service).
"Consolidated Interest Expense" for any period means interest in respect of Debt
(excluding capitalized interest) of the Borrower or any of its Consolidated
Subsidiaries outstanding during such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity the
accounts of which, in accordance with GAAP, would be consolidated with those of
the Borrower in its consolidated financial statements as of such date.
"Consolidated Total Assets" means, at any time, the total assets of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis, as set
forth or reflected on the most recent consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries, prepared in accordance with GAAP.
"Contribution Agreement" means the Contribution Agreement of even date herewith
in substantially the form of Exhibit L to be executed by the Borrower and the
Guarantors.
"Construction Period Termination Date" means, with respect to construction of
Multi-Family Properties for Eligible Properties, the date which is 3 months
after the issuance of a permanent certificate of occupancy for the last unit of
such Multi-Family Property which is an Eligible Property.
"Controlled Group" means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Current Maturities of Long Term Debt" means all payments in respect of Long
Term Debt (other than Debt under this Agreement) that are required to be made
within one year from the date of determination, whether or not the obligation to
make such payments would constitute a current liability of the obligor under
GAAP, excluding, however, any such payment required to be made on the ultimate
maturity date of such Debt.
"Debt" of any Person means at any date, without duplication, (i) all obligations
of such Person for borrowed money, (ii) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (iii) all obligations
of such Person to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business, (iv)
all obligations of such Person as lessee under capital leases, (v) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts payable under a banker's acceptance, (vi) all Redeemable Preferred Stock
of such Person (in the event such Person is a corporation), (vii) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid or to be paid or to be paid under a letter of credit or similar
instrument, (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Debt Rating" means at any time whichever is the higher of the rating of the
Borrower's senior unsecured, unenhanced debt (or, if no such debt exists, its
issuer credit rating for debt of such type) by Moody's Investor Service or
Standard and Poor's (as such rating may change from time to time, either
pursuant to Section 2.05(f) or otherwise) (provided, that in the event of a
double or greater split rating, the rating immediately above the lower rating
shall apply), or if only one of them rates the Borrower's senior unsecured,
unenhanced debt, such rating.
"Default" means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the sum of 2% plus
the interest rate (including the Applicable Margin) which is applicable to such
Loan hereunder.
"Dollars" or "$" means dollars in lawful currency of the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Georgia are authorized by law to close (including,
without limitation, any day which is a federal banking holiday in the United
States of America).
"Economically Occupied" means, with respect to any Eligible Property or
Multi-Family Property and in reference to a specified percentage, that tenants
paying rental obligations are occupying at least the specified percentage of the
total number of units at such Eligible Property or Multi-Family Property, as the
case may be.
"Eligible Property" means a Multi-Family Property of the Borrower or any of the
Guarantors consisting of real estate as to which there is no Mortgage in
existence encumbering such Property, other than, if applicable, a Bond Related
Mortgage, and such Multi-Family Property is subject to no other Liens or
encumbrances, other than Permitted Encumbrances.
"Environmental Authority" means any foreign, federal, state, local or regional
government that exercises any form of jurisdiction or authority under any
Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders, approvals,
notices, registrations or other legal prerequisites for conducting the business
of the Borrower or any Subsidiary required by any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or orders
arising from or in any way associated with any Environmental Requirements,
whether or not entered upon consent, or written agreements with an Environmental
Authority or other entity arising from or in any way associated with any
Environmental Requirement, whether or not incorporated in a judgment, decree or
order.
"Environmental Liabilities" means any liabilities, whether accrued, contingent
or otherwise, arising from and in any way associated with any Environmental
Requirements.
"Environmental Notices" means notice from any Environmental Authority or by any
other person or entity, of possible or alleged noncompliance with or liability
under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative proceedings
arising from or in any way associated with any Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA or under any
applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to health,
safety or the environment and applicable to the Borrower, any Subsidiary or the
Properties, including but not limited to any such requirement under CERCLA or
similar state legislation and all federal, state and local laws, ordinances,
regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, or any successor law. Any reference to any provision of ERISA
shall also be deemed to be a reference to any successor provision or provisions
thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan which bears or is to bear interest at a rate
based upon the Adjusted London Interbank Offered Rate, and to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.05(d).
"Event of Default" has the meaning set forth in Section 7.01.
"Executive Officer" means any of the following officers of the General Partner:
the chairman, the president, the chief financial officer, the chief accounting
officer, any senior vice president and the secretary.
"Facility Fee" has the meaning set forth in Section 2.06(a).
"Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if
necessary, to the next higher 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (ii) if
such rate is not so published for any day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent on such day on such transactions,
as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Rate Loan" means any Euro-Dollar Loan or Money Market Loan.
"Fronting Fee" has the meaning ascribed to it in Section 3.08.
"Funded Debt" means, without duplication, Long-Term Debt plus Current Maturities
of Long-Term Debt.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.
"GBP" means Gables Residential Trust, a Maryland trust.
"General Partner" means the sole general partner of the Borrower (which, on the
Closing Date, is Gables GP, Inc.) or, if there is more than one such general
partner, the managing general partner of the Borrower.
"Guarantee" by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guaranty" means the Guaranty Agreement of even date herewith in substantially
the form of Exhibit K to be executed by the Guarantors, unconditionally and
jointly and severally Guaranteeing payment of the Loans, the Notes and all other
obligations of the Borrower to the Agent and the Banks hereunder, including
without limitation all principal, interest, fees, costs, and compensation and
indemnification amounts.
"Guarantors" means any one or more or all of the following, as the context shall
require: (i) GBP, Gables GP, Inc., a Texas corporation, Gables-Tennessee
Properties, a Tennessee general partnership; and (ii) any Significant Subsidiary
which becomes a Guarantor pursuant to Section 6.23; and (iii) any other
Subsidiary which elects to become a Guarantor pursuant to Section 6.23; in each
case subject to the provisions of the last sentence of Section 6.11.
"Hazardous Materials" includes, without limitation, (a) solid or hazardous
waste, as defined in the Resource Conservation and Recovery Act of 1980, 42
U.S.C.6901 et seq. and its implementing regulations and amendments, or in any
applicable state or local law or regulation, (b) "hazardous substance",
"pollutant", or "contaminant" as defined in CERCLA, or in any applicable state
or local law or regulation, (c) gasoline, or any other petroleum product or
by-product, including, crude oil or any fraction thereof, (d) toxic substances,
as defined in the Toxic Substances Control Act of 1976, or in any applicable
state or local law or regulation and (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide
Act of 1975, or in any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time.
"Interest Period" means: (1) with respect to each Euro-Dollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the first, second, third or sixth month thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (subject to paragraph (c) below) which would otherwise
end on a day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall, subject to
paragraph (c) below, end on the last Euro-Dollar Business Day of the
appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the Termination Date
and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (subject to paragraph (b) below) which would otherwise
end on a day which is not a Domestic Business Day shall be extended to the
next succeeding Domestic Business Day; and
(b) no Interest Period which begins before the Termination Date and would
otherwise end after the Termination Date may be selected.
(3) with respect to each Money Market Borrowing, the period commencing on the
date of such Borrowing and ending on the Stated Maturity Date or such other date
or dates as may be specified in the applicable Money Market Quote; provided
that:
(a) any Interest Period (subject to clause (b) below) which would otherwise end
on a day which is not a Domestic Business Day shall be extended to the next
succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the Termination Date
and would otherwise end after the Termination Date.
"Investment" means any investment in any Person, whether by means of purchase or
acquisition of obligations or securities of such Person, capital contribution to
such Person, loan or advance to such Person, making of a time deposit with such
Person, Guarantee or assumption of any obligation of such Person or otherwise.
"Lending Office" means, as to each Bank, its office located at its address set
forth on the signature pages hereof (or identified on the signature pages hereof
as its Lending Office) or such other office as such Bank may hereafter designate
as its Lending Office by notice to the Borrower and the Agent.
"Letter of Credit" means a commercial letter of credit issued by the Agent for
the account of the Borrower pursuant to Article III.
"Letter of Credit Fee" has the meaning ascribed to it in Section 3.08.
"Letter of Credit Obligations" means, at any particular time, the sum of (a) the
Reimbursement Obligations at such time, (b) the aggregate maximum amount
available for drawing under the Letters of Credit at such time and (c) the
aggregate maximum amount available for drawing under Letters of Credit the
issuance of which has been authorized by the Agent but which have not yet been
issued.
"Lien" means, with respect to any asset, any mortgage, deed to secure debt, deed
of trust, lien, pledge, charge, security interest, security title, preferential
arrangement which has the practical effect of constituting a security interest
or encumbrance, or encumbrance or servitude of any kind in respect of such asset
to secure or assure payment of a Debt or a Guarantee, whether by consensual
agreement or by operation of statute or other law, or by any agreement,
contingent or otherwise, to provide any of the foregoing. For the purposes of
this Agreement, the Borrower or any Subsidiary shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means a Base Rate Loan, Euro-Dollar Loan, Money Market Loan or Syndicated
Loan, and "Loans" means Base Rate Loans, Euro-Dollar Loans, Money Market Loans
or Syndicated Loans, or any or all of them, as the context shall require.
"Loan Documents" means this Agreement, the Notes, the Guaranty, the Contribution
Agreement, any other document evidencing, relating to or securing the Loans or
the Letters of Credit, and any other document or instrument delivered from time
to time in connection with this Agreement, the Notes or the Loans or the Letters
of Credit, as such documents and instruments may be amended or supplemented from
time to time.
"London Interbank Offered Rate" has the meaning set forth in Section 2.05(d).
"Long-Term Debt" means at any date any Consolidated Debt which matures (or the
maturity of which may at the option of the Borrower or any Consolidated
Subsidiary be extended such that it matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business or properties of GBP, the General Partner, the
Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Agent or the Banks under the Loan Documents, or the ability of
the Borrower to perform its obligations under the Loan Documents to which it is
a party, as applicable, or (c) the legality, validity or enforceability of any
Loan Document.
"Money Market Borrowing Date" has the meaning specified in Section 2.02A.
"Money Market Loan Notes" means the promissory notes of the Borrower,
substantially in the form of Exhibit A-2, evidencing the obligation of the
Borrower to repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Money Market Quote" has the meaning specified in Section 2.02A.
"Money Market Quote Request" has the meaning specified in Section 2.02A(b).
"Money Market Rate" has the meaning specified in Section 2.02A(c)(ii)(C).
"Mortgage" means a mortgage, deed to secure debt, deed of trust or similar
instrument.
"Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3) of
ERISA.
"Multi-Family Property" means residential apartment communities and undeveloped
land acquired for development thereof.
"Net Operating Income" means, for any Multi-Family Property, the portion of
Consolidated Income Available for Debt Service derived from such Multi-Family
Property (which calculation includes an assumed 4% for management services).
"Notes" means each of the Syndicated Loan Notes or Money Market Loan Notes, or
any or all of them, as the context shall require.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Officer's Certificate" has the meaning set forth in Section 4.01(f).
"Original Agreement" has the meaning set forth in the preamble hereto.
"Original Notes" means the Notes executed and delivered pursuant to the Original
Agreement.
"Participant" has the meaning set forth in Section 10.08(b).
"Partner Interests" means any partner interests in the Borrower, whether limited
or general.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
"Permitted Encumbrances" means, with respect to any Eligible Property included
in the Borrowing Base, (i) Liens incidental to the conduct of its business or
the ownership of its assets which (x) do not secure Debt and (y) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business, (ii) any Bond Related
Mortgage, and (iii) any other Liens and encumbrances expressly consented to by
the Agent.
"Performance Pricing Determination Date" has the meaning set forth in Section
2.05(a).
"Person" means an individual, a corporation, a partnership, an unincorporated
association, a trust or any other entity or organization, including, but not
limited to, a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by a member of the Controlled Group for
employees of any member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within the
preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and set by Wachovia
from time to time as an interest rate basis for borrowings. The Prime Rate is
but one of several interest rate bases used by Wachovia. Wachovia lends at
interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used or occupied
by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred stock issued by
such Person which is at any time prior to the Termination Date either (i)
mandatorily redeemable for cash (by sinking fund or similar payments or
otherwise) or (ii) redeemable for cash at the option of the holder thereof.
"Refunding Loan" means a new Syndicated Loan made on the day on which an
outstanding Syndicated Loan is maturing or a Base Rate Borrowing is being
converted to a Euro-Dollar Rate Borrowing, if and to the extent that the
proceeds thereof are used entirely for the purpose of paying such maturing Loan
or Loan being converted, excluding any difference between the amount of such
maturing Loan or Loan being converted and any greater amount being borrowed on
such day and actually either being made available to the Borrower pursuant to
Section 2.02(c) or remitted to the Agent as provided in Section 2.11, in each
case as contemplated in Section 2.02(d).
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Reimbursement Obligations" means the reimbursement or repayment obligations of
the Borrower to the Agent pursuant to Section 3.05 with respect to Letters of
Credit.
"Required Banks" means at any time Banks having at least 66 2/3% of the
aggregate amount of the Commitments or, if the Commitments are no longer in
effect, Banks holding at least 66 2/3% of the aggregate outstanding principal
amount of the sum of the (i) Syndicated Loans and (ii) Money Market Loans.
"Restricted Payment" means (i) any distribution on any Partner Interests (other
than distributions consisting solely of additional Partner Interests) or (ii)
any payment on account of the purchase, redemption, retirement or acquisition of
(a) any Partner Interests or (b) any option, warrant or other right to acquire
Partner Interests.
"Significant Subsidiary" means any Subsidiary which either (x) has assets which
constitute more than 5% of Consolidated Total Assets at the end of the most
recent Fiscal Quarter, or (y) contributed more than 5% of Consolidated Income
Available for Debt Service during the most recent Fiscal Quarter and the 3
Fiscal Quarters immediately preceding such Fiscal Quarter (or, with respect to
any Subsidiary which existed during the entire 4 Fiscal Quarter period but was
acquired by the Borrower during such period, which would have contributed more
than 5% of Consolidated Income Available for Debt Service during such period had
it been a Subsidiary for the entire period).
"Stated Maturity Date" means, with respect to any Money Market Loan, the Stated
Maturity Date therefor specified by the Bank in the applicable Money Market
Quote.
"Subsidiary" means (i) any corporation or other entity the majority of the
shares of the non-voting capital stock or other equivalent ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower and/or GBP, and the majority of the shares of
the voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Borrower, GBP, the General Partner, another Subsidiary, and/or one
or more of Marcus E. Bromley, John T. Rippel, Marvin R. Banks, Jr., C. Jordan
Clark and William M. Hammond (or, in the event of death or disability of any of
the foregoing individuals, his respective legal representative(s)), or such
individuals' successors in office as an officer of such Subsidiary or the
Secretary of such Subsidiary, and (ii) any other entity (other than GBP or the
Borrower) the accounts of which are consolidated with the accounts of the
Borrower.
"Syndicated Loans" means Base Rate Loans or Euro-Dollar Loans made pursuant to
the terms and conditions set forth in Section 2.01.
"Syndicated Loan Notes" means the promissory notes of the Borrower,
substantially in the form of Exhibit A-1, evidencing the obligation of the
Borrower to repay Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Taxes" has the meaning set forth in Section 2.11(c).
"Termination Date" means March 22, 1999, provided, that if any of the following
events occur, the Termination Date shall be such earlier date or later date as
is applicable pursuant to the following: (i) such later date to which it is
extended by the Banks pursuant to Section 2.04(b), in their sole and absolute
discretion; (ii) such earlier date on which the Commitments are terminated
pursuant to Section 2.08 following the occurrence of a Change in Control; (iii)
such earlier date on which the Commitments are terminated pursuant to Section
7.01 following the occurrence of an Event of Default; or (iv) such earlier date
on which the Borrower terminates the Commitments entirely pursuant to Section
2.07.
"Third Parties" means all lessees, sublessees, licensees and other users of the
Properties, excluding those users of the Properties in the ordinary course of
the Borrower's business and on a temporary basis.
"Total Assets Value" means the sum of:
(i) the quotient of (x) the Net Operating Income for the 12 month period ending
on the last day of the month just ended prior to the date of determination,
from each Multi-Family Property which either was on average at least 90%
Economically Occupied during, or with respect to which the Construction
Period Termination Date occurred prior to the commencement of, such 12
month period, divided by (y) 0.09; provided, that if an Eligible Property
satisfies the criteria set forth in both this clause(i) and in clause (ii)
below, it shall be included in the calculations only in clause (ii) below;
plus
(ii) an amount equal to the quotient of (x) 400% of the Net Operating Income for
the 3 month period ending on the last day of the month just ended prior to
the date of determination, from each Multi-Family Property with respect to
which the Construction Period Termination Date did not occur prior to the
commencement of the 12 month period ending on the last day of the month
just ended prior to the date of determination, divided by (y) 0.09; plus
(iii)an amount equal to 50% of the aggregate amount of cash expenditures
(including indirect costs internally allocated in accordance with GAAP) as
of the last day of the month just ended prior to the date of determination
on all Multi-Family Properties as to which the Construction Period
Termination Date has not occurred as of such last day of the month just
ended.
"Total Debt" shall mean the sum of (i) total liabilities of the Borrower and the
Guarantors, on a consolidated basis, plus (ii) the aggregate amount of Debt
Guaranteed by the Borrower, the Guarantors and the other Subsidiaries (other
than Guarantees which have been fully cash collateralized), plus the face amount
of all letters of credit for which any of the Borrower or the Guarantors is the
account party, determined at the end of the Borrower's most recent Fiscal
Quarter.
"Total Secured Debt" shall mean, without duplication, all Debt of the Borrower
and the Guarantors consisting of: (i) capitalized leases; (ii) money borrowed or
the deferred purchase price of real property which is also secured by a Mortgage
on any real property owned by the Borrower or any Guarantor; or (iii)
reimbursement obligations pertaining to any letter of credit.
"Total Unencumbered Assets Value" means Total Assets Value, but determined with
reference only to Multi-Family Properties which are not subject to a Mortgage,
other than the Arbor Crest project, the Arbor Knoll project and the Wood Arbor
project.
"Transferee" has the meaning set forth in Section 10.08(d).
"Unsecured Funded Debt" means any Funded Debt which is not secured by a Mortgage
on any Property, other than a Bond Related Mortgage.
"Unused Commitment" means at any date, with respect to any Bank, an amount equal
to its Commitment less the aggregate outstanding principal amount of its
Syndicated Loans(but not its Money Market Loans), plus the Letter of Credit
Obligations.
"Wachovia" means Wachovia Bank, N.A., a national banking association, and its
successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of the
non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Borrower and/or GBP, and all of the shares of the voting capital
stock or other equivalent ownership interests of which are at the time directly
or indirectly owned by the Borrower, GBP, another Wholly Owned Subsidiary,
and/or one or more of Marcus E. Bromley, John T. Rippel, Marvin R. Banks, Jr.,
C. Jordan Clark and William M. Hammond (or, in the event of death or disability
of any of the foregoing individuals, his respective legal representative(s)), or
such individuals' successors in office as an officer of such Subsidiary or the
Secretary of such Subsidiary.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Banks unless with
respect to any such change concurred in by the Borrower's independent public
accountants or required by GAAP, in determining compliance with any of the
provisions of this Agreement or any of the other Loan Documents: (i) the
Borrower shall have objected to determining such compliance on such basis at the
time of delivery of such financial statements, or (ii) the Required Banks shall
so object in writing within 30 days after the delivery of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under Section 6.01
hereof, shall mean the financial statements referred to in Section 5.04).
SECTION 1.03. REFERENCES. Unless otherwise indicated, references in this
Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
SECTION 1.04. USE OF DEFINED TERMS. All terms defined in this Agreement shall
have the same defined meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall require otherwise.
SECTION 1.05. TERMINOLOGY. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND.
(a) Syndicated Loans. Each Bank severally agrees, on the terms and conditions
set forth herein, to make Syndicated Loans to the Borrower from time to
time before the Termination Date; provided that,
(i) immediately after each such Syndicated Loan is made, the aggregate
outstanding principal amount of Syndicated Loans by such Bank shall
not exceed the amount of its Commitment, and
(ii) the aggregate outstanding principal amount of all Syndicated Loans,
Money Market Loans and the Letter of Credit Obligations shall not
exceed the lesser of (A) the aggregate amount of the Commitments and
(B) the Borrowing Base.
Each Syndicated Borrowing under this Section shall be in an aggregate
principal amount of $3,000,000 or any larger integral multiple of $500,000
(except that any such Syndicated Borrowing may be in the aggregate amount
of the Unused Commitments) and shall be made from the several Banks ratably
in proportion to their respective Commitments. Within the foregoing limits,
the Borrower may borrow under this Section, repay or, to the extent
permitted by Section 2.09, prepay Syndicated Loans and reborrow under this
Section at any time before the Termination Date.
SECTION 2.02. METHOD OF BORROWING.
(a) The Borrower shall give the Agent notice (a "Notice of Borrowing"), which
shall be substantially in the form of Exhibit E, prior to 10:00 A.M.
(Atlanta, Georgia time) on the same Domestic Business Day for each Base
Rate Borrowing and at least 3 Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing, (ii) the
aggregate amount of such Borrowing,
(iii)whether the Borrowing is to be a Base Rate Borrowing or a
Euro-Dollar Borrowing,
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each
Bank of the contents thereof and of such Bank's ratable share of such
Borrowing and such Notice of Borrowing, once received by the Agent, shall
not thereafter be revocable by the Borrower.
(c) Not later than 2:00 P.M. (Atlanta, Georgia time) on the date of each
Syndicated Borrowing (or, if the notice required to be given by the Agent
pursuant to paragraph (b) of this Section shall be given later than 12:00
Noon, Atlanta, Georgia time on the date of any Syndicated Borrowing, not
later than two (2) hours following the time such notice is given on the
date of each Syndicated Borrowing), each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address determined pursuant to
Section 10.01. Unless the Agent determines that any applicable condition
specified in Article IV has not been satisfied, the Agent will make the
funds so received from the Banks available to the Borrower at the Agent's
aforesaid address. Unless the Agent receives notice from a Bank, at the
Agent's address referred to in or specified pursuant to Section 10.01, no
later than 4:00 P.M. (local time at such address) on the Domestic Business
Day before the date of a Syndicated Borrowing stating that such Bank will
not make a Syndicated Loan in connection with such Syndicated Borrowing,
the Agent shall be entitled to assume that such Bank will make a Syndicated
Loan in connection with such Syndicated Borrowing and, in reliance on such
assumption, the Agent may (but shall not be obligated to) make available
such Bank's ratable share of such Syndicated Borrowing to the Borrower for
the account of such Bank. If the Agent makes such Bank's ratable share
available to the Borrower as provided above and such Bank does not in fact
make its ratable share of such Syndicated Borrowing available on such date,
the Agent shall be entitled to recover such Bank's ratable share from such
Bank or the Borrower (and for such purpose shall be entitled to charge such
amount to any account of the Borrower maintained with the Agent), together
with interest thereon for each day during the period from the date of such
Syndicated Borrowing until such sum shall be paid in full at a rate per
annum equal to the rate at which the Agent determines that it obtained (or
could have obtained) overnight Federal funds to cover such amount for each
such day during such period, provided that (i) any such payment by the
Borrower of such Bank's ratable share and interest thereon shall be without
prejudice to any rights that the Borrower may have against such Bank and
(ii) until such Bank has paid its ratable share of such Syndicated
Borrowing, together with interest pursuant to the foregoing, it will have
no interest in or rights with respect to such Syndicated Borrowing for any
purpose hereunder. If the Agent does not exercise its option to advance
funds for the account of such Bank, it shall forthwith notify the Borrower
of such decision.
(d) If any Bank makes a new Syndicated Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Syndicated Loan from
such Bank, such Bank shall apply the proceeds of its new Syndicated Loan to
make such repayment as a Refunding Loan and only an amount equal to the
difference (if any) between the amount being borrowed and the amount of
such Refunding Loan shall be made available by such Bank to the Agent as
provided in paragraph (c) of this Section, or remitted by the Borrower to
the Agent as provided in Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained in this Agreement, no
Euro-Dollar Borrowing or Money Market Borrowing may be made if there shall
have occurred a Default or an Event of Default, which Default or Event of
Default shall not have been cured or waived, and all Refunding Loans shall
be made as Base Rate Loans (but shall bear interest at the Default Rate, if
applicable).
(f) In the event that a Notice of Borrowing fails to specify whether the
Syndicated Loans comprising such Syndicated Borrowing are to be Base Rate
Loans or Euro-Dollar Loans, such Syndicated Loans shall be made as Base
Rate Loans. If the Borrower is otherwise entitled under this Agreement to
repay any Syndicated Loans maturing at the end of an Interest Period
applicable thereto with the proceeds of a new Borrowing, and the Borrower
fails to repay such Syndicated Loans using its own moneys and fails to give
a Notice of Borrowing in connection with such new Syndicated Borrowing, a
new Syndicated Borrowing shall be deemed to be made on the date such
Syndicated Loans mature in an amount equal to the principal amount of the
Syndicated Loans so maturing, and the Syndicated Loans comprising such new
Syndicated Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein, there shall not
be more than 8 Euro-Dollar Borrowings and Money Market Borrowings
outstanding at any given time.
SECTION 2.02A. MONEY MARKET LOANS.
(a) In addition to making Syndicated Borrowings, so long as the Debt Rating is
BBB- or Baa3 or higher, the Borrower may, as set forth in this Section
2.02A, request the Banks to make offers to make Money Market Borrowings
available to the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section 2.02A,
provided that:
(i) the number of interest rates applicable to Money Market Loans
which may be outstanding at any given time is subject to the
provisions of Section 2.02(g);
(ii) the aggregate principal amount of all Money Market Loans at any
one time outstanding shall not exceed an amount equal to 50% of
the aggregate amount of the Commitments of all of the Banks at
such time;
(iii)the aggregate principal amount of all Money Market Loans,
together with the aggregate principal amount of all Syndicated
Loans, at any one time outstanding shall not exceed the aggregate
amount of the Commitments of all of the Banks at such time; and
(iv) the Money Market Loans of any Bank will be deemed to be usage of
the Commitments for the purpose of calculating availability
pursuant to Section 2.01(a)(ii) and 2.02A(a)(iii), but will not
reduce such Bank's obligation to lend its pro rata share of the
remaining Unused Commitment.
(b) When the Borrower wishes to request offers to make Money Market Loans, it
shall give the Agent (which shall promptly notify the Banks) notice
substantially in the form of Exhibit M hereto (a "Money Market Quote
Request") so as to be received no later than 10:00 A.M. (Atlanta, Georgia
time) at least 2 Domestic Business Days prior to the date of the Money
Market Borrowing proposed therein (or such other time and date as the
Borrower and the Agent, with the consent of the Required Banks, may agree),
specifying:
(i) the proposed date of such Money Market Borrowing, which shall be
a Euro-Dollar Business Day (the "Money Market Borrowing Date");
(ii) the maturity date (or dates) (each a "Stated Maturity Date") for
repayment of each Money Market Loan to be made as part of such
Money Market Borrowing (which Stated Maturity Date shall be that
date occurring not less than 7 days but not more than 180 days
from the date of such Money Market Borrowing); provided that the
Stated Maturity Date for any Money Market Loan may not extend
beyond the Termination Date (as in effect on the date of such
Money Market Quote Request); and
(iii)the aggregate amount of principal to be requested by the Borrower
as a result of such Money Market Borrowing, which shall be at
least $3,000,000 (and in larger integral multiples of $1,000,000)
but shall not cause the limits specified in Section 2.02A(a) to
be violated.
The Borrower may request offers to make Money Market Loans having up to 3
different Stated Maturity Dates in a single Money Market Quote Request;
provided that the request for each separate Stated Maturity Date shall be
deemed to be a separate Money Market Quote Request for a separate Money
Market Borrowing. Except as otherwise provided in the immediately preceding
sentence, after the first Money Market Quote Request has been given
hereunder, no Money Market Quote Request shall be given until at least 5
Domestic Business Days after all prior Money Market Quote Requests have
been fully processed by the Agent, the Banks and the Borrower pursuant to
this Section 2.02A.
(c) (i) Each Bank may, but shall have no obligation to, submit a response
containing an offer to make a Money Market Loan substantially in the form
of Exhibit N hereto (a "Money Market Quote") in response to any Money
Market Quote Request; provided that, if the Borrower's request under
Section 2.02A(b) specified more than 1 Stated Maturity Date, such Bank may,
but shall have no obligation to, make a single submission containing a
separate offer for each such Stated Maturity Date and each such separate
offer shall be deemed to be a separate Money Market Quote. Each Money
Market Quote must be submitted to the Agent not later than 10:00 A.M.
(Atlanta, Georgia time) on the Money Market Borrowing Date; provided that
any Money Market Quote submitted by Wachovia may be submitted, and may only
be submitted, if Wachovia notifies the Borrower of the terms of the offer
contained therein not later than 9:45 A.M. (Atlanta, Georgia time) on the
Money Market Borrowing Date (or 15 minutes prior to the time that the other
Banks are required to have submitted their respective Money Market Quotes).
Subject to Section 6.01, any Money Market Quote so made shall be
irrevocable except with the written consent of the Agent given on the
instructions of the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed Money Market Borrowing Date and the Stated Maturity
Date therefor;
(B) the principal amounts of the Money Market Loan which the quoting
Bank is willing to make for the applicable Money Market Quote,
which principal amounts (x) may be greater than or less than the
Commitment of the quoting Bank, (y)shall be at least $3,000,000
or a larger integral multiple of $500,000 and (z) may not exceed
the principal amount of the Money Market Borrowing for which
offers were requested;
(C) the rate of interest per annum (rounded upwards, if necessary, to
the nearest 1/100th of 1%) offered for each such Money Market
Loan (such amounts being hereinafter referred to as the "Money
Market Rate"); and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money Market
Quote shall contain qualifying, conditional or similar language or propose
terms other than or in addition to those set forth in the applicable Money
Market Quote Request (other than setting forth the principal amounts of the
Money Market Loan which the quoting Bank is willing to make for the
applicable Interest Period) and, in particular, no Money Market Quote may
be conditioned upon acceptance by the Borrower of all (or some specified
minimum) of the principal amount of the Money Market Loan for which such
Money Market Quote is being made.
(d) The Agent shall as promptly as practicable after the Money Market Quote is
submitted (but in any event not later than 10:30 A.M. (Atlanta, Georgia
time)) on the Money Market Borrowing Date, notify the Borrower of the terms
(i) of any Money Market Quote submitted by a Bank that is in accordance
with Section 2.02A(c) and (ii) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request.
Any such subsequent Money Market Quote shall be disregarded by the Agent
unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Agent's notice to the
Borrower shall specify (A) the principal amounts of the Money Market
Borrowing for which offers have been received and (B) the respective
principal amounts and Money Market Rates so offered by each Bank
(identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on the Money Market
Borrowing Date, the Borrower shall notify the Agent of its acceptance or
nonacceptance of the offers so notified to it pursuant to Section 2.02A(d)
and the Agent shall promptly notify each Bank which submitted an offer. In
the case of acceptance, such notice shall specify the aggregate principal
amount of offers (for each Stated Maturity Date) that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided
that:
(i) the aggregate principal amount of each Money Market Borrowing may not
exceed the applicable amount set forth in the related Money Market
Quote Request;
(ii) the aggregate principal amount of each Money Market Loan comprising a
Money Market Borrowing shall be at least $3,000,000 (and in larger
integral multiples of $1,000,000) but shall not cause the limits
specified in Section 2.02A(a) to be violated; (iii) acceptance of
offers may only be made in ascending order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the Agent has advised the
Borrower that such offer fails to comply with Section 2.02A(c)(ii) or
otherwise fails to comply with the requirements of this Agreement
(including without limitation, Section 2.02A(a)).
If offers are made by 2 or more Banks with the same Money Market Rates for
a greater aggregate principal amount than the amount in respect of which
offers are accepted for the related Stated Maturity Date, the principal
amount of Money Market Loans in respect of which such offers are accepted
shall be allocated by the Borrower among such Banks as nearly as possible
in proportion to the aggregate principal amount of such offers.
Determinations by the Borrower of the amounts of Money Market Loans shall
be conclusive in the absence of manifest error.
(f) Any Bank whose offer to make any Money Market Loan has been accepted shall,
not later than 12:00 P.M. (Atlanta, Georgia time) on the Money Market
Borrowing Date, make the amount of such Money Market Loan allocated to it
available to the Agent at its address referred to in Section 9.01 in
immediately available funds. The amount so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made available to
the Borrower on such date by depositing the same, in immediately available
funds, not later than 2:00 P.M. (Atlanta, Georgia time), in an account of
such Borrower maintained with Wachovia.
(g) After any Money Market Loan has been funded, the Agent shall notify the
Banks of the aggregate principal amount of the Money Market Quotes received
and the highest and lowest rates included in such Money Market Quotes.
SECTION 2.03. NOTES.
(a) The Syndicated Loans of each Bank shall be evidenced by a single Syndicated
Loan Note payable to the order of such Bank for the account of its Lending
Office in an amount equal to the original principal amount of such Bank's
Commitment.
(b) The Money Market Loans made by any Bank to the Borrower shall be evidenced
by a single Money Market Loan Note payable to the order of such Bank for
the account of its Lending Office in an amount equal to 50% of the original
principal amount of the aggregate Commitments. (c) Upon receipt of each
Bank's Notes pursuant to Section 4.01, the Agent shall deliver such Notes
to such Bank. Each Bank shall record, and prior to any transfer of its
Notes shall endorse on the schedules forming a part thereof appropriate
notations to evidence, the date, amount and maturity of, and effective
interest rate for, each Loan made by it, the date and amount of each
payment of principal made by the Borrower with respect thereto, and such
schedules of each such Bank's Notes shall constitute rebuttable presumptive
evidence of the respective principal amounts owing and unpaid on such
Bank's Notes; provided that the failure of any Bank to make, or any error
in making, any such recordation or endorsement shall not affect the
obligation of the Borrower hereunder or under the Notes or the ability of
any Bank to assign its Notes. Each Bank is hereby irrevocably authorized by
the Borrower so to endorse its Notes and to attach to and make a part of
any Note a continuation of any such schedule as and when required. (d) In
the event of loss, theft, destruction, total or partial obliteration,
mutilation or inappropriate cancellation of a Note, the Borrower will
execute and deliver, in lieu thereof, a replacement Note identical in form
and substance to such Note and dated as of the date of such Note.
SECTION 2.04. MATURITY OF LOANS.
(a) Each Loan included in any Borrowing shall mature, and the principal amount
thereof and interest thereon shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding principal amount of the
Loans, if any, together with all accrued but unpaid interest thereon, if
any, shall be due and payable on March 22, 1999, unless the Termination
Date is otherwise extended by the Banks, in their sole and absolute
discretion. Upon the written request of the Borrower, which request shall
be delivered to the Agent at least 90 days prior to each Extension Date (as
such term is hereinafter defined), the Banks shall have the option (without
any obligation whatsoever so to do) of extending the then current
Termination Date for additional one-year periods from the then current
Termination Date on but not before each of May 28, 1997, May 28, 1998 and
May 28, 1999 (each, an "Extension Date"), but in no event shall the
Commitment of any Bank or any Loan hereunder be outstanding for a period
greater than three (3) years. Notwithstanding any request by the Borrower
as described in the foregoing sentence, in the event that a Bank chooses,
in its sole and absolute discretion, not to extend the Termination Date for
such an additional one-year period, notice shall be given by such Bank to
the Borrower and the Agent not more than 60 days but not less than 45 days
prior to the relevant Extension Date; provided, that the Termination Date
shall not be extended with respect to any of the Banks unless the Required
Banks are willing to extend the Termination Date and either (x) the
remaining Banks shall elect to purchase ratable assignments (without any
obligation so to do) from such terminating Bank (in the form of an
Assignment and Acceptance) in accordance with their respective percentage
of the remaining aggregate Commitments; provided, that, such Banks shall be
provided such opportunity (which opportunity shall allow such Banks at
least 30 days in which to make a decision) prior to the Borrower finding
another bank pursuant to the immediately succeeding clause (y); and,
provided, further, that, should any of the remaining Banks elect not to
purchase such an assignment, then, such other remaining Banks shall be
entitled to purchase an assignment from any terminating Bank which includes
the ratable interest that was otherwise available to such non-purchasing
remaining Bank or Banks, as the case may be, or (y) the Borrower shall find
another bank, acceptable to the Agent, willing to accept an assignment from
such terminating Bank (in the form of an Assignment and Acceptance) or (z)
the Borrower shall reduce the aggregate Commitments in an amount equal to
the Commitment of any such terminating Bank. Notwithstanding the foregoing,
if the Termination Date is not extended for an additional one year period
on each Extension Date, there shall be no further Extension Dates or
extensions of the Termination Date. If the Termination Date is extended for
an additional one year period on each Extension Date, the Borrower shall
pay to the Agent, for the ratable account of the remaining Banks, an
extension fee in an amount equal to 0.1% of the aggregate Commitments in
effect on the relevant Extension Date, which fee shall be payable on such
Extension Date.
SECTION 2.05. INTEREST RATES.
(a) "Applicable Margin" means (i) for the period commencing on the Closing Date
to and including the first Performance Pricing Determination Date, (x) for
any Base Rate Loan, (0.25)%, and (y) for any Euro-Dollar Loan, 0.80%; and
(ii) from and after the first Performance Pricing Determination Date, (x)
for any Base Rate Loan, (0.25)% and (y) for each Euro-Dollar Loan, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth below as to such type of Loan and the Debt
Rating for the quarterly or annual period ending immediately prior to such
Performance Pricing Determination Date; provided, that (i) if there is no
Debt Rating, the Applicable Margin for Euro-Dollar Loans shall be based
upon Level IV of the table below, and (ii) for Euro-Dollar Loans in effect
under the Original Agreement on the Closing Date, the Applicable Margin in
effect under the Original Agreement shall continue to apply thereto for the
remainder of the Interest Period with respect thereto.
Level I Level II Level III Level IV
------- -------- --------- --------
Debt Rating greater than or BBB+ BBB BBB- less than BBB-
equal to
or or or or
greater than or Baa1 Baa2 Baa3 less than Baa3
equal to
Applicable Margin 0.675 0.80 0.95 1.15
In determining the amounts to be paid by the Borrower pursuant to Sections
2.05(b), and 2.06(a), the Borrower and the Banks shall refer to the
Borrower's Debt Rating from time to time. For purposes hereof, "Performance
Pricing Determination Date" shall mean each date on which the Debt Rating
changes. Each change in interest and fees as a result of a change in Debt
Rating shall be effective only for Loans (including Refunding Loans) which
are made on or after the relevant Performance Pricing Determination Date.
All determinations hereunder shall be made by the Agent unless the Required
Banks or the Borrower shall object to any such determination. The Borrower
shall promptly notify the Agent of any change in the Debt Rating.
(b) Each Base Rate Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it becomes due,
at a rate per annum equal to the Base Rate for such day less the Applicable
Margin. Such interest shall be payable for each Interest Period on the last
day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per
annum equal to the sum of the Applicable Margin plus the applicable
Adjusted London Interbank Offered Rate for such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 1 month, at intervals of 1
month after the first day thereof. Any overdue principal of and, to the
extent permitted by law, overdue interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per
annum equal to the Default Rate. The "Adjusted London Interbank Offered
Rate" applicable to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the next higher
1/100th of 1%) by dividing (i) the applicable London Interbank Offered Rate
for such Interest Period by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage. The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan,
the rate per annum determined on the basis of the offered rate for deposits
in Dollars of amounts equal or comparable to the principal amount of such
Euro-Dollar Loan offered for a term comparable to such Interest Period,
which rates appear on Telerate Page 3750 effective as of 11:00 A.M., London
time, 2 Euro-Dollar Business Days prior to the first day of such Interest
Period, provided that if no such offered rates appear on such page, the
"London Interbank Offered Rate" for such Interest Period will be the
arithmetic average (rounded upward, if necessary, to the next higher
1/100th of 1%) of rates quoted by not less than 2 major banks in New York
City, selected by the Agent, at approximately 10:00 A.M., New York City
time, 2 Euro-Dollar Business Days prior to the first day of such Interest
Period, for deposits in Dollars offered by leading European banks for a
period comparable to such Interest Period in an amount equal or comparable
to the principal amount of such Euro-Dollar Loan. "Euro-Dollar Reserve
Percentage" means for any day that percentage (expressed as a decimal)
which is in effect on such day, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" (or in respect of any other category
of liabilities which includes deposits by reference to which the interest
rate on Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States office
of any Bank to United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the effective
date of any change in the Euro-Dollar Reserve Percentage.
(d) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the Borrower and the Banks
by telecopier of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(e) After the occurrence and during the continuance of an Event of Default, the
principal amount of the Loans (and, to the extent permitted by applicable
law, all accrued interest thereon) may, at the election of the Required
Banks, bear interest at the Default Rate.
(f) Each Money Market Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Money Market Loan is made
until it becomes due, at a rate per annum equal to the applicable Money
Market Rate set forth in the relevant Money Market Quote. Such interest
shall be payable on the Stated Maturity Date thereof, and, if the Stated
Maturity Date occurs more than 90 days after the date of the relevant Money
Market Loan, at intervals of 90 days after the first day thereof. Any
overdue principal of and, to the extent permitted by law, overdue interest
on any Money Market Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the Default Rate.
SECTION 2.06. FEES.
(a) The Borrower shall pay to the Agent, for the ratable account of each Bank,
a facility fee (the "Facility Fee") on the maximum amount of the aggregate
Commitments in effect for any relevant period, irrespective of usage,
calculated in the manner provided in Section 2.06(a)(ii), at a rate per
annum equal to (i) for the period commencing on the Closing Date to and
including the first Performance Pricing Determination Date, 0.15%, and (ii)
from and after the first Performance Pricing Determination Date, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth below and the Debt Rating for the
quarterly or annual period ending immediately prior to such Performance
Pricing Determination Date; provided, that if there is no Debt Rating, the
Facility Fee shall be based upon Level IV of the table below. The Facility
Fee shall accrue at all times from and including the Closing Date to but
excluding the Termination Date and shall be payable, in arrears, on each
March 31, June 30, September 30 and December 31 and on the Termination
Date.
Level I Level II Level III Level IV
------- -------- --------- --------
Debt Rating greater than or BBB+ BBB BBB- less than BBB-
equal to
or or or or
greater than or Baa1 Baa2 Baa3 less than Baa3
equal to
Facility Fee 0.125 0.15 0.15 0.15
(b) The Borrower shall pay to the Agent, for the account and sole benefit of
the Agent, such fees and other amounts at such times as set forth in the
Agent's Letter Agreement.
SECTION 2.07. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. The Borrower
may, upon at least 3 Domestic Business Days' notice to the Agent,terminate at
any time, or proportionately reduce the Unused Commit- ments from time to time
by an aggregate amount of at least $5,000,000 or any larger integral multiple of
$1,000,000. If the Commitments are terminated in their entirety, all accrued
fees (as provided under Section 2.06) shall be due and payable on the effective
date of such termination.
SECTION 2.08. MANDATORY REDUCTION AND TERMINATION OF COMMITMENTS. The
Commitments shall terminate on the Termination Date and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable on
such date. In the event of a Change in Control, the Agent (acting at the
direction of the Required Banks) may terminate the Commitments on a date
specified in a notice to the Borrower, which date (i) must be at least 3
Domestic Business Days following the date of such notice, and (ii) shall
constitute the Termination Date for all purposes hereunder.
SECTION 2.09. OPTIONAL PREPAYMENTS.
(a) The Borrower may, upon at least 2 Domestic Business Days' notice to the
Agent, prepay any Euro-Dollar Borrowing in whole at any time, or from time
to time in part in amounts aggregating at least $3,000,000 or any larger
integral multiple of $500,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment, plus the
amount of compensation determined to be due pursuant to Section 9.05, if
such prepayment is not made on the last of an Interest Period. Each such
optional prepayment shall be applied to prepay ratably the Euro-Dollar
Loans of the several Banks included in such Euro-Dollar Borrowing.
(b) The Borrower may, upon at least 1 Domestic Business Days' notice to the
Agent, prepay any Base Rate Borrowing in whole at any time, or from time to
time in part in amounts aggregating at least $ 3,000,000 or any larger
integral multiple of $500,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the Base Rate Loans
of the several Banks included in such Base Rate Borrowing.
(c) Upon receipt of a notice of prepayment pursuant to this Section 2.09, the
Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice, once received by
the Agent, shall not thereafter be revocable by the Borrower.
SECTION 2.10 MANDATORY PREPAYMENTS.
(a) On each date on which the Commitments are reduced pursuant to Section 2.07,
the Borrower shall repay or prepay such principal amount of the outstanding
Loans, if any (together with interest accrued thereon and any amount
required to be paid pursuant to Section 9.05(a)), as may be necessary so
that after such payment the aggregate unpaid principal amount of the Loans
does not exceed the aggregate amount of the Commitments as then reduced. On
the Termination Date, the Borrower shall make the payments required to be
made pursuant to Section 2.08.
(b) On each date on which the aggregate outstanding principal amount of all
Syndicated Loans, Money Market Loans and the Letter of Credit Obligations
exceeds the lesser of (A) the aggregate amount of the Commitments and (B)
the Borrowing Base (the "Excess"), the Borrower shall repay or prepay such
principal amount of the outstanding Loans, if any (together with interest
accrued thereon and any amount due under Section 9.05(a)), by the amount of
the Excess.
(c) Each such payment or prepayment shall be applied ratably to the Loans of
the Banks outstanding on the date of payment or prepayment in the following
order of priority:(i) first, to Base Rate Loans; (ii) secondly, to
Euro-Dollar Loans; and (iii) lastly, to Money Market Loans.
SECTION 2.11. GENERAL PROVISIONS AS TO PAYMENTS.
(a) The Borrower shall make each payment of principal of, and interest on, the
Loans and of fees hereunder, not later than 1:00 P.M. (Atlanta, Georgia
time) on the date when due, in Federal or other funds immediately available
in Atlanta, Georgia, to the Agent at its address referred to in Section
10.01. The Agent will promptly distribute to each Bank its ratable share of
each such payment received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the Base Rate Loans
or Money Market Loans or of fees hereunder shall be due on a day which is
not a Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any payment of
principal of or interest on, the Euro-Dollar Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business
Day.
(c) All payments of principal, interest and fees and all other amounts to be
made by the Borrower pursuant to this Agreement with respect to any Loan or
fee relating thereto shall be paid without deduction for, and free from,
any tax, imposts, levies, duties, deductions, or withholdings of any nature
now or at anytime hereafter imposed by any governmental authority or by any
taxing authority thereof or therein excluding in the case of each Bank,
taxes imposed on or measured by its net income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Bank is organized
or any political subdivision thereof and, in the case of each Bank, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that
the Borrower is required by applicable law to make any such withholding or
deduction of Taxes with respect to any Loan or fee or other amount, the
Borrower shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which such
deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to such Bank additional amounts as
may be necessary in order that the amount received by such Bank after the
required withholding or other payment shall equal the amount such Bank
would have received had no such withholding or other payment been made.
Each Bank which is not organized under the laws of the United States or any
state thereof agrees, as soon as practicable after receipt by it of a
request by the Borrower to do so, to file all appropriate forms and take
other appropriate action to obtain a certificate or other appropriate
document from the appropriate governmental authority in the jurisdiction
imposing the relevant Taxes, establishing that it is entitled to receive
payments of principal and interest under this Agreement and the Notes
without deduction and free from withholding of any Taxes imposed by such
jurisdiction; provided that if it is unable, for any reason, to establish
such exemption, or to file such forms and, in any event, during such period
of time as such request for exemption is pending, the Borrower shall
nonetheless remain obligated under the terms of the immediately preceding
paragraph.
In the event any Bank receives a refund of any Taxes paid by the Borrower
pursuant to this Section 2.11(c), it will pay to the Borrower the amount of
such refund promptly upon receipt thereof; provided that if at any time
thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower and the Banks
contained in this Section 2.11(c) shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the
payment in full or cancellation of the Notes.
SECTION 2.12. COMPUTATION OF INTEREST AND FEES. Interest on Base Rate Loans and
Money Market Loans shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day). Interest on Euro-Dollar Loans shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed, calculated as
to each Interest Period from and including the first day thereof to but
excluding the last day thereof. Commitment fees and any other fees payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
ARTICLE III.
LETTER OF CREDIT FACILITY
SECTION 3.01. OBLIGATION TO ISSUE. Subject to the terms and conditions of this
Agreement (including, without limitation, the provisions of Section 3.11,
providing for the termination of this Letter of Credit facility under the
circumstances provided therein), and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent shall issue for the
account of Borrower, in order to provide long-term credit enhancement and
short-term liquidity for tax-exempt bonds issued for projects of the Borrower,
one or more Letters of Credit denominated in Dollars, in accordance with this
Article III, from time to time during the period commencing on the Closing Date
and ending 3 Domestic Business Days prior to the Termination Date. The Agent
shall use commercially reasonable efforts to furnish such Letters of Credit in a
form which will satisfy any relevant credit rating agencies for the purpose of
obtaining a credit rating on such bonds. Termination of the Letter of Credit
facility pursuant to this Section 3.01 shall not reduce the Commitment of any
Bank hereunder.
SECTION 3.02. TYPES AND AMOUNTS. The Agent shall have no obligation to issue any
Letter of Credit at any time:
(a) if the aggregate maximum amount then available for drawing under Letters of
Credit, after giving effect to the issuance of the requested Letter of
Credit, shall exceed any limit imposed by law or regulation upon the Agent;
(b) if, after giving effect to the issuance of the requested Letter of Credit,
(i) the aggregate Letter of Credit Obligations would exceed $50,000,000, or
(ii) the sum of the aggregate Letter of Credit Obligations, plus the
aggregate principal amount of the Loans outstanding at such time, would
exceed the lesser of (A) the aggregate amount of the Commitments or (B) the
Borrowing Base;
(c) which has an expiration date later than 2 Domestic Business Days before the
Termination Date.
SECTION 3.03. CONDITIONS. In addition to being subject to the satisfaction of
the conditions contained in Article IV, the obligation of the Agent to issue any
Letter of Credit is subject to the satisfaction in full of the following
conditions:
(a) as of the date of issuance no order, judgment or decree of any court,
arbitrator or Authority shall purport by its terms to enjoin or restrain
the Agent from issuing the Letter of Credit and no law, rule or regulation
applicable to the Agent and no request or directive (whether or not having
the force of law) from any Authority with jurisdiction over the Agent shall
prohibit or request that the Agent refrain from the issuance of letters of
credit generally or the issuance of that Letter of Credit; and
(b) the Unused Commitment shall not be less than the amount of the requested
Letter of Credit.
SECTION 3.04. ISSUANCE OF LETTERS OF CREDIT.
(a) Request for Issuance. The Borrower has requested that the following Letters
of Credit be issued on the following dates to enhance the following revenue
bonds:
Issue Date Amount Bonds
---------- ------ -----
March 28, 1996 $7,305,809.00 Housing Authority of County of DeKalb,
Georgia Variable Rate Demand Multifamily
Housing Revenue Bonds (Wood Arbor Pro-
ject) Series 1985
March 28, 1996 $13,697,370.00 The Industrial Development Board of the
Metropolitan Government of Nashville
County Variable Rate Demand Multifamily
Housing Revenue Bonds (Arbor Knoll Pro -
ject) Series 1985
March 28, 1996 $13,032,946.00 The Industrial Development Board of the
Metropolitan Government of Davidson
County Variable Rate Demand Multifamily
Housing Revenue Bonds (Arbor Crest Pro-
ject) Series 1985
April 1, 1996 $11,784,054.80 Housing Authority of the City of Roswell
Variable Rate Demand Multifamily Housing
Revenue Refunding Bonds (Wood Crossing
Project)Series 1994
As to any other Letter of Credit, at least five Domestic Business Days
before the effective date for any Letter of Credit, the Borrower shall give
the Agent a written notice containing the original signature of an
authorized officer or employee of the Borrower. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of
Credit requested (which original face amount shall not be less than
$100,000), the effective date (which day shall be a Domestic Business Day)
of issuance of such requested Letter of Credit, the date on which such
requested Letter of Credit is to expire, the amount of then outstanding
Letter of Credit Obligations, the purpose for which such Letter of Credit
is to be issued, whether such Letter of Credit may be drawn in single or
partial draws, whether it is to be direct pay or standby in nature and the
person for whose benefit the requested Letter of Credit is to be issued.
(b) Issuance; Notice of Issuance. If the original face amount of the requested
Letter of Credit is less than or equal to the Unused Commitment at such
time and the applicable conditions set forth in this Agreement are
satisfied, the Agent shall issue the requested Letter of Credit. The Agent
shall give each Bank written or telex notice in substantially the form of
Exhibit D, or telephonic notice confirmed promptly thereafter in writing,
of the issuance of a Letter of Credit and shall deliver to each Bank in
connection with such notice a copy of the Letter of Credit issued by the
Agent.
(c) No Extension or Amendment. The Agent shall not extend or amend any Letter
of Credit if the issuance of a new Letter of Credit having the same terms
as such Letter of Credit as so amended or extended would be prohibited by
Section 3.02 or Section 3.03.
SECTION 3.05. REIMBURSEMENT OBLIGATIONS; DUTIES OF THE ISSUING BANK.
(a) Reimbursement. The Borrower agrees that:
(i) the Borrower shall reimburse the Agent for drawings under a Letter of
Credit issued by it no later than 1 Domestic Business Day after the
payment by the Agent;
(ii) in the event of any circumstances which prevent the Banks from making
Loans for the repayment of Reimbursement Obligations pursuant to
clause (iii) below, such Reimbursement Obligations shall bear interest
from the date of the relevant drawing under the pertinent Letter of
Credit until the date of payment in full thereof at a rate per annum
equal to (A) prior to the date that is 3 Domestic Business Days after
the date of the related payment by the Agent, the Base Rate and (B)
thereafter, the Default Rate; and
(iii)in order to implement the foregoing, upon the occurrence of a draw
under any Letter of Credit, unless the Agent is otherwise reimbursed
in accordance with subsection (i) above, the Borrower irrevocably
authorizes the Agent and the Banks to, and the Agent shall, treat such
nonpayment as a Notice of Borrowing in the amount of such
Reimbursement Obligation and make Loans to the Borrower in such amount
regardless of whether the conditions precedent to the making of Loans
hereunder have been met. The Borrower further authorizes the Agent to,
and the Agent shall, credit the proceeds of such Loan so as to
immediately eliminate the liability of the Borrower for Reimbursement
Obligations under such Letter of Credit. Any Loans made under this
Section 3.05(a) shall be Base Rate Loans, unless the Borrower
otherwise requests pursuant to a Notice of Borrowing submitted in
accordance with Section 2.02.
(b) Duties of the Agent. Any action taken or omitted to be taken by the Agent
in connection with any Letter of Credit, if taken or omitted in the absence
of willful misconduct or gross negligence, shall not put the Agent under
any resulting liability to any Bank, or assuming that the Agent has
complied with the procedures specified in Section 3.04 and such Bank has
not given a notice contemplated by Section 3.06(a) that continues in full
force and effect, relieve that Bank of its obligations hereunder to the
Agent. In determining whether to pay under any Letter of Credit, the Agent
shall have no obligation relative to the Banks other than to confirm that
any documents required to have been delivered under such Letter of Credit
appear to comply on their face, with the requirements of such Letter of
Credit.
SECTION 3.06. PARTICIPATIONS.
(a) Purchase of Participations. Immediately upon issuance by the Agent of any
Letter of Credit in accordance with the procedures set forth in Section
3.04, each Bank shall be deemed to have irrevocably and unconditionally
purchased and received from the Agent, without recourse or warranty, an
undivided interest and participation, to the extent of such Bank's ratable
share as set forth as the Commitment Percentage opposite its name on the
signature pages hereof, in such Letter of Credit (or guaranty pertaining
thereto); provided, that a Letter of Credit shall not be entitled to the
benefits of this Section 3.06 if the Agent shall have received written
notice from any Bank on or before the Domestic Business Day immediately
prior to the date of the Agent's issuance of such Letter of Credit that one
or more of the conditions contained in Section 3.03 or Article IV is not
then satisfied, and, in the event the Agent receives such a notice, it
shall have no further obligation to issue any Letter of Credit until such
notice is withdrawn by that Bank or until the Required Banks have
effectively waived such condition in accordance with the provisions of this
Agreement.
(b) Sharing of Letter of Credit Payments. In the event that the Agent makes any
payment under any Letter of Credit for which the Borrower shall not have
repaid such amount to the Agent pursuant to Section 3.07 hereof or which
cannot be paid by a Loan pursuant to subsection (iii) of Section 3.05, the
Agent shall promptly notify each Bank of such failure, and each Bank shall
promptly and unconditionally pay to the Agent such Bank's Commitment Share
of the amount of such payment in Dollars and in same day funds. If the
Agent so notifies such Bank prior to 10:00 A.M. (Atlanta, Georgia time) on
any Domestic Business Day, such Bank shall make available to the Agent its
Commitment Share of the amount of such payment on such Domestic Business
Day in same day funds. If and to the extent such Bank shall not have so
made its Commitment Share of the amount of such payment available to the
Agent, such Bank agrees to pay to the Agent forthwith on demand such amount
together with interest thereon, for each day from the date such payment was
first due until the date such amount is paid to the Agent at the Base Rate
for the first 3 days and thereafter at the Default Rate. The failure of any
Bank to make available to the Agent its Commitment Share of any such
payment shall neither relieve nor increase the obligation of any other Bank
hereunder to make available to the Agent its Commitment Share of any
payment on the date such payment is to be made.
(c) Sharing of Reimbursement Obligation Payments. Whenever the Agent receives a
payment on account of a Reimbursement Obligation, including any interest
thereon, as to which the Agent has received any payments from the Banks
pursuant to this Section 3.06, it shall promptly pay to each Bank which has
funded its participating interest therein, in Dollars and in the kind of
funds so received, an amount equal to such Bank's Commitment Share thereof.
Each such payment shall be made by the Agent on the Domestic Business Day
on which the funds are paid to such Person, if received prior to 10:00 am.
(Atlanta, Georgia time) on such Domestic Business Day, and otherwise on the
next succeeding Domestic Business Day.
(d) Documentation. Upon the request of any Bank, the Agent shall furnish to
such Bank copies of any Letter of Credit and other documentation relating
to Letters of Credit issued pursuant to this Agreement.
(e) Obligations Irrevocable. The obligations of the Banks to make payments to
the Agent with respect to a Letter of Credit shall be irrevocable, not
subject to any qualification or exception whatsoever and shall be made in
accordance with, but not subject to, the terms and conditions of this
Agreement under all circumstances (assuming that the Agent has issued such
Letter of Credit in accordance with Section 3.04 and such Bank has not
given a notice contemplated by Section 3.06(a) that continues in full force
and effect), including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
(ii) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, any Bank or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions;
(iii)any draft, certificate or any other document presented under the
Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; (v)
payment by the Agent under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(vi) payment by the Agent under any Letter of Credit against presentation
of any draft or certificate that does not comply with the terms of
such Letter of Credit, except payment resulting from the gross
negligence or willful misconduct of the Agent; or
(vii)any other circumstances or happenings whatsoever, whether or not
similar to any of the foregoing, except circumstances or happenings
resulting from the gross negligence or willful misconduct of the
Agent.
SECTION 3.07. PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) Payments to Issuing Bank. The Borrower agrees to pay to the Agent the
amount of all Reimbursement Obligations, interest and other amounts payable
to the Agent under or in connection with any Letter of Credit issued for
such Borrower's account immediately when due, provided that the Agent has
acted in good faith and with reasonable care, irrespective of:
(i) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
(ii) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, any Bank or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions;
(iii)any draft, certificate or any other document presented under the
Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(v) payment by the Agent under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(vi) payment by the Agent under any Letter of Credit against presentation
of any draft or certificate that does not comply with the terms of
such Letter of Credit, except payment resulting from the gross
negligence or willful misconduct of the Agent; or
(vii)any other circumstances or happenings whatsoever, whether or not
similar to any of the foregoing, except circumstances or happenings
resulting from the gross negligence or willful misconduct of the
Agent.
(b) Recovery or Avoidance of Payments. In the event any payment by or on behalf
of the Borrower received by the Agent with respect to a Letter of Credit
and distributed by the Agent to the Banks on account of their
participations is thereafter set aside, avoided or recovered from the Agent
in connection with any receivership, liquidation or bankruptcy proceeding,
each Bank that received such distribution shall, upon demand by such Agent,
contribute such Bank's Commitment Share of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by the
Agent upon the amount required to be repaid by it.
SECTION 3.08. COMPENSATION FOR LETTERS OF CREDIT AND AGENT REPORTING
REQUIREMENTS.
(a) Letter of Credit Fees; Fronting Fees. The Borrower shall pay to the Agent
with respect to each Letter of Credit issued hereunder a quarterly letter
of credit fee ("Letter of Credit Fee") equal to 0.90% per annum of the face
amount of such Letter of Credit, and a quarterly fronting fee equal to
0.10% per annum of the face amount of such Letter of Credit (the "Fronting
Fee"), in each case payable on the Domestic Business Day on which such
Letter of Credit is issued and quarterly in advance. Letter of Credit Fees
and Fronting Fees payable hereunder shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed (including
the first day but excluding the last day). The Agent shall promptly remit
such Letter of Credit Fees, when paid, to the Banks in accordance with
their Commitment Shares thereof. The Fronting Fees shall be solely for the
account of the Agent.
(b) Agent Charges. The Borrower shall pay to the Agent, solely for its own
account, the standard charges assessed by the Agent in connection with the
issuance, administration, amendment and payment or cancellation of Letters
of Credit issued hereunder, which charges shall be those typically charged
by the Agent to its customers generally having credit and other
characteristics similar to the Borrower, as determined in good faith by the
Agent.
SECTION 3.09. INDEMNIFICATION; EXONERATION.
(a) Indemnification. In addition to amounts payable as elsewhere provided in
this Article III, the Borrower shall protect, indemnify, pay and save the
Agent and each Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees, provided that, notwithstanding anything
contained in O.C.G.A. 13-1-11(9)(2) to the contrary, the Agent and the
Banks shall not be entitled to collect more than attorneys' fees actually
incurred) which the Agent, or any Bank may incur or be subject to as a
consequence of the issuance of any Letter of Credit for the Borrower's
account other than as a result of its gross negligence or willful
misconduct, or, as to the Agent, unless it has not has acted in good faith
and with reasonable care, in each case as determined by a court of
competent jurisdiction, and subject to the provisions of Section 3.09(c).
(b) Assumption of Risk by Borrower. Subject to the provisions of Section
3.09(c), as between the Borrower, the Agent (provided that it has acted in
good faith and with reasonable care) and the Banks, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued for such Borrower's account by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
the Agent and the Banks shall not be responsible for (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of the Letters of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason, (iii) failure
of the beneficiary of a Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit, (iv)errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher, for errors in interpretation of technical terms, (vi)
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any Letter of Credit or of the proceeds
thereof, (vii) the misapplication by the beneficiary of a Letter of Credit
of the proceeds of any drawing under such Letter of Credit; and (viii) any
consequences arising from causes beyond the control of the Agent and the
Banks.
(c) Exoneration. In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth (including but not limited to
Section 3.07(a)), any action taken or omitted by the Agent under or in
connection with the Letters of Credit or any related certificates if taken
or omitted in good faith and with reasonable care, shall not put the Agent
or any Bank under any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to any such Person.
SECTION 3.10. CREDIT YIELD PROTECTION; CAPITAL ADEQUACY. If the adoption after
the date hereof of any applicable law, statute, rule, regulation, ordinance,
writ, injunction, decree, order, judgment, guideline or decision of any
Authority ("Governmental Rule"), any change after the date hereof in any
interpretation or administration of any applicable Governmental Rule by any
Person charged with its interpretation or administration or compliance by the
Agent or any Bank (or its Lending Office) with any request or directive (whether
or not having the force of law) of any such Person:
(a) shall subject the Agent or any Bank (or its Lending Office) to any tax
(other than overall net income, gross income, excise, franchise or similar
taxation), duty or other charge with respect to any amount drawn on any
Letter of Credit or its obligation to make any payment under the Letters of
Credit, or to maintain the Letters of Credit, or shall change the basis of
taxation (other than overall net income, gross income, excise, franchise or
similar taxation) of payments to the Agent or any Bank (or its Lending
Office) of any amounts due under this Agreement or any amount drawn on the
Letters of Credit; or
(b) shall impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System or any Person regulating banking activities or banking companies),
special deposit or similar requirements against assets of, deposits with or
for the account of, credit extended by, letters of credit issued or
maintained by, or collateral subject to a lien in favor of the Agent or any
Bank (or its Lending Office), or shall impose on the Agent or any Bank (or
its Lending Office) any other condition affecting any amount drawn on the
Letters of Credit, or its obligation to make any payment under the Letters
of Credit, as the case may be, or to maintain the Letters of Credit; then
the remaining provisions of this Section 3.10 shall apply. If the result of
any of the foregoing (without regard to whether the Agent or any Bank shall
have sold participations in its respective obligations under this
Agreement) is to increase the cost to or to impose a cost on the Agent or
any Bank (or its Lending Office) of making or maintaining any amounts
payable hereunder, of maintaining the Letters of Credit, or to reduce the
amount of any sum received or receivable by the Agent or any Bank (or its
Lending Office) under any Letter of Credit, then:
(i) the Agent or such Bank shall promptly deliver to the Borrower a
certificate stating the change which has occurred or the reserve
requirements or other conditions which have been imposed on the Agent
or such Bank (or its Lending Office) or the request, direction or
requirement with which it has complied, together with the effective
date thereof; and
(ii) the Borrower shall pay to the Agent or such Bank within 15 days of
written request (which request shall state the amount of increased
cost, reduction or payment and the way in which such amount has been
calculated), such amount or amounts as will compensate the Agent or
such Bank for the additional cost, reduction of return or payment
incurred by the Agent or such other Bank and, at the option of the
Borrower at any time while the Agent or such Bank is requesting such
additional amount or amounts, upon the giving of notice to the Bank
and payment to such Bank of all amounts owing to such Bank hereunder,
the Borrower may require such Bank to enter into an Assignment and
Assumption Agreement pursuant to which such Bank shall transfer all of
its rights and interests hereunder and under the other Loan Documents
to a third party selected by the Borrower and consented to by the
Agent. If such written request is given within 30 days after the event
which results in such increased cost, reduction of return or reduction
of payments, such amounts will be calculated from the date of such
event; otherwise, such amounts will be calculated as of the date on
which the Agent or such Bank makes the aforesaid written request. The
written request of the Agent or such Bank as to the additional amounts
payable pursuant to this paragraph delivered to the Borrower shall be
conclusive evidence of the amount thereof in the absence of manifest
error.
(c) If any Bank shall have determined that after the date hereof the adoption
of any applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any Authority, has or would have the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations hereunder
to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank pursuant to a certificate described in paragraph (d) below, the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction.
(d) Each Bank will promptly notify the Borrower and the Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder and including a
reasonable summary of the methods used in making the calculation, shall be
conclusive in the absence of manifest error. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
(e) The provisions of this Section 3.10 shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 3.11. TERMINATION OF LETTER OF CREDIT FACILITY. Notwithstanding any
provision of this Article III or any other provision of this Agreement to the
contrary, the parties contemplate that Wachovia may establish a letter of credit
facility separate and apart from this Agreement. Upon the establishment thereof,
Wachovia will give to the Agent, the Banks and the Borrower a written notice to
the effect that such separate letter of credit facility has been established.
Upon (but not until) the giving of such notice, (i) the definitions of "Letter
of Credit", "Letter of Credit Fee", "Letter of Credit Obligations" and
"Reimbursement Obligations", and Exhibit I, shall be deleted (but without
relettering the other Exhibits) and all references thereto and provisions with
respect thereto shall be ignored and have no further force or effect, (ii) the
Letter of Credit facility and all of the provisions of Article III shall
terminate (but without renumbering any of the other Articles) and be of no
further force and effect, and (iii) the Banks shall have no further risk
participations in any letters of credit under this Agreement.
ARTICLE IV
CONDITIONS TO BORROWINGS
SECTION 4.01. CONDITIONS TO FIRST BORROWING. The obligation of each Bank to make
a Syndicated Loan on the occasion of the first Borrowing or of the Agent to
issue the first Letter of Credit, whichever occurs first, is subject to the
satisfaction of the conditions set forth in Section 4.02 and receipt by the
Agent of the following (as to the documents described in paragraphs (a), (c),(d)
and (e) below, in sufficient number of counterparts for delivery of a
counterpart to each Bank and retention of one counterpart by the Agent),
provided, that so long as the Consent and Reaffirmation of Guarantors set forth
after the signature pages hereof is executed and delivered, for purposes hereof,
the conditions set forth in paragraphs (b) (but only with respect to the
Guaranty and the Contribution Agreement), (c), (d), (f), (h), and (i) (but only
with respect to the fees payable pursuant to Section 3.08) shall be deemed to
have been satisfied by the execution and delivery thereof in connection with the
Original Agreement and need not be satisfied in connection with this Agreement,
and such paragraphs are retained herein solely for historical reference and for
purposes of Section 6.23 and references in the forms of Guaranty and
Contribution Agreement to certain requirements contained in paragraph (f):
(a) from each of the parties hereto of either (i) a duly executed counterpart
of this Agreement signed by such party or (ii) a facsimile transmission of
such executed counterpart, with the original to be sent to the Agent by
overnight courier);
(b) a duly executed Syndicated Loan Note and Money Market Loan Note for the
account of each Bank complying with the provisions of Section 2.03 and a
duly executed Guaranty and Contribution Agreement, and from each Bank which
holds any of the Original Notes, such Original Notes,;
(c) an opinion letter (i) (together with any opinions of local counsel relied
on therein) of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., counsel for
the Borrower, dated as of the Closing Date, in form and substance
satisfactory to the Agent in its reasonable discretion, the forms attached
hereto as Exhibit B and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Bank may reasonably
request;
(d) an opinion of Jones, Day, Reavis & Pogue, special counsel for the Agent,
dated as of the Closing Date, substantially in the form of Exhibit C and
covering such additional matters relating to the transactions contemplated
hereby as the Agent may reasonably request;
(e) a certificate (the "Closing Certificate") substantially in the form of
Exhibit G), dated as of the Closing Date, signed by an Executive Officer
(other than the Secretary), to the effect that (i) no Default has occurred
and is continuing on the date of the first Borrowing and (ii) the
representations and warranties of the Borrower contained in Article V are
true on and as of the date of the first Borrowing hereunder;
(f) all documents which the Agent or any Bank may reasonably request relating
to the existence of the Borrower, the corporate authority for and the
validity of this Agreement, the Notes and the Guaranty, and any other
matters relevant hereto, all in form and substance satisfactory to the
Agent, including, without limitation, certificates of incumbency of the
General Partner and of each Guarantor, signed by the Secretary or an
Assistant Secretary of the General Partner substantially in the form of
Exhibit H (the "Officer's Certificate") and each Guarantor, certifying as
to the names, true signatures and incumbency of the officer or officers of
the General Partner and Guarantor authorized to execute and deliver the
Loan Documents on behalf of the Borrower or Guarantor, and certified copies
of the following items: (i) the Borrower's Certificate of Limited
Partnership; (ii) the Borrower's Partnership Agreement, (iii) for the
General Partner, its Certificate of Incorporation and its Bylaws, (v) for
GBP, its Declaration of Trust and Bylaws (vi) for the General Partner, a
certificate of the Secretary of State of Texas as to its valid existence as
a Texas corporation, (vii) for Gables - Tennessee Properties, its
Partnership Agreement; (viii) certificates of good standing or valid
existence or other equivalent certificate of the Borrower, the General
Partner, GBP and Gables - Tennessee Properties, as a foreign general or
limited partnership or foreign corporation, as the case may be, in each
other jurisdiction in which it is required to be qualified and (vii) the
action taken by the Board of Directors of the General Partner and each
Guarantor authorizing (A) on behalf of the Borrower, the execution,
delivery and performance of this Agreement, the Notes and the other Loan
Documents to which the Borrower is a party, and (B) on behalf of each
Guarantor, the execution, delivery and performance of the Guaranty;
(g) a Notice of Borrowing or notification pursuant to Section 2.02A(e)of
acceptance of one or more Money Market Quotes, as the case may be;
(h) receipt of the initial Borrowing Base Certificate, showing the Borrowing
Base as of the Closing Date; and
(i) receipt of the fees required to be paid on the Closing Date pursuant to
Sections 2.06 and 3.08.
SECTION 4.02. CONDITIONS TO ALL BORROWINGS. The obligation of each Bank to make
a Syndicated Loan or Money Market Loan, as the case may be, on the occasion of
each Borrowing is subject to the satisfaction of the following conditions except
as expressly provided in the last sentence of this Section 4.02:
(a) receipt by the Agent of a Notice of Borrowing or notification pursuant to
Section 2.02A(e) of acceptance of one or more Money Market Quotes, as
applicable.
(b) the fact that, immediately before and after such Borrowing or issuance of a
Letter of Credit, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Borrower contained
in Article V of this Agreement shall be true on and as of the date of such
Borrowing; and
(d) the fact that, immediately after such Borrowing or issuance of a Letter of
Credit, the conditions set forth in clauses (i) and (ii) of Section 2.01
shall have been satisfied.
Each Syndicated Borrowing and each Money Market Borrowing hereunder shall
be deemed to be a representation and warranty by the Borrower on the date
of such Borrowing as to the truth and accuracy of the facts specified in
paragraphs (b), (c) and (d) of this Section; provided that if such
Borrowing is a Syndicated Borrowing which consists solely of a Refunding
Loan, such Borrowing shall not be deemed to be such a representation and
warranty to the effect set forth in Section 5.04(b) as to any event, act or
condition having a Material Adverse Effect which has theretofore been
disclosed in writing by the Borrower to the Banks.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower and (by incorporation by reference in the Guaranty) the Guarantors,
as expressly stated, each represent and warrant that:
SECTION 5.01. PARTNERSHIP OR CORPORATE EXISTENCE. The Borrower is a limited
partnership duly created and validly existing under the laws of Delaware, GBP is
a trust duly created, validly existing and in good standing under the laws of
Maryland, the General Partner is a corporation duly organized, validly existing
and in good standing under the laws of Texas, and each of the foregoing is duly
qualified to transact business in every jurisdiction where, by the nature of its
business, such qualification is necessary, and has all partnership powers and
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except where any such failure does not
have and is not reasonably expected to cause a Material Adverse Effect.
SECTION 5.02. PARTNERSHIP OR CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents and by the Guarantors of the
Guaranty (i) are within the Borrower's partnership powers and the Guarantor's
respective corporate powers, (ii) have been duly authorized by all necessary
partnership or corporate action, (iii) require no action by or in respect of or
filing with, any governmental body, agency or official, other than filings
required by federal or state securities laws with respect to this Agreement (iv)
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of limited partnership or partnership
agreement of the Borrower or the articles of incorporation or by-laws of any
Guarantor or of any material agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrower, any Guarantor or any other
Subsidiaries, and (v) do not result in the creation or imposition of any Lien on
any asset of the Borrower, any Guarantor or any other Subsidiaries.
SECTION 5.03. BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of the Borrower enforceable in accordance with its terms, and the
Notes, the Guaranty and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower and the Guarantors parties thereto, enforceable in accordance with
their respective terms, provided that the enforceability hereof and thereof is
subject in each case to general principles of equity and to bankruptcy,
insolvency and similar laws affecting the enforcement of creditors' rights
generally.
SECTION 5.04. FINANCIAL AND PROPERTY INFORMATION.
(a) The balance sheet of GBP and the consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of December 31, 1996 and the related
consolidated statements of income, shareholders' equity and cash flows for
the Fiscal Year then ended, in the case of GBP reported on by Arthur
Andersen LLP, copies of which have been delivered to each of the Banks, and
the unaudited financial statement of GBP and consolidated financial
statements of the Borrower for the interim period ended March 31, 1997,
copies of which have been delivered to each of the Banks, fairly present,
in all material respects, in conformity with GAAP, subject in the case of
quarterly statements to normal year end audit adjustments, the consolidated
financial position of GBP and the Borrower and its Consolidated
Subsidiaries, respectively, as of such dates and their consolidated results
of operations and cash flows for such periods stated.
(b) Since December 31, 1996, there has been no event, act, condition or
occurrence having a Material Adverse Effect.
(c) All material information concerning the Properties which has been furnished
to the Banks by the Borrower is true and correct in all material respects.
SECTION 5.05. NO LITIGATION. There is no action, suit or proceeding pending, or
to the knowledge of the Executive Officers, threatened, against or affecting the
Borrower, any Guarantor or any other Subsidiaries before any court or arbitrator
or any governmental body, agency or official which has or is reasonably expected
to cause a Material Adverse Effect or which in any manner draws into question
the validity of or is reasonably expected to impair the ability of the Borrower
or any Guarantor to perform its obligations under, this Agreement, the Notes,
the Guaranty or any of the other Loan Documents.
SECTION 5.06. COMPLIANCE WITH ERISA.
(a) The Borrower and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA,
except where any such failure does not involve an aggregate amount in
excess of $2,500,000.
(b) Neither the Borrower nor any member of the Controlled Group is or ever has
been obligated to contribute to any Multiemployer Plan.
SECTION 5.07. COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Borrower, the
Guarantors and the other Subsidiaries are in compliance with all applicable
laws, regulations and similar requirements of governmental authorities, except
where (i) such compliance is being contested in good faith through appropriate
proceedings or (ii) any failure to comply does not have and is not reasonably
expected to cause a Material Adverse Effect. There have been filed on behalf of
the Borrower, the Guarantors and the other Subsidiaries all Federal, state and
local income, excise, property and other tax returns which are required to be
filed by them and all taxes due pursuant to such returns or pursuant to any
assessment received by or on behalf of the Borrower, the Guarantors or any other
Subsidiary have been paid, except: (A) ad valorem taxes not due and payable; and
(B) other liabilities, if (1) they are being contested in good faith and against
which the Borrower, Guarantor or Subsidiary has set up reserves in accordance
with GAAP, or (2) the aggregate amount involved is not in excess of $2,500,000.
The charges, accruals and reserves on the books of the Borrower, the Guarantors
and the other Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower and the Guarantors, adequate. United States
income tax returns of GBP for the 1994 Fiscal Year have been timely filed. GBP
has received no written communication from the Internal Revenue Service
regarding such returns.
SECTION 5.08. SUBSIDIARIES. The Borrower has no Subsidiaries except for those
Subsidiaries listed on Schedule 5.08, as supplemented from time to time, which
accurately sets forth each such Subsidiary's complete name and jurisdiction of
incorporation.
SECTION 5.09. INVESTMENT COMPANY ACT. Neither the Borrower, the Guarantors nor
any other Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 5.10 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower, any
Guarantor nor any Subsidiary is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 5.11. OWNERSHIP OF PROPERTY. Each of the Borrower, the Guarantors and
the Subsidiaries has title to its properties sufficient for the conduct of its
business, except where any such failure does not have and is not reasonably
expected to cause a Material Adverse Effect.
SECTION 5.12. NO DEFAULT. Neither the Borrower, the Guarantors nor any of the
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which has or is reasonably expected to cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
SECTION 5.13. FULL DISCLOSURE. All information heretofore furnished by the
Borrower or any Guarantor to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrower to the Agent or any
Bank will be, true, accurate and complete in all material respects or based on
reasonable estimates on the date as of which such information is stated or
certified. The Borrower and the Guarantors have disclosed to the Banks in
writing any and all facts which have had or are reasonably expected to cause a
Material Adverse Effect.
SECTION 5.14. ENVIRONMENTAL MATTERS.
(a) Neither the Borrower, the Guarantors nor any other Subsidiary is, to the
knowledge of the Executive Officers, subject to any Environmental Liability
which has had or is reasonably expected to cause a Material Adverse Effect
and neither the Borrower, the Guarantors nor any other Subsidiary has been
designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA, except as disclosed in writing to the
Agent (and the Agent shall promptly furnish a copy of any such disclosure
to the Banks). None of the Properties has been identified on any current or
proposed (i) National Priorities List under 40 C.F.R. 300, (ii) CERCLIS
list or (iii) any list arising from a state statute similar to CERCLA,
except as disclosed in writing to the Agent.
(b) No Hazardous Materials have been permitted or are being permitted to be
used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at, on, in
or under the Properties, or, to the best of the knowledge of the Executive
Officers, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
stored, disposed of, managed, or otherwise handled in all material respects
in compliance with all applicable Environmental Requirements and except as
disclosed in writing to the Agent.
(c) The Borrower, each Guarantor and each of the Subsidiaries, has procured all
Environmental Authorizations necessary for the conduct of its business, and
is in compliance with all Environmental Requirements (including, to the
best knowledge of the Executive Officers, with respect to any Environmental
Releases) in connection with the operation of the Properties and the
Borrower's, each Guarantor's and each other Subsidiary's respective
businesses, except where any such failure to comply does not have and is
not reasonably expected to cause a Material Adverse Effect.
SECTION 5.15. PARTNER INTERESTS AND CAPITAL STOCK. All Partner Interests and
Capital Stock, debentures, bonds, notes and all other securities of the
Borrower, each Guarantor and each of the other Subsidiaries presently issued and
outstanding are validly and properly issued in accordance with all applicable
laws, including, but not limited to, the "Blue Sky" laws of all applicable
states and the federal securities laws, except where any such failure to comply
does not and is not reasonably expected to cause a Material Adverse Effect. The
issued shares of Capital Stock of the Borrower's Wholly Owned Subsidiaries are
owned by the Borrower free and clear of any Lien or adverse claim. At least a
majority of the issued shares of non-voting Capital Stock of each of the
Borrower's other Subsidiaries is owned by the Borrower free and clear of any
Lien or adverse claim.
SECTION 5.16. MARGIN STOCK. Neither the Borrower, any Guarantor nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.
SECTION 5.17. INSOLVENCY. After giving effect to the execution and delivery of
the Loan Documents and the making of the Loans under this Agreement: (i) neither
the Borrower nor any Guarantor will (x) be "insolvent," within the meaning of
such term as used in O.C.G.A.18-2-22 or as defined in 101 of the "Bankruptcy
Code", or Section 2 of either the "UFTA" or the "UFCA", or as defined or used in
any "Other Applicable Law" (as those terms are defined below), or (y) be unable
to pay its debts generally as such debts become due within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section 6 of the
UFCA, or (z) have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated, within the meaning of Section 548
of the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA; and (ii)
the obligations of the Borrower under the Loan Documents and with respect to the
Loans will not be rendered avoidable under any Other Applicable Law. For
purposes of this Section 5.17, "Bankruptcy Code" means Title 11 of the United
States Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the
Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means any other
applicable state law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
SECTION 5.18. INSURANCE. The Borrower, each Guarantor and each of the
Subsidiaries has (either in the name of the Borrower, such Guarantor or in such
other Subsidiary's own name), with financially sound and reputable insurance
companies having an A.M. Best rating of B+ or better, insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies of established repute
engaged in the same or similar business.
SECTION 5.19. REAL ESTATE INVESTMENT TRUST. GBP is qualified under the Code as a
real estate investment trust.
ARTICLE VI
COVENANTS
The Borrower and (by incorporation by reference in the Guaranty) the Guarantors
agree that, so long as any Bank has any Commitment hereunder or any amount
payable hereunder or under any Note remains unpaid:
SECTION 6.01. INFORMATION. GBP and the Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the end of each
Fiscal Year, a consolidated balance sheet of GBP and its Consolidated
Subsidiaries as of the end of its Fiscal Year and the related consolidated
statements of income, shareholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all certified by Arthur Andersen LLP or other
independent public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications as to the scope
of the audit or as to the going concern nature of the business;
(b) as soon as available and in any event within 45 days after the end of each
of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated balance
sheet of GBP and its Consolidated Subsidiaries as of the end of such Fiscal
Quarter and the related statement of income and statement of cash flows for
such Fiscal Quarter and for the portion of the Fiscal Year ended at the end
of such Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding Fiscal Quarter and the corresponding portion
of the previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by an
Executive Officer;
(c) simultaneously with the delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, a certificate, substantially
in the form of Exhibit F (a "Compliance Certificate"), of an Executive
Officer (i) setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Sections 6.03 through 6.09, inclusive, and Sections 6.25 and 6.27, on the
date of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(d) within 5 Domestic Business Days after any Executive Officer becomes aware
of the occurrence of any Default, a certificate of an Executive Officer
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the holders of beneficial ownership in
GBP generally, copies of all financial statements, reports and proxy
statements so mailed;
(f) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form
S-8 or its equivalent) and annual, quarterly or monthly reports (excluding
Form 4, Statement of Changes in Beneficial Ownership, or its equivalent,
unless they reflect a Change in Control), any filing on Form 8-K, and any
filing pursuant to the Williams Act, which GBP shall have filed with the
Securities and Exchange Commission;
(g) if and when any member of the Controlled Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy of such
notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy
of such notice;
(h) within 45 Domestic Business Days after the end of each Fiscal Quarter, a
Borrowing Base Certificate as of the last day of the Fiscal Quarter just
ended; provided, however, that at the Borrower's election, Borrower may,
and or at the Agent's election on not less than 10 Domestic Business Days
notice, Borrower shall, submit a Borrowing Base Certificate to the Agent on
or before the twentieth Domestic Business Day after the end of the first or
second month in any Fiscal Quarter, as of the last day of such month;
(i) by April 1 of each year, a report as of the end of such Fiscal Year
containing the following information: (i) a schedule of all outstanding
Debt, showing for each component of Debt, the lender, the total commitment,
the total Debt outstanding, the interest rate, if fixed, or a statement
that the interest rate floats, the term, the required amortization (if any)
and the security (if any); (ii) a schedule of all interest rate protection
agreements, showing for each such agreement, the total dollar amount, the
type of agreement (i.e. cap, collar, swap, etc.) and the term thereof; and
(iii) a development schedule of the announced development pipeline,
including for each announced development project, the project name and
location, the number of units, the expected construction start date, the
expected date of delivery of the first units, the expected stabilization
date, and the total anticipated cost.
(j) from time to time such additional information regarding the financial
position or business of the Borrower and its Subsidiaries as the Agent, at
the request of any Bank, may reasonably request.
SECTION 6.02 INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Borrower and the
Guarantors will (i) keep, and cause each other Consolidated Subsidiary to keep,
proper books of record and account in which full, true and correct entries in
conformity with GAAP shall be made of all dealings and transactions in relation
to its business and activities; and (ii) permit, and cause each other
Consolidated Subsidiary to permit, representatives of any Bank at such Bank's
expense prior to the occurrence of a Default and at the Borrower's or such
Guarantor's expense after the occurrence and during the continuance of a Default
to visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower and the Guarantors
agree to cooperate and assist in such visits and inspections, in each case at
such reasonable times, upon reasonable prior notice to the Borrower or such
Guarantor and as often as may reasonably be desired.
SECTION 6.03. TOTAL SECURED DEBT. The amount of Total Secured Debt will not at
any time exceed 40% of Total Assets Value.
SECTION 6.04. RATIO OF TOTAL DEBT TO TOTAL ASSETS VALUE. The ratio of Total Debt
to Total Assets Value will not at any time exceed 0.55 to 1.00.
SECTION 6.05. INTEREST COVERAGE. The ratio of (x) Consolidated Income Available
for Debt Service to (y) Consolidated Interest Expense shall at all times exceed
2.00 to 1.0, calculated at the end of each Fiscal Quarter, based on the Fiscal
Quarter just ended and the immediately preceding three Fiscal Quarters.
SECTION 6.06. RESTRICTED PAYMENTS. The Borrower's Restricted Payments in any
calendar year shall not exceed 95% of Consolidated Income Available for
Distribution for such period, unless (i) the Borrower must pay out an amount in
excess of 95% of Consolidated Income Available for Distribution to permit GBP to
preserve its status as a real estate investment trust under the applicable
provision of the Code, or (ii) GBP declares one or more capital gains dividends
within such calendar year (in which event the amount of additional Restricted
Payments that may be made as a result of such declaration as provided in this
clause (ii) shall not exceed the greater of (A) the income tax liability of the
Borrower's partners with respect thereto and (B) $1,500,000). In the event that
the Borrower or GBP receives a public debt rating of BBB- or better from
Standard & Poors or Baa3 or better from Moody's Investor's Service and so long
as that rating is affirmed during each year, the Borrower's Restricted Payments
in any calendar year will be limited to 100% of Consolidated Income Available
for Distribution for such calendar year with the same exceptions contained in
clauses (i) and (ii) of this Section 6.06.
SECTION 6.07. LOANS OR ADVANCES. Neither the Borrower, the Guarantors nor any
other Subsidiary shall make loans or advances to any Person except: (i) deposits
required by government agencies or public utilities; (ii) loans and advances
made by Borrower or any Guarantor to any Guarantor or to Borrower; (iii) loans
or advances to directors, officers and employees in the ordinary course of
business in the aggregate outstanding at any time not exceeding $1,000,000; (iv)
loans or advances to employees in the ordinary course of business which are
secured by stock in GBP in the aggregate outstanding at any time not exceeding
$5,000,000; and (v) other loans or advances made in the ordinary course of
business in the aggregate outstanding at any time not exceeding 5% of the book
value of the total assets of the Borrower and its Consolidated Subsidiaries,
determined in accordance with GAAP minus all amounts outstanding under clause
(iii) of this Section 6.07 and minus Investments made and permitted pursuant to
Section 6.09(D); provided that after giving effect to the making of any loans,
advances or deposits permitted by clauses (i), (ii), (iii) or (iv), the Borrower
will be in full compliance with all the provisions of this Agreement.
SECTION 6.08. PURCHASES OF STOCK BY GUARANTORS. Except for purchases or
acquisitions of shares of GBP's Capital Stock made for purposes of having such
shares available for purchase by GBP shareholders pursuant to GBP's dividend
reinvestment and share purchase program known as "The Share Builder Plan", as
amended as of the Closing Date and, subject to the approval of the Required
Banks (not to be unreasonably withheld), as it may thereafter be amended, the
Guarantors shall not purchase or acquire any shares of GBP's Capital Stock
during any 12 month period in excess of 10% of all GBP's Capital Stock
outstanding on the first day of such period.
SECTION 6.09. INVESTMENTS. Neither the Borrower nor the Guarantors shall make
Investments in any Person except: (A) Investments in (i) direct obligations of
the United States Government, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Agent, (iii) commercial
paper rated A1 or the equivalent thereof by Standard & Poor's Corporation or P1
or the equivalent thereof by Moody's Investors Service, Inc. and in either case
maturing within 9 months after the date of acquisition, (iv) tender bonds the
payment of the principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term certificates of deposit
are rated at least AA or the equivalent thereof by Standard & Poor's Corporation
and Aa or the equivalent thereof by Moody's Investors Service, Inc., (v) insured
money market Investments and/or (vi) Investments in debt or equity securities
rated at least BBB+ or the equivalent thereof by Standard & Poor's Corporation
or at least Baa1 or the equivalent thereof by Moody's Investors Service not
exceeding an aggregate amount outstanding at any time of $25,000,000; (B)
Investments permitted by clauses (i), (ii) and (iii) of Section 6.07 or by
Section 6.08; (C) Investments in Significant Subsidiaries; and (D) other
Investments not exceeding an aggregate amount outstanding at any time 10% of the
book value of the total assets of the Borrower and its Consolidated
Subsidiaries, determined in accordance with GAAP, less loans and advances
outstanding and permitted by clause (iv) of Section 6.07.
SECTION 6.10 DISSOLUTION. Neither the Borrower, the Guarantors nor any of the
other Subsidiaries shall suffer or permit dissolution or liquidation either in
whole or in part or redeem or retire any shares of its own stock or that of any
Subsidiary, except to the extent permitted by Section 6.11 and except for
purchases by GBP of its own Capital Stock to the extent permitted by Section
6.08, and subject to the rights of limited partners of the Borrower to convert
or exchange their Partner Interests in the Borrower to stock in GBP.
SECTION 6.11. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The Borrower and the
Guarantors will not, nor will the Borrower permit any other Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise transfer all or
any substantial part of its assets to, any other Person, or discontinue or
eliminate any business line or segment, provided that
(a) the Borrower, any Guarantor and any other Subsidiary may merge with another
Person if (i) such Person was organized under the laws of the United States
of America or one of its states, (ii) the Borrower or such Guarantor or
other Subsidiary is the corporation surviving such merger and (iii)
immediately after giving effect to such merger, no Default shall have
occurred and be continuing,
(b) any Guarantor may merge with or transfer assets to another Guarantor or the
Borrower (with the Borrower as the survivor of any such merger) and any
other Subsidiary may merge with or transfer assets to a Guarantor, another
Subsidiary, or the Borrower (with the Borrower as the survivor of any such
merger), and
(c) the foregoing limitation on the sale, lease or other transfer of assets and
on the discontinuation or elimination of a business line or segment shall
not prohibit, during any Fiscal Quarter, a transfer of assets or the
discontinuance or elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the aggregate
assets to be so transferred or utilized in a business line or segment to be
so discontinued, when combined with all other assets transferred, and all
other assets utilized in all other business lines or segments discontinued,
during such Fiscal Quarter and the immediately preceding 3 Fiscal Quarters,
either (x) constituted more than 5% of Consolidated Total Assets at the end
of the Fiscal Quarter immediately preceding such Fiscal Quarter, or (y)
contributed more than 5% of Consolidated Income Available for Debt Service
during the 4 Fiscal Quarters immediately preceding such Fiscal Quarter.
In the case of any Subsidiary which transfers substantially all of its
assets pursuant to clause (c) of the preceding sentence, and in the case of
any Subsidiary the stock of which is being sold and with respect to which
clause (c) would have been satisfied if the transaction had been a sale of
assets of such Subsidiary, such Subsidiary may dissolve and, if it is a
Guarantor, such Subsidiaries shall be entitled to obtain from the Agent a
written release from the Guaranty, provided that it can demonstrate to the
reasonable satisfaction of the Agent that (A) it was not a Significant
Subsidiary immediately prior to such transfer of assets, and (B) it has
repaid in full all Debt owed to the Borrower or any other Guarantor which
was incurred after the Closing Date (or such Debt has been assumed by the
Borrower or a Significant Subsidiary), and upon obtaining such written
release, it shall no longer be a Guarantor for any purpose hereunder.
SECTION 6.12. USE OF PROCEEDS. The proceeds of the Loans may be used to provide
a line of credit for construction and acquisition financing and for general
corporate and partnership purposes of the Borrower and the Guarantors. No
portion of the proceeds of the Loans will be used by the Borrower or any
Guarantor (i) in connection with, whether directly or indirectly, any tender
offer for, or other acquisition of, stock of any corporation with a view towards
obtaining control of such other corporation, unless such tender offer or other
acquisition is to be made on a negotiated basis with the approval of the Board
of Directors of the Person to be acquired or (ii) for any purpose in violation
of any applicable law or regulation.
SECTION 6.13. COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Borrower and
Guarantors will, and will cause each of the other Subsidiaries and each member
of the Controlled Group to, comply with applicable laws (including but not
limited to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where (i) the necessity
of such compliance is being contested in good faith through appropriate
proceedings, or (ii) any failure to comply which does not have and is not
reasonably expected to cause a Material Adverse Effect. The Borrower and
Guarantors will, and will cause each of the other Subsidiaries to, pay promptly
when due all taxes, assessments, governmental charges, claims for labor,
supplies, rent and other obligations which, if unpaid, might become a Lien
against the Property of the Borrower, any Guarantor or any other Subsidiary,
except (A) liabilities being contested in good faith and against which, if
requested by the Agent, the Borrower, Guarantor or Subsidiary will set up
reserves in accordance with GAAP, and (B) liabilities in an aggregate amount for
all Properties not in excess of $1,000,000.
SECTION 6.14. INSURANCE. The Borrower and the Guarantors will maintain, and will
cause each of the other Subsidiaries to maintain (either in the name of the
Borrower or such Guarantor's or such other Subsidiary's own name), with
financially sound and reputable insurance companies having an A.M. Best rating
of B+ or better, insurance on all its property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar business.
SECTION 6.15. CHANGE IN FISCAL YEAR. The Borrower and the Guarantors will not,
and will cause the other Subsidiaries to not, change its Fiscal Year without the
consent of the Required Banks.
SECTION 6.16. MAINTENANCE OF PROPERTY; PRINCIPAL BUSINESS. The Borrower and the
Guarantors shall, and shall cause each other Subsidiary to, maintain all of its
properties and assets in good condition, repair and working order, ordinary wear
and tear excepted, and maintain all Multi-Family Property (other than Property
consisting of land acquired with existing improvements which are to be
substantially demolished) in a first class manner. The principal business
operations of the Borrower and the Subsidiaries, taken as a whole, will be
directly or indirectly related to Multi-Family Properties.
SECTION 6.17. ENVIRONMENTAL NOTICES. Promptly upon any Executive Officer's
becoming aware thereof, the Borrower and the Guarantors shall furnish to the
Banks and the Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, which
has had or is reasonably expected to cause a Material Adverse Effect.
SECTION 6.18. ENVIRONMENTAL MATTERS. The Borrower and the Guarantors will not,
and will cause the other Subsidiaries to not, and will not permit any Third
Party to, use, produce, manufacture, process, treat, recycle, generate, store,
dispose of, manage at, or otherwise handle, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials such as
cleaning solvents, pesticides and other materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed, managed, or otherwise
handled in compliance in all material respects with all applicable Environmental
Requirements.
SECTION 6.19. ENVIRONMENTAL RELEASE. The Borrower and the Guarantors agree that
upon any Executive Officer's becoming aware of the occurrence of an
Environmental Release at or on any of the Properties the Borrower will act
promptly to investigate the extent of, and to take appropriate action to
remediate such Environmental Release, whether or not ordered or otherwise
directed to do so by any Environmental Authority.
SECTION 6.20 TRANSACTIONS WITH AFFILIATES. Neither the Borrower, the Guarantors
nor any of the other Subsidiaries shall enter into, or be a party to, any
transaction with any Affiliate of the Borrower, such Guarantor or such other
Subsidiary (which Affiliate is not GBP, the Borrower, a Guarantor or a Wholly
Owned Subsidiary), except as permitted by law and in the ordinary course of
business and pursuant to reasonable terms which are no less favorable to
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person which is not an Affiliate.
SECTION 6.21. AMENDMENT OF OTHER AGREEMENTS. Within 90 days after the Closing
Date, the Borrower shall amend all other agreements pertaining to credit
facilities with any of the Banks so as to conform the financial covenants
contained therein to those contained in this Agreement.
SECTION 6.22 QUALIFICATIONS AS A REAL ESTATE INVESTMENT TRUST; GENERAL PARTNERS.
GBP shall at all times remain qualified under the Code as a real estate
investment trust and Gables GP, Inc. shall at all times be the General Partner.
The Borrower will not agree to amend or waive the requirements of Section 3.2 of
the limited partnership agreement of the Borrower, as in effect on the date of
this Agreement, as such requirements are applicable to the General Partner,
without the prior written consent of the Required Banks (which consent the Banks
hereby agree not to unreasonably withhold or delay).
SECTION 6.23. SIGNIFICANT SUBSIDIARIES TO BE GUARANTORS; ELECTION TO BECOME
GUARANTOR. Any Subsidiary (whether existing on the Closing Date or acquired or
created thereafter) (i) must become a Guarantor promptly upon becoming a
Significant Subsidiary, and (ii) may elect to become a Guarantor at any time if
it is not a Significant Subsidiary, in each case by (x) executing and delivering
to the Agent a counterpart of the Guaranty and a counterpart of the Contribution
Agreement, thereby becoming a party to each of them, (y) delivering to the Agent
an opinion of counsel to such Subsidiary, in form and substance satisfactory to
the Agent in its reasonable discretion, the form attached hereto as Exhibit B
(being one such satisfactory form, but limited to such Subsidiary, and making
appropriate modifications, including references to this Agreement and to
Wachovia Bank, N.A., as Agent, rather than to the Original Agreement and
Wachovia Bank of Georgia, N.A., respectively, and excluding paragraph 2 thereof,
and (z) delivering to the Agent documents pertaining to the Subsidiary
reasonably requested by the Agent of the types described in paragraph (f) of
Section 4.01 (but making appropriate modifications, including references to this
Agreement and to Wachovia Bank, N.A., as Agent, rather than to the Original
Agreement and Wachovia Bank of Georgia, N.A., respectively).
SECTION 6.24. CERTAIN PROVISIONS REGARDING ELIGIBLE PROPERTIES. Neither the
Borrower nor any Consolidated Subsidiary will create, assume or suffer to exist
any Lien on any Eligible Property included in the Borrowing Base, now owned or
hereafter acquired by it, except Permitted Encumbrances.
SECTION 6.25. RESTRICTIONS OF CERTAIN ADDITIONAL GUARANTEES. Neither the
Borrower nor any of the Guarantors shall incur or permit to exist any Guarantees
of unsecured revolving Debt, other than the Guaranty made hereunder, in an
aggregate principal amount outstanding at any time of $25,000,000 or more.
SECTION 6.26. MAINTENANCE OF EXISTENCE. The Borrower shall, and shall cause each
Subsidiary to, maintain its corporate existence and carry on its business in
substantially the same manner and in substantially the same fields as such
business is now carried on and maintained.
SECTION 6.27. RATIO OF TOTAL UNENCUMBERED ASSETS VALUE TO UNSECURED FUNDED DEBT
will not at any time be less than 1.75 to 1.00.
ARTICLE VII
DEFAULTS
SECTION 7.01. EVENTS OF DEFAULT. If one or more of the following events ("Events
of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan or any
Reimbursement Obligations with respect to the Letter of Credit or shall
fail to pay any interest on any Loan within 5 Domestic Business Days after
such interest shall become due, or shall fail to pay any fee or other
amount payable hereunder within 5 Domestic Business Days after such fee or
other amount becomes due; or
(b) the Borrower or any Guarantor shall fail to observe or perform any covenant
contained in Sections 6.01(c), 6.02(ii), 6.03 through 6.12, inclusive,
Sections 6.22 or Sections 6.24 through 6.27; or
(c) the Borrower or any Guarantor shall fail to observe or perform any covenant
or agreement contained in this Agreement or any other Loan Document (other
than those covered by paragraph (a) or (b) above) and such failure shall
not have been cured within 30 days after the earlier to occur of (i)
written notice thereof has been given to the Borrower or such Guarantor by
the Agent at the request of any Bank or (ii) an Executive Officer or such
Guarantor otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by the
Borrower or any Guarantor in Article V of this Agreement or in any other
Loan Document or in any certificate, financial statement or other document
delivered pursuant to this Agreement or any other Loan Document shall prove
to have been incorrect or misleading in any material respect when made (or
deemed made); or
(e) the Borrower, GBP or any Subsidiary shall fail to make any payment in
respect of Debt outstanding (other than the Notes) when due or within any
applicable grace period, if the amount of any such Debt of the Borrower,
GBP or any Subsidiary individually is $5,000,000 or more or if the
aggregate amount of all such Debt of the Borrower, GBP and all Subsidiaries
is $10,000,000 or more; or
(f) any event or condition shall occur which results in the acceleration of the
maturity of Debt outstanding of the Borrower, GBP or any Subsidiary
(including, without limitation, any required mandatory prepayment or "put"
of such Debt to the Borrower or any Subsidiary) or enables (or, with the
giving of notice or lapse of time or both, would enable) the holders of
such Debt or commitment or any Person acting on such holders' behalf to
accelerate the maturity thereof or terminate any such commitment
(including, without limitation, any required mandatory prepayment or "put"
of such Debt to the Borrower or any Subsidiary), if the amount of any such
Debt of the Borrower, GBP or any Subsidiary individually is $5,000,000 or
more or if the aggregate amount of all such Debt of the Borrower, GBP and
all Subsidiaries is $10,000,000 or more; or
(g) the Borrower, GBP or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally,
or shall admit in writing its inability, to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be commenced against the
Borrower, GBP or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower, GBP or any Subsidiary under the federal bankruptcy laws as
now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to pay when
due any material amount which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans shall be filed under Title IV of ERISA by the Borrower, any
member of the Controlled Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer any
such Plan or Plans or a proceeding shall be instituted by a fiduciary of
any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and
such proceeding shall not have been dismissed within 30 days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must be
terminated; or the Borrower or any other member of the Controlled Group
shall enter into, contribute or be obligated to contribute to, terminate or
incur any withdrawal liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against the Borrower or
any Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or any Subsidiary
under Section 6323 of the Code or a lien of the PBGC shall be filed against
the Borrower or any Subsidiary under Section 4068 of ERISA and in either
case such lien shall remain undischarged for a period of 25 days after the
date of filing.
then, and in every such event, (i) the Agent shall, if requested by the Required
Banks, by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, (ii) the Agent shall, if requested by the Required Banks,
by notice to the Borrower declare the Notes (together with accrued interest
thereon), and all other amounts payable hereunder and under the other Loan
Documents, to be, and the Notes, together with accrued interest thereon, and all
other amounts payable hereunder and under the other Loan Documents shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower together with interest at the Default Rate accruing on the principal
amount thereof from and after the date of such Event of Default, and (iii) any
Bank may terminate its obligation to fund a Money Market Loan in connection with
any relevant Money Market Quote; provided that if any Event of Default specified
in paragraph (g) or (h) above occurs with respect to the Borrower, without any
notice to the Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) and all other amounts payable hereunder and under the other
Loan Documents shall automatically and without notice become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower together with interest thereon at the
Default Rate accruing on the principal amount thereof from and after the date of
such Event of Default. In addition, upon the occurrence of an Event of Default,
to the extent of any existing Letter of Credit Obligations, the Borrower shall
immediately deposit with the Agent the principal amount thereof and the amount
so deposited shall be set aside as a cash collateral reserve for payment of the
Reimbursement Obligations relating to Letters of Credit which are subsequently
funded. The Agent will invest such cash collateral reserve in compliance with
instructions received from the Borrower to the extent necessary to preserve the
tax-exempt status of the bonds secured by the Letters of Credit. After all
Letters of Credit have been cancelled and all Reimbursement Obligations have
been satisfied, and the Agent has been reimbursed all amounts funded by it with
respect thereto, any balance remaining in said cash collateral reserve may be
applied to other amounts owed by the Borrower hereunder, and, if none, shall be
remitted to Borrower. Notwithstanding the foregoing, the Agent shall have
available to it all other remedies at law or equity, and under any of the other
Loan Documents, and shall exercise any one or all of them at the request of the
Required Banks.
SECTION 7.02. NOTICE OF DEFAULT. The Agent shall give notice to the Borrower of
any Default under Section 7.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VIII
THE AGENT
SECTION 8.01. APPOINTMENT; POWERS AND IMMUNITIES. Each Bank hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the Agent
by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent: (a) shall have no duties or
responsibilities except as expressly set forth in this Agreement and the other
Loan Documents, and shall not by reason of this Agreement or any other Loan
Document be a trustee for any Bank; (b) shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any Bank under, this Agreement or
any other Loan Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Banks, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other Loan Document or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article VII are solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, the Agent shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower. The duties
of the Agent shall be ministerial and administrative in nature, and the Agent
shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank. The Agent shall administer the
Loans and the Loan Documents with a degree of care at least equal to that
customarily employed by the Agent in the administration of similar credit
facilities for its own account.
SECTION 8.02. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
SECTION 8.03. DEFAULTS. The Agent shall not be deemed to have knowledge of the
occurrence of a Default or an Event of Default (other than the nonpayment of
principal of or interest on the Loans) unless the Agent has received notice from
a Bank or the Borrower specifying such Default or Event of Default and stating
that such notice is a "Notice of Default". In the event that the Agent receives
such a notice of the occurrence of a Default or an Event of Default, the Agent
shall give prompt notice thereof to the Banks. The Agent shall give each Bank
prompt notice of each nonpayment of principal of or interest on the Loans
whether or not it has received any notice of the occurrence of such nonpayment.
The Agent shall (subject to Section 10.06) take such action hereunder with
respect to such Default or Event of Default as shall be directed by the Required
Banks, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
SECTION 8.04. RIGHTS OF AGENT AND ITS AFFILIATES AS A BANK. With respect to the
Loans made by the Agent and any Affiliate of the Agent, Wachovia in its capacity
as a Bank hereunder and any Affiliate of the Agent or such Affiliate in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though Wachovia were not acting as
the Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include Wachovia in its individual capacity and any Affiliate of the
Agent in its individual capacity. The Agent and any Affiliate of the Agent may
(without having to account therefor to any Bank) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Borrower (and any of the Borrower's Affiliates) as if Wachovia were not
acting as the Agent, and the Agent and any Affiliate of the Agent may accept
fees and other consideration from the Borrower (in addition to any agency fees
and arrangement fees heretofore agreed to between the Borrower and the Agent)
for services in connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 8.05. INDEMNIFICATION. Each Bank severally agrees to indemnify the
Agent, to the extent the Agent shall not have been reimbursed by the Borrower,
ratably in accordance with its Commitment, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided that no Bank shall be liable for
any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the opinion of the Agent, be insufficient or become impaired,
the Agent may call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is furnished.
SECTION 8.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE RESPONSIBLE OR
LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
SECTION 8.07. PAYEE OF NOTE TREATED AS OWNER. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent and the provisions of Section 10.08(c) have been satisfied. Any
requests, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Note or of any Note or Notes issued in exchange therefor or replacement thereof.
SECTION 8.08. NONRELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees that it
has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. The Agent
shall not be required to keep itself (or any Bank) informed as to the
performance or observance by the Borrower of this Agreement or any of the other
Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any other
Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Person (or any of
their Affiliates) which may come into the possession of the Agent; provided,
that the Agent shall make available to any Bank, upon its request, (i) copies of
the Agent's records with respect to all sums received or expended by the Agent
in connection with the Loans and the Loan Documents, (ii) information as to the
amount of the then outstanding Loans, Letters of Credit and Reimbursement
Obligations and (iii) copies of any documents pertaining to an Eligible Property
requested by such Bank and held by the Agent pursuant to Section 6.24(b).
SECTION 8.09. FAILURE TO ACT. Except for action expressly required of the Agent
hereunder or under the other Loan Documents, the Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction by the Banks of their
indemnification obligations under Section 8.05 against any and all liability and
expense which may be incurred by the Agent by reason of taking, continuing to
take, or failing to take any such action.
SECTION 8.10. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Required Banks shall have the right to appoint a
successor Agent, subject to the approval of the Borrower, which approval shall
not be unreasonably withheld or delayed; provided, however, that no such
approval of the Borrower shall be required if (i) the successor is a Bank or
(ii) a Default or Event of Default is in existence. If no successor Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment within 30 days after the retiring Agent's notice of resignation or
the Required Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, subject to the approval of
the Borrower, which approval shall not be unreasonably withheld or delayed;
provided, however, that no such approval of the Borrower shall be required if
(i) the successor is a Bank or (ii) a Default or Event of Default is in
existence. Any successor Agent shall be a bank which has a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
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. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder.
SECTION 8.11. AGENT'S RIGHT TO REPLACE NON-QUALIFYING BANKS. In the event that
any Bank (a "Non-Qualifying Bank") shall at the end of any quarter not qualify
as a "well-capitalized" bank (within the meaning provided therefor in 12 CFR 6,
as amended from time to time) under the regulations or policies of the
Comptroller of the Currency, or the sum of its non-performing assets and its
"Other Real Estate Owned" shall be equal to more than fifty percent (50%) of its
tangible equity, the Agent, in its sole discretion, may give notice to such
Non-Qualifying Bank and to the other Banks, with a copy to the Borrower (the
"Replacement Notice"), that it wishes to seek one or more assignees (which may
be one or more of the Banks) to assume the Commitment of such Non-Qualifying
Bank and to purchase its outstanding Loans and Notes, participation in the
Letters of Credit and interest in this Agreement, and in such event: (i) the
remaining Banks may elect to purchase ratable assignments (without any
obligation so to do) from the Non-Qualifying Bank (in the form of an Assignment
and Acceptance and in accordance with Section 10.08(c)) in accordance with their
respective percentage of the remaining aggregate Commitments, by giving notice
of such election to the Agent and the other Banks, with a copy to the Borrower,
no later than the date (the "Initial Option Date") which is 15 days after the
date of the Replacement Notice; (ii) should any of the remaining Banks not elect
on or before the Initial Option Date to purchase such an assignment, then, such
other remaining Banks shall be entitled to purchase an assignment from
Non-Qualifying Bank which includes the ratable interest that was otherwise
available to such non-purchasing remaining Bank or Banks, by giving notice of
such election to the Agent and the other Banks, with a copy to the Borrower,
within 15 days after the Initial Option Date; and (iii) if and to the extent
that the remaining Banks have not elected to purchase such an assignment, the
Agent may find another assignee to purchase such assignment. Each Non-Qualifying
Bank agrees to sell its Commitment, Loans, Notes, participation in the Letters
of Credit and interest in this Agreement by an Assignment and Acceptance in
accordance with Section 10.08(c) to any such assignee or assignees for an amount
equal to the sum of the outstanding unpaid principal of and accrued interest on
such Loans and Notes, plus all other fees and amounts (including, without
limitation, any compensation claimed by such Non-Qualifying Bank under Section
2.11(c) or this Section 8.11) due such Non-Qualifying Bank hereunder calculated,
in each case, to the date such Loans, Notes and interest are purchased. Upon
such sale or prepayment, and assumption by the assignee or assignees of the
Non-Qualifying Banks's Commitment and participation in the Letters of Credit,
such Non-Qualifying Bank shall have no further Commitment or other obligation to
the Borrower hereunder or under any Note.
ARTICLE IX
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 9.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. If on or
prior to the first day of any Interest Period:te or Unfair
(a) the Agent determines that deposits in Dollars (in the applicable amounts)
are not being offered in the relevant market for such Interest Period, or
(b) the Required Banks advise the Agent that the London Interbank Offered Rate,
as determined by the Agent will not adequately and fairly reflect the cost
to such Banks of funding the relevant Euro-Dollar Rate Loans for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
Euro-Dollar Loans specified in such notice shall be suspended. Unless the
Borrower notifies the Agent at least 2 Domestic Business Days before the date of
any Euro-Dollar Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, such Borrowing shall instead be
made as a Base Rate Borrowing.
SECTION 9.02. ILLEGALITY. If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein or any existing or
future law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any such
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each Euro-Dollar Loan of
such Bank, together with accrued interest thereon and any amount due such Bank
pursuant to Section 9.05(a). Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal principal amount
from such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
such Bank shall make such a Base Rate Loan.
SECTION 9.03. INCREASED COST AND REDUCED RETURN.
(a) If after the date hereof, a Change of Law or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the
force of law) of any Authority:
(i) shall impose, modify or deem applicable any reserve, special deposit
or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Lending Office); or
(ii) shall impose on any Bank (or its Lending Office) or on the United
States market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans, its Notes
or its obligation to make Fixed Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Lending Office) of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction.
(b) If any Bank shall have determined that after the date hereof the adoption
of any applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any Authority, has or would have the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations hereunder
to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank, the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount, such Bank may
use any reasonable averaging and attribution methods.
(d) The provisions of this Section 9.03 shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 9.04. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR LOANS. If (i)
the obligation of any Bank to make or maintain any Euro-Dollar Loans has been
suspended pursuant to Section 9.02 or (ii) any Bank has demanded compensation
under Section 9.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank, through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as Euro-Dollar Loans
shall be made instead as Base Rate Loans, and interest and principal on
such Loans shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks, and
(b) after each of its Euro-Dollar Loans has been repaid, all payments of
principal which would otherwise be applied to repay such Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
SECTION 9.05. COMPENSATION. Upon the request of any Bank, delivered to the
Borrower and the Agent, the Borrower shall pay to such Bank such amount or
amounts as shall compensate such Bank for any loss, cost or expense incurred by
such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09, 2.10, 7.01, 9.02 or
otherwise) of a Fixed Rate Loan on a date other than the last day of an
Interest Period for such Loan; or
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the date for
such prepayment specified in the relevant notice of prepayment hereunder;
or
(c) any failure by the Borrower to borrow a Fixed Rate Loan on the date for the
Fixed Rate Borrowing of which such Fixed Rate Loan is a part specified in
the applicable Notice of Borrowing delivered pursuant to Section 2.02 or
notification of acceptance of Money Market Quotes pursuant to Section
2.02A(e);
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Fixed Rate Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Fixed Rate Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Fixed Rate Loan provided for herein over
(y) the amount of interest (as reasonably determined by such Bank) such Bank
would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market (if such Fixed Rate Loan is a Euro-Dollar Loan).
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopier or similar writing)
and shall be given to such party at its address or telecopier number set forth
on the signature pages hereof or such other address or telecopier number as such
party may hereafter specify for the purpose by notice to each other party. Each
such notice, request or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in this Section and the confirmation is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent under Article II or Article IX shall not be effective until
received.
SECTION 10.02. NO WAIVERS. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10.03. EXPENSES; DOCUMENTARY TAXES. The Borrower shall pay (i) all
out-of-pocket expenses of the Agent, including fees and disbursements of Jones,
Day, Reavis & Pogue, special counsel for the Banks and the Agent, in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder, (ii) legal fees up to but
not in excess of $10,000, plus expenses, incurred by each Bank in connection
with the preparation of this Agreement and the other Loan Documents and (iii) if
a Default occurs, all out-of-pocket expenses incurred by the Agent and the
Banks, including fees and disbursements of counsel, in connection with such
Default and collection and other enforcement proceedings resulting therefrom,
including out-of-pocket expenses incurred in enforcing this Agreement and the
other Loan Documents. The Borrower shall indemnify the Agent and each Bank
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Loan Documents. The provisions of this Section 10.03 are in addition to
and not in limitation of any expense reimbursement or indemnification provision
contained in any other Loan Documents.
SECTION 10.04. INDEMNIFICATION. The Borrower shall indemnify the Agent, the
Banks and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by the Borrower of the proceeds of any extension
of credit by any Bank hereunder or breach by the Borrower of this Agreement or
any other Loan Document or from any investigation, litigation (including,
without limitation, any actions taken by the Agent or any of the Banks to
enforce this Agreement or any of the other Loan Documents) or other proceeding
(including, without limitation, any threatened investigation or proceeding)
relating to the foregoing, and the Borrower shall reimburse the Agent and each
Bank, and each Affiliate thereof and their respective directors, officers,
employees and agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified. The provisions of this Section 10.04 are in addition
to and not in limitation of any expense reimbursement or indemnification
provision contained in any other Loan Documents.
SECTION 10.05. SHARING OF SETOFFS. Each Bank agrees that if it shall, by
exercising any right of setoff or counterclaim or resort to collateral security
or otherwise, receive payment of a proportion of the aggregate amount of
principal and interest owing with respect to the Note held by it which is
greater than the proportion received by any other Bank in respect of the
aggregate amount of all principal and interest owing with respect to the Note
held by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other Banks owing to
such other Banks, and such other adjustments shall be made, as may be required
so that all such payments of principal and interest with respect to the Notes
held by the Banks owing to such other Banks shall be shared by the Banks pro
rata; provided that (i) nothing in this Section shall impair the right of any
Bank to exercise any right of setoff or counterclaim it may have and to apply
the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Notes, and (ii) if all or any
portion of such payment received by the purchasing Bank is thereafter recovered
from such purchasing Bank, such purchase from each other Bank shall be rescinded
and such other Bank shall repay to the purchasing Bank the purchase price of
such participation to the extent of such recovery together with an amount equal
to such other Bank's ratable share (according to the proportion of (x) the
amount of such other Bank's required repayment to (y) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Note, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of setoff or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 10.06. AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement, the Notes or any other Loan Documents may
be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided
that no such amendment or waiver shall, unless signed by all Banks, (i)
change the Commitment of any Bank or subject any Bank to any additional
obligation, (ii) change the principal of or rate of interest on any Loan or
any fees (other than fees payable to the Agent) hereunder, (iii) change the
date fixed for any payment of principal of or interest on any Loan or any
fees hereunder, (iv) change the amount of principal, interest or fees due
on any date fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or
the percentage of Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other provision of this
Agreement, (vi) change the manner of application of any payments made under
this Agreement or the Notes, (vii) release or substitute all or any
substantial part of the collateral (if any) held as security for the Loans,
except as expressly authorized by this Agreement or any of the other Loan
Documents, (viii) release any Guarantee given to support payment of the
Loans, (ix) change the definition of Borrowing Base in a such a way as to
make it less restrictive, (x) change the definition of Required Banks or
(xi) change this Section 10.06.
(b) The Borrower will not solicit, request or negotiate for or with respect to
any proposed waiver or amendment of any of the provisions of this Agreement
unless each Bank shall be informed thereof by the Borrower and shall be
afforded an opportunity of considering the same and shall be supplied by
the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any
waiver or consent effected pursuant to the provisions of this Agreement
shall be delivered by the Borrower to each Bank forthwith following the
date on which the same shall have been executed and delivered by the
requisite percentage of Banks. The Borrower will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Bank (in its
capacity as such) as consideration for or as an inducement to the entering
into by such Bank of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid,
on the same terms, ratably to all such Banks.
SECTION 10.07. NO MARGIN STOCK COLLATERAL. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that the Borrower may not assign or otherwise transfer any of its
rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each a "Participant")
participating interests in any Loan owing to such Bank, any Note held by
such Bank, any Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement
shall remain unchanged, such Bank shall remain solely responsible for the
performance thereof, such Bank shall remain the holder of any such Note for
all purposes under this Agreement, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. In no event shall a
Bank that sells a participation be obligated to the Participant to take or
refrain from taking any action hereunder except that such Bank may agree
that it will not (except as provided below), without the consent of the
Participant, agree to (i) the change of any date fixed for the payment of
principal of or interest on the related Loan or loans, (ii) the change of
the amount of any principal, interest or fees due on any date fixed for the
payment thereof with respect to the related Loan or loans, (iii) the change
of the principal of the related Loan or loans, (iv) any change in the rate
at which either interest is payable thereon or (if the Participant is
entitled to any part thereof) fee is payable hereunder from the rate at
which the Participant is entitled to receive interest or fee (as the case
may be) in respect of such participation, (v) the release or substitution
of all or any substantial part of the collateral (if any) held as security
for the Loans, or (vi) the release of any Guarantee given to support
payment of the Loans. Each Bank selling a participating interest in any
Loan, Note, Commitment or other interest under this Agreement (other than
solely with respect to a Money Market Loan or Money Market Note or
participating interest therein) shall, within 10 Domestic Business Days of
such sale, provide the Borrower and the Agent with written notification
stating that such sale has occurred and identifying the Participant and the
interest purchased by such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Article IX with respect to
its participation in Loans outstanding from time to time.
(c) Any Bank may at any time assign to one or more banks or financial
institutions (each an "Assignee") all or a proportionate part of its rights
and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance, executed by such Assignee, such
transferor Bank and the Agent (and, in the case of an Assignee that is not
then a Bank, subject to clause (iii) below, by the Borrower); provided that
(i) no interest may be sold by a Bank pursuant to this paragraph (c) unless
the Assignee shall agree to assume ratably equivalent portions of the
transferor Bank's Commitment, (ii) if a Bank is assigning only a portion of
its Commitment, then, the amount of the Commitment being assigned
(determined as of the effective date of the assignment) shall be in an
amount not less than $5,000,000, (iii) except during the continuance of a
Default, no interest may be sold by a Bank pursuant to this paragraph (c)
to any Assignee that is not then a Bank (or an Affiliate of a Bank) without
the consent of the Borrower and the Agent, which consent shall not be
unreasonably withheld, and (iv) a Bank may not have more than 2 Assignees
that are not then Banks at any one time. Upon (A) execution of the
Assignment and Acceptance by such transferor Bank, such Assignee, the Agent
and (if applicable) the Borrower, (B) delivery of an executed copy of the
Assignment and Acceptance to the Borrower and the Agent, (C) payment by
such Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee, and (D)
payment of a processing and recordation fee of $2,500 to the Agent, such
Assignee shall for all purposes be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank under this Agreement to the
same extent as if it were an original party hereto with a Commitment as set
forth in such instrument of assumption, and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by the Borrower, the Banks or the Agent shall be
required. Upon the consummation of any transfer to an Assignee pursuant to
this paragraph (c), the transferor Bank, the Agent and the Borrower shall
make appropriate arrangements so that, if required, a new Note is issued to
each of such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 10.09, the Borrower authorizes each
Bank to disclose to any Participant, Assignee or other transferee (each a
"Transferee") and any prospective Transferee any and all financial
information in such Bank's possession concerning the Borrower which has
been delivered to such Bank by the Borrower pursuant to this Agreement or
which has been delivered to such Bank by the Borrower in connection with
such Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater payment under
Section 9.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with
the Borrower's prior written consent or by reason of the provisions of
Section 9.02 or 9.03 requiring such Bank to designate a different Lending
Office under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
(f) Anything in this Section 10.08 to the contrary notwithstanding, any Bank
may assign and pledge all or any portion of the Loans and/or obligations
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or
pledging Bank in accordance with the terms of this Agreement shall satisfy
the Borrower's obligations hereunder in respect of such assigned Loans
and/or obligations to the extent of such payment. No such assignment shall
release the assigning and/or pledging Bank from its obligations hereunder.
SECTION 10.09. CONFIDENTIALITY. Each Bank agrees to exercise commercially
reasonable efforts to keep any information delivered or made available by the
Borrower to it which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in connection
with any litigation to which the Agent, any Bank or their respective Affiliates
may be a party, (vi) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (vii) to such Bank's legal counsel and
independent auditors and (viii) to any actual or proposed Participant, Assignee
or other Transferee of all or part of its rights hereunder which has agreed in
writing to be bound by the provisions of this Section 10.09; provided that
should disclosure of any such confidential information be required by virtue of
clause (ii) of the immediately preceding sentence, any relevant Bank shall, to
the extent permitted by law, promptly notify the Borrower of same so as to allow
the Borrower to seek a protective order or to take any other appropriate action;
provided, further, that, no Bank shall be required to delay compliance with any
directive to disclose any such information so as to allow the Borrower to effect
any such action.
SECTION 10.10. REPRESENTATION BY BANKS. Each Bank hereby represents that it is a
commercial lender or financial institution which makes loans in the ordinary
course of its business and that it will make its Loans hereunder for its own
account in the ordinary course of such business; provided that, subject to
Section 10.08, the disposition of the Note or Notes held by that Bank shall at
all times be within its exclusive control.
SECTION 10.11. OBLIGATIONS SEVERAL. The obligations of each Bank hereunder are
several, and no Bank shall be responsible for the obligations or commitment of
any other Bank hereunder. Nothing contained in this Agreement and no action
taken by the Banks pursuant hereto shall be deemed to constitute the Banks to be
a partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement or any other Loan Document and it shall not
be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
SECTION 10.12. GEORGIA LAW. This Agreement and each Note shall be construed in
accordance with and governed by the law of the State of Georgia.
SECTION 10.13. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement, the Notes or any of the other Loan Documents should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
SECTION 10.14. INTEREST. In no event shall the amount of interest, and all
charges, amounts or fees contracted for, charged or collected pursuant to this
Agreement, the Notes or the other Loan Documents and deemed to be interest under
applicable law (collectively, "Interest") exceed the highest rate of interest
allowed by applicable law (the "Maximum Rate"), and in the event any such
payment is inadvertently received by any Bank, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the Borrower shall
notify such Bank in writing that it elects to have the Excess returned
forthwith. It is the express intent hereof that the Borrower not pay and the
Banks not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrower under applicable law.
The right to accelerate maturity of any of the Loans does not include the right
to accelerate any interest that has not otherwise accrued on the date of such
acceleration, and the Agent and the Banks do not intend to collect any unearned
interest in the event of any such acceleration. All monies paid to the Agent or
the Banks hereunder or under any of the Notes or the other Loan Documents,
whether at maturity or by prepayment, shall be subject to rebate of unearned
interest as and to the extent required by applicable law. By the execution of
this Agreement, the Borrower covenants, to the fullest extent permitted by law,
that (i) the credit or return of any Excess shall constitute the acceptance by
the Borrower of such Excess, and (ii) the Borrower shall not seek or pursue any
other remedy, legal or equitable , against the Agent or any Bank, based in whole
or in part upon contracting for charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by the Agent or any Bank, all interest
at any time contracted for, charged or received from the Borrower in connection
with this Agreement, the Notes or any of the other Loan Documents shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
in equal parts throughout the full term of the Commitments. The Borrower, the
Agent and each Bank shall, to the maximum extent permitted under applicable law,
(i) characterize any non-principal payment as an expense, fee or premium rather
than as Interest and (ii) exclude voluntary prepayments and the effects thereof.
The provisions of this Section shall be deemed to be incorporated into each Note
and each of the other Loan Documents (whether or not any provision of this
Section is referred to therein). All such Loan Documents and communications
relating to any Interest owed by the Borrower and all figures set forth therein
shall, for the sole purpose of computing the extent of obligations hereunder and
under the Notes and the other Loan Documents be automatically recomputed by the
Borrower, and by any court considering the same, to give effect to the
adjustments or credits required by this Section.
SECTION 10.15. INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 10.16. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. The Borrower (a)
and each of the Banks and the Agent irrevocably waives, to the fullest extent
permitted by law, any and all right to trial by jury in any legal proceeding
arising out of this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, (b) submits to the nonexclusive
personal jurisdiction in the State of Georgia, the courts thereof and the United
States District Courts sitting therein, for the enforcement of this Agreement,
the Notes and the other Loan Documents, (c) waives any and all personal rights
under the law of any jurisdiction to object on any basis (including, without
limitation, inconvenience of forum) to jurisdiction or venue within the State of
Georgia for the purpose of litigation to enforce this Agreement, the Notes or
the other Loan Documents, and (d) agrees that service of process may be made
upon it in the manner prescribed in Section 10.01 for the giving of notice to
the Borrower. Nothing herein contained, however, shall prevent the Agent from
bringing any action or exercising any rights against any security and against
the Borrower personally, and against any assets of the Borrower, within any
other state or jurisdiction.
SECTION 10.17. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTI0N 10.18. SOURCE OF FUNDS -- ERISA. Each of the Banks hereby severally (and
not jointly) represents to the Borrower that no part of the funds to be used by
such Bank to fund the Loans hereunder from time to time constitutes (i) assets
allocated to any separate account maintained by such Bank in which any employee
benefit plan (or its related trust) has any interest nor (ii) any other assets
of any employee benefit plan. As used in this Section, the terms "employee
benefit plan" and "separate account" shall have the respective meanings assigned
to such terms in Section 3 of ERISA.
SECTION 10.19. ENTIRE AGREEMENT. The Loan Documents and, as between the Borrower
and the Agent, the Agent's Letter Agreement, contain the entire agreement
between the Borrower, the Agent and the Banks relating to the credit
transactions contemplated hereby and supersede entirely any and all prior
written or oral agreements with respect thereto; and the Borrower acknowledges
and agrees that there are no contemporaneous oral agreements with respect to the
subject matter hereof.
SECTION 10.20. MORE RESTRICTIVE AGREEMENTS. Should the Borrower or any
Guarantor, while this Agreement is in effect or any Note remains unpaid, enter
into, refinance or modify the relevant documents pertaining to any existing or
future Debt for money borrowed which constitutes revolving credit, in an amount
exceeding $5,000,000 in aggregate amount to any lender or group of lenders
acting in concert with one another, pursuant to a Loan agreement, credit
agreement, note purchase agreement, indenture or other similar instrument, which
instrument includes covenants, warranties, representations, or defaults or
events of default (or any other type of restriction which would have the
practical effect of any of the foregoing, including, without limitation, any
"put" or mandatory prepayment of such debt) other than those set forth herein or
in any of the other Loan Documents, the Borrower shall promptly so notify the
Agent and, if the Agent, in the discretion of the Agent, shall so request by
written notice to the Borrower, the Borrower, the Agent and the Required Banks
(in their sole discretion and based on their respective independent credit
judgment, and subject to Section 10.06) shall promptly amend this Agreement to
incorporate some or all of such provisions, into this Agreement and, to the
extent necessary and reasonably desirable to the Agent and the Required Banks
(in their sole discretion and based on their respective independent credit
judgment, and subject to Section 8.06), into any of the other Loan Documents,
all at the election of the Agent; provided, however, that any such amendment
shall provide that, upon cancellation or termination of the Loan agreement,
credit agreement, note purchase agreement, indenture or other instrument
pertaining to such other revolving credit (other than by reason of an event of
default thereunder), so long as no Default or Event of Default is in existence,
such amendment also shall terminate and the provisions of the Credit Agreement
affected by such amendment shall revert to the terms thereof as in effect prior
to giving effect to such amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, under seal, by their respective authorized officers as of the day
and year first above written.
GABLES REALTY LIMITED PARTNERSHIP
By: Gables GP, Inc., its sole
general partner
By: /s/ Marvin R. Banks, Jr.
----------------------------
Marvin R. Banks, Jr.
----------------------------
Vice President
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
<PAGE>
WACHOVIA BANK, N.A.,
as Agent and as a Bank
Commitment:
$57,500,000 By: /s/ Mary F. Hughes
--------------------------
Title: Vice President
-----------------------
Commitment
Percentage:
32.85% Lending Office
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Real Estate Finance Division
Telecopier number: 404-332-4005
Confirmation number: 404-332-6971
<PAGE>
FIRST UNION NATIONAL BANK
Commitment:
$57,500,000 By: /s/ Susan T. Miller
--------------------------------
Susan T. Miller
--------------------------------
Senior Vice President
--------------------------------
Commitment Lending Office
Percentage: First Union National Bank
32.86% First Union Plaza
999 Peachtree Street, N.E., Suite 610
Atlanta, Georgia 30309
Attention: Susan Miller
Telecopier number: 404-225-4113
Confirmation number: 404-225-4030
with a copy of all notices to:
First Union National Bank
Construction Loan Administration Unit
200 E. Ponce de Leon Avenue, 1st Floor
Decatur, Georgia 30030
Attention: Navina Assar
Telecopier number: 404-687-4706
Confirmation number: 404-687-7605
<PAGE>
GUARANTY FEDERAL BANK, F.S.B.
Commitment:
$20,000,000 By: /s/ Lisa B. Balsley
-----------------------------------
Title: Vice President/ Division Manager
-----------------------------------
Commitment Lending Office
Percentage: Guaranty Federal Bank, F.S.B.
11.43% 8333 Douglas
Dallas, Texas 75225
Attention: Roger Davis
Telecopier number: 214-360-8910
Confirmation number: 214-360-2849
with a copy of all notices to:
Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Commercial Real Estate
Lending Division
Telecopier number: 214-360-1661
Confirmation number: 214-360-2849
<PAGE>
AMSOUTH BANK OF ALABAMA
Commitment:
$20,000,000 By: /s/ Arthur J. Sharbel, IV
---------------------------
Title: Vice President
---------------------------
Commitment Lending Office
Percentage: AmSouth Bank of Alabama
11.43% 1900 5th Avenue North
9th Floor
Birmingham, Alabama 35203
Attention: Arthur Sharbel
Telecopier number: 205-326-4075
Confirmation number: 205-581-7647
<PAGE>
COMMERZBANK AG, ATLANTA AGENCY
Commitment:
$20,000,000 By: /s/ Harry Yergey
-------------------------------
Title: Harry Yergey - Vice President
-------------------------------
Commitment
Percentage: By: /s/ Mark Wortmann
-------------------------------
11.43% Title: Mark Wortmann - Asst.
Vice President
Lending Office
Commerzbank AG, Atlanta Agency
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Mark Wortman
Telecopier number: 404-888-6539
Confirmation number: 404-888-6500
TOTAL COMMITMENTS:
$175,000,000
<PAGE>
CONSENT AND REAFFIRMATION OF GUARANTORS
Each of the undersigned (i) acknowledges receipt of the foregoing Amended and
Restated Credit Agreement (the "Replacement Agreement"), (ii) consents to the
execution and delivery of the Replacement Agreement by the parties thereto and
(iii) reaffirms all of its obligations and covenants under the Guaranty
Agreement dated as of March 28, 1996 executed by it, and agrees that none of
such obligations and covenants shall be affected by the execution and delivery
of the Replacement Agreement. In addition, (a) the General Partner certifies
that it is authorized to execute the Replacement Agreement on behalf of the
Borrower and to bind the Borrower thereby, that it is authorized to execute this
Consent and Reaffirmation of Guarantors on behalf of Gables-Tennessee Properties
and to bind Gables-Tennessee Properties hereby, that since March 28, 1996, there
has been no amendment to the Borrower's Certificate of Limited Partnership, the
Borrower's Partnership Agreement, the General Partner's Certificate of
Incorporation or the General Partner's Bylaws, and that each of such documents,
as in effect on March 28, 1996, continues in full force and effect as of the
date hereof and that since March 28, 1996, there has been no amendment to its
Partnership Agreement and that its Partnership Agreement, as in effect on March
28, 1996 continues in full force and effect as of the date hereof, except that
the Partnership Agreement was amended on July 24, 1997, to create preferred
units in response to an issuance of preferred shares, and to make other changes
relating thereto; and (b) GBP hereby certifies that since March 29, 1996, there
has been no amendment to its Declaration of Trust or its Bylaws, except as
indicated in the Secretary's Certificate to the Agent, and that each of such
documents, as in effect on March 28, 1996, and as amended as indicated in such
Secretary's Certificate, continues in full force and effect as of the date
hereof.
This Consent and Reaffirmation may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.
GABLES GP, INC.
By: /s/ Marvin R. Banks, Jr.
-----------------------------
Marvin R. Banks, Jr.,
Vice President
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
------------------------------
Marvin R. Banks, Jr.,
Vice President
GABLES-TENNESSEE PROPERTIES
By: Gables GP, Inc., its general
partner
By: /s/ Marvin R. Banks, Jr.
------------------------------
Marvin R. Banks, Jr.,
Vice President
<PAGE>
EXHIBIT K
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of March 28, 1996, by GABLES GP,
INC., a Texas corporation, GABLES RESIDENTIAL TRUST, a Maryland Trust and
GABLES-TENNESSEE PROPERTIES, a Tennessee general partnership (each a
"Guarantor", and collectively, the "Guarantors", which terms shall include any
subsidiary of Gables Realty Limited Partnership which becomes a Guarantor
pursuant to Section 15 hereof and Section 6.23 of the Credit Agreement referred
to below) in favor of the Agent, for the ratable benefit of the Banks, under the
Credit Agreement referred to below;
W I T N E S S E T H
WHEREAS, GABLES REALTY LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Borrower"), WACHOVIA BANK OF GEORGIA, N.A., as Agent (the "Agent"), and certain
other Banks from time to time party thereto have entered into a certain Credit
Agreement dated as of even date herewith (as it may be amended or modified
further from time to time, the "Credit Agreement"), providing, subject to the
terms and conditions thereof, for extensions of credit to be made by the Banks
to the Borrower which will the benefit the Guarantors;
WHEREAS, it is required by Section 4.01(b) of the Credit Agreement, that the
Guarantors execute and deliver this Guaranty whereby the Guarantors shall
guarantee the payment when due of all principal, interest and other amounts that
shall be at any time payable by the Borrower under the Credit Agreement, the
Notes and the other Loan Documents; and
WHEREAS, in consideration of the financial and other support that the Borrower
has provided, and such financial and other support as the Borrower may in the
future provide, to the Guarantors, whether directly or indirectly, and in order
to induce the Banks and the Agent to enter into the Credit Agreement, the
Guarantors are willing to guarantee the obligations of the Borrower under the
Credit Agreement, the Notes, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein.
SECTION 2. Representations and Warranties. The Guarantors incorporate herein by
reference as fully as if set forth herein all of the representations and
warranties pertaining to the Guarantors contained in Article V of the Credit
Agreement (which representations and warranties shall be deemed to have been
renewed by the Guarantors upon each Borrowing under the Credit Agreement).
SECTION 3. Covenants. The Guarantors covenant that, so long as any Bank has any
Commitment outstanding under the Credit Agreement or any amount payable under
the Credit Agreement or any Note shall remain unpaid, the Guarantors will fully
comply with those covenants set forth in Article VI of the Credit Agreement
pertaining to the Guarantors, and the Guarantors incorporate herein by reference
as fully as if set forth herein all of such covenants.
SECTION 4. The Guaranty. The Guarantors hereby unconditionally and jointly and
severally guarantee (i) the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by the Borrower pursuant to the Credit Agreement, and the full
and punctual payment of all other amounts payable by the Borrower under the
Credit Agreement, including, without limitation, all Syndicated Loans and Money
Market Loans and interest thereon, all Letter of Credit Obligations, all
compensation and indemnification amounts and fees payable pursuant to the Credit
Agreement and the Agent's Letter Agreement, and (ii) the timely performance of
all other obligations of the Borrower under the Credit Agreement and the other
Loan Documents (all of the foregoing obligations being referred to collectively
as the "Guaranteed Obligations"). Upon failure by the Borrower to pay punctually
any such amount or perform such obligations, each of the Guarantors agrees that
it shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement, the relevant Note or the relevant Loan
Document, as the case may be, or perform such obligation in accordance with the
terms and conditions therefor specified in the Credit Agreement or the other
Loan Documents, and pay all costs of collection, including reasonable attorneys
fees; provided that, notwithstanding the provisions of O.C.G.A. 13-1-11(a)(2)
to the contrary, the Guarantor shall not be obligated to pay more than the
attorneys fees actually incurred in connection with such collection.
SECTION 5. Guaranty Unconditional. The obligations of the Guarantor hereunder
shall be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the Borrower under the Credit Agreement, any
Note, or any other Loan Document, by operation of law or otherwise or any
obligation of any other guarantor of any of the Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Credit Agreement, any
Note, or any other Loan Document;
(iii)any release, nonperfection or invalidity of any direct or indirect
security, if any, for any obligation of the Borrower under the Credit
Agreement, any Note, any Loan Document, or any obligations of any other
guarantor of any of the Guaranteed Obligations;
(iv) any change in the partnership structure or ownership of the Borrower or
corporate structure or ownership of any other Guarantor or any other
guarantor of any of the Guaranteed Obligations, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Borrower, or any other Guarantor or any other guarantor of the Guaranteed
Obligations, or its assets or any resulting release or discharge of any
obligation of the Borrower, or any other Guarantor or any other guarantor
of any of the Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the Guarantors may
have at any time against the Borrower, any other Guarantor or any other
guarantor of any of the Guaranteed Obligations, the Agent, any Bank or any
other Person, whether in connection herewith or any unrelated transactions,
provided that nothing herein shall prevent the assertion of any such claim
by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the Borrower, or
any other Guarantor or any other guarantor of any of the Guaranteed
Obligations, for any reason related to the Credit Agreement, any other Loan
Document, or any other Guaranty, or any provision of applicable law or
regulation purporting to prohibit the payment by the Borrower, or any other
Guarantor or any other guarantor of the Guaranteed Obligations, of the
principal of or interest on any Note or any other amount payable by the
Borrower under the Credit Agreement, the Notes, or any other Loan Document;
or
(vii)any other act or omission to act or delay of any kind by the Borrower, any
other Guarantor or any other guarantor of the Guaranteed Obligations, the
Agent, any Bank or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal
or equitable discharge of the Guarantor's obligations hereunder.
SECTION 6. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantors' obligations hereunder shall remain in full force
and effect until all Guaranteed Obligations shall have been paid in full and the
Commitments under the Credit Agreement shall have terminated or expired. If at
any time any payment of the principal of or interest on any Note or any other
amount payable by the Borrower under the Credit Agreement or any other Loan
Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, the
Guarantors' obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
SECTION 7. Waiver of Notice by the Guarantors. The Guarantors irrevocably waive
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any Person against the Borrower, any
other Guarantor or any other guarantor of the Guaranteed Obligations, or any
other Person.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under the Credit Agreement, any Note or any other
Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
the Credit Agreement, any Note or any other Loan Document shall nonetheless be
payable by the Guarantors hereunder forthwith on demand by the Agent made at the
request of the Required Banks.
SECTION 9. Notices. All notices, requests and other communications to any party
hereunder shall be given or made by telecopier or other writing and telecopied
or mailed or delivered to the intended recipient at its address or telecopier
number set forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for such purpose by notice to the
Agent in accordance with the provisions of Section 9.01 of the Credit Agreement.
Except as otherwise provided in this Guaranty, all such communications shall be
deemed to have been duly given when transmitted by telecopier, or personally
delivered or, in the case of a mailed notice, 3 Domestic Business Days after
such communication is deposited in the mails with first class postage prepaid,
in each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by the Agent or any Banks in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, the
Notes, and the other Loan Documents shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the benefit of the
Agent and the Banks and their respective successors and assigns and in the event
of an assignment of any amounts payable under the Credit Agreement, the Notes,
or the other Loan Documents, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such indebtedness. This
Guaranty may not be assigned by the Guarantors without the prior written consent
of the Agent and the Required Banks, and shall be binding upon the Guarantors
and their respective successors and permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any provision hereof
may be changed, waived, discharged or terminated orally, but only in writing
signed by the Guarantors and the Agent, with the consent of the Required Banks.
SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF GEORGIA. EACH OF THE GUARANTOR AND THE AGENT HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA
AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTORS IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE GUARANTORS AND THE
Agent HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by the Guarantor
hereunder shall be made without setoff or counterclaim and free and clear of and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority pursuant and subject to the
provisions of Section 2.11(c) of the Credit Agreement, the terms of which are
incorporated herein by reference as to the Guarantors as fully as if set forth
herein, and for such purposes, the rights and obligations of the Borrower under
such Section shall devolve to the Guarantors as to payments required to be made
by the Guarantors hereunder.
SECTION 15. Additional Guarantors; Release of Guarantors. Section 6.23 of the
Credit Agreement provides that Significant Subsidiaries must become Guarantors,
and Subsidiaries which are not Significant Subsidiaries may elect to become
Guarantors, by, among other things, executing and delivering to the Agent a
counterpart of this Guaranty. Any Subsidiary which executes and delivers to the
Agent a counterpart of this Guaranty shall be a Guarantor for all purposes
hereunder. Under certain circumstances described in the last sentence of Section
6.11 of the Credit Agreement, Subsidiaries which are not Significant
Subsidiaries may obtain from the Agent a written release from this Guaranty
pursuant to the provisions of such sentence, and upon obtaining such written
release, any such Subsidiary shall no longer be a Guarantor hereunder. Each
other Guarantor consents and agrees to any such release and agrees that no such
release shall affect its obligations hereunder.
SECTION 16. Other Waivers by the Guarantors. The Guarantors hereby expressly
waive, renounce, and agree not to assert, any right, claim or cause of action,
including, without limitation, a claim for reimbursement, subrogation,
indemnification or otherwise, against the Borrower arising out of or by reason
of this Guaranty or the obligations of the Guarantors hereunder, including,
without limitation, the payment or securing or purchasing of any of the
Guaranteed Obligations by the Guarantors. The waiver, renunciation and agreement
contained in the immediately preceding sentence is for the benefit of the Agent
and the Banks and also for the benefit of the Borrower who may assert the
benefits thereof as a third-party beneficiary, and the Guarantors may be
released from such waiver, renunciation and agreement only by the execution and
delivery, by the Agent, the Required Banks and the Borrower, of an instrument
expressly releasing the Guarantors therefrom.
<PAGE>
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly
executed, under seal, by its authorized officer as of the date first above
written.
GABLES GP, INC.
By: /s/ Marvin R. Banks, Jr.
--------------------------------
Marvin R. Banks, Jr.,
Vice President
Address:
c/o Gables Realty Limited
Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks
------------------------------
Name: Marvin R. Banks, Jr.
Vice President
Address:
c/o Gables Realty Limited
Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES-TENNESSEE PROPERTIES
By: Gables Realty Limited
Partnership, a general partner
By: Gables GP, Inc., its
general partner
By: /s/ Marvin R. Banks, Jr.
-------------------------
Marvin R. Banks, Jr.,
Vice President
Address:
c/o Gables Realty Limited
Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
<PAGE>
EXHIBIT L
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of March 28,
1996 by and between GABLES REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Principal"), GABLES GP, INC., a Texas corporation and
GABLES-TENNESSEE PROPERTIES, a Tennessee general partnership (collectively, the
"Subsidiary Guarantors" and, together with any subsidiary of the Principal which
becomes a Guarantor pursuant to the last paragraph hereof, Section 15 of the
Guaranty referred to below and Section 6.23 of the Credit Agreement referred to
below). The Principal and each of the Subsidiary Guarantors are sometimes
hereinafter referred to individually as a "Contributing Party" and collectively
as the "Contributing Parties").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of even date
herewith among the Principal, the Banks party thereto and Wachovia Bank of
Georgia, N.A., as Agent (such agreement, as the same may from time to time be
amended, modified, restated or extended, being hereinafter referred to as the
"Credit Agreement"; capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement), the Banks have agreed to extend
financial accommodations to the Principal;
WHEREAS, as a condition, among others, to the willingness of the Agent and the
Banks to enter into the Credit Agreement, they have required that each
Subsidiary Guarantor, along with Gables Residential Trust ("GBP"), execute and
deliver that certain Guaranty, dated as of even date herewith (such agreement,
as the same may from time to time be amended, modified, restated or extended,
being hereinafter referred to as the "Guaranty"), pursuant to which, among other
things, the Subsidiary Guarantors and GBP have jointly and severally agreed to
guarantee the "Guaranteed Obligations" (as defined in the Guaranty); and
WHEREAS, each Subsidiary Guarantor is a direct or indirect subsidiary of the
Principal and is engaged in businesses related to those of the Principal and
each other Subsidiary Guarantor, and each of the Subsidiary Guarantors will
derive direct or indirect economic benefit from the effectiveness and existence
of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained, and to induce each Subsidiary Guarantor to enter into the Guaranty,
it is agreed as follows:
To the extent that any Subsidiary Guarantor shall, under the Guaranty, make a
payment (a "Subsidiary Guarantor Payment") of a portion of the Guaranteed
Obligations, then, without limiting its rights of subrogation against the
principal, such Subsidiary Guarantor shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Contributing
Parties in an amount, for each such Contributing Party, equal to a fraction of
such Subsidiary Guarantor Payment, the numerator of which fraction is such
Contributing Party's Allocable Amount and the denominator of which is the sum of
the Allocable Amounts of all of the Contributing Parties.
As of any date of determination, the "Allocable Amount" of each Contributing
Party shall be equal to the maximum amount of liability which could be asserted
against such Contributing Party hereunder with respect to the applicable
Subsidiary Guarantor Payment without (i) rendering such Contributing Party
"insolvent" within the meaning of Section 101(31) of the Federal Bankruptcy Code
(the "Bankruptcy Code") or Section 2 of either the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA"), (ii)
leaving such Contributing Party with unreasonably small capital, within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA or
Section 5 of the UFCA, or (iii) leaving such Contributing Party unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code or Section 4 of the UFTA or Section 6 of the UFCA.
This Agreement is intended only to define the relative rights of the
Contributing Parties, and nothing set forth in this Agreement is intended to or
shall impair the obligations of the Subsidiary Guarantors, jointly and
severally, to pay any amounts, as and when the same shall become due and payable
in accordance with the terms of the Guaranty.
The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets in favor of each Subsidiary
Guarantor to which such contribution and indemnification is owing.
This Agreement shall become effective upon its execution by each of the
Contributing Parties and shall continue in full force and effect and may not be
terminated or otherwise revoked by any Contributing Party until all of the
Guaranteed Obligations shall have been indefeasibly paid in full (in lawful
money of the United States of America) and discharged and the Credit Agreement
and financing arrangements evidenced and governed by the Credit Agreement shall
have been terminated. Each Contributing Party agrees that if, notwithstanding
the foregoing, such Contributing Party shall have any right under applicable law
to terminate or revoke this Agreement, and such Contributing Party shall attempt
to exercise such right, then such termination or revocation shall not be
effective until a written notice of such revocation or termination, specifically
referring hereto and signed by such Contributing Party, is actually received by
each of the other Contributing Parties and by the Agent at its notice address
set forth in the Credit Agreement. Such notice shall not affect the right or
power of any Contributing Party to enforce rights arising prior to receipt of
such written notice by each of the other Contributing Parties and the Agent. If
any Bank grants additional loans to the Principal or takes other action giving
rise to additional Guaranteed Obligations after any Contributing Party has
exercised any right to terminate or revoke this Agreement but before the Agent
receives such written notice, the rights of each other Contributing Party to
contribution and indemnification hereunder in connection with any Subsidiary
Guarantor Payments made with respect to such loans or Guaranteed Obligations
shall be the same as if such termination or revocation had not occurred.
Section 6.23 of the Credit Agreement provides that Significant Subsidiaries must
become Guarantors, and Subsidiaries which are not Significant Subsidiaries may
elect to become Guarantors, by, among other things, executing and delivering to
the Agent a counterpart of the Guaranty and of this Contribution Agreement. Any
Subsidiary which executes and delivers to the Agent a counterpart of the
Guaranty and of this Contribution Agreement shall be a Subsidiary Guarantor for
all purposes hereunder. Under certain circumstances described in the last
sentence of Section 6.11 of the Credit Agreement, Subsidiaries which are not
Significant Subsidiaries may obtain from the Agent a written release from the
Guaranty pursuant to the provisions of such sentence, and upon obtaining such
written release, any such Subsidiary shall no longer be a Subsidiary Guarantor
or Contributing Party hereunder, and such release shall automatically and
without further action constitute a release by each other Contributing Party of
all obligations of such Subsidiary hereunder. Each other Subsidiary Guarantor
consents and agrees to any such release and agrees that no such release shall
affect its obligations hereunder, except as to the Subsidiary so released.
<PAGE>
IN WITNESS WHEREOF, each Contributing Party has executed and delivered this
Agreement, under seal, as of the date first above written.
GABLES REALTY LIMITED PARTNERSHIP
By: Gables GP, Inc., its sole general partner
By: /s/ Marvin R. Banks, Jr.
----------------------------------
Marvin R. Banks, Jr.
Vice President
Address:
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES GP, INC.
By: /s/ Marvin R. Banks, Jr.
----------------------------------
Marvin R. Banks, Jr.
Vice President
Address:
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES-TENNESSEE PROPERTIES
By: Gables Realty Limited
Partnership, a general partner
By: Gables GP, Inc., its general partner
By: /s/ Marvin R. Banks, Jr.
---------------------------------
Marvin R. Banks, Jr.
Vice President
Address:
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
SWAP TRANSACTION
CONFIRMATION
Date: May 23, 1997
To: GABLES REALTY LIMITED PARTNERSHIP ("Counterparty")
Address: 2859 Paces Ferry Road, Suite 1450 Atlanta, GA 30339
Fax: (770) 435-7434
Attention: Marvin Banks
From: FIRST UNION NATIONAL BANK OF GEORGIA ("First Union")
Ref. No. 51824/64805
Dear Mr. Banks:
This confirms the terms of the Transaction described below between Counterparty
and First Union. This Transaction is subject to the 1991 ISDA Definitions
published by the International Swaps and Derivatives Association, Inc. ("ISDA
Definitions"), which are incorporated herein by reference. Fixed Amounts and
Floating Amounts for each applicable Payment Date hereunder will be calculated
in accordance with the ISDA Definitions, and if any Fixed Amount and Floating
Amount are for the same Payment Date hereunder, then those amounts shall not be
payable and instead the Fixed Rate Payer shall pay the positive difference, if
any, between the Fixed Amount and the Floating Amount, and the Floating Rate
Payer shall pay the positive difference, if any, between the Floating Amount and
the Fixed Amount.
Transaction Type: Interest Rate Swap
Currency for Payments: U.S. Dollars
Notional Amount: $25,000,000.00
TERM:
- -----
Trade Date: May 23, 1997
Effective Date: February 27, 1998
Termination Date: February 28, 2000, subject to the Modified Following
Business Day Convention, provided that if the
Floating Rate Option (of the Designated Maturity)
for a Calculation Period is equal to or greater
6.70%, the Termination Date shall be the first day
of that Calculation Period.
FIXED AMOUNTS:
- -------------
Fixed Rate Payer: Counterparty
Payment Dates: Monthly on the 27th day of each month commencing
March 27,1998, through and including the Termination
Date.
Business Day Convention: Modified Following
Business Day: New York
Fixed Rate: 5.76%
Fixed Rate Day Count
Fraction: Actual/360
FLOATING AMOUNTS:
- ------------------
Floating Rate Payer: First Union
Payment Dates: Monthly on the 27th day of each month commencing
March 27, 1998,through and including the Termination
Date.
Business Day Convention: Modified Following
Business Day: New York
Floating Rate for initial
Calculation Period: Determined two London Banking Days before the
Effective Date
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 1 Month
Spread: None
Floating Rate Day
Count Fraction: Actual /360
Floating Rate determined: Two London Banking Days prior to each Reset Date
Reset Dates: The first day of each Calculation Period
Compounding: Inapplicable
Rounding convention: 5 decimal places per the ISDA Definitions
Calculation Agent: First Union
Payments to First Union: First Union Charlotte
Capital Markets
Attention: Derivatives Desk
Fed. ABA No.053000219
Ref. No.:51824/64805
First Union Settlements: Jay Saunders
Derivatives Desk
Tel:(704)383-1187
Fax: (704) 383-9139
First Union Address: One First Union Center
301 South College Street DC-4
Charlotte, NC 28288-0601
Payments to Counterparty: Please forward payment instructions to First Union
in Charlotte, NC. Payments will not be made to
Counterparty without its written instructions.
DOCUMENTATION
- -------------
This Confirmation is a binding and complete contract between the parties,
provided that if at any time there exists a master agreement (however described)
between the parties governing this Transaction ("Master Agreement"), this
Confirmation supplements, forms part of and will be governed by the Master
Agreement. Unless otherwise provided in the Master Agreement, this Confirmation
is governed by the law (and not the law of conflicts) of the State of New York.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation and returning it to us.
Very truly yours,
FIRST UNION NATIONAL BANK OF GEORGIA
By: /s/ Peter J. Lancos
--------------------------------
Name: Peter J. Lancos
--------------------------------
Title: Vice President
--------------------------------
By: /s/ Delene Travella
--------------------------------
Name: Delene M. Travella
--------------------------------
Title: Vice President
--------------------------------
Accepted and confirmed as of the date first above written:
GABLES REALTY LIMITED PARTNERSHIP
By: /s/ Marvin R. Banks, Jr.
-------------------------------
Name: Marvin R. Banks, Jr.
-------------------------------
Title: Sr. Vice President
-------------------------------
$45,820,180
REIMBURSEMENT AGREEMENT
dated as of
October 1, 1997
among
GABLES REALTY LIMITED PARTNERSHIP
The Banks Listed Herein
and
WACHOVIA BANK, N.A.,
as Agent
<PAGE>
TABLE OF CONTENTS
REIMBURSEMENT AGREEMENT
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions......................................................1
SECTION 1.02. Accounting Terms and Determinations.............................17
SECTION 1.03. References......................................................17
SECTION 1.04. Use of Defined Terms............................................17
SECTION 1.05. Terminology.....................................................17
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend.............................................17
SECTION 2.02. Method of Borrowing.............................................18
SECTION 2.03. Reimbursement Notes.............................................19
SECTION 2.04. Maturity of Loans...............................................20
SECTION 2.05. Interest Rates..................................................21
SECTION 2.06. Agent's Fees....................................................23
SECTION 2.07. Payment of Fees Upon Termination of Letters of
Credit............................................23
SECTION 2.08. Mandatory Reduction and Termination of
Commitments........................................24
SECTION 2.09. Optional Prepayments............................................24
SECTION 2.10. Mandatory Prepayments...........................................24
SECTION 2.11. General Provisions as to Payments...............................25
SECTION 2.12. Computation of Interest and Fees................................26
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.01 Letters of Credit...........................................27
SECTION 3.02 No Extension or Amendment...................................28
SECTION 3.03 Reimbursement Obligations; Duties of the
Issuing Bank.......................................28
SECTION 3.04 Participations..............................................29
SECTION 3.05 Payment of Reimbursement Obligations........................31
SECTION 3.06 Compensation for Letters of Credit and Agent
Reporting Requirements............................32
SECTION 3.07 Indemnification; Exoneration................................32
SECTION 3.08 Credit Yield Protection; Capital Adequacy...................33
ARTICLE IV
CONDITIONS TO EFFECTIVENESS AND BORROWINGS ...................................36
SECTION 4.01. Conditions to Effectiveness and First
Borrowing..........................................36
SECTION 4.02. Conditions to All Borrowings....................................37
SECTION 4.03. Certain Conditions and Provisions Pertaining
to Guaranty Federal Bank, F.S.B....................38
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Partnership or Corporate Existence and Power....................39
SECTION 5.02. Partnership or Corporate and Governmental
Authorization; No Contravention....................39
SECTION 5.03. Binding Effect..................................................40
SECTION 5.04. Financial and Property Information..............................40
SECTION 5.05. No Litigation...................................................40
SECTION 5.06. Compliance with ERISA...........................................41
SECTION 5.07. Compliance with Laws; Payment of Taxes..........................41
SECTION 5.08. Subsidiaries....................................................41
SECTION 5.09. Investment Company Act..........................................42
SECTION 5.10. Public Utility Holding Company Act..............................42
SECTION 5.11. Ownership of Property...........................................42
SECTION 5.12. No Default......................................................42
SECTION 5.13. Full Disclosure.................................................42
SECTION 5.14. Environmental Matters...........................................42
SECTION 5.15. Partner Interests and Capital Stock.............................43
SECTION 5.16. Margin Stock....................................................43
SECTION 5.17. Insolvency......................................................43
SECTION 5.18. Insurance.......................................................44
SECTION 5.19. Estate Investment Trust.........................................52
ARTICLE VI
COVENANTS
SECTION 6.01. Information.....................................................44
SECTION 6.02. Inspection of Property, Books and Records.......................47
SECTION 6.03. Total Secured Debt..............................................47
SECTION 6.04. Ratio of Total Debt to Total Assets Value.......................47
SECTION 6.05. Interest Coverage...............................................47
SECTION 6.06. Restricted Payments.............................................47
SECTION 6.07. Loans or Advances...............................................48
SECTION 6.08. Purchases of Stock by Guarantors................................55
SECTION 6.09. Investments.....................................................48
SECTION 6.10. Dissolution.....................................................49
SECTION 6.11. Consolidations, Mergers and Sales of Assets.....................49
SECTION 6.12. Use of Proceeds.................................................50
SECTION 6.13. Compliance with Laws; Payment of Taxes..........................50
SECTION 6.14. Insurance.......................................................51
SECTION 6.15. Change in Fiscal Year...........................................51
SECTION 6.16. Maintenance of Property; Principal Business.....................51
SECTION 6.17. Environmental Notices...........................................51
SECTION 6.18. Environmental Matters...........................................51
SECTION 6.19. Environmental Release...........................................52
SECTION 6.20. Transactions with Affiliates....................................52
SECTION 6.21. Amendment of Other Agreements...................................52
SECTION 6.22. Qualification as a Real Estate Investment Trust;
General Partner....................................52
SECTION 6.23. Significant Subsidiaries to be Guarantors; Election to
Become Guarantor...................................60
SECTION 6.24. Certain Provisions Regarding Eligible
Properties.........................................53
SECTION 6.25 Restrictions of Certain Additional Guarantees...................53
SECTION 6.26 Maintenance of Existence........................................53
SECTION 6.27 Ratio of Total Unencumbered Assets Value to
Unsecured Funded Debt..............................53
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default...............................................53
SECTION 7.02. Notice of Default...............................................56
ARTICLE VIII
THE AGENT
SECTION 8.01. Appointment; Powers and Immunities..............................56
SECTION 8.02. Reliance by Agent...............................................57
SECTION 8.03. Defaults........................................................58
SECTION 8.04. Rights of Agent and its Affiliates as a Bank....................58
SECTION 8.05. Indemnification.................................................58
SECTION 8.06 Consequential Damages...........................................59
SECTION 8.07. Payee of Note Treated as Owner..................................59
SECTION 8.08. Nonreliance on Agent and Other Banks............................59
SECTION 8.09. Failure to Act..................................................60
SECTION 8.10. Resignation or Removal of Agent.................................60
SECTION 8.11. Agent's Right to Replace Non-Qualifying Bank...................60
ARTICLE IX
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 9.01. Basis for Determining Interest Rate Inadequate
or Unfair..........................................61
SECTION 9.02. Illegality......................................................62
SECTION 9.03. Increased Cost and Reduced Return...............................63
SECTION 9.04. Base Rate Loans Substituted for Affected Euro-
Dollar Loans.......................................64
SECTION 9.05. Compensation....................................................64
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices........................................................65
SECTION 10.02. No Waivers.....................................................65
SECTION 10.03. Expenses; Documentary Taxes....................................65
SECTION 10.04. Indemnification................................................66
SECTION 10.05. Sharing of Setoffs.............................................66
SECTION 10.06. Amendments and Waivers.........................................67
SECTION 10.07. No Margin Stock Collateral.....................................68
SECTION 10.08. Successors and Assigns.........................................68
SECTION 10.09. Confidentiality................................................70
SECTION 10.10. Representation by Banks........................................71
SECTION 10.11. Obligations Several............................................71
SECTION 10.12. Georgia Law....................................................71
SECTION 10.13. Severability...................................................71
SECTION 10.14. Interest.......................................................71
SECTION 10.15. Interpretation.................................................72
SECTION 10.16. Waiver of Jury Trial; Consent to Jurisdiction..................73
SECTION 10.17. Counterparts...................................................73
SECTION 10.18. Source of Funds -- ERISA.......................................73
SECTION 10.19. Entire Agreement...............................................73
SECTION 10.20. More Restrictive Agreements....................................73
EXHIBIT A Form of Reimbursement Note
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H-1 Form of Officer's Certificate
EXHIBIT H-2 Form of Alternate Officer's Certificate
EXHIBIT I Form of Borrowing Base Certificate
EXHIBIT J Form of Guaranty
EXHIBIT K Form of Contribution Agreement
Schedule 5.08 Subsidiaries
<PAGE>
REIMBURSEMENT AGREEMENT
REIMBURSEMENT AGREEMENT dated as of October 1, 1997 among GABLES REALTY LIMITED
PARTNERSHIP, the BANKS listed on the signature pages hereof and WACHOVIA BANK,
N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The terms as defined in this Section 1.01 shall, for
all purposes of this Agreement and any amendment hereto (except as herein
otherwise expressly provided or unless the context otherwise requires), have the
meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Affiliate" of any relevant Person means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the relevant Person (a
"Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank, N.A., a national banking association organized
under the laws of the United States of America, in its capacity as agent for the
Banks hereunder, and its successors and permitted assigns in such capacity.
"Agent's Letter Agreement" means that certain letter agreement, dated as of
_________, 1997 between the Borrower and the Agent, but only as it relates to
certain fees from time to time payable by the Borrower to the Agent.
"Agreement" means this Reimbursement Agreement, together with all amendments and
supplements hereto.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Assignment and Acceptance" means an Assignment and Acceptance executed in
accordance with Section 10.08(c) in the form attached as Exhibit D.
"Authority" has the meaning set forth in Section 9.02.
"Bank" means each bank listed on the signature pages hereof as having a
Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate per annum equal
to the higher as of such day of (i) the Prime Rate, or (ii) three quarters of
one percent above the Federal Funds Rate. For purposes of determining the Base
Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be
effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear interest at a rate based
upon the Base Rate, and is to be made as a Base Rate Loan pursuant to the
applicable Notice of Borrowing, Section 2.02(f), or Article VIII, as applicable.
"Bond Related Mortgage" means a Mortgage on Eligible Property which is granted
(i) to an institutional trustee with respect to revenue bonds or similar
instruments, to which trustee a standby letter of credit is issued as credit
enhancement for such revenue bonds or similar instruments and (ii) to secure
obligations which are payable with the proceeds of a draw under such letter of
credit.
"Borrower" means Gables Realty Limited Partnership, a Delaware limited
partnership, and its successors and
its permitted assigns.
"Borrowing" means a borrowing hereunder consisting of Loans.
"Borrowing Base" means the sum of each of the following, as determined by
reference to the most recent Borrowing Base Certificate furnished pursuant to
Section 4.01(h) or Section 6.01(h), as applicable:
(i) an amount equal to the product of: (x) 7.22222; times (y) the Net Operating
Income for the 12 month period ending on the last day of the month just
ended prior to the date of determination, from each Eligible Property which
either was on average at least 90% Economically Occupied during, or with
respect to which the Construction Period Termination Date occurred prior to
the commencement of, such 12 month period; provided, that if an Eligible
Property satisfies the criteria set forth in both this clause (i) and in
clause (ii) below, it shall be included in the calculations only in this
clause (i); plus
(ii) an amount equal to the product of: (x) 28.88889; times (y) the Net
Operating Income for the 3 month period ending on the last day of the month
just ended prior to the date of determination, from each Eligible Property
with respect to which the Construction Period Termination Date did not
occur prior to the commencement of the 12 month period ending on the last
day of the month just ended prior to the date of determination; plus
(iii)an amount equal to the lesser of: (x) 50% of the aggregate amount of cash
expenditures (including indirect costs internally allocated in accordance
with GAAP) as of the last day of the month just ended prior to the date of
determination on all Eligible Properties which consist of Properties as to
which the Construction Period Termination Date has not occurred as of such
last day of the month just ended (provided, that no more than an aggregate
of $5,000,000 for all Eligible Properties shall be included for land on
which construction has not commenced); and (y) $50,000,000; less
(iv) the aggregate amount of all outstanding unsecured Consolidated Debt
including standby letters of credit, other than the outstanding Letter of
Credit Obligations.
"Borrowing Base Certificate" means a certificate substantially in the form of
Exhibit I, duly executed by the chief financial officer of the General Partner,
setting forth in reasonable detail the calculations for each component of the
Borrowing Base, and certifying availability of funds sufficient to complete all
Eligible Properties then under construction.
"Capital Stock" means any nonredeemable capital stock or shares of beneficial
ownership of GBP or any Consolidated Subsidiary (to the extent issued to a
Person other than GBP), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. 9601 et. seq. and its implementing regulations and
amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation and
Liability Inventory System established pursuant to CERCLA.
"Change in Control" shall mean the occurrence of any of the following: (i) more
than 50% of the outstanding voting common stock of GBP is owned, directly or
indirectly, by less than 6 "individuals" (as provided in Section 542(a)(2) of
the Code); or (ii) a majority of the Persons comprising the Board of Directors
of GBP shall during any 12 month period cease to serve on the Board of Directors
of GBP for any reason other than disability or death; or (iii) the Borrower or
any Guarantor shall fail to maintain their current partnership or corporate
status; or (iv) GBP shall fail to own at least 65% of the partnership interests
in the Borrower; or (v) the Borrower shall fail to own at least 99% of the
partnership interests in Gable-Tennessee Properties and Candlewood-Indian Creek,
L.P.
"Change of Law" shall have the meaning set forth in Section 9.02.
"Closing Certificate" has the meaning set forth in Section 4.01(e).
"Closing Date" means October 1, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
Federal tax code.
"Commitment" means, with respect to each Bank, (i) the amount set forth opposite
the name of such Bank on the signature pages hereof, and (ii) as to any Bank
which enters into any Assignment and Acceptance (whether as transferor Bank or
as Assignee thereunder), the amount of such Bank's Commitment after giving
effect to such Assignment and Acceptance, in each case as such amount may be
reduced from time to time pursuant to Sections 2.07 and 2.08.
"Commitment Percentage" for any Bank means the percentage which such Bank's
Commitment bears to the aggregate Commitment of all Banks.
"Compliance Certificate" has the meaning set forth in Section 6.01(c).
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Income Available for Debt Service" shall mean, calculated on a
consolidated basis, the sum of the Borrower's and its Subsidiaries': (i) net
income before minority interests and extraordinary items in accordance with
GAAP, plus (ii)depreciation and amortization, plus (iii) losses from sales or
joint ventures, plus (iv) increases in deferred taxes and other non-cash items,
minus (v) gains from sales or joint ventures, minus (vi) decreases in deferred
taxes and other non-cash items, plus (vii) interest expense and letter of credit
fees on tax exempt bonds and plus (viii) taxes (excluding ad valorem taxes).
"Consolidated Income Available for Distribution" means, in any calendar year,
the sum of the following for such calendar year, calculated on a consolidated
basis for the Borrower and its Subsidiaries: (i) Consolidated Income Available
for Debt Service, less (ii) interest expense and letter of credit fees on tax
exempt bonds (including fees payable with respect to the Letters of Credit
pursuant to Section 3.06), and less (iii) taxes (excluding ad valorem taxes and
taxes on gains described in clause (v) of the definition of Consolidated Income
Available for Debt Service).
"Consolidated Interest Expense" for any period means interest in respect of Debt
(excluding capitalized interest) of the Borrower or any of its Consolidated
Subsidiaries outstanding during such period.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity the
accounts of which, in accordance with GAAP, would be consolidated with those of
the Borrower in its consolidated financial statements as of such date.
"Consolidated Total Assets" means, at any time, the total assets of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis, as set
forth or reflected on the most recent consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries, prepared in accordance with GAAP.
"Contribution Agreement" means the Contribution Agreement of even date herewith
in substantially the form of Exhibit K to be executed by the Borrower and the
Guarantors.
"Construction Period Termination Date" means, with respect to construction of
Multi-Family Properties for Eligible Properties, the date which is 3 months
after the issuance of a permanent certificate of occupancy for the last unit of
such Multi-Family Property which is an Eligible Property.
"Controlled Group" means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.
"Current Maturities of Long Term Debt" means all payments in respect of Long
Term Debt (other than Debt under this Agreement) that are required to be made
within one year from the date of determination, whether or not the obligation to
make such payments would constitute a current liability of the obligor under
GAAP, excluding, however, any such payment required to be made on the ultimate
maturity date of such Debt.
"Debt" of any Person means at any date, without duplication, (i) all obligations
of such Person for borrowed money, (ii) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (iii) all obligations
of such Person to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business, (iv)
all obligations of such Person as lessee under capital leases, (v) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts payable under a banker's acceptance, (vi) all Redeemable Preferred Stock
of such Person (in the event such Person is a corporation), (vii) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid or to be paid or to be paid under a letter of credit or similar
instrument, (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt of
others Guaranteed by such Person.
"Debt Rating" means at any time whichever is the higher of the rating of the
Borrower's senior unsecured, unenhanced debt (or, if no such debt exists, its
issuer credit rating for debt of such type) by Moody's Investor Service or
Standard and Poor's (as such rating may change from time to time, either
pursuant to Section 2.05(a) or otherwise) (provided, that in the event of a
double or greater split rating, the rating immediately above the lower rating
shall apply), or if only one of them rates the Borrower's senior unsecured,
unenhanced debt, such rating.
"Default" means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the sum of 2% plus
the interest rate (including the Applicable Margin) which is applicable to such
Loan hereunder.
"Dollars" or "$" means dollars in lawful currency of the United States of
America.
"Domestic Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Georgia are authorized by law to close (including,
without limitation, any day which is a federal banking holiday in the United
States of America).
"Economically Occupied" means, with respect to any Eligible Property or
Multi-Family Property and in reference to a specified percentage, that tenants
paying rental obligations are occupying at least the specified percentage of the
total number of units at such Eligible Property or Multi-Family Property, as the
case may be.
"Eligible Property" means a Multi-Family Property of the Borrower or any of the
Guarantors consisting of real estate as to which there is no Mortgage in
existence encumbering such Property, other than, if applicable, a Bond Related
Mortgage, and such Multi-Family Property is subject to no other Liens or
encumbrances, other than Permitted Encumbrances.
"Environmental Authority" means any foreign, federal, state, local or regional
government that exercises any form of jurisdiction or authority under any
Environmental Requirement. "Environmental Authorizations" means all licenses,
permits, orders, approvals, notices, registrations or other legal prerequisites
for conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or orders
arising from or in any way associated with any Environmental Requirements,
whether or not entered upon consent, or written agreements with an Environmental
Authority or other entity arising from or in any way associated with any
Environmental Requirement, whether or not incorporated in a judgment, decree or
order.
"Environmental Liabilities" means any liabilities, whether accrued, contingent
or otherwise, arising from and in any way associated with any Environmental
Requirements.
"Environmental Notices" means notice from any Environmental Authority or by any
other person or entity, of possible or alleged noncompliance with or liability
under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative proceedings
arising from or in any way associated with any Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA or under any
applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to health,
safety or the environment and applicable to the Borrower, any Subsidiary or the
Properties, including but not limited to any such requirement under CERCLA or
similar state legislation and all federal, state and local laws, ordinances,
regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, or any successor law. Any reference to any provision of ERISA
shall also be deemed to be a reference to any successor provision or provisions
thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means a Loan which bears or is to bear interest at a rate
based upon the Adjusted London Interbank Offered Rate, and to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.05(c).
"Event of Default" has the meaning set forth in Section 7.01.
"Excess" has the meaning set forth in Section 2.10(b).
"Executive Officer" means any of the following officers of the General Partner:
the chairman, the president, the chief financial officer, the chief accounting
officer, any senior vice president and the secretary.
"Federal Funds Rate" means, for any day, the rate per annum (rounded upward, if
necessary, to the next higher 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day, provided that (i) if the day for which such rate is to be
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (ii) if
such rate is not so published for any day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent on such day on such transactions,
as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fronting Fee" has the meaning ascribed to it in Section 3.06.
"Funded Debt" means, without duplication, Long-Term Debt plus Current Maturities
of Long-Term Debt.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.
"GBP" means Gables Residential Trust, a Maryland trust.
"General Partner" means the sole general partner of the Borrower (which, on the
Closing Date, is Gables GP, Inc.) or, if there is more than one such general
partner, the managing general partner of the Borrower.
"Guarantee" by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guaranty" means the Guaranty Agreement of even date herewith in substantially
the form of Exhibit J to be executed by the Guarantors, unconditionally and
jointly and severally Guaranteeing payment of the Loans, the Reimbursement Notes
and all other obligations of the Borrower to the Agent and the Banks hereunder,
including without limitation all principal, interest, fees, costs, and
compensation and indemnification amounts.
"Guarantors" means any one or more or all of the following, as the context shall
require: (i) GBP, Gables GP, Inc., a Texas corporation, Gables-Tennessee
Properties, a Tennessee general partnership; and (ii) any Significant Subsidiary
which becomes a Guarantor pursuant to Section 6.23; and (iii) any other
Subsidiary which elects to become a Guarantor pursuant to Section 6.23; in each
case subject to the provisions of the last sentence of Section 6.11.
"Hazardous Materials" includes, without limitation, (a) solid or hazardous
waste, as defined in the Resource Conservation and Recovery Act of 1980, 42
U.S.C. 6901 et seq. and its implementing regulations and amendments, or in any
applicable state or local law or regulation, (b) "hazardous substance",
"pollutant", or "contaminant" as defined in CERCLA, or in any applicable state
or local law or regulation, (c) gasoline, or any other petroleum product or
by-product, including, crude oil or any fraction thereof, (d) toxic substances,
as defined in the Toxic Substances Control Act of 1976, or in any applicable
state or local law or regulation and (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide
Act of 1975, or in any applicable state or local law or regulation, as each such
Act, statute or regulation may be amended from time to time. "Interest Period"
means: (1) with respect to each Euro-Dollar Borrowing, the period commencing on
the date of such Borrowing and ending on the numerically corresponding day in
the first, second, third or sixth month thereafter, as the Borrower may elect in
the applicable Notice of Borrowing; provided that:
(a) any Interest Period (subject to paragraph (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall,
subject to paragraph (c) below, end on the last Euro-Dollar Business
Day of the appropriate subsequent calendar month; and
(c) no Interest Period may be selected which begins before the Termination
Date and would otherwise end after the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (subject to paragraph (b) below) which would
otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and
(b) no Interest Period which begins before the Termination Date and would
otherwise end after the Termination Date may be selected.
"Investment" means any investment in any Person, whether by means of purchase or
acquisition of obligations or securities of such Person, capital contribution to
such Person, loan or advance to such Person, making of a time deposit with such
Person, Guarantee or assumption of any obligation of such Person or otherwise.
"Lending Office" means, as to each Bank, its office located at its address set
forth on the signature pages hereof (or identified on the signature pages hereof
as its Lending Office) or such other office as such Bank may hereafter designate
as its Lending Office by notice to the Borrower and the Agent.
"Letters of Credit" has the meaning set forth in Section 3.01.
"Letter of Credit Fee" has the meaning ascribed to it in Section 3.06.
"Letter of Credit Obligations" means, at any particular time, the sum of (a) the
Reimbursement Obligations at such time and (b) the aggregate maximum amount
available for drawing under the Letters of Credit at such time.
"Lien" means, with respect to any asset, any mortgage, deed to secure debt, deed
of trust, lien, pledge, charge, security interest, security title, preferential
arrangement which has the practical effect of constituting a security interest
or encumbrance, or encumbrance or servitude of any kind in respect of such asset
to secure or assure payment of a Debt or a Guarantee, whether by consensual
agreement or by operation of statute or other law, or by any agreement,
contingent or otherwise, to provide any of the foregoing. For the purposes of
this Agreement, the Borrower or any Subsidiary shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Loan" means a Base Rate Loan or Euro-Dollar Loan, and "Loans" means Base Rate
Loans or Euro-Dollar Loans, or any or all of them, as the context shall require.
"Loan Documents" means this Agreement, the Reimbursement Notes, the Guaranty,
the Contribution Agreement, any other document evidencing, relating to or
securing the Loans or the Letters of Credit, and any other document or
instrument delivered from time to time in connection with this Agreement, the
Reimbursement Notes or the Loans or the Letters of Credit, as such documents and
instruments may be amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in Section 2.05(c).
"Long-Term Debt" means at any date any Consolidated Debt which matures (or the
maturity of which may at the option of the Borrower or any Consolidated
Subsidiary be extended such that it matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business or properties of GBP, the General Partner, the
Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Agent or the Banks under the Loan Documents, or the ability of
the Borrower to perform its obligations under the Loan Documents to which it is
a party, as applicable, or (c) the legality, validity or enforceability of any
Loan Document.
"Mortgage" means a mortgage, deed to secure debt, deed of trust or similar
instrument.
"Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3) of
ERISA.
"Multi-Family Property" means residential apartment communities and undeveloped
land acquired for development thereof.
"Net Operating Income" means, for any Multi-Family Property, the portion of
Consolidated Income Available for Debt Service derived from such Multi-Family
Property (which calculation includes an assumed 4% for management services).
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Officer's Certificate" has the meaning set forth in Section 4.01(f).
"Participant" has the meaning set forth in Section 10.08(b).
"Partner Interests" means any partner interests in the Borrower, whether limited
or general.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
"Permitted Encumbrances" means, with respect to any Eligible Property included
in the Borrowing Base, (i) Liens incidental to the conduct of its business or
the ownership of its assets which (x) do not secure Debt and (y) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business, (ii) any Bond Related
Mortgage, and (iii) any other Liens and encumbrances expressly consented to by
the Agent.
"Performance Pricing Determination Date" has the meaning set forth in Section
2.05(a).
"Person" means an individual, a corporation, a partnership, an unincorporated
association, a trust or any other entity or organization, including, but not
limited to, a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (i) maintained by a member of the Controlled Group for
employees of any member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within the
preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and set by Wachovia
from time to time as an interest rate basis for borrowings. The Prime Rate is
but one of several interest rate bases used by Wachovia. Wachovia lends at
interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used or occupied
by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred stock issued by
such Person which is at any time prior to the Termination Date either (i)
mandatorily redeemable for cash (by sinking fund or similar payments or
otherwise) or (ii) redeemable for cash at the option of the holder thereof.
"Refunding Loan" means a new Loan made on the day on which an outstanding Loan
is maturing or a Base Rate Borrowing is being converted to a Euro-Dollar Rate
Borrowing, the proceeds of which are used entirely for the purpose of paying
such maturing Loan or Loan being converted.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.
"Reimbursement Obligations" means the reimbursement or repayment obligations of
the Borrower to the Agent pursuant to Section 3.05 with respect to Letters of
Credit.
"Required Banks" means at any time Banks having at least 66 2/3% of the
aggregate amount of the Commitments or, if the Commitments are no longer in
effect, Banks holding at least 66 2/3% of the aggregate outstanding principal
amount of the Loans.
"Restricted Payment" means (i) any distribution on any Partner Interests (other
than distributions consisting solely of additional Partner Interests) or (ii)
any payment on account of the purchase, redemption, retirement or acquisition of
(a) any Partner Interests or (b) any option, warrant or other right to acquire
Partner Interests.
"Revolving Credit Agreement" means the Amended and Restated Credit Agreement
dated as of August 5, 1997 among the Borrower, Wachovia, as Agent, and the Banks
party thereto, as amended or supplemented from time to time.
"Significant Subsidiary" means any Subsidiary which either (x) has assets which
constitute more than 5% of Consolidated Total Assets at the end of the most
recent Fiscal Quarter, or (y) contributed more than 5% of Consolidated Income
Available for Debt Service during the most recent Fiscal Quarter and the 3
Fiscal Quarters immediately preceding such Fiscal Quarter (or, with respect to
any Subsidiary which existed during the entire 4 Fiscal Quarter period but was
acquired by the Borrower during such period, which would have contributed more
than 5% of Consolidated Income Available for Debt Service during such period had
it been a Subsidiary for the entire period).
"Subsidiary" means (i) any corporation or other entity the majority of the
shares of the non-voting capital stock or other equivalent ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower and/or GBP, and the majority of the shares of
the voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Borrower, GBP, the General Partner, another Subsidiary, and/or one
or more of Marcus E. Bromley, John T. Rippel, Marvin R. Banks, Jr., C. Jordan
Clark and William M. Hammond (or, in the event of death or disability of any of
the foregoing individuals, his respective legal representative(s)), or such
individuals' successors in office as an officer of such Subsidiary or the
Secretary of such Subsidiary, and (ii) any other entity (other than GBP or the
Borrower) the accounts of which are consolidated with the accounts of the
Borrower.
"Reimbursement Notes" means the promissory notes of the Borrower, substantially
in the form of Exhibit A, evidencing the obligation of the Borrower to repay
Loans, together with all amendments, consolidations, modifications, renewals and
supplements thereto.
"Taxes" has the meaning set forth in Section 2.11(c).
"Tender Advance" means a Loan which is made for the sole purpose of paying
Reimbursement Obligations pursuant to Section 3.03(a)(iii).
"Termination Date" means October 1, 2002, provided, that if any of the following
events occur, the Termination Date shall be such earlier date or later date as
is applicable pursuant to the following: (i) such later date to which it is
extended by the Banks pursuant to Section 2.04(b), in their sole and absolute
discretion; (ii) such earlier date on which the Commitments are terminated
pursuant to Section 2.08 following the occurrence of a Change in Control; (iii)
such earlier date on which the Commitments are terminated pursuant to Section
7.01 following the occurrence of an Event of Default; or (iv) such earlier date
on which the Borrower terminates the Commitments entirely pursuant to Section
2.07.
"Third Parties" means all lessees, sublessees, licensees and other users of the
Properties, excluding those users of the Properties in the ordinary course of
the Borrower's business and on a temporary basis.
"Total Assets Value" means the sum of:
(i) the quotient of (x) the Net Operating Income for the 12 month period
ending on the last day of the month just ended prior to the date of
determination, from each Multi-Family Property which either was on
average at least 90% Economically Occupied during, or with respect to
which the Construction Period Termination Date occurred prior to the
commencement of, such 12 month period, divided by (y) 0.09; provided,
that if an Eligible Property satisfies the criteria set forth in both
this clause(i) and in clause (ii) below, it shall be included in the
calculations only in clause (ii) below; plus
(ii) an amount equal to the quotient of (x) 400% of the Net Operating
Income for the 3 month period ending on the last day of the month just
ended prior to the date of determination, from each Multi-Family
Property with respect to which the Construction Period Termination
Date did not occur prior to the commencement of the 12 month period
ending on the last day of the month just ended prior to the date of
determination, divided by (y) 0.09; plus
(iii)an amount equal to 50% of the aggregate amount of cash expenditures
(including indirect costs internally allocated in accordance with
GAAP) as of the last day of the month just ended prior to the date of
determination on all Multi-Family Properties as to which the
Construction Period Termination Date has not occurred as of such last
day of the month just ended.
"Total Debt" shall mean the sum of (i) total liabilities of the Borrower and the
Guarantors, on a consolidated basis, plus (ii) the aggregate amount of Debt
Guaranteed by the Borrower, the Guarantors and the other Subsidiaries (other
than Guarantees which have been fully cash collateralized), plus the face amount
of all letters of credit for which any of the Borrower or the Guarantors is the
account party, determined at the end of the Borrower's most recent Fiscal
Quarter.
"Total Secured Debt" shall mean, without duplication, all Debt of the Borrower
and the Guarantors consisting of: (i) capitalized leases; (ii) money borrowed or
the deferred purchase price of real property which is also secured by a Mortgage
on any real property owned by the Borrower or any Guarantor; or (iii)
reimbursement obligations pertaining to any letter of credit.
"Total Unencumbered Assets Value" means Total Assets Value, but determined with
reference only to Multi-Family Properties which are not subject to a Mortgage,
other than the Arbor Crest project, the Arbor Knoll project and the Wood Arbor
project.
"Transferee" has the meaning set forth in Section 10.08(d).
"Unsecured Funded Debt" means any Funded Debt which is not secured by a Mortgage
on any Property, other than a Bond Related Mortgage.
"Wachovia" means Wachovia Bank, N.A., a national banking association, and its
successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of the
non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Borrower and/or GBP, and all of the shares of the voting capital
stock or other equivalent ownership interests of which are at the time directly
or indirectly owned by the Borrower, GBP, another Wholly Owned Subsidiary,
and/or one or more of Marcus E. Bromley, John T. Rippel, Marvin R. Banks, Jr.,
C. Jordan Clark and William M. Hammond (or, in the event of death or disability
of any of the foregoing individuals, his respective legal representative(s)), or
such individuals' successors in office as an officer of such Subsidiary or the
Secretary of such Subsidiary.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Banks unless with
respect to any such change concurred in by the Borrower's independent public
accountants or required by GAAP, in determining compliance with any of the
provisions of this Agreement or any of the other Loan Documents: (i) the
Borrower shall have objected to determining such compliance on such basis at the
time of delivery of such financial statements, or (ii) the Required Banks shall
so object in writing within 30 days after the delivery of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under Section 6.01
hereof, shall mean the financial statements referred to in Section 5.04).
SECTION 1.03. REFERENCES. Unless otherwise indicated, references in this
Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.
SECTION 1.04. USE OF DEFINED TERMS. All terms defined in this Agreement shall
have the same defined meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall require otherwise.
SECTION 1.05. TERMINOLOGY. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND.
(a) Loans. Each Bank severally agrees, on the terms and conditions set forth
herein, to make Loans to the Borrower from time to time before the
Termination Date; provided that,
(i) immediately after each such Loan is made, the aggregate outstanding
principal amount of Loans by such Bank shall not exceed the amount of
its Commitment,
(ii) there shall be no Excess, and
(iii)all such Loans shall be either (x) Tender Advances or (y) Refunding
Loans.
Each Refunding Loan under this Section shall be in an aggregate principal amount
of $3,000,000 or any larger integral multiple of $500,000 and shall be made from
the several Banks ratably in proportion to their respective Commitments. Within
the foregoing limits, the Borrower may borrow under this Section, repay or, to
the extent permitted by Section 2.09, prepay Loans and reborrow under this
Section at any time before the Termination Date; provided, however, that once
repaid, a Loan which is a Tender Advance may not be reborrowed, except as a
Refunding Loan.
SECTION 2.02. METHOD OF BORROWING.
(a) The Borrower shall give the Agent notice (a "Notice of Borrowing"), which
shall be substantially in the form of Exhibit E, prior to 10:00 A.M.
(Atlanta, Georgia time) on the same Domestic Business Day for each Base
Rate Borrowing and at least 3 Euro-Dollar Business Days before each
Euro-Dollar Borrowing (except that, with respect to Tender Advances, if no
such Notice of Borrowing is so given, such Tender Advance shall be made as
a Base Rate Borrowing), specifying:
(i) the date of such Borrowing, which shall be a Domestic Business Day in
the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii)whether the Borrowing is to be a Base Rate Borrowing or a Euro-Dollar
Borrowing,
(iv) in the case of a Euro-Dollar Borrowing, the duration of the Interest
Period applicable thereto, subject to the provisions of the definition
of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly notify each
Bank of the contents thereof and of such Bank's ratable share of such
Borrowing and such Notice of Borrowing, once received by the Agent, shall
not thereafter be revocable by the Borrower. The Agent also shall notify
each Bank of a Tender Advance to be made automatically pursuant to Section
3.03(a)(iii).
(c) Not later than two (2) hours following the time such notice is given on the
date of each Tender Advance, each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of such
Tender Advance, in Federal or other funds immediately available in Atlanta,
Georgia, to the Agent at its address determined pursuant to Section 10.01.
The Agent will use the funds so received from the Banks for Tender Advances
to pay the related Reimbursement Obligations. If any Bank does not in fact
make its ratable share of such Tender Advance available on such date, the
Agent shall be entitled to recover such Bank's ratable share from such Bank
or the Borrower (and for such purpose shall be entitled to charge such
amount to any account of the Borrower maintained with the Agent), together
with interest thereon for each day during the period from the date of such
Tender Advance until such sum shall be paid in full at a rate per annum
equal to the rate at which the Agent determines that it obtained (or could
have obtained) overnight Federal funds to cover such amount for each such
day during such period, provided that (i) any such payment by the Borrower
of such Bank's ratable share and interest thereon shall be without
prejudice to any rights that the Borrower may have against such Bank and
(ii) until such Bank has paid its ratable share of such Tender Advance,
together with interest pursuant to the foregoing, it will have no interest
in or rights with respect to such Tender Advance for any purpose hereunder.
(d) With respect to the Refunding Loan of each Bank, such Bank shall apply the
proceeds of its Refunding Loan to pay the Loan maturing or being converted
on the date thereof, and no funds actually need be made available by such
Bank to the Agent.
(e) Notwithstanding anything to the contrary contained in this Agreement, no
Euro-Dollar Borrowing may be made if there shall have occurred a Default or
an Event of Default, which Default or Event of Default shall not have been
cured or waived, and all Loans shall be made as Base Rate Loans (but shall
bear interest at the Default Rate, if applicable).
(f) In the event that a Notice of Borrowing fails to specify whether the Loans
comprising such Borrowing are to be Base Rate Loans or Euro-Dollar Loans,
such Loans shall be made as Base Rate Loans. If the Borrower is otherwise
entitled under this Agreement to repay any Loans maturing at the end of an
Interest Period applicable thereto with the proceeds of a new Borrowing,
and the Borrower fails to repay such Loans using its own moneys and fails
to give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Loans mature in an
amount equal to the principal amount of the Loans so maturing, and the
Loans comprising such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein, there shall not
be more than 4 Euro-Dollar Borrowings outstanding at any given time.
SECTION 2.03. REIMBURSEMENT NOTES.
(a) The Loans of each Bank shall be evidenced by a single Reimbursement Note
payable to the order of such Bank for the account of its Lending Office in
an amount equal to the original principal amount of such Bank's Commitment.
(b) Upon receipt of each Bank's Reimbursement Notes pursuant to Section 4.01,
the Agent shall deliver such Reimbursement Notes to such Bank. Each Bank
shall record, and prior to any transfer of its Reimbursement Notes shall
endorse on the schedules forming a part thereof appropriate notations to
evidence, the date, amount and maturity of, and effective interest rate
for, each Loan made by it, the date and amount of each payment of principal
made by the Borrower with respect thereto, and such schedules of each such
Bank's Reimbursement Notes shall constitute rebuttable presumptive evidence
of the respective principal amounts owing and unpaid on such Bank's
Reimbursement Notes; provided that the failure of any Bank to make, or any
error in making, any such recordation or endorsement shall not affect the
obligation of the Borrower hereunder or under the Reimbursement Notes or
the ability of any Bank to assign its Reimbursement Notes. Each Bank is
hereby irrevocably authorized by the Borrower so to endorse its
Reimbursement Notes and to attach to and make a part of any Note a
continuation of any such schedule as and when required.
(c) In the event of loss, theft, destruction, total or partial obliteration,
mutilation or inappropriate cancellation of a Reimbursement Note, the
Borrower will execute and deliver, in lieu thereof, a replacement
Reimbursement Note identical in form and substance to such Reimbursement
Note and dated as of the date of such Reimbursement Note.
SECTION 2.04. MATURITY OF LOANS.
(a) Each Loan included in any Borrowing shall mature, and the principal amount
thereof and interest thereon shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding principal amount of the
Loans, if any, together with all accrued but unpaid interest thereon, if
any, shall be due and payable on October 1, 2002, unless the Termination
Date is otherwise extended by the Banks, in their sole and absolute
discretion. Upon the written request of the Borrower, which request shall
be delivered to the Agent at least 90 days prior to each Extension Date (as
such term is hereinafter defined), the Banks shall have the option (without
any obligation whatsoever so to do) of extending the then current
Termination Date for additional one-year periods from the then current
Termination Date on but not before each of October 1, 1998, October 1,
1999, October 1, 2000 and October 1, 2001 (each, an "Extension Date"), but
in no event shall the Commitment of any Bank or any Loan hereunder be
outstanding for a period greater than 5 years. Notwithstanding any request
by the Borrower as described in the foregoing sentence, in the event that a
Bank chooses, in its sole and absolute discretion, not to extend the
Termination Date for such an additional one-year period, notice shall be
given by such Bank to the Borrower and the Agent not more than 60 days but
not less than 45 days prior to the relevant Extension Date; provided, that
the Termination Date shall not be extended with respect to any of the Banks
unless the Required Banks are willing to extend the Termination Date and
either (x) the remaining Banks shall elect to purchase ratable assignments
(without any obligation so to do) from such terminating Bank (in the form
of an Assignment and Acceptance) in accordance with their respective
percentage of the remaining aggregate Commitments; provided, that, such
Banks shall be provided such opportunity (which opportunity shall allow
such Banks at least 30 days in which to make a decision) prior to the
Borrower finding another bank pursuant to the immediately succeeding clause
(y); and, provided, further, that, should any of the remaining Banks elect
not to purchase such an assignment, then, such other remaining Banks shall
be entitled to purchase an assignment from any terminating Bank which
includes the ratable interest that was otherwise available to such
non-purchasing remaining Bank or Banks, as the case may be, or (y) the
Borrower shall find another bank, acceptable to the Agent, willing to
accept an assignment from such terminating Bank (in the form of an
Assignment and Acceptance) or (z) the Borrower shall reduce the aggregate
Commitments in an amount equal to the Commitment of any such terminating
Bank. Notwithstanding the foregoing, if the Termination Date is not
extended for an additional one year period on each Extension Date, there
shall be no further Extension Dates or extensions of the Termination Date.
(c) Upon extension of the Termination Date in accordance with the terms of
Section 2.04(b) above, the expiration date of any of the Letters of Credit
may be extended by the Agent, subject to the conditions set forth in
Section 3.02.
SECTION 2.05. INTEREST RATES.
(a) "Applicable Margin" means (i) for the period commencing on the Closing Date
to and including the first Performance Pricing Determination Date, (x) for
any Base Rate Loan, 0.25%, and (y) for any Euro-Dollar Loan, 0.80%; and
(ii) from and after the first Performance Pricing Determination Date, (x)
for any Base Rate Loan, (0.25)% and (y) for each Euro-Dollar Loan, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth below as to such type of Loan and the Debt
Rating for the quarterly or annual period ending immediately prior to such
Performance Pricing Determination Date; provided, that if there is no Debt
Rating, the Applicable Margin for Euro-Dollar Loans shall be based upon
Level IV of the table below.
Level I Level II Level III Level IV
------- -------- --------- --------
Debt Rating greater than
or equal to BBB+ BBB BBB- less than BBB-
or or or or
greater than
or equal to Baa1 Baa2 Baa3 less than Baa3
Applicable Margin 0.675 0.80 0.95 1.15
In determining the amounts to be paid by the Borrower pursuant to Sections
2.05(c), the Borrower and the Banks shall refer to the Borrower's Debt
Rating from time to time. For purposes hereof, "Performance Pricing
Determination Date" shall mean each date on which the Debt Rating changes.
Each change in interest and fees as a result of a change in Debt Rating
shall be effective only for Loans (including Refunding Loans) which are
made on or after the relevant Performance Pricing Determination Date. All
determinations hereunder shall be made by the Agent unless the Required
Banks or the Borrower shall object to any such determination. The Borrower
shall promptly notify the Agent of any change in the Debt Rating.
(b) Each Base Rate Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it becomes due,
at a rate per annum equal to the Base Rate for such day less the Applicable
Margin. Such interest shall be payable for each Interest Period on the last
day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per
annum equal to the sum of the Applicable Margin plus the applicable
Adjusted London Interbank Offered Rate for such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 1 month, at intervals of 1
month after the first day thereof. Any overdue principal of and, to the
extent permitted by law, overdue interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per
annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any Interest
Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/100th of 1%) by dividing (i)
the applicable London Interbank Offered Rate for such Interest Period by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar Loan
means for the Interest Period of such Euro-Dollar Loan, the rate per annum
determined on the basis of the offered rate for deposits in Dollars of
amounts equal or comparable to the principal amount of such Euro-Dollar
Loan offered for a term comparable to such Interest Period, which rates
appear on Telerate Page 3750 effective as of 11:00 A.M., London time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period,
provided that if no such offered rates appear on such page, the "London
Interbank Offered Rate" for such Interest Period will be the arithmetic
average (rounded upward, if necessary, to the next higher 1/100th of 1%) of
rates quoted by not less than 2 major banks in New York City, selected by
the Agent, at approximately 10:00 A.M., New York City time, 2 Euro-Dollar
Business Days prior to the first day of such Interest Period, for deposits
in Dollars offered by leading European banks for a period comparable to
such Interest Period in an amount equal or comparable to the principal
amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the
Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or
any category of extensions of credit or other assets which includes loans
by a non-United States office of any Bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the Borrower and the Banks
by telecopier of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(e) After the occurrence and during the continuance of an Event of Default, the
principal amount of the Loans (and, to the extent permitted by applicable
law, all accrued interest thereon) may, at the election of the Required
Banks, bear interest at the Default Rate.
SECTION 2.06. AGENT'S FEES. The Borrower shall pay to the Agent, for the account
and sole benefit of the Agent, such fees and other amounts at such times as set
forth in the Agent's Letter Agreement.
SECTION 2.07. PAYMENT OF FEES UPON TERMINATION OF LETTERS OF CREDIT. If any
Letter of Credit is terminated in its entirety, all accrued fees (as provided
under Section 3.06) with respect thereto shall be due and payable on the
effective date of such termination.
SECTION 2.08. MANDATORY REDUCTION AND TERMINATION OF COMMITMENTS. The
Commitments shall terminate on the Termination Date and any Loans then
outstanding (together with accrued interest thereon) shall be due and payable on
such date. In the event of a Change in Control, the Agent (acting at the
direction of the Required Banks) may terminate the Commitments on a date
specified in a notice to the Borrower, which date (i) must be at least 3
Domestic Business Days following the date of such notice, and (ii) shall
constitute the Termination Date for all purposes hereunder, in which event (x)
no Tender Advances shall be made thereafter, and (y) to the extent of any
existing Letter of Credit Obligations, the Borrower shall immediately deposit
with the Agent the principal amount thereof and the amount so deposited shall be
set aside as a cash collateral reserve for payment of the Reimbursement
Obligations relating to Letters of Credit which are subsequently funded,
pursuant to Section 7.01.
SECTION 2.09. OPTIONAL PREPAYMENTS.
(a) The Borrower may, upon at least 2 Domestic Business Days' notice to the
Agent, prepay any Euro-Dollar Borrowing in whole at any time, or from time
to time in part in amounts aggregating at least $3,000,000 or any larger
integral multiple of $500,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment, plus the
amount of compensation determined to be due pursuant to Section 9.05, if
such prepayment is not made on the last of an Interest Period. Each such
optional prepayment shall be applied to prepay ratably the Euro-Dollar
Loans of the several Banks included in such Euro-Dollar Borrowing.
(b) The Borrower may, upon at least 1 Domestic Business Days' notice to the
Agent, prepay any Base Rate Borrowing in whole at any time, or from time to
time in part in amounts aggregating at least $3,000,000 or any larger
integral multiple of $500,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the Base Rate Loans
of the several Banks included in such Base Rate Borrowing.
(c) Upon receipt of a notice of prepayment pursuant to this Section 2.09, the
Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice, once received by
the Agent, shall not thereafter be revocable by the Borrower.
SECTION 2.10. MANDATORY PREPAYMENTS.
(a) On each date on which the Commitments are reduced pursuant to Section 2.07,
the Borrower shall repay or prepay such principal amount of the outstanding
Loans, if any (together with interest accrued thereon and any amount
required to be paid pursuant to Section 9.05(a)), as may be necessary so
that after such payment the aggregate unpaid principal amount of the Loans
does not exceed the aggregate amount of the Commitments as then reduced. On
the Termination Date, the Borrower shall make the payments required to be
made pursuant to Section 2.08.
(b) On each date on which the aggregate outstanding principal amount of all
Loans and the Letter of Credit Obligations exceeds the lesser of (A) the
aggregate amount of the Commitments and (B) the Borrowing Base (the
"Excess"), the Borrower shall repay or prepay such principal amount of the
outstanding Loans, if any (together with interest accrued thereon and any
amount due under Section 9.05(a)), by the amount of the Excess.
(c) Each such payment or prepayment shall be applied ratably to the Loans of
the Banks outstanding on the date of payment or prepayment in the following
order of priority:(i) first, to Base Rate Loans; and (ii) secondly, to
Euro-Dollar Loans.
SECTION 2.11. GENERAL PROVISIONS AS TO PAYMENTS.
(a) The Borrower shall make each payment of principal of, and interest on, the
Loans and of fees hereunder, not later than 1:00 P.M. (Atlanta, Georgia
time) on the date when due, in Federal or other funds immediately available
in Atlanta, Georgia, to the Agent at its address referred to in Section
10.01. The Agent will promptly distribute to each Bank its ratable share of
each such payment received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of Base Rate Loans or of fees hereunder
shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business Day, the
date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day.
(c) All payments of principal, interest and fees and all other amounts to be
made by the Borrower pursuant to this Agreement with respect to any Loan or
fee relating thereto shall be paid without deduction for, and free from,
any tax, imposts, levies, duties, deductions, or withholdings of any nature
now or at anytime hereafter imposed by any governmental authority or by any
taxing authority thereof or therein excluding in the case of each Bank,
taxes imposed on or measured by its net income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Bank is organized
or any political subdivision thereof and, in the case of each Bank, taxes
imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that
the Borrower is required by applicable law to make any such withholding or
deduction of Taxes with respect to any Loan or fee or other amount, the
Borrower shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which such
deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to such Bank additional amounts as
may be necessary in order that the amount received by such Bank after the
required withholding or other payment shall equal the amount such Bank
would have received had no such withholding or other payment been made.
Each Bank which is not organized under the laws of the United States or any
state thereof agrees, as soon as practicable after receipt by it of a
request by the Borrower to do so, to file all appropriate forms and take
other appropriate action to obtain a certificate or other appropriate
document from the appropriate governmental authority in the jurisdiction
imposing the relevant Taxes, establishing that it is entitled to receive
payments of principal and interest under this Agreement and the
Reimbursement Notes without deduction and free from withholding of any
Taxes imposed by such jurisdiction; provided that if it is unable, for any
reason, to establish such exemption, or to file such forms and, in any
event, during such period of time as such request for exemption is pending,
the Borrower shall nonetheless remain obligated under the terms of the
immediately preceding paragraph.
In the event any Bank receives a refund of any Taxes paid by the Borrower
pursuant to this Section 2.11(c), it will pay to the Borrower the amount of
such refund promptly upon receipt thereof; provided that if at any time
thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower and the Banks
contained in this Section 2.11(c) shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the
payment in full or cancellation of the Reimbursement Notes.
SECTION 2.12. COMPUTATION OF INTEREST AND FEES. Interest on Base Rate Loans
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
Interest on Euro-Dollar Loans shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed, calculated as to each
Interest Period from and including the first day thereof to but excluding the
last day thereof. Commitment fees and any other fees payable hereunder shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
ARTICLE III.
LETTER OF CREDIT FACILITY
SECTION 3.01. LETTERS OF CREDIT. In order to provide long-term credit
enhancement and short-term liquidity for tax-exempt bonds issued for projects of
the Borrower, the Agent has issued for the account of Borrower, the following
Letters of Credit (individually or collectively, as the context shall require,
the "Letters of Credit"), on the following dates, to enhance the following
revenue bonds:
Letter of
Issue Date Credit Amount Bonds
---------- ------------- -----
March 28, 1996 $7,305,809.00 Housing Authority of County of DeKalb,
Georgia Variable Rate Demand Multifamily
Housing Revenue Bonds (Wood Arbor
Project) Series 1985
March 28, 1996 $13,697,370.00 The Industrial Development Board of the
Metropolitan Government of Nashville and
Davidson County Multifamily Housing
Revenue Bonds (Arbor Knoll Project)
Series 1985
March 28, 1996 $13,032,946.00 The Industrial Development Board of the
Metropolitan Government of Nashville and
Davidson County Multifamily Housing
Revenue Bonds (Arbor Crest Project)
Series 1985
April 1, 1996 $11,784,054.80 Housing Authority of the City of Roswell
Variable Rate Demand Multifamily Housing
Revenue Refunding Bonds (Wood Crossing
Project)Series 1994
SECTION 3.02. NO EXTENSION OR AMENDMENT. The Agent shall not extend or amend any
Letter of Credit if: (i) the expiration date as so extended would be later than
2 Domestic Business Days before the Termination Date; or (ii) an Excess would be
created; or (iii) as of the date of amendment or extension, any order, judgment
or decree of any court, arbitrator or Authority shall purport by its terms to
enjoin or restrain the Agent from amending or extending the Letter of Credit or
issuing any other letter of credit generally or any law, rule or regulation
applicable to the Agent or any request or directive (whether or not having the
force of law) from any Authority with jurisdiction over the Agent shall prohibit
or request that the Agent refrain from the issuance of letters of credit
generally or the amendment or extension of that Letter of Credit.
SECTION 3.03 REIMBURSEMENT OBLIGATIONS; DUTIES OF THE ISSUING BANK
(a) Reimbursement. The Borrower agrees that:
(i) the Borrower shall reimburse the Agent for drawings under a Letter of
Credit issued by it no later than 1 Domestic Business Day after the
payment by the Agent;
(ii) in the event of any circumstances which prevent the Banks from making
Loans for the repayment of Reimbursement Obligations pursuant to
clause (iii) below, such Reimbursement Obligations shall bear interest
from the date of the relevant drawing under the pertinent Letter of
Credit until the date of payment in full thereof at a rate per annum
equal to (A) prior to the date that is 3 Domestic Business Days after
the date of the related payment by the Agent, the Base Rate and (B)
thereafter, the Default Rate; and
(iii)in order to implement the foregoing, upon the occurrence of a draw
under any Letter of Credit, unless the Agent is otherwise reimbursed
in accordance with subsection (i) above, the Borrower irrevocably
authorizes the Agent and the Banks to, and the Agent shall, treat such
nonpayment as a Notice of Borrowing in the amount of such
Reimbursement Obligation and the Banks shall make a Tender Advance to
the Borrower in such amount regardless of whether the conditions
precedent to the making of Loans hereunder have been met. The Borrower
further authorizes the Agent to, and the Agent shall, credit the
proceeds of such Tender Advance so as to immediately eliminate the
liability of the Borrower for Reimbursement Obligations under such
Letter of Credit. Any Tender Advance made under this Section 3.03(a)
shall be Base Rate Loans, unless the Borrower otherwise requests
pursuant to a Notice of Borrowing submitted in accordance with Section
2.02.
(b) Duties of the Agent. Any action taken or omitted to be taken by the Agent
in connection with any Letter of Credit, if taken or omitted in the absence
of willful misconduct or gross negligence, shall not put the Agent under
any resulting liability to any Bank, or relieve that Bank of its
obligations hereunder to the Agent. In determining whether to pay under any
Letter of Credit, the Agent shall have no obligation relative to the Banks
other than to confirm that any documents required to have been delivered
under such Letter of Credit appear to comply on their face, with the
requirements of such Letter of Credit.
SECTION 3.04 PARTICIPATIONS
(a) Purchase of Participations. Each Bank agrees that it has irrevocably and
unconditionally purchased and received from the Agent, without recourse or
warranty, an undivided interest and participation, to the extent of such
Bank's ratable share as set forth as the Commitment Percentage opposite its
name on the signature pages hereof, in such Letter of Credit (or guaranty
pertaining thereto).
(b) Sharing of Letter of Credit Payments. In the event that the Agent makes any
payment under any Letter of Credit for which the Borrower shall not have
repaid such amount to the Agent pursuant to Section 3.05 or which cannot be
paid by a Tender Advance, the Agent shall promptly notify each Bank of such
failure, and each Bank shall promptly and unconditionally pay to the Agent
such Bank's Commitment Percentage of the amount of such payment in Dollars
and in same day funds. If the Agent so notifies such Bank prior to 10:00
A.M. (Atlanta, Georgia time) on any Domestic Business Day, such Bank shall
make available to the Agent its Commitment Percentage of the amount of such
payment on such Domestic Business Day in same day funds. If and to the
extent such Bank shall not have so made its Commitment Percentage of the
amount of such payment available to the Agent, such Bank agrees to pay to
the Agent forthwith on demand such amount together with interest thereon,
for each day from the date such payment was first due until the date such
amount is paid to the Agent at the Base Rate for the first 3 days and
thereafter at the Default Rate. The failure of any Bank to make available
to the Agent its Commitment Percentage of any such payment shall neither
relieve nor increase the obligation of any other Bank hereunder to make
available to the Agent its Commitment Percentage of any payment on the date
such payment is to be made.
(c) Sharing of Reimbursement Obligation Payments. Whenever the Agent receives a
payment on account of a Reimbursement Obligation, including any interest
thereon, as to which the Agent has received any payments from the Banks
pursuant to this Section 3.04, it shall promptly pay to each Bank which has
funded its participating interest therein, in Dollars and in the kind of
funds so received, an amount equal to such Bank's Commitment Percentage
thereof. Each such payment shall be made by the Agent on the Domestic
Business Day on which the funds are paid to such Person, if received prior
to 10:00 am. (Atlanta, Georgia time) on such Domestic Business Day, and
otherwise on the next succeeding Domestic Business Day.
(d) Documentation. Upon the request of any Bank, the Agent shall furnish to
such Bank copies of any Letter of Credit and other documentation relating
to the Letters of Credit.
(e) Obligations Irrevocable. The obligations of the Banks to make payments to
the Agent with respect to a Letter of Credit shall be irrevocable, not
subject to any qualification or exception whatsoever and shall be made in
accordance with, but not subject to, the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of
the following circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
(ii) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, any Bank or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions;
(iii)any draft, certificate or any other document presented under the
Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(v) payment by the Agent under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(vi) payment by the Agent under any Letter of Credit against presentation
of any draft or certificate that does not comply with the terms of
such Letter of Credit, except payment resulting from the gross
negligence or willful misconduct of the Agent; or
(vii)any other circumstances or happenings whatsoever, whether or not
similar to any of the foregoing, except circumstances or happenings
resulting from the gross negligence or willful misconduct of the
Agent.
SECTION 3.05 PAYMENT OF REIMBURSEMENT OBLIGATIONS
(a) Payments to Issuing Bank. The Borrower agrees to pay to the Agent the
amount of all Reimbursement Obligations, interest and other amounts payable
to the Agent under or in connection with any Letter of Credit issued for
such Borrower's account immediately when due, provided that the Agent has
acted in good faith and with reasonable care, irrespective of:
(i) any lack of validity or enforceability of this Agreement or any of the
other Loan Documents;
(ii) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), the Agent, any Bank or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions;
(iii)any draft, certificate or any other document presented under the
Letter of Credit proves to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(v) payment by the Agent under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(vi) payment by the Agent under any Letter of Credit against presentation
of any draft or certificate that does not comply with the terms of
such Letter of Credit, except payment resulting from the gross
negligence or willful misconduct of the Agent; or
(vii)any other circumstances or happenings whatsoever, whether or not
similar to any of the foregoing, except circumstances or happenings
resulting from the gross negligence or willful misconduct of the
Agent.
(b) Recovery or Avoidance of Payments. In the event any payment by or on behalf
of the Borrower received by the Agent with respect to a Letter of Credit
and distributed by the Agent to the Banks on account of their
participations is thereafter set aside, avoided or recovered from the Agent
in connection with any receivership, liquidation or bankruptcy proceeding,
each Bank that received such distribution shall, upon demand by such Agent,
contribute such Bank's Commitment Percentage of the amount set aside,
avoided or recovered together with interest at the rate required to be paid
by the Agent upon the amount required to be repaid by it.
SECTION 3.06. COMPENSATION FOR LETTERS OF CREDIT AND AGENT REPORTING
REQUIREMENTS.
(a) Letter of Credit Fees; Fronting Fees. The Borrower shall pay to the Agent
with respect to each Letter of Credit issued hereunder a quarterly letter
of credit fee ("Letter of Credit Fee") equal to 0.85% per annum of the face
amount of such Letter of Credit, and a quarterly fronting fee equal to
0.10% per annum of the face amount of such Letter of Credit (the "Fronting
Fee"), in each case payable on the Closing Date and quarterly in advance.
Letter of Credit Fees and Fronting Fees payable hereunder shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day). The Agent
shall promptly remit such Letter of Credit Fees, when paid, to the Banks in
accordance with their Commitment Percentages thereof. The Fronting Fees
shall be solely for the account of the Agent.
(b) Agent Charges. The Borrower shall pay to the Agent, solely for its own
account, the standard charges assessed by the Agent in connection with the
issuance, administration, amendment and payment or cancellation of Letters
of Credit issued hereunder, which charges shall be those typically charged
by the Agent to its customers generally having credit and other
characteristics similar to the Borrower, as determined in good faith by the
Agent.
SECTION 3.07. INDEMNIFICATION; EXONERATION.
(a) Indemnification. In addition to amounts payable as elsewhere provided in
this Article III, the Borrower shall protect, indemnify, pay and save the
Agent and each Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees, provided that, notwithstanding anything
contained in O.C.G.A. 13-1-11(9)(2) to the contrary, the Agent and the
Banks shall not be entitled to collect more than attorneys' fees actually
incurred) which the Agent, or any Bank may incur or be subject to as a
consequence of the issuance of any Letter of Credit for the Borrower's
account other than as a result of its gross negligence or willful
misconduct, or, as to the Agent, unless it has not has acted in good faith
and with reasonable care, in each case as determined by a court of
competent jurisdiction, and subject to the provisions of Section 3.07(c).
(b) Assumption of Risk by Borrower. Subject to the provisions of Section
3.07(c), as between the Borrower, the Agent (provided that it has acted in
good faith and with reasonable care) and the Banks, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued for such Borrower's account by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing,
the Agent and the Banks shall not be responsible for (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of the Letters of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason, (iii) failure
of the beneficiary of a Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit, (iv) errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher, for errors in interpretation of technical terms, (vi)
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any Letter of Credit or of the proceeds
thereof, (vii) the misapplication by the beneficiary of a Letter of Credit
of the proceeds of any drawing under such Letter of Credit; and (viii) any
consequences arising from causes beyond the control of the Agent and the
Banks.
(c) Exoneration. In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth (including but not limited to
Section 3.03(a)), any action taken or omitted by the Agent under or in
connection with the Letters of Credit or any related certificates if taken
or omitted in good faith and with reasonable care, shall not put the Agent
or any Bank under any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to any such Person.
SECTION 3.08. CREDIT YIELD PROTECTION; CAPITAL ADEQUACY. If the adoption after
the date hereof of any applicable law, statute, rule, regulation, ordinance,
writ, injunction, decree, order, judgment, guideline or decision of any
Authority ("Governmental Rule"), any change after the date hereof in any
interpretation or administration of any applicable Governmental Rule by any
Person charged with its interpretation or administration or compliance by the
Agent or any Bank (or its Lending Office) with any request or directive (whether
or not having the force of law) of any such Person:
(a) shall subject the Agent or any Bank (or its Lending Office) to any tax
(other than overall net income, gross income, excise, franchise or similar
taxation), duty or other charge with respect to any amount drawn on any
Letter of Credit or its obligation to make any payment under the Letters of
Credit, or to maintain the Letters of Credit, or shall change the basis of
taxation (other than overall net income, gross income, excise, franchise or
similar taxation) of payments to the Agent or any Bank (or its Lending
Office) of any amounts due under this Agreement or any amount drawn on the
Letters of Credit; or
(b) shall impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System or any Person regulating banking activities or banking companies),
special deposit or similar requirements against assets of, deposits with or
for the account of, credit extended by, letters of credit issued or
maintained by, or collateral subject to a lien in favor of the Agent or any
Bank (or its Lending Office), or shall impose on the Agent or any Bank (or
its Lending Office) any other condition affecting any amount drawn on the
Letters of Credit, or its obligation to make any payment under the Letters
of Credit, as the case may be, or to maintain the Letters of Credit; then
the remaining provisions of this Section 3.08 shall apply. If the result of
any of the foregoing (without regard to whether the Agent or any Bank shall
have sold participations in its respective obligations under this
Agreement) is to increase the cost to or to impose a cost on the Agent or
any Bank (or its Lending Office) of making or maintaining any amounts
payable hereunder, of maintaining the Letters of Credit, or to reduce the
amount of any sum received or receivable by the Agent or any Bank (or its
Lending Office) under any Letter of Credit, then:
(i) the Agent or such Bank shall promptly deliver to the Borrower a
certificate stating the change which has occurred or the reserve
requirements or other conditions which have been imposed on the Agent
or such Bank (or its Lending Office) or the request, direction or
requirement with which it has complied, together with the effective
date thereof; and
(ii) the Borrower shall pay to the Agent or such Bank within 15 days of
written request (which request shall state the amount of increased
cost, reduction or payment and the way in which such amount has been
calculated), such amount or amounts as will compensate the Agent or
such Bank for the additional cost, reduction of return or payment
incurred by the Agent or such other Bank and, at the option of the
Borrower at any time while the Agent or such Bank is requesting such
additional amount or amounts, upon the giving of notice to the Bank
and payment to such Bank of all amounts owing to such Bank hereunder,
the Borrower may require such Bank to enter into an Assignment and
Assumption Agreement pursuant to which such Bank shall transfer all of
its rights and interests hereunder and under the other Loan Documents
to a third party selected by the Borrower and consented to by the
Agent. If such written request is given within 30 days after the event
which results in such increased cost, reduction of return or reduction
of payments, such amounts will be calculated from the date of such
event; otherwise, such amounts will be calculated as of the date on
which the Agent or such Bank makes the aforesaid written request. The
written request of the Agent or such Bank as to the additional amounts
payable pursuant to this paragraph delivered to the Borrower shall be
conclusive evidence of the amount thereof in the absence of manifest
error.
(c) If any Bank shall have determined that after the date hereof the adoption
of any applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any Authority, has or would have the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations hereunder
to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank pursuant to a certificate described in paragraph (d) below, the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction.
(d) Each Bank will promptly notify the Borrower and the Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder and including a
reasonable summary of the methods used in making the calculation, shall be
conclusive in the absence of manifest error. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.
(e) The provisions of this Section 3.08 shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS AND BORROWINGS
SECTION 4.01. CONDITIONS TO EFFECTIVENESS AND FIRST BORROWING. Subject to the
provisions of Section 4.03, the obligations of the Agent and each Bank hereunder
is subject to the satisfaction of the conditions set forth in Section 4.02 and
receipt by the Agent of the following (as to the documents described in
paragraphs (a), (c),(d) and (e) below, in sufficient number of counterparts for
delivery of a counterpart to each Bank and retention of one counterpart by the
Agent):
(a) from each of the parties hereto of either (i) a duly executed counterpart
of this Agreement signed by such party or (ii) a facsimile transmission of
such executed counterpart, with the original to be sent to the Agent by
overnight courier);
(b) a duly executed Reimbursement Note for the account of each Bank complying
with the provisions of Section 2.03 and a duly executed Guaranty and
Contribution Agreement;
(c) an opinion letter (i) (together with any opinions of local counsel relied
on therein) of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., counsel for
the Borrower, dated as of the Closing Date, in form and substance
satisfactory to the Agent in its reasonable discretion, the forms attached
hereto as Exhibit B and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Bank may reasonably
request;
(d) an opinion of Jones, Day, Reavis & Pogue, special counsel for the Agent,
dated as of the Closing Date, substantially in the form of Exhibit C and
covering such additional matters relating to the transactions contemplated
hereby as the Agent may reasonably request;
(e) a certificate (the "Closing Certificate") substantially in the form of
Exhibit G), dated as of the Closing Date, signed by an Executive Officer
(other than the Secretary), to the effect that (i) no Default has occurred
and is continuing on the date of the first Borrowing and (ii) the
representations and warranties of the Borrower contained in Article V are
true on and as of the date of the first Borrowing hereunder;
(f) all documents which the Agent or any Bank may reasonably request relating
to the existence of the Borrower, the corporate authority for and the
validity of this Agreement, the Reimbursement Notes and the Guaranty, and
any other matters relevant hereto, all in form and substance satisfactory
to the Agent, including, without limitation, certificates of incumbency of
the General Partner and of each Guarantor, signed by the Secretary or an
Assistant Secretary of the General Partner substantially in the form of
Exhibit H-1 (the "Officer's Certificate") and each Guarantor, certifying as
to the names, true signatures and incumbency of the officer or officers of
the General Partner and Guarantor authorized to execute and deliver the
Loan Documents on behalf of the Borrower or Guarantor, and certified copies
of the following items: (i) the Borrower's Certificate of Limited
Partnership; (ii) the Borrower's Partnership Agreement, (iii) for the
General Partner, its Certificate of Incorporation and its Bylaws, (v) for
GBP, its Declaration of Trust and Bylaws (vi) for the General Partner, a
certificate of the Secretary of State of Texas as to its valid existence as
a Texas corporation, (vii) for Gables - Tennessee Properties, its
Partnership Agreement; (viii) certificates of good standing or valid
existence or other equivalent certificate of the Borrower, the General
Partner, GBP and Gables - Tennessee Properties, as a foreign general or
limited partnership or foreign corporation, as the case may be, in each
other jurisdiction in which it is required to be qualified and (vii) the
action taken by the Board of Directors of the General Partner and each
Guarantor authorizing (A) on behalf of the Borrower, the execution,
delivery and performance of this Agreement, the Reimbursement Notes and the
other Loan Documents to which the Borrower is a party, and (B) on behalf of
each Guarantor, the execution, delivery and performance of the Guaranty;
provided, however, that for purposes of the Closing, in lieu of the
Officer's Certificate and the documents described in clauses (i) through
(v), inclusive, and (vii) the Borrower may elect to deliver an alternative
form of Officer's Certificate, executed on behalf of the General Partner,
GBP and Gables - Tennessee Properties, in the form of Exhibit H-2;
(g) execution and sending of the written notice by Wachovia pursuant to Section
3.11 of the Revolving Credit Agreement to the effect that the letter of
credit facility hereunder has been established and terminating the letter
of credit facility under the Revolving Credit Agreement;
(h) receipt of the initial Borrowing Base Certificate, showing the Borrowing
Base as of the Closing Date;
(i) receipt of the fees required to be paid on the Closing Date pursuant to
Section 3.06.
SECTION 4.02. CONDITIONS TO ALL BORROWINGS. Except as expressly provided in
Section 3.05(iii) as to Tender Advances, the obligation of each Bank to make a
Loan on the occasion of each Borrowing is subject to the satisfaction of the
following conditions except as expressly provided in the last sentence of this
Section 4.02:
(a) receipt by the Agent of a Notice of Borrowing.
(b) the fact that, immediately before and after such Borrowing, no Default
shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Borrower contained
in Article V of this Agreement shall be true on and as of the date of such
Borrowing; and
(d) the fact that, immediately after such Borrowing, the conditions set forth
in clauses (i) and (ii) of Section 2.01 shall have been satisfied.
Each Borrowing hereunder, other than a Tender Advance, shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing as to
the truth and accuracy of the facts specified in paragraphs (b), (c) and (d) of
this Section; provided that such Borrowing shall not be deemed to be such a
representation and warranty to the effect set forth in Section 5.04(b) as to any
event, act or condition having a Material Adverse Effect which has theretofore
been disclosed in writing by the Borrower to the Banks. In no event will the
failure of any condition set forth herein excuse or otherwise affect each Bank's
obligation to purchase participations under the Letters of Credit as set forth
in Section 3.04.
SECTION 4.03. CERTAIN CONDITIONS AND PROVISIONS PERTAINING TO GUARANTY FEDERAL
BANK, F.S.B. Notwithstanding anything in this Agreement to the contrary, it is
acknowledged that as of the Closing Date, approval for execution of this
Agreement by Guaranty Federal Bank, F.S.B. ("Guaranty Federal") has not been
obtained, and Guaranty Federal is not executing this Agreement.
Unless and until counterparts of this Agreement are executed by Guaranty
Federal: (i) Guaranty Federal shall not be a Bank hereunder or have any
Commitment or Commitment Percentage hereunder, notwithstanding the statement of
an amount therefor on the signature pages hereof; (ii) the amount of the
Commitment and Commitment Percentage of Guaranty Federal set forth on the
signature pages hereof shall be added to the Commitment and Commitment
Percentage of Wachovia, and a Reimbursement Note shall be executed and delivered
in favor of Wachovia in such aggregate amount (the "Initial Wachovia Note");
(iii) the Reimbursement Note in favor of Guaranty Federal shall be held in
escrow; (iv) an additional Reimbursement Note in favor of Wachovia in the amount
of its Commitment set forth on the signature pages hereto shall be held in
escrow (the "Wachovia Substitute Note".
If counterparts of this Agreement are executed and delivered by Guaranty Federal
by October 31, 1997, then: (1) the provisions of the foregoing sentence shall no
longer be in effect; (2) Guaranty Federal shall be a Bank hereunder, with a
Commitment and Commitment Percentage as set forth on the signature pages hereof;
(3) the Reimbursement Note in favor of Guaranty Federal shall be delivered to
it; (4) the Wachovia Substitute Note shall be delivered to Wachovia; and (5) the
Initial Wachovia Note shall be returned to the Borrower for cancellation.
If execution of counterparts of this Agreement by Guaranty Federal has not
occurred by October 31, 1997: (1) Guaranty Federal shall have not be a Bank
hereunder or have any Commitment or Commitment Percentage hereunder,
notwithstanding the statement of an amount therefor on the signature pages
hereof; (2) the amount of the Commitment and Commitment Percentage of Guaranty
Federal set forth on the signature pages hereof shall remain added to the
Commitment and Commitment Percentage of Wachovia; and (3) the Reimbursement Note
in favor of Guaranty Federal and the Wachovia Substitute Note shall be returned
to the Borrower for cancellation; provided, however, that in such event, nothing
in this sentence shall prevent Guaranty Federal's thereafter becoming a Bank
hereunder by assignment from any Bank hereunder, subject and pursuant to the
provisions of Section 10.08(c).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower and (by incorporation by reference in the Guaranty) the Guarantors,
as expressly stated, each represent and warrant that:
SECTION 5.01. PARTNERSHIP OR CORPORATE EXISTENCE AND POWER. The Borrower is a
limited partnership duly created and validly existing under the laws of
Delaware, GBP is a trust duly created, validly existing and in good standing
under the laws of Maryland, the General Partner is a corporation duly organized,
validly existing and in good standing under the laws of Texas, and each of the
foregoing is duly qualified to transact business in every jurisdiction where, by
the nature of its business, such qualification is necessary, and has all
partnership powers and all governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted, except where any
such failure does not have and is not reasonably expected to cause a Material
Adverse Effect.
SECTION 5.02. PARTNERSHIP OR CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Borrower of this
Agreement, the Reimbursement Notes and the other Loan Documents and by the
Guarantors of the Guaranty (i) are within the Borrower's partnership powers and
the Guarantor's respective corporate powers, (ii) have been duly authorized by
all necessary partnership or corporate action, (iii) require no action by or in
respect of or filing with, any governmental body, agency or official, other than
filings required by federal or state securities laws with respect to this
Agreement (iv) do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the certificate of limited partnership or
partnership agreement of the Borrower or the articles of incorporation or
by-laws of any Guarantor or of any material agreement, judgment, injunction,
order, decree or other instrument binding upon the Borrower, any Guarantor or
any other Subsidiaries, and (v) do not result in the creation or imposition of
any Lien on any asset of the Borrower, any Guarantor or any other Subsidiaries.
SECTION 5.03. BINDING EFFECT. This Agreement constitutes a valid and binding
agreement of the Borrower enforceable in accordance with its terms, and the
Reimbursement Notes, the Guaranty and the other Loan Documents, when executed
and delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower and the Guarantors parties thereto,
enforceable in accordance with their respective terms, provided that the
enforceability hereof and thereof is subject in each case to general principles
of equity and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 5.04. FINANCIAL AND PROPERTY INFORMATION.
(a) The balance sheet of GBP and the consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of December 31, 1996 and the related
consolidated statements of income, shareholders' equity and cash flows for
the Fiscal Year then ended, in the case of GBP reported on by Arthur
Andersen LLP, copies of which have been delivered to each of the Banks, and
the unaudited financial statement of GBP and consolidated financial
statements of the Borrower for the interim period ended March 31, 1997,
copies of which have been delivered to each of the Banks, fairly present,
in all material respects, in conformity with GAAP, subject in the case of
quarterly statements to normal year end audit adjustments, the consolidated
financial position of GBP and the Borrower and its Consolidated
Subsidiaries, respectively, as of such dates and their consolidated results
of operations and cash flows for such periods stated.
(b) Since December 31, 1996, there has been no event, act, condition or
occurrence having a Material Adverse Effect.
(c) All material information concerning the Properties which has been furnished
to the Banks by the Borrower is true and correct in all material respects.
SECTION 5.05. NO LITIGATION. There is no action, suit or proceeding pending, or
to the knowledge of the Executive Officers, threatened, against or affecting the
Borrower, any Guarantor or any other Subsidiaries before any court or arbitrator
or any governmental body, agency or official which has or is reasonably expected
to cause a Material Adverse Effect or which in any manner draws into question
the validity of or is reasonably expected to impair the ability of the Borrower
or any Guarantor to perform its obligations under, this Agreement, the
Reimbursement Notes, the Guaranty or any of the other Loan Documents.
SECTION 5.06. COMPLIANCE WITH ERISA.
(a) The Borrower and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or a Plan under Title IV of ERISA,
except where any such failure does not involve an aggregate amount in
excess of $2,500,000.
(b) Neither the Borrower nor any member of the Controlled Group is or ever has
been obligated to contribute to any Multiemployer Plan.
SECTION 5.07. COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Borrower, the
Guarantors and the other Subsidiaries are in compliance with all applicable
laws, regulations and similar requirements of governmental authorities, except
where (i) such compliance is being contested in good faith through appropriate
proceedings or (ii) any failure to comply does not have and is not reasonably
expected to cause a Material Adverse Effect. There have been filed on behalf of
the Borrower, the Guarantors and the other Subsidiaries all Federal, state and
local income, excise, property and other tax returns which are required to be
filed by them and all taxes due pursuant to such returns or pursuant to any
assessment received by or on behalf of the Borrower, the Guarantors or any other
Subsidiary have been paid, except: (A) ad valorem taxes not due and payable; and
(B) other liabilities, if (1) they are being contested in good faith and against
which the Borrower, Guarantor or Subsidiary has set up reserves in accordance
with GAAP, or (2) the aggregate amount involved is not in excess of $2,500,000.
The charges, accruals and reserves on the books of the Borrower, the Guarantors
and the other Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower and the Guarantors, adequate. United States
income tax returns of GBP for the 1994 Fiscal Year have been timely filed. GBP
has received no written communication from the Internal Revenue Service
regarding such returns.
SECTION 5.08. SUBSIDIARIES. The Borrower has no Subsidiaries except for those
Subsidiaries listed on Schedule 5.08, as supplemented from time to time, which
accurately sets forth each such Subsidiary's complete name and jurisdiction of
incorporation.
SECTION 5.09. INVESTMENT COMPANY ACT. Neither the Borrower, the Guarantors nor
any other Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 5.10. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower, any
Guarantor nor any Subsidiary is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 5.11. OWNERSHIP OF PROPERTY. Each of the Borrower, the Guarantors and
the Subsidiaries has title to its properties sufficient for the conduct of its
business, except where any such failure does not have and is not reasonably
expected to cause a Material Adverse Effect.
SECTION 5.12. NO DEFAULT. Neither the Borrower, the Guarantors nor any of the
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which has or is reasonably expected to cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
SECTION 5.13. FULL DISCLOSURE. All information heretofore furnished by the
Borrower or any Guarantor to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Borrower to the Agent or any
Bank will be, true, accurate and complete in all material respects or based on
reasonable estimates on the date as of which such information is stated or
certified. The Borrower and the Guarantors have disclosed to the Banks in
writing any and all facts which have had or are reasonably expected to cause a
Material Adverse Effect.
SECTION 5.14. ENVIRONMENTAL MATTERS.
(a) Neither the Borrower, the Guarantors nor any other Subsidiary is, to the
knowledge of the Executive Officers, subject to any Environmental Liability
which has had or is reasonably expected to cause a Material Adverse Effect
and neither the Borrower, the Guarantors nor any other Subsidiary has been
designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA, except as disclosed in writing to the
Agent (and the Agent shall promptly furnish a copy of any such disclosure
to the Banks). None of the Properties has been identified on any current or
proposed (i) National Priorities List under 40 C.F.R. 300, (ii) CERCLIS
list or (iii) any list arising from a state statute similar to CERCLA,
except as disclosed in writing to the Agent.
(b) No Hazardous Materials have been permitted or are being permitted to be
used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at, on, in
or under the Properties, or, to the best of the knowledge of the Executive
Officers, at or from any adjacent site or facility, except for Hazardous
Materials, such as cleaning solvents, pesticides and other materials used,
stored, disposed of, managed, or otherwise handled in all material respects
in compliance with all applicable Environmental Requirements and except as
disclosed in writing to the Agent.
(c) The Borrower, each Guarantor and each of the Subsidiaries, has procured all
Environmental Authorizations necessary for the conduct of its business, and
is in compliance with all Environmental Requirements (including, to the
best knowledge of the Executive Officers, with respect to any Environmental
Releases) in connection with the operation of the Properties and the
Borrower's, each Guarantor's and each other Subsidiary's respective
businesses, except where any such failure to comply does not have and is
not reasonably expected to cause a Material Adverse Effect.
SECTION 5.15. PARTNER INTERESTS AND CAPITAL STOCK. All Partner Interests and
Capital Stock, debentures, bonds, Reimbursement Notes and all other securities
of the Borrower, each Guarantor and each of the other Subsidiaries presently
issued and outstanding are validly and properly issued in accordance with all
applicable laws, including, but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws, except where any such failure
to comply does not and is not reasonably expected to cause a Material Adverse
Effect. The issued shares of Capital Stock of the Borrower's Wholly Owned
Subsidiaries are owned by the Borrower free and clear of any Lien or adverse
claim. At least a majority of the issued shares of non-voting Capital Stock of
each of the Borrower's other Subsidiaries is owned by the Borrower free and
clear of any Lien or adverse claim.
SECTION 5.16. MARGIN STOCK. Neither the Borrower, any Guarantor nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
the provisions of Regulation X.
SECTION 5.17. INSOLVENCY. After giving effect to the execution and delivery of
the Loan Documents and the making of the Loans under this Agreement: (i) neither
the Borrower nor any Guarantor will (x) be "insolvent," within the meaning of
such term as used in O.C.G.A. 18-2-22 or as defined in 101 of the "Bankruptcy
Code", or Section 2 of either the "UFTA" or the "UFCA", or as defined or used in
any "Other Applicable Law" (as those terms are defined below), or (y) be unable
to pay its debts generally as such debts become due within the meaning of
Section 548 of the Bankruptcy Code, Section 4 of the UFTA or Section 6 of the
UFCA, or (z) have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated, within the meaning of Section 548
of the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA; and (ii)
the obligations of the Borrower under the Loan Documents and with respect to the
Loans will not be rendered avoidable under any Other Applicable Law. For
purposes of this Section 5.17, "Bankruptcy Code" means Title 11 of the United
States Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the
Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means any other
applicable state law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
SECTION 5.18. INSURANCE. The Borrower, each Guarantor and each of the
Subsidiaries has (either in the name of the Borrower, such Guarantor or in such
other Subsidiary's own name), with financially sound and reputable insurance
companies having an A.M. Best rating of B+ or better, insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies of established repute
engaged in the same or similar business.
SECTION 5.19. REAL ESTATE INVESTMENT TRUST. GBP is qualified under the Code as a
real estate investment trust.
ARTICLE VI
COVENANTS
The Borrower and (by incorporation by reference in the Guaranty) the Guarantors
agree that, so long as any Bank has any Commitment hereunder or any amount
payable hereunder or under any Note remains unpaid:
SECTION 6.01. INFORMATION. GBP and the Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the end of each
Fiscal Year, a consolidated balance sheet of GBP and its Consolidated
Subsidiaries as of the end of its Fiscal Year and the related consolidated
statements of income, shareholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all certified by Arthur Andersen LLP or other
independent public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications as to the scope
of the audit or as to the going concern nature of the business; provided,
that so long as the Revolving Credit Agreement is in effect, delivery of
the quarterly financial statements pursuant to and in compliance with
Section 6.01(a) thereof shall constitute compliance with the provisions of
this Section 6.01(a);
(b) as soon as available and in any event within 45 days after the end of each
of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated balance
sheet of GBP and its Consolidated Subsidiaries as of the end of such Fiscal
Quarter and the related statement of income and statement of cash flows for
such Fiscal Quarter and for the portion of the Fiscal Year ended at the end
of such Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding Fiscal Quarter and the corresponding portion
of the previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by an
Executive Officer provided, that so long as the Revolving Credit Agreement
is in effect, delivery of the quarterly financial statements pursuant to
and in compliance with Section 6.01(b) thereof shall constitute compliance
with the provisions of this Section 6.01(b);
(c) simultaneously with the delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, a certificate, substantially
in the form of Exhibit F (a "Compliance Certificate"), of an Executive
Officer (i) setting forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the requirements of
Sections 6.03 through 6.09, inclusive, and Sections 6.25 and 6.27, on the
date of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto; provided, that so long as
the Revolving Credit Agreement is in effect, delivery of the "Compliance
Certificate" pursuant to and in compliance with Section 6.01(c) thereof
shall constitute compliance with the provisions of this Section 6.01(c);
(d) within 5 Domestic Business Days after any Executive Officer becomes aware
of the occurrence of any Default, a certificate of an Executive Officer
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the holders of beneficial ownership in
GBP generally, copies of all financial statements, reports and proxy
statements so mailed; provided, that so long as the Revolving Credit
Agreement is in effect, delivery of copies of financial statements, reports
and proxy statements pursuant to and in compliance with Section 6.01(e)
thereof shall constitute compliance with the provisions of this Section
6.01(e)
(f) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form
S-8 or its equivalent) and annual, quarterly or monthly reports (excluding
Form 4, Statement of Changes in Beneficial Ownership, or its equivalent,
unless they reflect a Change in Control), any filing on Form 8-K, and any
filing pursuant to the Williams Act, which GBP shall have filed with the
Securities and Exchange Commission; provided, that so long as the Revolving
Credit Agreement is in effect, delivery of copies of all such pursuant to
and in compliance with Section 6.01(f) thereof shall constitute compliance
with the provisions of this Section 6.01(f);
(g) if and when any member of the Controlled Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) with respect to any Plan which might constitute grounds for
a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy of such
notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy
of such notice;
(h) within 45 Domestic Business Days after the end of each Fiscal Quarter, a
Borrowing Base Certificate as of the last day of the Fiscal Quarter just
ended; provided, however, that at the Borrower's election, Borrower may,
and or at the Agent's election on not less than 10 Domestic Business Days
notice, Borrower shall, submit a Borrowing Base Certificate to the Agent on
or before the twentieth Domestic Business Day after the end of the first or
second month in any Fiscal Quarter, as of the last day of such month;
(i) by April 1 of each year, a report as of the end of such Fiscal Year
containing the following information: (i) a schedule of all outstanding
Debt, showing for each component of Debt, the lender, the total commitment,
the total Debt outstanding, the interest rate, if fixed, or a statement
that the interest rate floats, the term, the required amortization (if any)
and the security (if any); (ii) a schedule of all interest rate protection
agreements, showing for each such agreement, the total dollar amount, the
type of agreement (i.e. cap, collar, swap, etc.) and the term thereof; and
(iii) a development schedule of the announced development pipeline,
including for each announced development project, the project name and
location, the number of units, the expected construction start date, the
expected date of delivery of the first units, the expected stabilization
date, and the total anticipated cost; provided, that so long as the
Revolving Credit Agreement is in effect, delivery of such schedules
pursuant to and in compliance with Section 6.01(i) thereof shall constitute
compliance with the provisions of this Section 6.01(i); and
(j) from time to time such additional information regarding the financial
position or business of the Borrower and its Subsidiaries as the Agent, at
the request of any Bank, may reasonably request.
SECTION 6.02. INSPECTION OF PROPERTY, BOOKS, AND RECORDS. The Borrower and the
Guarantors will (i) keep, and cause each other Consolidated Subsidiary to keep,
proper books of record and account in which full, true and correct entries in
conformity with GAAP shall be made of all dealings and transactions in relation
to its business and activities; and (ii) permit, and cause each other
Consolidated Subsidiary to permit, representatives of any Bank at such Bank's
expense prior to the occurrence of a Default and at the Borrower's or such
Guarantor's expense after the occurrence and during the continuance of a Default
to visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower and the Guarantors
agree to cooperate and assist in such visits and inspections, in each case at
such reasonable times, upon reasonable prior notice to the Borrower or such
Guarantor and as often as may reasonably be desired.
SECTION 6.03. TOTAL SECURED DEBT. The amount of Total Secured Debt will not at
any time exceed 40% of Total Assets Value.
SECTION 6.04. RATIO OF TOTAL DEBT TO TOTAL ASSETS VALUE. The ratio of Total Debt
to Total Assets Value will not at any time exceed 0.55 to 1.00.
SECTION 6.05. INTEREST COVERAGE. The ratio of (x) Consolidated Income Available
for Debt Service to (y) Consolidated Interest Expense shall at all times exceed
2.00 to 1.0, calculated at the end of each Fiscal Quarter, based on the Fiscal
Quarter just ended and the immediately preceding three Fiscal Quarters.
SECTION 6.06. RESTRICTED PAYMENTS. The Borrower's Restricted Payments in any
calendar year shall not exceed 95% of Consolidated Income Available for
Distribution for such period, unless (i) the Borrower must pay out an amount in
excess of 95% of Consolidated Income Available for Distribution to permit GBP to
preserve its status as a real estate investment trust under the applicable
provision of the Code, or (ii) GBP declares one or more capital gains dividends
within such calendar year (in which event the amount of additional Restricted
Payments that may be made as a result of such declaration as provided in this
clause (ii) shall not exceed the greater of (A) the income tax liability of the
Borrower's partners with respect thereto and (B) $1,500,000). In the event that
the Borrower or GBP receives a public debt rating of BBB- or better from
Standard & Poors or Baa3 or better from Moody's Investor's Service and so long
as that rating is affirmed during each year, the Borrower's Restricted Payments
in any calendar year will be limited to 100% of Consolidated Income Available
for Distribution for such calendar year with the same exceptions contained in
clauses (i) and (ii) of this Section 6.06.
SECTION 6.07. LOANS OR ADVANCES. Neither the Borrower, the Guarantors nor any
other Subsidiary shall make loans or advances to any Person except: (i) deposits
required by government agencies or public utilities; (ii) loans and advances
made by Borrower or any Guarantor to any Guarantor or to Borrower; (iii) loans
or advances to directors, officers and employees in the ordinary course of
business in the aggregate outstanding at any time not exceeding $1,000,000; (iv)
loans or advances to employees in the ordinary course of business which are
secured by stock in GBP in the aggregate outstanding at any time not exceeding
$5,000,000; and (v) other loans or advances made in the ordinary course of
business in the aggregate outstanding at any time not exceeding 5% of the book
value of the total assets of the Borrower and its Consolidated Subsidiaries,
determined in accordance with GAAP minus all amounts outstanding under clause
(iii) of this Section 6.07 and minus Investments made and permitted pursuant to
Section 6.09(D); provided that after giving effect to the making of any loans,
advances or deposits permitted by clauses (i), (ii), (iii) or (iv), the Borrower
will be in full compliance with all the provisions of this Agreement.
SECTION 6.08. PURCHASES OF STOCK BY GUARANTORS. Except for purchases or
acquisitions of shares of GBP's Capital Stock made for purposes of having such
shares available for purchase by GBP shareholders pursuant to GBP's dividend
reinvestment and share purchase program known as "The Share Builder Plan", as
amended as of the Closing Date and, subject to the approval of the Required
Banks (not to be unreasonably withheld), as it may thereafter be amended, the
Guarantors shall not purchase or acquire any shares of GBP's Capital Stock
during any 12 month period in excess of 10% of all GBP's Capital Stock
outstanding on the first day of such period.
SECTION 6.09. INVESTMENTS. Neither the Borrower nor the Guarantors shall make
Investments in any Person except: (A) Investments in (i) direct obligations of
the United States Government, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Agent, (iii) commercial
paper rated A1 or the equivalent thereof by Standard & Poor's Corporation or P1
or the equivalent thereof by Moody's Investors Service, Inc. and in either case
maturing within 9 months after the date of acquisition, (iv) tender bonds the
payment of the principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term certificates of deposit
are rated at least AA or the equivalent thereof by Standard & Poor's Corporation
and Aa or the equivalent thereof by Moody's Investors Service, Inc., (v) insured
money market Investments and/or (vi) Investments in debt or equity securities
rated at least BBB+ or the equivalent thereof by Standard & Poor's Corporation
or at least Baa1 or the equivalent thereof by Moody's Investors Service not
exceeding an aggregate amount outstanding at any time of $25,000,000; (B)
Investments permitted by clauses (i), (ii) and (iii) of Section 6.07 or by
Section 6.08; (C) Investments in Significant Subsidiaries; and (D) other
Investments not exceeding an aggregate amount outstanding at any time 10% of the
book value of the total assets of the Borrower and its Consolidated
Subsidiaries, determined in accordance with GAAP, less loans and advances
outstanding and permitted by clause (iv) of Section 6.07.
SECTION 6.10. DISSOLUTION. Neither the Borrower, the Guarantors nor any of the
other Subsidiaries shall suffer or permit dissolution or liquidation either in
whole or in part or redeem or retire any shares of its own stock or that of any
Subsidiary, except to the extent permitted by Section 6.11 and except for
purchases by GBP of its own Capital Stock to the extent permitted by Section
6.08, and subject to the rights of limited partners of the Borrower to convert
or exchange their Partner Interests in the Borrower to stock in GBP.
SECTION 6.11. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The Borrower and the
Guarantors will not, nor will the Borrower permit any other Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise transfer all or
any substantial part of its assets to, any other Person, or discontinue or
eliminate any business line or segment, provided that
(a) the Borrower, any Guarantor and any other Subsidiary may merge with another
Person if (i) such Person was organized under the laws of the United States
of America or one of its states, (ii) the Borrower or such Guarantor or
other Subsidiary is the corporation surviving such merger and (iii)
immediately after giving effect to such merger, no Default shall have
occurred and be continuing,
(b) any Guarantor may merge with or transfer assets to another Guarantor or the
Borrower (with the Borrower as the survivor of any such merger) and any
other Subsidiary may merge with or transfer assets to a Guarantor, another
Subsidiary, or the Borrower (with the Borrower as the survivor of any such
merger), and
(c) the foregoing limitation on the sale, lease or other transfer of assets and
on the discontinuation or elimination of a business line or segment shall
not prohibit, during any Fiscal Quarter, a transfer of assets or the
discontinuance or elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the aggregate
assets to be so transferred or utilized in a business line or segment to be
so discontinued, when combined with all other assets transferred, and all
other assets utilized in all other business lines or segments discontinued,
during such Fiscal Quarter and the immediately preceding 3 Fiscal Quarters,
either (x) constituted more than 5% of Consolidated Total Assets at the end
of the Fiscal Quarter immediately preceding such Fiscal Quarter, or (y)
contributed more than 5% of Consolidated Income Available for Debt Service
during the 4 Fiscal Quarters immediately preceding such Fiscal Quarter.
In the case of any Subsidiary which transfers substantially all of its
assets pursuant to clause (c) of the preceding sentence, and in the case of
any Subsidiary the stock of which is being sold and with respect to which
clause (c) would have been satisfied if the transaction had been a sale of
assets of such Subsidiary, such Subsidiary may dissolve and, if it is a
Guarantor, such Subsidiaries shall be entitled to obtain from the Agent a
written release from the Guaranty, provided that it can demonstrate to the
reasonable satisfaction of the Agent that (A) it was not a Significant
Subsidiary immediately prior to such transfer of assets, and (B) it has
repaid in full all Debt owed to the Borrower or any other Guarantor which
was incurred after the Closing Date (or such Debt has been assumed by the
Borrower or a Significant Subsidiary), and upon obtaining such written
release, it shall no longer be a Guarantor for any purpose hereunder.
SECTION 6.12. USE OF PROCEEDS. The proceeds of the Loans may be used only for
Tender Advances and Refunding Loans.
SECTION 6.13. COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Borrower and
Guarantors will, and will cause each of the other Subsidiaries and each member
of the Controlled Group to, comply with applicable laws (including but not
limited to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where (i) the necessity
of such compliance is being contested in good faith through appropriate
proceedings, or (ii) any failure to comply which does not have and is not
reasonably expected to cause a Material Adverse Effect. The Borrower and
Guarantors will, and will cause each of the other Subsidiaries to, pay promptly
when due all taxes, assessments, governmental charges, claims for labor,
supplies, rent and other obligations which, if unpaid, might become a Lien
against the Property of the Borrower, any Guarantor or any other Subsidiary,
except (A) liabilities being contested in good faith and against which, if
requested by the Agent, the Borrower, Guarantor or Subsidiary will set up
reserves in accordance with GAAP, and (B) liabilities in an aggregate amount for
all Properties not in excess of $1,000,000.
SECTION 6.14. INSURANCE. The Borrower and the Guarantors will maintain, and will
cause each of the other Subsidiaries to maintain (either in the name of the
Borrower or such Guarantor's or such other Subsidiary's own name), with
financially sound and reputable insurance companies having an A.M. Best rating
of B+ or better, insurance on all its property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar business.
SECTION 6.15. CHANGE IN FISCAL YEAR. The Borrower and the Guarantors will not,
and will cause the other Subsidiaries to not, change its Fiscal Year without the
consent of the Required Banks.
SECTION 6.16. MAINTENANCE OF PROPERTY; PRINCIPAL BUSINESS. The Borrower and the
Guarantors shall, and shall cause each other Subsidiary to, maintain all of its
properties and assets in good condition, repair and working order, ordinary wear
and tear excepted, and maintain all Multi-Family Property (other than Property
consisting of land acquired with existing improvements which are to be
substantially demolished) in a first class manner. The principal business
operations of the Borrower and the Subsidiaries, taken as a whole, will be
directly or indirectly related to Multi-Family Properties.
SECTION 6.17. ENVIRONMENTAL NOTICES. Promptly upon any Executive Officer's
becoming aware thereof, the Borrower and the Guarantors shall furnish to the
Banks and the Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, which
has had or is reasonably expected to cause a Material Adverse Effect.
SECTION 6.18. ENVIRONMENTAL MATTERS. The Borrower and the Guarantors will not,
and will cause the other Subsidiaries to not, and will not permit any Third
Party to, use, produce, manufacture, process, treat, recycle, generate, store,
dispose of, manage at, or otherwise handle, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials such as
cleaning solvents, pesticides and other materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed, managed, or otherwise
handled in compliance in all material respects with all applicable Environmental
Requirements.
SECTION 6.19. ENVIRONMENTAL RELEASE. The Borrower and the Guarantors agree that
upon any Executive Officer's becoming aware of the occurrence of an
Environmental Release at or on any of the Properties the Borrower will act
promptly to investigate the extent of, and to take appropriate action to
remediate such Environmental Release, whether or not ordered or otherwise
directed to do so by any Environmental Authority.
SECTION 6.20. TRANSACTIONS WITH AFFILIATES. Neither the Borrower, the Guarantors
nor any of the other Subsidiaries shall enter into, or be a party to, any
transaction with any Affiliate of the Borrower, such Guarantor or such other
Subsidiary (which Affiliate is not GBP, the Borrower, a Guarantor or a Wholly
Owned Subsidiary), except as permitted by law and in the ordinary course of
business and pursuant to reasonable terms which are no less favorable to
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person which is not an Affiliate.
SECTION 6.21. AMENDMENT OF OTHER AGREEMENTS. Within 90 days after the Closing
Date, the Borrower shall amend all other agreements pertaining to credit
facilities with any of the Banks so as to conform the financial covenants
contained therein to those contained in this Agreement.
SECTION 6.22. QUALIFICATIONS AS A REAL ESTATE INVESTMENT TRUST; GENERAL
PARTNERS. GBP shall at all times remain qualified under the Code as a real
estate investment trust and Gables GP, Inc. shall at all times be the General
Partner. The Borrower will not agree to amend or waive the requirements of
Section 3.2 of the limited partnership agreement of the Borrower, as in effect
on the date of this Agreement, as such requirements are applicable to the
General Partner, without the prior written consent of the Required Banks (which
consent the Banks hereby agree not to unreasonably withhold or delay).
SECTION 6.23. SIGNIFICANT SUBSIDIARIES TO BE GUARANTORS; ELECTION TO BECOME
GUARANTOR. Any Subsidiary (whether existing on the Closing Date or acquired or
created thereafter) (i) must become a Guarantor promptly upon becoming a
Significant Subsidiary, and (ii) may elect to become a Guarantor at any time if
it is not a Significant Subsidiary, in each case by (x) executing and delivering
to the Agent a counterpart of the Guaranty and a counterpart of the Contribution
Agreement, thereby becoming a party to each of them, (y) delivering to the Agent
an opinion of counsel to such Subsidiary, in form and substance satisfactory to
the Agent in its reasonable discretion, the form attached hereto as Exhibit B
(being one such satisfactory form, but limited to such Subsidiary, and making
appropriate modifications and excluding paragraph 2 thereof, and (z) delivering
to the Agent documents pertaining to the Subsidiary reasonably requested by the
Agent of the types described in paragraph (f) of Section 4.01 (but making
appropriate modifications, and excluding the proviso at the end thereof
pertaining to an alternate form of officer's certificate).
SECTION 6.24. CERTAIN PROVISIONS REGARDING ELIGIBLE PROPERTIES. Neither the
Borrower nor any Consolidated Subsidiary will create, assume or suffer to exist
any Lien on any Eligible Property included in the Borrowing Base, now owned or
hereafter acquired by it, except Permitted Encumbrances.
SECTION 6.25. RESTRICTIONS OF CERTAIN ADDITIONAL GUARANTEES. Neither the
Borrower nor any of the Guarantors shall incur or permit to exist any Guarantees
of unsecured revolving Debt, other than the Guaranty made hereunder, in an
aggregate principal amount outstanding at any time of $25,000,000 or more.
SECTION 6.26. MAINTENANCE OF EXISTENCE. The Borrower shall, and shall cause each
Subsidiary to, maintain its corporate existence and carry on its business in
substantially the same manner and in substantially the same fields as such
business is now carried on and maintained.
SECTION 6.27. RATIO OF TOTAL UNENCUMBERED ASSETS VALUE TO UNSECURED FUNDED DEBT
will not at any time be less than 1.75 to 1.00.
ARTICLE VII
DEFAULTS
SECTION 7.01. EVENTS OF DEFAULT. If one or more of the following events ("Events
of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan or any
Reimbursement Obligations with respect to the Letter of Credit or shall
fail to pay any interest on any Loan within 5 Domestic Business Days after
such interest shall become due, or shall fail to pay any fee or other
amount payable hereunder within 5 Domestic Business Days after such fee or
other amount becomes due; or
(b) the Borrower or any Guarantor shall fail to observe or perform any covenant
contained in Sections 6.01(c), 6.02(ii), 6.03 through 6.12, inclusive,
Sections 6.22 or Sections 6.24 through 6.27; or
(c) the Borrower or any Guarantor shall fail to observe or perform any covenant
or agreement contained in this Agreement or any other Loan Document (other
than those covered by paragraph (a) or (b) above) and such failure shall
not have been cured within 30 days after the earlier to occur of (i)
written notice thereof has been given to the Borrower or such Guarantor by
the Agent at the request of any Bank or (ii) an Executive Officer or such
Guarantor otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by the
Borrower or any Guarantor in Article V of this Agreement or in any other
Loan Document or in any certificate, financial statement or other document
delivered pursuant to this Agreement or any other Loan Document shall prove
to have been incorrect or misleading in any material respect when made (or
deemed made); or
(e) the Borrower, GBP or any Subsidiary shall fail to make any payment in
respect of the Revolving Credit Agreement or any other Debt outstanding
(other than the Reimbursement Notes) when due or within any applicable
grace period, if the amount of any such Debt of the Borrower, GBP or any
Subsidiary individually is $5,000,000 or more or if the aggregate amount of
all such Debt of the Borrower, GBP and all Subsidiaries is $10,000,000 or
more; or
(f) any event or condition shall occur which results in the acceleration of the
maturity of Debt under the Revolving Credit Agreement or other Debt
outstanding of the Borrower, GBP or any Subsidiary (including, without
limitation, any required mandatory prepayment or "put" of such Debt to the
Borrower or any Subsidiary) or enables (or, with the giving of notice or
lapse of time or both, would enable) the holders of such Debt or commitment
or any Person acting on such holders' behalf to accelerate the maturity
thereof or terminate any such commitment (including, without limitation,
any required mandatory prepayment or "put" of such Debt to the Borrower or
any Subsidiary), if the amount of any such Debt of the Borrower, GBP or any
Subsidiary individually is $5,000,000 or more or if the aggregate amount of
all such Debt of the Borrower, GBP and all Subsidiaries is $10,000,000 or
more; or
(g) the Borrower, GBP or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally,
or shall admit in writing its inability, to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing;
or
(h) an involuntary case or other proceeding shall be commenced against the
Borrower, GBP or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower, GBP or any Subsidiary under the federal bankruptcy laws as
now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to pay when
due any material amount which it shall have become liable to pay to the
PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate
a Plan or Plans shall be filed under Title IV of ERISA by the Borrower, any
member of the Controlled Group, any plan administrator or any combination
of the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer any
such Plan or Plans or a proceeding shall be instituted by a fiduciary of
any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and
such proceeding shall not have been dismissed within 30 days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must be
terminated; or the Borrower or any other member of the Controlled Group
shall enter into, contribute or be obligated to contribute to, terminate or
incur any withdrawal liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against the Borrower or
any Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or any Subsidiary
under Section 6323 of the Code or a lien of the PBGC shall be filed against
the Borrower or any Subsidiary under Section 4068 of ERISA and in either
case such lien shall remain undischarged for a period of 25 days after the
date of filing.
then, and in every such event, (i) the Agent shall, if requested by the Required
Banks, by notice to the Borrower terminate the Commitments and they shall
thereupon terminate and (ii) the Agent shall, if requested by the Required
Banks, by notice to the Borrower declare the Reimbursement Notes (together with
accrued interest thereon), and all other amounts payable hereunder and under the
other Loan Documents, to be, and the Reimbursement Notes, together with accrued
interest thereon, and all other amounts payable hereunder and under the other
Loan Documents shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower together with interest at the Default Rate
accruing on the principal amount thereof from and after the date of such Event
of Default; provided that if any Event of Default specified in paragraph (g) or
(h) above occurs with respect to the Borrower, without any notice to the
Borrower or any other act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Reimbursement Notes (together with accrued interest
thereon) and all other amounts payable hereunder and under the other Loan
Documents shall automatically and without notice become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower together with interest thereon at the
Default Rate accruing on the principal amount thereof from and after the date of
such Event of Default. In addition, upon the occurrence of an Event of Default
(and in any event on the Termination Date, pursuant to Section 2.08), to the
extent of any existing Letter of Credit Obligations, the Borrower shall
immediately deposit with the Agent the principal amount thereof and the amount
so deposited shall be set aside as a cash collateral reserve for payment of the
Reimbursement Obligations relating to Letters of Credit which are subsequently
funded. The Agent will invest such cash collateral reserve in compliance with
instructions received from the Borrower to the extent necessary to preserve the
tax-exempt status of the bonds secured by the Letters of Credit. After all
Letters of Credit have been cancelled and all Reimbursement Obligations have
been satisfied, and the Agent has been reimbursed all amounts funded by it with
respect thereto, any balance remaining in said cash collateral reserve may be
applied to other amounts owed by the Borrower hereunder, and, if none, shall be
remitted to Borrower. Notwithstanding the foregoing, the Agent shall have
available to it all other remedies at law or equity, and under any of the other
Loan Documents, and shall exercise any one or all of them at the request of the
Required Banks.
SECTION 7.02. NOTICE OF DEFAULT. The Agent shall give notice to the Borrower of
any Default under Section 7.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VIII
THE AGENT
SECTION 8.01. APPOINTMENT; POWERS AND IMMUNITIES. Each Bank hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
other Loan Documents with such powers as are specifically delegated to the Agent
by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent: (a) shall have no duties or
responsibilities except as expressly set forth in this Agreement and the other
Loan Documents, and shall not by reason of this Agreement or any other Loan
Document be a trustee for any Bank; (b) shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any Bank under, this Agreement or
any other Loan Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Banks, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any other Loan Document or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article VII are solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, the Agent shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the Borrower. The duties
of the Agent shall be ministerial and administrative in nature, and the Agent
shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank. The Agent shall administer the
Loans and the Loan Documents with a degree of care at least equal to that
customarily employed by the Agent in the administration of similar credit
facilities for its own account.
SECTION 8.02. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
SECTION 8.03. DEFAULTS. The Agent shall not be deemed to have knowledge of the
occurrence of a Default or an Event of Default (other than the nonpayment of
principal of or interest on the Loans) unless the Agent has received notice from
a Bank or the Borrower specifying such Default or Event of Default and stating
that such notice is a "Notice of Default". In the event that the Agent receives
such a notice of the occurrence of a Default or an Event of Default, the Agent
shall give prompt notice thereof to the Banks. The Agent shall give each Bank
prompt notice of each nonpayment of principal of or interest on the Loans
whether or not it has received any notice of the occurrence of such nonpayment.
The Agent shall (subject to Section 10.06) take such action hereunder with
respect to such Default or Event of Default as shall be directed by the Required
Banks, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
SECTION 8.04. RIGHTS OF AGENT AND ITS AFFILIATES AS A BANK. With respect to the
Loans made by the Agent and any Affiliate of the Agent, Wachovia in its capacity
as a Bank hereunder and any Affiliate of the Agent or such Affiliate in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though Wachovia were not acting as
the Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include Wachovia in its individual capacity and any Affiliate of the
Agent in its individual capacity. The Agent and any Affiliate of the Agent may
(without having to account therefor to any Bank) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Borrower (and any of the Borrower's Affiliates) as if Wachovia were not
acting as the Agent, and the Agent and any Affiliate of the Agent may accept
fees and other consideration from the Borrower (in addition to any agency fees
and arrangement fees heretofore agreed to between the Borrower and the Agent)
for services in connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 8.05. INDEMNIFICATION. Each Bank severally agrees to indemnify the
Agent, to the extent the Agent shall not have been reimbursed by the Borrower,
ratably in accordance with its Commitment, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided that no Bank shall be liable for
any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the opinion of the Agent, be insufficient or become impaired,
the Agent may call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is furnished.
SECTION 8.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE RESPONSIBLE OR
LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
SECTION 8.07. PAYEE OF NOTE TREATED AS OWNER. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with the Agent and the provisions of Section 10.08(c) have been satisfied. Any
requests, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Note or of any Note or Reimbursement Notes issued in exchange therefor or
replacement thereof.
SECTION 8.08. NONRELIANCE ON AGENT AND OTHER BANKS. Each Bank agrees that it
has, independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any of the other Loan Documents. The Agent
shall not be required to keep itself (or any Bank) informed as to the
performance or observance by the Borrower of this Agreement or any of the other
Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower or any other
Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Person (or any of
their Affiliates) which may come into the possession of the Agent; provided,
that the Agent shall make available to any Bank, upon its request, (i) copies of
the Agent's records with respect to all sums received or expended by the Agent
in connection with the Loans and the Loan Documents, (ii) information as to the
amount of the then outstanding Loans, Letters of Credit and Reimbursement
Obligations and (iii) copies of any documents pertaining to an Eligible Property
requested by such Bank and held by the Agent pursuant to Section 6.24(b).
SECTION 8.09. FAILURE TO ACT. Except for action expressly required of the Agent
hereunder or under the other Loan Documents, the Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction by the Banks of their
indemnification obligations under Section 8.05 against any and all liability and
expense which may be incurred by the Agent by reason of taking, continuing to
take, or failing to take any such action.
SECTION 8.10. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Required Banks shall have the right to appoint a
successor Agent, subject to the approval of the Borrower, which approval shall
not be unreasonably withheld or delayed; provided, however, that no such
approval of the Borrower shall be required if (i) the successor is a Bank or
(ii) a Default or Event of Default is in existence. If no successor Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment within 30 days after the retiring Agent's notice of resignation or
the Required Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, appoint a successor Agent, subject to the approval of
the Borrower, which approval shall not be unreasonably withheld or delayed;
provided, however, that no such approval of the Borrower shall be required if
(i) the successor is a Bank or (ii) a Default or Event of Default is in
existence. Any successor Agent shall be a bank which has a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
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. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder.
SECTION 8.11. AGENT'S RIGHT TO REPLACE NON-QUALIFYING BANK. In the event that
any Bank (a "Non-Qualifying Bank") shall at the end of any quarter not qualify
as a "well-capitalized" bank (within the meaning provided therefor in 12 CFR 6,
as amended from time to time) under the regulations or policies of the
Comptroller of the Currency, or the sum of its non-performing assets and its
"Other Real Estate Owned" shall be equal to more than fifty percent (50%) of its
tangible equity, the Agent, in its sole discretion, may give notice to such
Non-Qualifying Bank and to the other Banks, with a copy to the Borrower (the
"Replacement Notice"), that it wishes to seek one or more assignees (which may
be one or more of the Banks) to assume the Commitment of such Non-Qualifying
Bank and to purchase its outstanding Loans and Reimbursement Notes,
participation in the Letters of Credit and interest in this Agreement, and in
such event: (i) the remaining Banks may elect to purchase ratable assignments
(without any obligation so to do) from the Non-Qualifying Bank (in the form of
an Assignment and Acceptance and in accordance with Section 10.08(c)) in
accordance with their respective percentage of the remaining aggregate
Commitments, by giving notice of such election to the Agent and the other Banks,
with a copy to the Borrower, no later than the date (the "Initial Option Date")
which is 15 days after the date of the Replacement Notice; (ii) should any of
the remaining Banks not elect on or before the Initial Option Date to purchase
such an assignment, then, such other remaining Banks shall be entitled to
purchase an assignment from Non-Qualifying Bank which includes the ratable
interest that was otherwise available to such non-purchasing remaining Bank or
Banks, by giving notice of such election to the Agent and the other Banks, with
a copy to the Borrower, within 15 days after the Initial Option Date; and (iii)
if and to the extent that the remaining Banks have not elected to purchase such
an assignment, the Agent may find another assignee to purchase such assignment.
Each Non-Qualifying Bank agrees to sell its Commitment, Loans, Reimbursement
Notes, participation in the Letters of Credit and interest in this Agreement by
an Assignment and Acceptance in accordance with Section 10.08(c) to any such
assignee or assignees for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans and Reimbursement Notes, plus
all other fees and amounts (including, without limitation, any compensation
claimed by such Non-Qualifying Bank under Section 2.11(c) or this Section 8.11)
due such Non-Qualifying Bank hereunder calculated, in each case, to the date
such Loans, Reimbursement Notes and interest are purchased. Upon such sale or
prepayment, and assumption by the assignee or assignees of the Non-Qualifying
Banks's Commitment and participation in the Letters of Credit, such
Non-Qualifying Bank shall have no further Commitment or other obligation to the
Borrower hereunder or under any Note.
ARTICLE IX
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 9.01. BASIS FOR DETERMINING INTEREST RATES INADEQUATE OR UNFAIR. If on
or prior to the first day of any Interest Period
(a) the Agent determines that deposits in Dollars (in the applicable amounts)
are not being offered in the relevant market for such Interest Period, or
(b) the Required Banks advise the Agent that the London Interbank Offered Rate,
as determined by the Agent will not adequately and fairly reflect the cost
to such Banks of funding the relevant Euro-Dollar Rate Loans for such
Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
Euro-Dollar Loans specified in such notice shall be suspended. Unless the
Borrower notifies the Agent at least 2 Domestic Business Days before the date of
any Euro-Dollar Borrowing for which a Notice of Borrowing has previously been
given that it elects not to borrow on such date, such Borrowing shall instead be
made as a Base Rate Borrowing.
SECTION 9.02. ILLEGALITY. If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein or any existing or
future law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any such
agency being referred to as an "Authority" and any such event being referred to
as a "Change of Law"), or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority shall make it unlawful or impossible for any Bank (or its Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be suspended. Before
giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each Euro-Dollar Loan of
such Bank, together with accrued interest thereon and any amount due such Bank
pursuant to Section 9.05(a). Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal principal amount
from such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other Banks), and
such Bank shall make such a Base Rate Loan.
SECTION 9.03. INCREASED COST AND REDUCED RETURN.
(a) If after the date hereof, a Change of Law or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the
force of law) of any Authority:
(i) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding with respect to any
Euro-Dollar Loan any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits with
or for the account of, or credit extended by, any Bank (or its
Lending Office); or
(ii) shall impose on any Bank (or its Lending Office) or on the United
States market for certificates of deposit or the London interbank
market any other condition affecting its Euro-Dollar Loans, its
Reimbursement Notes or its obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Lending Office) of making or maintaining any Loan, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Reimbursement Notes with respect
thereto, by an amount deemed by such Bank to be material, then, within 15
days after demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that after the date hereof the adoption
of any applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any Authority, has or would have the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations hereunder
to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank, the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount, such Bank may
use any reasonable averaging and attribution methods.
(d) The provisions of this Section 9.03 shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 9.04. BASE RATE LOANS SUBSTITUTED FOR AFFECTED EURO-DOLLAR LOANS. If (i)
the obligation of any Bank to make or maintain any Euro-Dollar Loans has been
suspended pursuant to Section 9.02 or (ii) any Bank has demanded compensation
under Section 9.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank, through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as Euro-Dollar Loans
shall be made instead as Base Rate Loans, and interest and principal on
such Loans shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks, and
(b) after each of its Euro-Dollar Loans has been repaid, all payments of
principal which would otherwise be applied to repay such Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
SECTION 9.05. COMPENSATION. Upon the request of any Bank, delivered to the
Borrower and the Agent, the Borrower shall pay to such Bank such amount or
amounts as shall compensate such Bank for any loss, cost or expense incurred by
such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09, 2.10, 7.01, 9.02 or
otherwise) of a Euro-Dollar Loan on a date other than the last day of an
Interest Period for such Loan; or
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the date for
such prepayment specified in the relevant notice of prepayment hereunder;
or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on the date for
the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a part
specified in the applicable Notice of Borrowing delivered pursuant to
Section 2.02; such compensation to include, without limitation, an amount
equal to the excess, if any, of (x) the amount of interest which would have
accrued on the amount so paid or prepaid or not prepaid or borrowed for the
period from the date of such payment, prepayment or failure to prepay or
borrow to the last day of the then current Interest Period for such
Euro-Dollar Loan (or, in the case of a failure to prepay or borrow, the
Interest Period for such Euro-Dollar Loan which would have commenced on the
date of such failure to prepay or borrow) at the applicable rate of
interest for such Euro-Dollar Loan provided for herein over (y) the amount
of interest (as reasonably determined by such Bank) such Bank would have
paid on deposits in Dollars of comparable amounts having terms comparable
to such period placed with it by leading banks in the London interbank
market.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopier or similar writing)
and shall be given to such party at its address or telecopier number set forth
on the signature pages hereof or such other address or telecopier number as such
party may hereafter specify for the purpose by notice to each other party. Each
such notice, request or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in this Section and the confirmation is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent under Article II or Article IX shall not be effective until
received.
SECTION 10.02. NO WAIVERS. No failure or delay by the Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note or other
Loan Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10.03. EXPENSES; DOCUMENTARY TAXES. The Borrower shall pay (i) all
out-of-pocket expenses of the Agent, including fees and disbursements of Jones,
Day, Reavis & Pogue, special counsel for the Banks and the Agent, in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder, (ii) if a Default occurs,
all out-of-pocket expenses incurred by the Agent and the Banks, including fees
and disbursements of counsel, in connection with such Default and collection and
other enforcement proceedings resulting therefrom, including out-of-pocket
expenses incurred in enforcing this Agreement and the other Loan Documents. The
Borrower shall indemnify the Agent and each Bank against any transfer taxes,
documentary taxes, assessments or charges made by any Authority by reason of the
execution and delivery of this Agreement or the other Loan Documents. The
provisions of this Section 10.03 are in addition to and not in limitation of any
expense reimbursement or indemnification provision contained in any other Loan
Documents.
SECTION 10.04. INDEMNIFICATION. The Borrower shall indemnify the Agent, the
Banks and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by the Borrower of the proceeds of any extension
of credit by any Bank hereunder or breach by the Borrower of this Agreement or
any other Loan Document or from any investigation, litigation (including,
without limitation, any actions taken by the Agent or any of the Banks to
enforce this Agreement or any of the other Loan Documents) or other proceeding
(including, without limitation, any threatened investigation or proceeding)
relating to the foregoing, and the Borrower shall reimburse the Agent and each
Bank, and each Affiliate thereof and their respective directors, officers,
employees and agents, upon demand for any expenses (including, without
limitation, legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified. The provisions of this Section 10.04 are in addition
to and not in limitation of any expense reimbursement or indemnification
provision contained in any other Loan Documents.
SECTION 10.05. SHARING OF SETOFFS. Each Bank agrees that if it shall, by
exercising any right of setoff or counterclaim or resort to collateral security
or otherwise, receive payment of a proportion of the aggregate amount of
principal and interest owing with respect to the Note held by it which is
greater than the proportion received by any other Bank in respect of the
aggregate amount of all principal and interest owing with respect to the Note
held by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Reimbursement Notes held by the other
Banks owing to such other Banks, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Reimbursement Notes held by the Banks owing to such other Banks shall be
shared by the Banks pro rata; provided that (i) nothing in this Section shall
impair the right of any Bank to exercise any right of setoff or counterclaim it
may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Reimbursement
Notes, and (ii) if all or any portion of such payment received by the purchasing
Bank is thereafter recovered from such purchasing Bank, such purchase from each
other Bank shall be rescinded and such other Bank shall repay to the purchasing
Bank the purchase price of such participation to the extent of such recovery
together with an amount equal to such other Bank's ratable share (according to
the proportion of (x) the amount of such other Bank's required repayment to (y)
the total amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
setoff or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
SECTION 10.06. AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement, the Reimbursement Notes or any other Loan
Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall, unless signed by
all Banks, (i) change the Commitment of any Bank or subject any Bank to any
additional obligation, (ii) change the principal of or rate of interest on
any Loan or any fees (other than fees payable to the Agent) hereunder,
(iii) change the date fixed for any payment of principal of or interest on
any Loan or any fees hereunder, (iv) change the amount of principal,
interest or fees due on any date fixed for the payment thereof, (v) change
the percentage of the Commitments or of the aggregate unpaid principal
amount of the Reimbursement Notes, or the percentage of Banks, which shall
be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement, (vi) change the manner of
application of any payments made under this Agreement or the Reimbursement
Notes, (vii) release or substitute all or any substantial part of the
collateral (if any) held as security for the Loans, except as expressly
authorized by this Agreement or any of the other Loan Documents, (viii)
release any Guarantee given to support payment of the Loans, (ix) change
the definition of Borrowing Base in a such a way as to make it less
restrictive, (x) change the definition of Required Banks or (xi) change
this Section 10.06.
(b) The Borrower will not solicit, request or negotiate for or with respect to
any proposed waiver or amendment of any of the provisions of this Agreement
unless each Bank shall be informed thereof by the Borrower and shall be
afforded an opportunity of considering the same and shall be supplied by
the Borrower with sufficient information to enable it to make an informed
decision with respect thereto. Executed or true and correct copies of any
waiver or consent effected pursuant to the provisions of this Agreement
shall be delivered by the Borrower to each Bank forthwith following the
date on which the same shall have been executed and delivered by the
requisite percentage of Banks. The Borrower will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Bank (in its
capacity as such) as consideration for or as an inducement to the entering
into by such Bank of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid,
on the same terms, ratably to all such Banks.
SECTION 10.07. NO MARGIN STOCK COLLATERAL. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not, directly or
indirectly (by negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 10.08. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that the Borrower may not assign or otherwise transfer any of its
rights under this Agreement.
(b) Any Bank may at any time sell to one or more Persons (each a "Participant")
participating interests in any Loan owing to such Bank, any Reimbursement
Note held by such Bank, any Commitment hereunder or any other interest of
such Bank hereunder. In the event of any such sale by a Bank of a
participating interest to a Participant, such Bank's obligations under this
Agreement shall remain unchanged, such Bank shall remain solely responsible
for the performance thereof, such Bank shall remain the holder of any such
Reimbursement Note for all purposes under this Agreement, and the Borrower
and the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement. In
no event shall a Bank that sells a participation be obligated to the
Participant to take or refrain from taking any action hereunder except that
such Bank may agree that it will not (except as provided below), without
the consent of the Participant, agree to (i) the change of any date fixed
for the payment of principal of or interest on the related Loan or loans,
(ii) the change of the amount of any principal, interest or fees due on any
date fixed for the payment thereof with respect to the related Loan or
loans, (iii) the change of the principal of the related Loan or loans, (iv)
any change in the rate at which either interest is payable thereon or (if
the Participant is entitled to any part thereof) fee is payable hereunder
from the rate at which the Participant is entitled to receive interest or
fee (as the case may be) in respect of such participation, (v) the release
or substitution of all or any substantial part of the collateral (if any)
held as security for the Loans, or (vi) the release of any Guarantee given
to support payment of the Loans. Each Bank selling a participating interest
in any Loan, Reimbursement Note, Commitment or other interest under this
Agreement shall, within 10 Domestic Business Days of such sale, provide the
Borrower and the Agent with written notification stating that such sale has
occurred and identifying the Participant and the interest purchased by such
Participant. The Borrower agrees that each Participant shall be entitled to
the benefits of Article IX with respect to its participation in Loans
outstanding from time to time.
(c) Any Bank may at any time assign to one or more banks or financial
institutions (each an "Assignee") all or a proportionate part of its rights
and obligations under this Agreement, the Reimbursement Notes and the other
Loan Documents, and such Assignee shall assume all such rights and
obligations, pursuant to an Assignment and Acceptance, executed by such
Assignee, such transferor Bank and the Agent (and, in the case of an
Assignee that is not then a Bank, subject to clause (iii) below, by the
Borrower); provided that (i) no interest may be sold by a Bank pursuant to
this paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the transferor Bank's Commitment and risk
participations in the Letters of Credit, (ii) if a Bank is assigning only a
portion of its Commitment and risk participations in the Letters of Credit,
then, the amount of the Commitment being assigned (determined as of the
effective date of the assignment) shall be in an amount not less than
$5,000,000, (iii) no interest may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank (or an Affiliate of a
Bank) without the prior written consent of the Agent, (iv) except during
the continuance of a Default, no interest may be sold by a Bank pursuant to
this paragraph (c) to any Assignee that is not then a Bank (or an Affiliate
of a Bank) without the consent of the Borrower and the issuer of the
Letters of Credit, which consent shall not be unreasonably withheld, and
(v) a Bank may not have more than 2 Assignees that are not then Banks at
any one time. Upon (A) execution of the Assignment and Acceptance by such
transferor Bank, such Assignee, the Agent and (if applicable) the Borrower,
(B) delivery of an executed copy of the Assignment and Acceptance to the
Borrower and the Agent, (C) payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, and (D) payment of a processing and
recordation fee of $2,500 to the Agent, such Assignee shall for all
purposes be a Bank party to this Agreement and shall have all the rights
and obligations of a Bank under this Agreement to the same extent as if it
were an original party hereto with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent
or action by the Borrower, the Banks or the Agent shall be required. Upon
the consummation of any transfer to an Assignee pursuant to this paragraph
(c), the transferor Bank, the Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Reimbursement Note is issued to
each of such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 10.09, the Borrower authorizes each
Bank to disclose to any Participant, Assignee or other transferee (each a
"Transferee") and any prospective Transferee any and all financial
information in such Bank's possession concerning the Borrower which has
been delivered to such Bank by the Borrower pursuant to this Agreement or
which has been delivered to such Bank by the Borrower in connection with
such Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater payment under
Section 9.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with
the Borrower's prior written consent or by reason of the provisions of
Section 9.02 or 9.03 requiring such Bank to designate a different Lending
Office under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
(f) Anything in this Section 10.08 to the contrary notwithstanding, any Bank
may assign and pledge all or any portion of the Loans and/or obligations
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or
pledging Bank in accordance with the terms of this Agreement shall satisfy
the Borrower's obligations hereunder in respect of such assigned Loans
and/or obligations to the extent of such payment. No such assignment shall
release the assigning and/or pledging Bank from its obligations hereunder.
SECTION 10.09. CONFIDENTIALITY. Each Bank agrees to exercise commercially
reasonable efforts to keep any information delivered or made available by the
Borrower to it which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in connection
with any litigation to which the Agent, any Bank or their respective Affiliates
may be a party, (vi) to the extent reasonably required in connection with the
exercise of any remedy hereunder, (vii) to such Bank's legal counsel and
independent auditors and (viii) to any actual or proposed Participant, Assignee
or other Transferee of all or part of its rights hereunder which has agreed in
writing to be bound by the provisions of this Section 10.09; provided that
should disclosure of any such confidential information be required by virtue of
clause (ii) of the immediately preceding sentence, any relevant Bank shall, to
the extent permitted by law, promptly notify the Borrower of same so as to allow
the Borrower to seek a protective order or to take any other appropriate action;
provided, further, that, no Bank shall be required to delay compliance with any
directive to disclose any such information so as to allow the Borrower to effect
any such action.
SECTION 10.10. REPRESENTATION BY BANKS. Each Bank hereby represents that it is a
commercial lender or financial institution which makes loans in the ordinary
course of its business and that it will make its Loans hereunder for its own
account in the ordinary course of such business; provided that, subject to
Section 10.08, the disposition of the Reimbursement Notes held by that Bank
shall at all times be within its exclusive control.
SECTION 10.11. OBLIGATIONS SEVERAL. The obligations of each Bank hereunder are
several, and no Bank shall be responsible for the obligations or commitment of
any other Bank hereunder. Nothing contained in this Agreement and no action
taken by the Banks pursuant hereto shall be deemed to constitute the Banks to be
a partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement or any other Loan Document and it shall not
be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
SECTION 10.12. GEORGIA LAW. This Agreement and each Note shall be construed in
accordance with and governed by the law of the State of Georgia.
SECTION 10.13. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement, the Reimbursement Notes or any of the other Loan Documents
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby and shall be
enforced to the greatest extent permitted by law.
SECTION 10.14. INTEREST. In no event shall the amount of interest, and all
charges, amounts or fees contracted for, charged or collected pursuant to this
Agreement, the Reimbursement Notes or the other Loan Documents and deemed to be
interest under applicable law (collectively, "Interest") exceed the highest rate
of interest allowed by applicable law (the "Maximum Rate"), and in the event any
such payment is inadvertently received by any Bank, then the excess sum (the
"Interest Excess") shall be credited as a payment of principal, unless the
Borrower shall notify such Bank in writing that it elects to have the Interest
Excess returned forthwith. It is the express intent hereof that the Borrower not
pay and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law. The right to accelerate maturity of any of the Loans does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the Agent and the Banks do not intend to
collect any unearned interest in the event of any such acceleration. All monies
paid to the Agent or the Banks hereunder or under any of the Reimbursement Notes
or the other Loan Documents, whether at maturity or by prepayment, shall be
subject to rebate of unearned interest as and to the extent required by
applicable law. By the execution of this Agreement, the Borrower covenants, to
the fullest extent permitted by law, that (i) the credit or return of any
Interest Excess shall constitute the acceptance by the Borrower of such Interest
Excess, and (ii) the Borrower shall not seek or pursue any other remedy, legal
or equitable , against the Agent or any Bank, based in whole or in part upon
contracting for charging or receiving any Interest in excess of the Maximum
Rate. For the purpose of determining whether or not any Interest Excess has been
contracted for, charged or received by the Agent or any Bank, all interest at
any time contracted for, charged or received from the Borrower in connection
with this Agreement, the Reimbursement Notes or any of the other Loan Documents
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the Commitments.
The Borrower, the Agent and each Bank shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee or premium rather than as Interest and (ii) exclude voluntary prepayments
and the effects thereof. The provisions of this Section shall be deemed to be
incorporated into each Note and each of the other Loan Documents (whether or not
any provision of this Section is referred to therein). All such Loan Documents
and communications relating to any Interest owed by the Borrower and all figures
set forth therein shall, for the sole purpose of computing the extent of
obligations hereunder and under the Reimbursement Notes and the other Loan
Documents be automatically recomputed by the Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section.
SECTION 10.15. INTERPRETATION. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 10.16. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. The Borrower (a)
and each of the Banks and the Agent irrevocably waives, to the fullest extent
permitted by law, any and all right to trial by jury in any legal proceeding
arising out of this Agreement, any of the other Loan Documents, or any of the
transactions contemplated hereby or thereby, (b) submits to the nonexclusive
personal jurisdiction in the State of Georgia, the courts thereof and the United
States District Courts sitting therein, for the enforcement of this Agreement,
the Reimbursement Notes and the other Loan Documents, (c) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of Georgia for the purpose of litigation to enforce this
Agreement, the Reimbursement Notes or the other Loan Documents, and (d) agrees
that service of process may be made upon it in the manner prescribed in Section
10.01 for the giving of notice to the Borrower. Nothing herein contained,
however, shall prevent the Agent from bringing any action or exercising any
rights against any security and against the Borrower personally, and against any
assets of the Borrower, within any other state or jurisdiction.
SECTION 10.17. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 10.18. SOURCE OF FUNDS -- ERISA. Each of the Banks hereby severally (and
not jointly) represents to the Borrower that no part of the funds to be used by
such Bank to fund the Loans hereunder from time to time constitutes (i) assets
allocated to any separate account maintained by such Bank in which any employee
benefit plan (or its related trust) has any interest nor (ii) any other assets
of any employee benefit plan. As used in this Section, the terms "employee
benefit plan" and "separate account" shall have the respective meanings assigned
to such terms in Section 3 of ERISA.
SECTION 10.19. ENTIRE AGREEMENT. The Loan Documents and, as between the Borrower
and the Agent, the Agent's Letter Agreement, contain the entire agreement
between the Borrower, the Agent and the Banks relating to the credit
transactions contemplated hereby and supersede entirely any and all prior
written or oral agreements with respect thereto; and the Borrower acknowledges
and agrees that there are no contemporaneous oral agreements with respect to the
subject matter hereof.
SECTION 10.20. MORE RESTRICTIVE AGREEMENTS. Should the Borrower or any
Guarantor, while this Agreement is in effect or any Note remains unpaid, enter
into, refinance or modify the relevant documents pertaining to any existing or
future Debt for money borrowed which constitutes revolving credit, in an amount
exceeding $5,000,000 in aggregate amount to any lender or group of lenders
acting in concert with one another, pursuant to a Loan agreement, credit
agreement, note purchase agreement, indenture or other similar instrument, which
instrument includes covenants, warranties, representations, or defaults or
events of default (or any other type of restriction which would have the
practical effect of any of the foregoing, including, without limitation, any
"put" or mandatory prepayment of such debt) other than those set forth herein or
in any of the other Loan Documents, the Borrower shall promptly so notify the
Agent and, if the Agent, in the discretion of the Agent, shall so request by
written notice to the Borrower, the Borrower, the Agent and the Required Banks
(in their sole discretion and based on their respective independent credit
judgment, and subject to Section 10.06) shall promptly amend this Agreement to
incorporate some or all of such provisions, into this Agreement and, to the
extent necessary and reasonably desirable to the Agent and the Required Banks
(in their sole discretion and based on their respective independent credit
judgment, and subject to Section 8.06), into any of the other Loan Documents,
all at the election of the Agent; provided, however, that any such amendment
shall provide that, upon cancellation or termination of the Loan agreement,
credit agreement, note purchase agreement, indenture or other instrument
pertaining to such other revolving credit (other than by reason of an event of
default thereunder), so long as no Default or Event of Default is in existence,
such amendment also shall terminate and the provisions of the Reimbursement
Agreement affected by such amendment shall revert to the terms thereof as in
effect prior to giving effect to such amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, under seal, by their respective authorized officers as of the day
and year first above written.
GABLES REALTY LIMITED PARTNERSHIP
By: Gables GP, Inc., its sole
general partner
By: /s/ Marvin R. Banks, Jr.
------------------------------
Marvin R. Banks, Jr.
Vice President
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
WACHOVIA BANK, N.A.,
as Agent and as a Bank
Commitment:
$30,620,179.801
By: /s/ Mary F. Hughes
------------------------------
Title: Vice President
------------------------------
Commitment
Percentage: Lending Office
66.8268%1 Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Real Estate Finance Division
Telecopier number: 404-332-4005
Confirmation number: 404-332-6971
<PAGE>
GUARANTY FEDERAL BANK, F.S.B.
Commitment:
$10,000,0001 By: /s/ Lisa B. Balsley
---------------------------
Title: Vice President
---------------------------
Commitment Lending Office
Percentage: Guaranty Federal Bank, F.S.B.
21.8245%1 8333 Douglas
Dallas, Texas 75225
Attention: Roger Davis
Telecopier number: 214-360-8910
Confirmation number: 214-360-2849
with a copy of all notices to:
Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Commercial Real Estate Lending
Division
Telecopier number: 214-360-1661
Confirmation number: 214-360-2849
<PAGE>
AMSOUTH BANK
Commitment:
$5,200,000 By: /s/ Arthur J. Sharbel, IV
-------------------------------
Title: Vice President
-------------------------------
Commitment Lending Office
Percentage: AmSouth Bank
11.3487% 1900 5th Avenue North
9th Floor
Birmingham, Alabama 35203
Attention: Arthur Sharbel
Telecopier number: 205-326-4075
Confirmation number: 205-581-7647
TOTAL COMMITMENTS:
$45,820,180
<PAGE>
EXHIBIT J
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of October 1, 1997, by GABLES GP,
INC., a Texas corporation, GABLES RESIDENTIAL TRUST, a Maryland Trust and
GABLES-TENNESSEE PROPERTIES, a Tennessee general partnership (each a
"Guarantor", and collectively, the "Guarantors", which terms shall include any
subsidiary of Gables Realty Limited Partnership which becomes a Guarantor
pursuant to Section 15 hereof and Section 6.23 of the Reimbursement Agreement
referred to below) in favor of the Agent, for the ratable benefit of the Banks,
under the Reimbursement Agreement referred to below;
W I T N E S S E T H
WHEREAS, GABLES REALTY LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Borrower"), WACHOVIA BANK OF GEORGIA, N.A., as Agent (the "Agent"), and certain
other Banks from time to time party thereto have entered into a certain
Reimbursement Agreement dated as of even date herewith (as it may be amended or
modified further from time to time, the "Reimbursement Agreement"), providing,
subject to the terms and conditions thereof, for extensions of credit to be made
by the Banks to the Borrower which will the benefit the Guarantors;
WHEREAS, it is required by Section 4.01(b) of the Reimbursement Agreement, that
the Guarantors execute and deliver this Guaranty whereby the Guarantors shall
guarantee the payment when due of all principal, interest and other amounts that
shall be at any time payable by the Borrower under the Reimbursement Agreement,
the Reimbursement Notes and the other Loan Documents; and
WHEREAS, in consideration of the financial and other support that the Borrower
has provided, and such financial and other support as the Borrower may in the
future provide, to the Guarantors, whether directly or indirectly, and in order
to induce the Banks and the Agent to enter into the Reimbursement Agreement, the
Guarantors are willing to guarantee the obligations of the Borrower under the
Reimbursement Agreement, the Reimbursement Notes, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Reimbursement Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. Representations and Warranties. The Guarantors incorporate herein by
reference as fully as if set forth herein all of the representations and
warranties pertaining to the Guarantors contained in Article V of the
Reimbursement Agreement (which representations and warranties shall be deemed to
have been renewed by the Guarantors upon each Borrowing under the Reimbursement
Agreement).
SECTION 3. Covenants. The Guarantors covenant that, so long as any Bank has any
Commitment outstanding under the Reimbursement Agreement or any amount payable
under the Reimbursement Agreement or any Reimbursement Note shall remain unpaid,
the Guarantors will fully comply with those covenants set forth in Article VI of
the Reimbursement Agreement pertaining to the Guarantors, and the Guarantors
incorporate herein by reference as fully as if set forth herein all of such
covenants.
SECTION 4. The Guaranty. The Guarantors hereby unconditionally and jointly and
severally guarantee (i) the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Reimbursement Note issued by the Borrower pursuant to the Reimbursement
Agreement, and the full and punctual payment of all other amounts payable by the
Borrower under the Reimbursement Agreement, including, without limitation, all
Loans and interest thereon, all Letter of Credit Obligations, all compensation
and indemnification amounts and fees payable pursuant to the Reimbursement
Agreement and the Agent's Letter Agreement, and (ii) the timely performance of
all other obligations of the Borrower under the Reimbursement Agreement and the
other Loan Documents (all of the foregoing obligations being referred to
collectively as the "Guaranteed Obligations"). Upon failure by the Borrower to
pay punctually any such amount or perform such obligations, each of the
Guarantors agrees that it shall forthwith on demand pay the amount not so paid
at the place and in the manner specified in the Reimbursement Agreement, the
relevant Reimbursement Note or the relevant Loan Document, as the case may be,
or perform such obligation in accordance with the terms and conditions therefor
specified in the Reimbursement Agreement or the other Loan Documents, and pay
all costs of collection, including reasonable attorneys fees; provided that,
notwithstanding the provisions of O.C.G.A. 13-1-11(a)(2) to the contrary, the
Guarantor shall not be obligated to pay more than the attorneys fees actually
incurred in connection with such collection.
SECTION 5. Guaranty Unconditional. The obligations of the Guarantor hereunder
shall be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or release in
respect of any obligation of the Borrower under the Reimbursement
Agreement, any Reimbursement Note, or any other Loan Document, by
operation of law or otherwise or any obligation of any other guarantor
of any of the Guaranteed Obligations;
(ii) any modification or amendment of or supplement to the Reimbursement
Agreement, any Reimbursement Note, or any other Loan Document;
(iii)any release, nonperfection or invalidity of any direct or indirect
security, if any, for any obligation of the Borrower under the
Reimbursement Agreement, any Reimbursement Note, any Loan Document, or
any obligations of any other guarantor of any of the Guaranteed
Obligations;
(iv) any change in the partnership structure or ownership of the Borrower
or corporate structure or ownership of any other Guarantor or any
other guarantor of any of the Guaranteed Obligations, or any
insolvency, bankruptcy, reorganization or other similar proceeding
affecting the Borrower, or any other Guarantor or any other guarantor
of the Guaranteed Obligations, or its assets or any resulting release
or discharge of any obligation of the Borrower, or any other Guarantor
or any other guarantor of any of the Guaranteed Obligations;
(v) the existence of any claim, setoff or other rights which the
Guarantors may have at any time against the Borrower, any other
Guarantor or any other guarantor of any of the Guaranteed Obligations,
the Agent, any Bank or any other Person, whether in connection
herewith or any unrelated transactions, provided that nothing herein
shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower, or any other Guarantor or any other guarantor of any of the
Guaranteed Obligations, for any reason related to the Reimbursement
Agreement, any other Loan Document, or any other Guaranty, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower, or any other Guarantor or any other guarantor
of the Guaranteed Obligations, of the principal of or interest on any
Reimbursement Note or any other amount payable by the Borrower under
the Reimbursement Agreement, the Reimbursement Notes, or any other
Loan Document; or
(vii)any other act or omission to act or delay of any kind by the
Borrower, any other Guarantor or any other guarantor of the Guaranteed
Obligations, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the
Guarantor's obligations hereunder.
SECTION 6. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantors' obligations hereunder shall remain in full force
and effect until all Guaranteed Obligations shall have been paid in full and the
Commitments under the Reimbursement Agreement shall have terminated or expired.
If at any time any payment of the principal of or interest on any Reimbursement
Note or any other amount payable by the Borrower under the Reimbursement
Agreement or any other Loan Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, the Guarantors' obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
SECTION 7. Waiver of Notice by the Guarantors. The Guarantors irrevocably waive
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any Person against the Borrower, any
other Guarantor or any other guarantor of the Guaranteed Obligations, or any
other Person.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment of any
amount payable by the Borrower under the Reimbursement Agreement, any
Reimbursement Note or any other Loan Document is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of the Reimbursement Agreement, any
Reimbursement Note or any other Loan Document shall nonetheless be payable by
the Guarantors hereunder forthwith on demand by the Agent made at the request of
the Required Banks.
SECTION 9. Notices. All notices, requests and other communications to any party
hereunder shall be given or made by telecopier or other writing and telecopied
or mailed or delivered to the intended recipient at its address or telecopier
number set forth on the signature pages hereof or such other address or telecopy
number as such party may hereafter specify for such purpose by notice to the
Agent in accordance with the provisions of Section 9.01 of the Reimbursement
Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice, 3
Domestic Business Days after such communication is deposited in the mails with
first class postage prepaid, in each case given or addressed as aforesaid.
SECTION 10. No Waivers. No failure or delay by the Agent or any Banks in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Reimbursement Agreement,
the Reimbursement Notes, and the other Loan Documents shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 11. Successors and Assigns. This Guaranty is for the benefit of the
Agent and the Banks and their respective successors and assigns and in the event
of an assignment of any amounts payable under the Reimbursement Agreement, the
Reimbursement Notes, or the other Loan Documents, the rights hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty may not be assigned by the Guarantors without the
prior written consent of the Agent and the Required Banks, and shall be binding
upon the Guarantors and their respective successors and permitted assigns.
SECTION 12. Changes in Writing. Neither this Guaranty nor any provision hereof
may be changed, waived, discharged or terminated orally, but only in writing
signed by the Guarantors and the Agent, with the consent of the Required Banks.
SECTION 13. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF GEORGIA. EACH OF THE GUARANTOR AND THE AGENT HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN ATLANTA, GEORGIA
AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTORS IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE GUARANTORS AND THE
Agent HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14. Taxes, etc. All payments required to be made by the Guarantor
hereunder shall be made without setoff or counterclaim and free and clear of and
without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
any government or any political or taxing authority pursuant and subject to the
provisions of Section 2.11(c) of the Reimbursement Agreement, the terms of which
are incorporated herein by reference as to the Guarantors as fully as if set
forth herein, and for such purposes, the rights and obligations of the Borrower
under such Section shall devolve to the Guarantors as to payments required to be
made by the Guarantors hereunder.
SECTION 15. Additional Guarantors; Release of Guarantors. Section 6.23 of the
Reimbursement Agreement provides that Significant Subsidiaries must become
Guarantors, and Subsidiaries which are not Significant Subsidiaries may elect to
become Guarantors, by, among other things, executing and delivering to the Agent
a counterpart of this Guaranty. Any Subsidiary which executes and delivers to
the Agent a counterpart of this Guaranty shall be a Guarantor for all purposes
hereunder. Under certain circumstances described in the last sentence of Section
6.11 of the Reimbursement Agreement, Subsidiaries which are not Significant
Subsidiaries may obtain from the Agent a written release from this Guaranty
pursuant to the provisions of such sentence, and upon obtaining such written
release, any such Subsidiary shall no longer be a Guarantor hereunder. Each
other Guarantor consents and agrees to any such release and agrees that no such
release shall affect its obligations hereunder.
SECTION 16. Other Waivers by the Guarantors. The Guarantors hereby expressly
waive, renounce, and agree not to assert, any right, claim or cause of action,
including, without limitation, a claim for reimbursement, subrogation,
indemnification or otherwise, against the Borrower arising out of or by reason
of this Guaranty or the obligations of the Guarantors hereunder, including,
without limitation, the payment or securing or purchasing of any of the
Guaranteed Obligations by the Guarantors. The waiver, renunciation and agreement
contained in the immediately preceding sentence is for the benefit of the Agent
and the Banks and also for the benefit of the Borrower who may assert the
benefits thereof as a third-party beneficiary, and the Guarantors may be
released from such waiver, renunciation and agreement only by the execution and
delivery, by the Agent, the Required Banks and the Borrower, of an instrument
expressly releasing the Guarantors therefrom.
<PAGE>
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly
executed, under seal, by its authorized officer as of the date first above
written.
GABLES GP, INC.
By: /s/ Marvin R. Banks, Jr.
------------------------------
Marvin R. Banks, Jr.
Vice President
Address:
c/o Gables Realty Limited
Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES RESIDENTIAL TRUST
By: /s/ Marvin R. Banks, Jr.
---------------------------
Name: Marvin R. Banks, Jr.
---------------------------
Title:Vice President
---------------------------
Address:
c/o Gables Realty Limited
Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES-TENNESSEE PROPERTIES
By: Gables Realty Limited
Partnership, a general partner
By: Gables GP, Inc., its
general partner
By: /s/ Marvin R. Banks, Jr.
-----------------------------
Marvin R. Banks, Jr.
Vice President
Address:
c/o Gables Realty Limited
Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
<PAGE>
EXHIBIT K
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of October 1,
1997 by and between GABLES REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Principal"), GABLES GP, INC., a Texas corporation and
GABLES-TENNESSEE PROPERTIES, a Tennessee general partnership (collectively, the
"Subsidiary Guarantors" and, together with any subsidiary of the Principal which
becomes a Guarantor pursuant to the last paragraph hereof, Section 15 of the
Guaranty referred to below and Section 6.23 of the Reimbursement Agreement
referred to below). The Principal and each of the Subsidiary Guarantors are
sometimes hereinafter referred to individually as a "Contributing Party" and
collectively as the "Contributing Parties").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Reimbursement Agreement, dated as of even date
herewith among the Principal, the Banks party thereto and Wachovia Bank, N.A.,
as Agent (such agreement, as the same may from time to time be amended,
modified, restated or extended, being hereinafter referred to as the
"Reimbursement Agreement"; capitalized terms used herein shall have the meanings
ascribed thereto in the Reimbursement Agreement), the Banks have agreed to
extend financial accommodations to the Principal;
WHEREAS, as a condition, among others, to the willingness of the Agent and the
Banks to enter into the Reimbursement Agreement, they have required that each
Subsidiary Guarantor, along with Gables Residential Trust ("GBP"), execute and
deliver that certain Guaranty, dated as of even date herewith (such agreement,
as the same may from time to time be amended, modified, restated or extended,
being hereinafter referred to as the "Guaranty"), pursuant to which, among other
things, the Subsidiary Guarantors and GBP have jointly and severally agreed to
guarantee the "Guaranteed Obligations" (as defined in the Guaranty); and
WHEREAS, each Subsidiary Guarantor is a direct or indirect subsidiary of the
Principal and is engaged in businesses related to those of the Principal and
each other Subsidiary Guarantor, and each of the Subsidiary Guarantors will
derive direct or indirect economic benefit from the effectiveness and existence
of the Reimbursement Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained, and to induce each Subsidiary Guarantor to enter into the Guaranty,
it is agreed as follows:
To the extent that any Subsidiary Guarantor shall, under the Guaranty, make a
payment (a "Subsidiary Guarantor Payment") of a portion of the Guaranteed
Obligations, then, without limiting its rights of subrogation against the
principal, such Subsidiary Guarantor shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Contributing
Parties in an amount, for each such Contributing Party, equal to a fraction of
such Subsidiary Guarantor Payment, the numerator of which fraction is such
Contributing Party's Allocable Amount and the denominator of which is the sum of
the Allocable Amounts of all of the Contributing Parties.
As of any date of determination, the "Allocable Amount" of each Contributing
Party shall be equal to the maximum amount of liability which could be asserted
against such Contributing Party hereunder with respect to the applicable
Subsidiary Guarantor Payment without (i) rendering such Contributing Party
"insolvent" within the meaning of Section 101(31) of the Federal Bankruptcy Code
(the "Bankruptcy Code") or Section 2 of either the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the "UFCA"), (ii)
leaving such Contributing Party with unreasonably small capital, within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA or
Section 5 of the UFCA, or (iii) leaving such Contributing Party unable to pay
its debts as they become due within the meaning of Section 548 of the Bankruptcy
Code or Section 4 of the UFTA or Section 6 of the UFCA.
This Agreement is intended only to define the relative rights of the
Contributing Parties, and nothing set forth in this Agreement is intended to or
shall impair the obligations of the Subsidiary Guarantors, jointly and
severally, to pay any amounts, as and when the same shall become due and payable
in accordance with the terms of the Guaranty.
The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets in favor of each Subsidiary
Guarantor to which such contribution and indemnification is owing.
This Agreement shall become effective upon its execution by each of the
Contributing Parties and shall continue in full force and effect and may not be
terminated or otherwise revoked by any Contributing Party until all of the
Guaranteed Obligations shall have been indefeasibly paid in full (in lawful
money of the United States of America) and discharged and the Reimbursement
Agreement and financing arrangements evidenced and governed by the Reimbursement
Agreement shall have been terminated. Each Contributing Party agrees that if,
notwithstanding the foregoing, such Contributing Party shall have any right
under applicable law to terminate or revoke this Agreement, and such
Contributing Party shall attempt to exercise such right, then such termination
or revocation shall not be effective until a written notice of such revocation
or termination, specifically referring hereto and signed by such Contributing
Party, is actually received by each of the other Contributing Parties and by the
Agent at its notice address set forth in the Reimbursement Agreement. Such
notice shall not affect the right or power of any Contributing Party to enforce
rights arising prior to receipt of such written notice by each of the other
Contributing Parties and the Agent. If any Bank grants additional loans to the
Principal or takes other action giving rise to additional Guaranteed Obligations
after any Contributing Party has exercised any right to terminate or revoke this
Agreement but before the Agent receives such written notice, the rights of each
other Contributing Party to contribution and indemnification hereunder in
connection with any Subsidiary Guarantor Payments made with respect to such
loans or Guaranteed Obligations shall be the same as if such termination or
revocation had not occurred.
Section 6.23 of the Reimbursement Agreement provides that Significant
Subsidiaries must become Guarantors, and Subsidiaries which are not Significant
Subsidiaries may elect to become Guarantors, by, among other things, executing
and delivering to the Agent a counterpart of the Guaranty and of this
Contribution Agreement. Any Subsidiary which executes and delivers to the Agent
a counterpart of the Guaranty and of this Contribution Agreement shall be a
Subsidiary Guarantor for all purposes hereunder. Under certain circumstances
described in the last sentence of Section 6.11 of the Reimbursement Agreement,
Subsidiaries which are not Significant Subsidiaries may obtain from the Agent a
written release from the Guaranty pursuant to the provisions of such sentence,
and upon obtaining such written release, any such Subsidiary shall no longer be
a Subsidiary Guarantor or Contributing Party hereunder, and such release shall
automatically and without further action constitute a release by each other
Contributing Party of all obligations of such Subsidiary hereunder. Each other
Subsidiary Guarantor consents and agrees to any such release and agrees that no
such release shall affect its obligations hereunder, except as to the Subsidiary
so released.
<PAGE>
IN WITNESS WHEREOF, each Contributing Party has executed and delivered this
Agreement, under seal, as of the date first above written.
GABLES REALTY LIMITED PARTNERSHIP
By: Gables GP, Inc., its sole general partner
By: /s/ Marvin R. Banks, Jr.
---------------------------------
Marvin R. Banks, Jr.
Vice President
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES GP, INC.
By: /s/ Marvin R. Banks, Jr.
---------------------------------
Marvin R. Banks, Jr.
Vice President
Address:
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
GABLES-TENNESSEE PROPERTIES
By: Gables Realty Limited Partnership, a
general partner
By: Gables GP, Inc., its general partner
By: /s/ Marvin R. Banks, Jr.
----------------------------------
Marvin R. Banks, Jr.
Vice President
Address:
Gables Realty Limited Partnership
2859 Paces Ferry Road
Suite 1450
Atlanta, Georgia 30339
Attention: Marvin R. Banks, Jr.
Telecopier number: 770-438-5559
Confirmation number: 770-438-5501
FORWARD TREASURY LOCK AGREEMENT
WHEREAS, Gables Realty Limited Partnership ("Counterparty") wishes to defer the
fixing of the effective cost to it of its financings based on current interest
rates and J.P. Morgan Securities Inc. ("JPMS"), is willing to enter into this
Forward Treasury Lock Agreement, dated as of September 22, 1997 to enable
Counterparty to do so.
NOW, THEREFORE, Counterparty and JPMS hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have the
following meanings:
(a) This "Agreement" shall mean this Forward Treasury Lock Agreement.
(b) The "Determination Date" shall mean the day specified below opposite
the term "Determination Date". JPMS may, upon written notice to and
with the consent of Counterparty, change the Determination Date.
Counterparty may also, upon written notice to and with consent of
JPMS, change the Determination Date.
(c) The "Notional Principal" shall mean that amount specified below
opposite the term "Notional Principal".
(d) The "Offer Price" for the Reference Treasury on any day shall mean the
spot "offer" price for the Reference Treasury less JPMS' hedging
costs, expressed as a percentage, all as determined by JPMS in its
reasonable good faith judgment.
(e) The "Payment Amount" on any day shall mean an amount equal to the
product of (i) the difference of the Reference Price minus the Offer
Price for the Reference Treasury on such day multiplied by (ii) the
Notional Principal.
(f) The "Reference Price" for the Reference Treasury shall mean that
price, expressed as a percentage, specified below opposite the term
"Reference Price".
(g) The "Reference Treasury" shall mean the United States Treasury Bill or
Note having the interest rate and maturity specified below opposite
the term "Reference Treasury".
(h) The "Settlement Date" shall mean the date specified below opposite the
term "Settlement Date".
2. Payment. The parties hereto agree that on the Settlement Date a payment
shall be made equal to the Payment Amount on the Determination Date. If the
Payment Amount is a positive number, MGT shall pay the Payment Amount to
Counterparty. If such Payment Amount is a negative number, Counterparty
shall pay the absolute value of such Payment Amount to MGT.
3. Default: Set-off. In the event a party (the "Defaulting Party") shall (i)
fail to make the payment due to Section 2 hereof, or (ii) have an Act of
Insolvency (as defined below) occur in respect of it, the other party (the
"Non-Defaulting Party") shall have the right, without notice or demand of
any kind, to (A) set-off and apply to such Defaulting Party's obligations
all property of the Defaulting Party held by the Non-Defaulting Party and
all liabilities of and amounts owed by the Non-Defaulting Party to the
Defaulting Party, whether matured or unmatured, and whether arising
hereunder or under any other agreement or transaction between the parties,
and (B) in the case of an Act of Insolvency, establish a Determination Date
as of the date of default in which case the Payment Amount shall be
immediately payable. The Defaulting Party shall be liable to the
Non-Defaulting Party for the Payment Amount and the amount of all
reasonable legal and other professional expenses incurred by the
Non-Defaulting Party in connection with or as a consequence of an Event of
Default, together with interest thereon at LIBOR plus 2%. "Act of
Insolvency", with respect to any party, shall mean (i) the commencement by
such party as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, moratorium, dissolution,
delinquency or similar law, or such party seeking the appointment or
election of a receiver, conservator, trustee, custodian, or similar
official for such party or any substantial part of its property, or the
convening of any meeting of creditors for the purpose of commencing any
such case or proceeding or seeking such an appointment or election, (ii)
the commencement of any such case or proceeding against such party, or
another seeking such an appointment or election, or the filing against a
party of an application for a protective decree under the provisions of the
Securities Investor Protection Act of 1970, which (a) is consented to or
not timely contested by such party, (b) results in the entry of an order
for relief, such an appointment or election, the issuance of such
protective decree or the entry of an order having a similar effect, or (c)
is not dismissed within 15 days, (iii) the making by a party of a general
assignment for the benefit of creditors, or (iv) the admission in writing
by a party of such party's inability to pay such party's debts as they
become due.
4. No Assignment. The Client may not, without prior written consent of JPMS,
assign, transfer or set over to another, in whole or in part, any or all of
its benefits, rights, duties and obligations under this Agreement, and any
such purported assignment shall be null and void.
5. Early Termination by Agreement. At any time, either party shall have the
right by notice to the other to request that the parties negotiate with
respect to the termination of this Agreement. In such case, the parties
shall promptly negotiate in good faith with respect to an early termination
date and the amount, if any, payable by one party to the other, as the case
may be, in satisfaction for such early termination. Any such early
termination and all terms thereof shall be subject to the mutual agreement
of the parties, and each party shall have complete and unfettered
discretion as to its agreement to a proposed termination.
6. Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original.
7. Governing Law and Jurisdiction. 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 doctrines. This Agreement, including settlement
and delivery, shall be subject to the rules and regulations of the
appropriate self-regulatory organizations and the federal and state
securities laws.
8. Miscellaneous. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and
supersedes all oral communication and prior writings with respect thereto.
No amendment, modification or waiver in respect to this Agreement will be
effective unless in writing and executed by each of the parties or
confirmed by an exchange of any rights, powers, remedies and privileges
provided by law. A failure or delay in exercising any right, power or
privilege will not be presumed to preclude any subsequent or further
exercise of any other right, power or privilege. The headings used in this
Agreement are for convenience of reference only and are not to affect the
construction of or to be taken into consideration in interpreting this
Agreement. Should any part of this Agreement be held void and unenforceable
it shall not affect any other part of this Agreement.
Reference Treasury: 7 7/8% of November 15, 2004
Notional Principal: USD 75,000,000
Agreement Date: September 22, 1997
Determination Date: December 19, 1997
Settlement Date: December 22, 1997
Reference Yield: 6.099%
Reference Price: 109-27 3/4
The Office of JPMS for this transaction is:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
For Treasury Lock information only:
Facsimile Transmission Number: (212) 648-5088
Telephone Number: (212) 648-6712
Attention: Bob Candella
If you are in agreement with the foregoing, please complete the signature line
below and return to Bob Candella via facsimile at (212) 648-5088 (Phone: (212)
648-6712).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date specified on the first
page of this Agreement.
Gables Realty Limited Partnership J.P. MORGAN SECURITIES, INC.
By: /s/ Marvin R. Banks, Jr. By: /s/ Jason Manske
----------------------------- -------------------------
Name: Marvin R. Banks, Jr. Name: Jason Manske
---------------------------- -------------------------
Title: Vice President Title: Vice President
---------------------------- -------------------------
Address: 2859 Paces Ferry Road Address:60 Wall Street
Suite 1450 New York, NY 10260
Atlanta, Georgia 30339
1 Subject to the provisions of Section 4.03
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF GABLES RESIDENTIAL TRUST FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000913782
<NAME> GABLES RESIDENTIAL TRUST
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,257
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,007,520
<DEPRECIATION> 90,459
<TOTAL-ASSETS> 943,405
<CURRENT-LIABILITIES> 0
<BONDS> 440,728
0
115,000
<COMMON> 202
<OTHER-SE> 294,585
<TOTAL-LIABILITY-AND-EQUITY> 943,405
<SALES> 0
<TOTAL-REVENUES> 102,866
<CGS> 0
<TOTAL-COSTS> 58,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,227
<INCOME-PRETAX> 29,054
<INCOME-TAX> 0
<INCOME-CONTINUING> 24,576
<DISCONTINUED> 0
<EXTRAORDINARY> 602
<CHANGES> 0
<NET-INCOME> 23,974
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 0
</TABLE>
