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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 1, 1998
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
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(Exact name of registrant as specified in its charter)
MARYLAND 1-13232 84-1259577
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1873 SOUTH BELLAIRE STREET, SUITE 1700, DENVER, CO 80222-4348
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 757-8101
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
On October 1, 1998, Apartment Investment and Management Company
("AIMCO") and Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), completed the merger (the "Insignia Merger") of Insignia with and
into AIMCO pursuant to the Amended and Restated Agreement and Plan of Merger,
dated as of May 26, 1998, among AIMCO, AIMCO Properties, L.P., Insignia and
Insignia/ESG Holdings, Inc. (the "Insignia Merger Agreement"). Pursuant to the
Insignia Merger Agreement, on September 15, 1998, Insignia distributed to its
stockholders all assets related to its U.S. and international commercial real
estate business, its New York-based cooperative and condominium management
company, its single-family home brokerage operations and other related holding
(the "Spin Off"). Previously, on September 14, 1998, the stockholders of AIMCO
approved the Insignia Merger Agreement and the stockholders of Insignia approved
the Spin Off and the Insignia Merger Agreement.
In the Insignia Merger, each share of Class A Common Stock, par value
$.01 per share, of Insignia, was converted into the right to receive 0.262
shares of Class E Cumulative Convertible Preferred Stock, par value $.01 per
share, of AIMCO ("AIMCO Class E Preferred Stock"). AIMCO will issue up to a
total of approximately 8.96 million shares of AIMCO Class E Preferred Stock
pursuant to the Insignia Merger. In addition, AIMCO repaid approximately $325
million in outstanding indebtedness of Insignia, and assumed approximately $149
million aggregate principal amount of 6 1/2% Convertible Debentures originally
issued by Insignia.
The terms of the AIMCO Class E Preferred Stock provide that in addition
to receiving the same dividends as holders of AIMCO Common Stock, holders of
AIMCO Class E Preferred Stock are entitled to a special cash dividend of $50.0
million in the aggregate, and when such dividend is paid, the AIMCO Class E
Preferred Stock automatically will convert into AIMCO Common Stock on a
one-for-one basis, subject to antidilution adjustments, if any.
In October 1998, the AIMCO Operating Partnership and AIMCO, entered
into a $300 million senior unsecured interim term loan agreement with an
affiliate of Lehman Brothers Inc. The term loan matures in one year. AIMCO used
the proceeds to refinance existing indebtedness outstanding of Insignia at the
time of merger.
Also in connection with the Insignia Merger, AIMCO amended and
restated its revolving credit facility with Bank of America National Trust and
Savings Association and BankBoston, N.A. (the "Credit Facility"). The Credit
Facility now provides for loans of up to $100 million, including a $30 million
swing-line. AIMCO Properties, L.P. is the borrower under the Credit Facility,
and all obligations thereunder are guaranteed by AIMCO and certain of its
subsidiaries.
As a result of the Insignia Merger, as of October 1, 1998, AIMCO owned
or controlled 58,495 units in 209 apartment properties, held an equity interest
in 239,879 units in 1,335 apartment properties and managed 97,716 units in 759
apartment properties for third party owners and affiliates. AIMCO's press
release dated October 2, 1998, relating to the Insignia Merger is included as
Exhibit 99.1 to this Report and is incorporated herein by reference.
ITEM 5. OTHER EVENTS.
As a result of the Insignia Merger, AIMCO acquired approximately 51% of
the common shares of beneficial interest, par value $.01 per share ("IPT
Shares"), of Insignia Properties Trust, a Maryland real estate investment trust
("IPT"). On October 2 1998, AIMCO and IPT executed a definitive merger agreement
(the "IPT Merger Agreement") pursuant to which IPT will be merged into AIMCO or
a subsidiary of AIMCO, and IPT shareholders will receive $13.25 per share in
cash or AIMCO common stock worth $13.28 per share, at AIMCO's option. The
transactions contemplated by the IPT Merger Agreement are subject to certain
conditions. The IPT merger requires the approval of a majority of the
outstanding IPT shares. AIMCO intends to vote all of its IPT shares in favor of
the IPT merger. AIMCO's press release dated October 5, 1998, relating to the IPT
Merger Agreement is included as Exhibit 99.2 to this Report and is incorporated
herein by reference.
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
The following exhibits are filed with this report:
Exhibit
Number Description
- -------- -----------
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between Apartment Investment and Management Company and Insignia
Properties Trust.
10.1 Amended and Restated Credit Agreement, dated October 1, 1998,
among AIMCO Properties, L.P., Bank of America National Trust and
Savings Association, and BankBoston, N.A.
10.2 Promissory Note, dated October 1, 1998, in the principal amount of
$65,000,000, issued by AIMCO Properties, L.P. to Bank of America
National Trust and Savings Association.
10.3 Promissory Note, dated October 1, 1998, in the principal amount of
$35,000,000, issued by AIMCO Properties, L.P. to Bank of America
National Trust and Savings Association.
10.4 Swing Line Promissory Note, dated October 1, 1998, in the
principal amount of $30,000,000, issued by AIMCO Properties, L.P. to
Bank of America National Trust and Savings Association.
99.1 Press Release of Apartment Investment and Management Company, dated
October 2, 1998.
99.2 Press Release of Apartment Investment and Management Company, dated
October 5, 1998.
* * * * *
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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.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
Date: October 13, 1998 /s/ Troy Butts
------------------------------------
Troy D. Butts
Senior Vice President and Chief
Financial Officer
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EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between Apartment Investment and Management Company and Insignia
Properties Trust.
10.1 Amended and Restated Credit Agreement, dated October 1, 1998, among
AIMCO Properties, L.P., Bank of America National Trust and Savings
Association, and BankBoston, N.A.
10.2 Promissory Note, dated October 1, 1998, in the principal amount of
$65,000,000, issued by AIMCO Properties, L.P. to Bank of America
National Trust and Savings Association.
10.3 Promissory Note, dated October 1, 1998, in the principal amount of
$35,000,000, issued by AIMCO Properties, L.P. to Bank of America
National Trust and Savings Association.
10.4 Swing Line Promissory Note, dated October 1, 1998, in the
principal amount of $30,000,000, issued by AIMCO Properties, L.P. to
Bank of America National Trust and Savings Association.
99.1 Press Release of Apartment Investment and Management Company, dated
October 2, 1998.
99.2 Press Release of Apartment Investment and Management Company, dated
October 5, 1998.
</TABLE>
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
and
INSIGNIA PROPERTIES TRUST
Dated as of October 1, 1998
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 1, 1998, by and between Apartment Investment and Management Company, a
Maryland corporation ("AIMCO"), and Insignia Properties Trust, a Maryland real
estate investment trust ("IPT").
WHEREAS, AIMCO, AIMCO Properties, L.P., a Delaware limited
partnership ("AIMCO OP"), Insignia Financial Group, Inc., a Delaware corporation
("IFG"), and Insignia/ESG Holdings, Inc., a Delaware corporation, have entered
into an Amended and Restated Agreement and Plan of Merger (the "IFG Agreement"),
dated as of May 26, 1998;
WHEREAS, pursuant to the IFG Agreement, IFG has merged with
and into AIMCO, with AIMCO being the surviving entity (the "Insignia Merger");
WHEREAS, the IFG Agreement requires AIMCO to propose to
acquire (by merger) IPT and to use its reasonable best efforts to consummate
such merger within three months following the effective time of the Insignia
Merger, and the performance of AIMCO's obligations under this Agreement, if it
uses its reasonable best efforts to consummate the Merger (as hereinafter
defined) within such period, will constitute AIMCO's performance of such
obligations under the IFG Agreement;
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of July 18, 1997, by and among Angeles Mortgage Investment Trust, an
unincorporated California business trust ("AMIT"), IPT, IFG and MAE GP
Corporation, a Delaware corporation, AMIT was merged with and into IPT on
September 17, 1998, with IPT being the surviving entity (the "AMIT Merger");
WHEREAS, the Board of Trustees of IPT (the "IPT Board") has
received the written opinion of Lehman Brothers Inc. dated the date hereof that
the Merger Consideration (as defined in Section 2.1(b)) is fair from a financial
point of view to the holders (the "IPT Shareholders") of common shares of
beneficial interest, par value $.01 per share, of IPT ("IPT Shares"), other than
IFG and AIMCO and their respective Subsidiaries (as defined in Section 2.1(a));
WHEREAS, the Board of Directors of AIMCO (the "AIMCO Board")
and the IPT Board have approved the merger of IPT and AIMCO (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement; and
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WHEREAS, the surviving entity in the Merger intends that,
following the Merger, it shall continue to be subject to taxation as a real
estate investment trust (a "REIT") within the meaning of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Structure of the Merger.
(a) At least 14 business days prior to the anticipated mailing
of the Information Statement/Prospectus (as defined in Section 6.2) AIMCO shall
notify IPT whether, at the Effective Time (as defined in Section 1.4) (x) IPT
shall be merged with and into AIMCO, with AIMCO being the surviving entity or
(y) a subsidiary of AIMCO shall be merged with and into IPT, with IPT being the
surviving entity. If AIMCO elects to cause the Merger to occur pursuant to (y)
above, then this Agreement shall be amended to (i) add such subsidiary as a
party to this Agreement, (ii) make such other additional incidental amendments
as are needed to provide for a subsidiary merger, and where required, to provide
that AIMCO will cause its subsidiary to take action in lieu of AIMCO, as agreed
by IPT and AIMCO and their respective counsel, and (iii) include an
unconditional guarantee by AIMCO of the obligations of its subsidiary in the
Merger.
(b) In the event AIMCO shall have been advised by its tax
counsel that it does not expect to be able to issue the opinion referred to in
Section 7.2(f) of this Agreement at the Closing, in addition to the actions
referenced to in the second sentence of this Section 1.1, IPT, acting through a
majority of the Continuing Trustees, and AIMCO shall use their best efforts to
restructure the form of the transaction to provide for the issuance of AIMCO
Common Stock without materially changing either the consideration to be received
by IPT Shareholders or the tax or other economic consequences of the transaction
to AIMCO and its Subsidiaries, but if the transaction cannot reasonably be so
restructured, it shall be restructured as an all cash transaction.
Section 1.2 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time IPT shall be merged with and
into AIMCO in accordance with the laws of the State of Maryland. AIMCO shall be
the surviving entity
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in the Merger and shall continue its corporate existence under the laws of the
State of Maryland. AIMCO after the Effective Time is sometimes referred to
herein as the "Surviving Entity." The effects of the Merger shall be as set
forth in Section 1.3. AIMCO covenants and agrees to use its reasonable best
efforts to consummate the Merger as soon as possible.
Section 1.3 Effects of the Merger. At the Effective Time, (a)
the charter of AIMCO (the "AIMCO Charter"), as in effect immediately prior to
the Effective Time, shall be the charter of the Surviving Entity until
thereafter amended as provided by law and the AIMCO Charter, (b) the by-laws of
AIMCO, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Entity until thereafter amended as provided by law, the
AIMCO Charter and such by-laws and (c) the directors and officers of AIMCO
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Entity until their respective successors are duly
elected and qualified. Subject to the foregoing, the additional effects of the
Merger shall be as provided in Section 3-114 of the Maryland General Corporation
Law ("MGCL") and Section 8-501.1(n) of Title 8 of the Corporations and
Associations Article of the Annotated Code of Maryland (the "MCAA").
Section 1.4 Effective Time of the Merger. On the Closing Date
(as defined in Section 3.1), articles of merger shall be executed and filed by
AIMCO and IPT with the State Department of Assessments and Taxation of the State
of Maryland pursuant to the MGCL and the MCAA. The Merger shall become effective
upon the acceptance of the articles of merger for record by the State Department
of Assessments and Taxation of the State of Maryland (the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on IPT Shares.
(a) Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"AIMCO Collar Price" means the average price (computed based
on the sum of the high and low sales prices of AIMCO Common Stock (as reported
in the NYSE Composite Transactions reporting system as published in The Wall
Street Journal or, if not published therein, in another authoritative source)
divided by two) of a share
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of AIMCO Common Stock during the ten consecutive NYSE trading day period ending
on (and including) December 31, 1998.
"AIMCO Common Stock" means the Class A Common Stock, par value
$.01 per share, of AIMCO.
"AIMCO Exchange Value" means (a) the AIMCO Reference Price, if
the Effective Time occurs on or prior to December 31, 1998, or (b) the lesser of
the AIMCO Collar Price or the AIMCO Reference Price, if the Effective Time
occurs on or after January 1, 1999.
"AIMCO Reference Period" means the ten consecutive NYSE
trading day period commencing on and including the tenth (10th) NYSE trading day
preceding the IPT Meeting Date (as defined in Section 6.4) and ending on and
including the NYSE trading day immediately preceding the IPT Meeting Date.
"AIMCO Reference Price" means the average price (computed
based on the sum of the high and low sales prices of AIMCO Common Stock (as
reported in the NYSE Composite Transactions reporting system as published in The
Wall Street Journal or, if not published therein, in another authoritative
source) divided by two) of a share of AIMCO Common Stock during the AIMCO
Reference Period.
"Cash Election Notice" is defined in Section 2.1(e).
"Cash Percentage" is defined in Section 2.1(e).
"Conversion Ratio" means the IPT Exchange Value divided by the
AIMCO Exchange Value.
"Distribution Shortfall Amount" means the aggregate per-IPT
Share amount, if any, of the distributions required to be paid by IPT pursuant
to Section 6.1 but which IPT fails to make for any reason, plus a return on the
amount of each such unpaid distribution at an annual rate equal to the lesser of
20% or the maximum rate permitted by applicable law, to be calculated based on
the number of days elapsed from and including the date on which such
distribution was required to be paid through and including the date of the
Effective Time (and assuming a 365 day year).
"Excess Distribution Amount" is defined in Section 6.1(c).
"IPT Distribution Amount" means, as of any date of
determination, (a) $.16 during the period from the date of this Agreement
through and including February
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28, 1999, and (b) thereafter, the greater of (i) $.16 and (ii) the amount
determined by dividing $13.28 by the AIMCO Collar Price and multiplying the
result by the per share amount of the corresponding distribution declared by
AIMCO in respect of AIMCO Common Stock.
"IPT Exchange Value" means $13.28.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Stock Percentage" means a percentage equal to 100% minus the
Cash Percentage.
"Subsidiary" means as to any Person, any other Person of which
at least a majority of the voting power represented by the outstanding shares of
capital stock or other voting securities or interests (including, without
limitation, general partner interests) having voting power under ordinary
circumstances to elect directors or similar members of the governing body of
such other Person shall at the time be held, directly or indirectly, by such
first Person.
(b) General. Subject to Sections 2.1(c) and (d), as of the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of an IPT Share, each issued and outstanding IPT Share shall be
converted into and become the right to receive the following (together with any
cash to be issued in lieu of fractional shares pursuant to Section 2.4, the
"Merger Consideration"):
(i) If the Effective Time occurs on or prior to
December 31, 1998: (A) that number of shares of AIMCO Common Stock
equal to the Stock Percentage multiplied by the Conversion Ratio; and
(B) an amount in cash equal to the Cash Percentage multiplied by the
sum of (x) $13.25, plus (y) the Distribution Shortfall Amount (if any),
minus (z) the Excess Distribution Amount (if any); and (C) an amount in
cash equal to the IPT Distribution Amount, determined as of Effective
Time, multiplied by the number of days that have elapsed from and
including the day immediately following the record date for the last
regular quarterly distribution declared by IPT through and including
the date immediately preceding the Closing Date, divided by 91; or
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(ii) If the Effective Time occurs between January 1,
1999 and January 31, 1999: (A) that number of shares of AIMCO Common
Stock equal to the Stock Percentage multiplied by the Conversion Ratio;
and (B) an amount in cash equal to the Cash Percentage multiplied by
the sum of (w) $13.25, plus (x) $.0018 multiplied by the number of days
that has elapsed from and including January 1, 1999 through and
including the day immediately preceding the Closing Date, plus (y) the
Distribution Shortfall Amount (if any), minus (z) the Excess
Distribution Amount (if any); and (C) an amount in cash equal to the
IPT Distribution Amount, determined as of Effective Time, multiplied by
the number of days that have elapsed from and including the day
immediately following the record date for the last regular quarterly
distribution declared by IPT through and including the date immediately
preceding the Closing Date, divided by 91; or
(iii) If the Effective Time occurs between February
1, 1999 and February 28, 1999: (A) that number of shares of AIMCO
Common Stock equal to the Stock Percentage multiplied by the Conversion
Ratio; and (B) an amount in cash equal to the Cash Percentage
multiplied by the sum of (w) $13.25, plus (x) $.0036 multiplied by the
number of days that has elapsed from and including January 1, 1999
through and including the day immediately preceding the Closing Date,
plus (y) the Distribution Shortfall Amount (if any), minus (z) the
Excess Distribution Amount (if any); and (C) an amount in cash equal to
the IPT Distribution Amount, determined as of Effective Time,
multiplied by the number of days that have elapsed from and including
the day immediately following the record date for the last regular
quarterly distribution declared by IPT through and including the date
immediately preceding the Closing Date, divided by 91; or
(iv) If the Effective Time occurs on or after March
1, 1999: (A) that number of shares of AIMCO Common Stock equal to the
Conversion Ratio; and (B) an amount in cash equal to the IPT
Distribution Amount, determined as of Effective Time, multiplied by the
number of days that have elapsed from and including the day immediately
following the record date for the last regular quarterly distribution
declared by IPT through and including the date immediately preceding
the Closing Date, divided by 91;
and shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate (a
"Certificate") which immediately prior to the Effective Time represented any
such IPT Share shall cease to have any rights with respect to such IPT Share,
except the right to receive the Merger Consideration contemplated by this
Section 2.1.
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(c) Cancellation of Certain IPT Shares. As of the Effective
Time, by virtue of the Merger and without any action on the part of any IPT
Shareholder, all IPT Shares owned directly or indirectly by AIMCO and its
Subsidiaries shall automatically be canceled and retired and shall cease to
exist, and no Merger Consideration or other consideration shall be issued or
delivered in exchange therefor.
(d) Restricted Shares.
(i) Treatment. At the Effective Time, each unvested
restricted IPT Share awarded under the IPT 1997 Share Incentive Plan
(the "IPT Share Plan") shall, by virtue of this Agreement and without
any further action of IPT, AIMCO or the holder of such restricted
share, be converted into that number of restricted shares ("AIMCO
Restricted Shares") of AIMCO Common Stock equal to the Conversion
Ratio. Each such AIMCO Restricted Share shall continue to have, and be
subject to, the same terms and conditions (including rights to Dividend
Equivalents (as defined in the IPT Share Plan), if any) set forth in
the IPT Share Plan and the applicable restricted share agreement, each
as in effect immediately prior to the Effective Time.
(ii) Registration. AIMCO shall (A) cause such shares
of AIMCO Common Stock to be covered by an effective registration
statement on Form S-8 (or any successor or other appropriate forms),
and (B) use its reasonable best efforts to maintain the effectiveness
of such registration statement (and maintain the current status of the
prospectus contained therein) for so long as the restricted shares
remain outstanding.
(e) Cash Election Option. Not later than the close of business
on the second NYSE trading day immediately preceding the first day of the AIMCO
Reference Period, AIMCO shall deliver to IPT a written notice (the "Cash
Election Notice"), which shall be irrevocable, in which AIMCO specifies a
percentage, from 0% to 100%, of the Merger Consideration to be paid in cash (the
"Cash Percentage"); provided, however, that if (x) AIMCO fails to timely deliver
the Cash Election Notice to IPT or (y) the IPT Meeting Date is on or after March
1, 1999, then AIMCO shall not be entitled to deliver a Cash Election Notice
(i.e., the Cash Percentage shall be deemed to be zero percent (0%) and AIMCO
shall not be entitled to pay any portion of the Merger Consideration in cash).
AIMCO shall use its best efforts to cause IPT to issue, on the date the Cash
Election Notice is required to be delivered, via the Dow Jones News Service and
PR Newswire, a press release announcing the Cash Percentage.
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Section 2.2 Surrender of Certificates.
(a) AIMCO shall provide on the date of the Effective Time to
the paying agent selected by AIMCO (the "Paying Agent") certificates
representing shares of AIMCO Common Stock and funds as necessary to make
issuances and payments pursuant to Sections 2.l(b) and 2.4 (such certificates
and funds being hereinafter referred to as the "Exchange Fund"). Out of the
Exchange Fund, the Paying Agent shall make, pursuant to irrevocable
instructions, the issuances and payments referred to in Sections 2.1(b) and 2.4,
and the Exchange Fund shall not be used for any other purpose. The Paying Agent
may invest portions of the Exchange Fund as AIMCO may direct, provided that such
investments be in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations receiving the highest rating from
either Moody's Investors Service or Standard & Poor's Corporation or in
certificates of deposit, bank repurchase agreements or bankers' acceptances of
commercial banks with capital exceeding $100,000,000. Any net profit resulting
from, or interest or income produced by, such investments shall be payable to
AIMCO. AIMCO shall replace any monies lost through any investment made pursuant
to this Section 2.2(a) upon request therefor by the Paying Agent. Any portion of
the Exchange Fund that remains unclaimed after 180 days after the Effective Time
shall be returned to AIMCO upon its request made to the Paying Agent, after
which time the holder of any unsurrendered Certificates shall look only to AIMCO
for delivery of the Merger Consideration. AIMCO shall not be liable to any
Person for any funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(b) As soon as practicable after the Effective Time, AIMCO
shall cause the Paying Agent to mail to each holder of record of a Certificate
which immediately prior to the Effective Time represented an IPT Share that was
canceled and became instead the right to receive Merger Consideration pursuant
to Section 2.1(b): (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon actual delivery of the Certificates to the Paying Agent); and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate to the
Paying Agent for exchange (or to such other agent or agents as may be appointed
by AIMCO), together with a duly executed letter of transmittal and such other
documents as the Paying Agent shall require, the holder of such Certificate
shall be entitled to receive, in respect of the IPT Shares formerly represented
thereby, (A) a certificate or certificates representing that number of whole
shares of AIMCO Common Stock which such holder has the right to receive pursuant
to the provisions of Section 2.1(b), if any, (B) the amount of cash which such
holder has the right to receive pursuant to the provisions of Section 2.1(b) and
(C) cash in lieu of fractional shares which such holder is entitled to receive
pursuant to Section 2.4. If payment is to be made to a Person other than the one
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in whose name a surrendered Certificate is registered, it shall be a condition
of receipt of the Merger Consideration that the Certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the Person
requesting such payment either pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving Entity
that such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this Section 2.2, after the Effective Time
each Certificate shall represent for all purposes only the right to receive the
Merger Consideration for each IPT Share represented by such Certificate,
together with any dividends and other distributions paid in respect thereof
after the Effective Time.
Section 2.3 Closing of Transfer Books; Etc. From and after the
Effective Time, the share transfer books of IPT shall be closed, and no
registration of any transfer of any IPT Shares shall thereafter be made on the
records of IPT. If, after the Effective Time, Certificates are presented to
AIMCO for any reason, they shall be canceled, and each IPT Share represented
thereby shall be exchanged for the Merger Consideration, together with any
dividends and other distributions paid in respect thereof after the Effective
Time. Shares of AIMCO Common Stock issued in the Merger shall be issued as of,
and be deemed to be outstanding as of, the Effective Time. AIMCO shall cause all
such shares of AIMCO Common Stock issued pursuant to the Merger to be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. In the event any Certificate(s) shall have been lost, stolen
or destroyed, upon the making of any affidavit of that fact by the IPT
Shareholder claiming such Certificate(s) to be lost, stolen or destroyed and, if
reasonably required by AIMCO or the Paying Agent, upon the posting by such IPT
Shareholder of a bond in such amount as reasonably determined as indemnity
against any claim that may be made against either of them with respect to such
Certificate(s), the Paying Agent shall issue the Merger Consideration in respect
of each IPT Share represented by such lost, stolen or destroyed Certificate(s).
Appropriate procedures shall be established by AIMCO and the Paying Agent so
that each holder of a Certificate at the Effective Time shall be entitled to
vote on all matters subject to the vote of holders of AIMCO Common Stock with a
record date on or after the date of the Effective Time, whether or not such
Certificate holder shall have surrendered Certificates in accordance with the
provisions of this Agreement. For purposes of the immediately preceding
sentence, AIMCO may rely conclusively on the shareholder records of IPT in
determining the identity of, and the number of IPT Shares held by, each holder
of a Certificate at the Effective Time.
Section 2.4 Fractional Shares. Notwithstanding any other
provision of this Agreement, no fractional shares of AIMCO Common Stock will be
issued, and any IPT Shareholder entitled to receive a fractional share of AIMCO
Common Stock but for this Section 2.4 will be entitled to receive a cash payment
in lieu thereof equal to such
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shareholder's proportionate interest in a share of AIMCO Common Stock multiplied
by the AIMCO Reference Price as of the Effective Time.
Section 2.5 No Other Rights. Upon consummation of the Merger,
the holder of a Certificate at and after the Effective Time shall have no rights
under this Agreement with respect to the IPT Shares represented thereby other
than the right to receive the Merger Consideration together with any dividends
and other distributions paid in respect thereof after the Effective Time, upon
the surrender of such Certificate pursuant to Section 2.2 and the right to
receive any declared but unpaid distributions in respect of such IPT Shares.
Nothing in this Agreement supersedes the right of the IPT Shareholders to
enforce Section 5.6 for the period provided in Section 9.1.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York 10022, at 10:00 A.M., local time, on the
business day on which all of the conditions set forth in Article VII hereof are
first fulfilled or have been waived, provided that all of the conditions set
forth in Article VII hereof continue to be so satisfied or waived on such day,
and if not so satisfied or waived, the Closing shall be automatically extended
from time to time until the first subsequent day on which all such conditions
are again so satisfied or waived, subject, however, to Article VIII hereof, or
shall take place at such other time, date and place as AIMCO and IPT shall
mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IPT
IPT represents and warrants to AIMCO as follows:
Section 4.1 Organization and Qualification of IPT. IPT is a
real estate investment trust duly formed, validly existing and in good standing
under the laws of the State of Maryland. IPT has furnished to AIMCO true and
complete copies of IPT's Declaration of Trust (the "IPT Charter") and bylaws
(the "IPT Bylaws"), each as is in effect on the date of this Agreement.
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Section 4.2 Organization and Qualification of IPLP. IPLP is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware. IPT has furnished to AIMCO true and complete
copies of the Fourth Amended and Restated Agreement of Limited Partnership of
IPLP as in effect on the date of this Agreement (the "IPLP Limited Partnership
Agreement"). As of the date hereof, the sole general partner of IPLP is IPT, and
the sole limited partners of IPLP are IFG and Insignia Capital Corporation
(which is a wholly-owned subsidiary of IFG).
Section 4.3 Capitalization. As of the date hereof, the
authorized shares of IPT beneficial interest consist of 400,000,000 IPT Shares
and 100,000,000 preferred shares of beneficial interest, par value $.01 per
share, of IPT ("IPT Preferred Shares"). As of the date hereof, 23,446,538 IPT
Shares were issued and outstanding, of which 510,000 have been issued under the
IPT Share Plan. In addition, (a) 25,000 IPT Shares are issuable upon exercise of
outstanding options, and 28,000 IPT Shares are issuable upon vesting of
restricted share awards under the IPT Share Plan, (b) no IPT Shares were held by
IPT's Subsidiaries, (c) no IPT Preferred Shares were issued and (d) no bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into securities having the right to vote) on any matters on which shareholders
of IPT may vote ("Voting Debt") were issued or outstanding. All outstanding IPT
Shares are validly issued, fully paid and nonassessable and are not subject to
preemptive rights. Except as described above, as of the date hereof there are no
outstanding subscriptions, calls, options, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating IPT or IPLP to issue,
deliver or sell, or cause to be issued, delivered or sold, additional IPT
Shares, IPT Preferred Shares or other ownership interests in IPT or IPLP or any
Voting Debt of IPT or IPLP or obligating IPT or IPLP to grant, extend or enter
into any such agreement or commitment.
Section 4.4 Authority; Non-Contravention
(a) Authority. IPT has all requisite power to enter into this
Agreement and, subject to obtaining the IPT Shareholders' Approval (as defined
in Section 4.6), to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation by IPT of the
transactions contemplated hereby have been duly authorized by the IPT Board,
which constitutes all necessary action on the part of IPT, subject to obtaining
the IPT Shareholders' Approval. This Agreement has been duly and validly
executed and delivered by IPT and, assuming the due authorization, execution and
delivery hereof by AIMCO, constitutes the legal, valid and binding obligation of
IPT enforceable against IPT in accordance with its terms.
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(b) Non-Contravention. As of the date hereof, the execution
and delivery of this Agreement by IPT do not, and, subject to obtaining the IPT
Shareholders' Approval, the consummation of the transactions contemplated
hereby will not, in any respect, violate, conflict with or result in a breach of
any provision of the IPT Charter or the IPT Bylaws.
Section 4.5 Tax Matters. "Taxes," as used in this Agreement,
means any and all federal, state, local and foreign taxes, including, without
limitation, income, sales and use, withholding, transfer, franchise, real and
personal property, employment, and payroll taxes, together with any interest,
penalties and additions thereto. "Tax Return," as used in this Agreement, means
any report, return or other information required to be supplied to any person
with respect to Taxes.
(a) REIT Classification. At all times since its organization,
IPT has been organized and operated in conformity with Section 856-860 of the
Code (the "Status Requirements"), and its proposed method of operation will
enable it to meet the Status Requirements and otherwise qualify as a REIT. The
consummation by IPT of the transactions contemplated hereby and the compliance
with or fulfillment of the terms and provisions hereof by IPT will not adversely
affect the qualification of IPT as a REIT for each taxable year ending on or
after the Closing Date.
(b) Subchapter C Earnings and Profits. IPT does not have any
earnings and profits in excess of $1 million accumulated in any non-REIT year
within the meaning of Section 857 of the Code, including as a result of the AMIT
Merger.
Section 4.6 Vote Required. The affirmative vote of a majority
of the IPT Shares outstanding on the record date for the IPT Meeting (as defined
below) at which such vote is taken (the "IPT Shareholders' Approval") is the
only vote of the holders of any class of shares of beneficial interest of IPT
that is required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
Section 4.7 AMIT Merger. AMIT was merged with and into IPT on
September 17, 1998.
Section 4.8 Opinion of Financial Advisor. The IPT Board has
received the opinion of Lehman Brothers Inc., dated the date hereof, that the
Merger Consideration is fair from a financial point of view to the holders of
IPT Shares other than IFG and AIMCO and their respective Subsidiaries.
Section 4.9 Brokers. Except for Lehman Brothers Inc., no
broker, finder or investment banker is entitled to any broker's, finder's or
other fee or
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commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of IPT.
Section 4.10 Absence of Inducement. In entering into this
Agreement, IPT has not been induced by, or relied upon, any representations,
warranties, or statements by AIMCO not set forth or referred to in this
Agreement, the schedules hereto or the other documents required to be delivered
hereby, whether or not such representations, warranties, or statements have
actually been made, in writing or orally, and IPT acknowledges that, in entering
into this Agreement, AIMCO has been induced by and relied upon the
representations and warranties of IPT herein set forth and in the other
documents required to be delivered hereby. IPT has made its own investigation of
AIMCO prior to the execution of this Agreement and has not been induced by or
relied upon any representations, warranties or statements as to the advisability
of entering into this Agreement other than as set forth above or in the AIMCO
SEC Reports (as defined in Section 5.4).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AIMCO represents and warrants to IPT as follows:
Section 5.1 Organization and Qualification. AIMCO is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland. AIMCO is duly qualified and in good standing to do
business in each jurisdiction where such qualification is required, other than
in such jurisdictions where the failure to so qualify would not have,
individually or in the aggregate, a material adverse effect on the business,
assets, financial condition, results of operations or prospects (a "Material
Adverse Effect") of AIMCO and its Subsidiaries taken as a whole (an "AIMCO
Material Adverse Effect"). AIMCO has all requisite corporate power and
authority, and has been duly authorized by all necessary approvals and orders,
to own, lease and operate its assets and properties to the extent owned, leased
and operated and to carry on it business as it is now being conducted.
Section 5.2 Capitalization. As of the date hereof, the
authorized stock of AIMCO consists of 486,027,500 shares of AIMCO Common Stock,
262,500 shares of Class B Common Stock, par value $.01 per share ("AIMCO Class B
Common Stock") and 24,460,000 shares of Preferred Stock, par value $.01 per
share ("AIMCO Preferred Stock"). As of the date hereof, (a) 47,982,057 shares of
AIMCO Common Stock were issued and outstanding, (b) 162,500 shares of AIMCO
Class B Common Stock were
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issued and outstanding, (c) 22,345,921 shares of AIMCO Preferred Stock were
issued and outstanding (including 750,000 shares of AIMCO Class B Cumulative
Convertible Preferred Stock, par value $.01 per share, 2,400,000 shares of AIMCO
9% Class C Cumulative Preferred Stock, par value $.01 per share, 4,200,000
shares of AIMCO 8.75% Class D Cumulative Preferred Stock, par value $.01 per
share, 8,945,921 shares of AIMCO Class E Cumulative Convertible Preferred Stock,
par value $.01 per share, 4,050,000 shares of AIMCO Class G Preferred Stock, par
value $.01 per share, and 2,000,000 shares of AIMCO Class H Preferred Stock, par
value $.01 per share), (d) 5,362,879 shares of AIMCO Common Stock were reserved
for issuance upon the exchange of units of limited partnership in AIMCO OP, (e)
5,115,246 shares of AIMCO Common Stock were reserved for issuance pursuant to
the AIMCO benefit plans (the "AIMCO Benefit Plans") listed on Schedule 5.2
hereof and outstanding warrants, (f) 11,408,973 shares of AIMCO Common Stock
were reserved for issuance upon conversion of AIMCO Preferred Stock, (g) 162,500
shares of AIMCO Common Stock were reserved for issuance upon conversion of AIMCO
Class B Common Stock and (h) no Voting Debt of AIMCO was issued or outstanding.
All outstanding shares of AIMCO Common Stock and AIMCO Preferred Stock are
validly issued, fully paid and nonassessable and are not subject to preemptive
rights. Upon consummation of the Merger and issuance of shares of AIMCO Common
Stock which comprise all or a part of the Merger Consideration, all such shares
will be validly issued, fully paid and nonassessable and will not be subject to
preemptive rights. As of the date hereof, except as set forth on Schedule 5.2
hereof or pursuant to this Agreement or the AIMCO Benefit Plans, there are no
outstanding subscriptions, calls, options, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating AIMCO or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other ownership interest or any
Voting Debt of AIMCO or any AIMCO Subsidiary or obligating AIMCO or any AIMCO
Subsidiary to grant, extend or enter into any such agreement or commitment.
Except as set forth on Schedule 5.2 hereof or in connection with the AIMCO
Benefit Plans, after the Effective Time, there will be no agreement or
commitment of any character obligating AIMCO or any AIMCO Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of capital
stock or other ownership interest or any Voting Debt of AIMCO or any AIMCO
Subsidiary, or obligating AIMCO or any AIMCO Subsidiary to grant, extend or
enter into any such agreement or commitment.
Section 5.3 Authority; Non-Contravention; Required Filings.
(a) Authority. AIMCO has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby.
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The execution and delivery of this Agreement and the consummation by AIMCO of
the transactions contemplated hereby have been duly authorized by the AIMCO
Board, which constitutes all necessary corporate action on the part of AIMCO.
This Agreement has been duly and validly executed and delivered by AIMCO and,
assuming the due authorization, execution and delivery hereof by IPT,
constitutes the legal, valid and binding obligation of AIMCO enforceable against
AIMCO in accordance with its terms.
(b) Non-Contravention. The execution and delivery of this
Agreement by AIMCO do not, and the consummation of the transactions contemplated
hereby will not, result in a violation, conflict with or breach of (any such
violation, conflict or breach is referred to herein as a "Violation") any
provisions of (i) the AIMCO Charter or by-laws of AIMCO, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any governmental authority applicable to AIMCO or any AIMCO
Subsidiary or any of their respective properties or assets or (iii) any note,
bond, mortgage, indenture, credit enhancement agreement, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which AIMCO or any AIMCO Subsidiary is a party or by
which it or any of its properties or assets may be bound or affected, except in
the case of clause (ii) or (iii) for any such Violation which would not have,
individually or in the aggregate, an AIMCO Material Adverse Effect.
(c) Required Filings. Except as required under the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules of the NYSE (the "AIMCO
Required Filings"), no declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any court, federal, state, local or
foreign government or regulatory body (including the United States Department of
Housing and Urban Development and/or applicable state housing agencies
(collectively, "HUD"), a stock exchange or other self-regulatory body) or
authority (each, a "Governmental Authority") is necessary for the execution and
delivery of this Agreement by AIMCO or the consummation by AIMCO of the
transactions contemplated hereby, except as would not result, individually or in
the aggregate, in an AIMCO Material Adverse Effect.
Section 5.4 Reports and Financial Statements. All filings
required to be made by AIMCO since December 31, 1997 under Section 13(a), 13(c),
14 or 15(d) of the Exchange Act have been filed with the Securities and Exchange
Commission ( the "SEC") (the "AIMCO SEC Reports"). The AIMCO SEC Reports, as of
their respective dates, complied in all material respects with all applicable
requirements of the appropriate statutes and the rules and regulations
thereunder. As of their respective dates, the AIMCO SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
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statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim financial statements of AIMCO included in the AIMCO SEC Reports have
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated therein or in
the notes thereto or, with respect to unaudited interim financial statements, as
permitted by Form 10-Q of the SEC) and fairly present, in all material respects,
the financial position of AIMCO as of the dates thereof and the results of its
operations and cash flows for the periods then ended, subject, in the case of
the unaudited interim financial statements, to normal, recurring audit and
year-end adjustments.
Section 5.5 Absence of Certain Changes or Events. Except as
set forth in the AIMCO SEC Reports, since December 31, 1997, each of AIMCO and
its Subsidiaries has conducted its business in the ordinary course of business
consistent with past practice, and there has not been any AIMCO Material Adverse
Effect.
Section 5.6 Registration Statement, Information
Statement/Prospectus and Schedule 13E-3. The information supplied or to be
supplied by or on behalf of AIMCO for inclusion or incorporation by reference in
(a) the Registration Statement (as defined in Section 6.2), at the time it is
filed with the SEC, at the time it becomes effective under the Securities Act
and at the Effective Time, (b) the Information Statement/Prospectus (as defined
in Section 6.2), at the time it is filed with the SEC, at the time it is mailed
to the IPT Shareholders and at the time of the IPT Meeting and (c) the Schedule
13E-3 (as defined in Section 6.2), at the time such statement is filed with the
SEC, will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. The Registration Statement, the Information Statement/Prospectus
and the Schedule 13E-3 will comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
Section 5.7 No Vote Required. The approval of this Agreement,
the Merger and the other transactions contemplated hereby, including without
limitation, the issuance and listing on the NYSE of the AIMCO Common Stock to be
issued in the Merger, does not require the vote of the holders of any class or
series of the capital stock of AIMCO or any of its Subsidiaries.
Section 5.8 Tax Matters.
(a) Filing of Timely Tax Returns. AIMCO and each of its
Subsidiaries have filed (or there has been filed on its behalf) all Tax Returns
required to be filed by
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each of them under applicable law. All such Tax Returns were and are in all
material respects true, complete and correct and filed on a timely basis.
(b) Payment of Taxes. AIMCO and each of its Subsidiaries have,
within the time and in the manner prescribed by law, paid all Taxes that are
currently due and payable for all periods through and including the Closing
Date, except for those contested in good faith and for which adequate reserves
have been taken.
(c) Tax Reserves. AIMCO and its Subsidiaries have established
on their books and records reserves adequate to pay all material Taxes and
reserves for deferred income Taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the material assets
of AIMCO or any of its Subsidiaries except liens for Taxes not yet delinquent.
(e) REIT Classification. At all times since the initial public
offering of AIMCO, AIMCO has been organized and operated in conformity with the
Status Requirements, and its proposed method of operation will enable it to
continue to meet the Status Requirements and otherwise qualify as a REIT.
(f) Continuation as REIT. The consummation by AIMCO of the
transactions contemplated hereby or compliance with or fulfillment of terms and
provisions hereof by AIMCO, will not adversely affect the qualification of AIMCO
as a REIT for each taxable year ending on or after the Closing Date.
(g) Deficiencies. No deficiencies for any Taxes have been
proposed, asserted or assessed against AIMCO and there is no outstanding waiver
of the statute of limitations with respect to any Taxes or Tax Returns of AIMCO.
(h) Domestic Control. AIMCO believes that it is a
"domestically-controlled" REIT within the meaning of Section 897(h)(4)(B) of
the Code.
Section 5.9 Brokers. No broker, finder or investment banker is
entitled to any broker's, finder's or other fee or commission in connection with
the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of AIMCO.
Section 5.10 Absence of Inducement. In entering into this
Agreement, AIMCO has not been induced by, or relied upon, any representations,
warranties, or statements by IPT not set forth or referred to in this Agreement
or the other documents required to be delivered hereby, whether or not such
representations, warranties, or
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statements have actually been made, in writing or orally, and AIMCO acknowledges
that, in entering into this Agreement, IPT has been induced by and relied upon
the representations and warranties of AIMCO herein set forth, the information
set forth in the AIMCO SEC Reports and in the other documents required to be
delivered hereby. AIMCO has made its own investigation of IPT prior to the
execution of this Agreement and has not been induced by or relied upon any
representations, warranties or statements as to the advisability of entering
into this Agreement other than as set forth above.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 IPT and IPLP Distributions.
(a) IPT shall (and shall cause IPLP to) continue to make
regular quarterly distributions, as follows: IPT shall pay on October 15, 1998
its previously declared distribution of $.16 per IPT Share to IPT Shareholders
of record on September 30, 1998; thereafter, IPT shall declare and pay quarterly
distributions with record dates and payment dates which are exactly the same as
the record dates and payment dates for regular quarterly distributions paid by
AIMCO in respect of the AIMCO Common Stock, in each case at the then current IPT
Distribution Amount (determined as of the applicable record date); provided,
however, that with respect to the first such IPT distribution required to be
declared and paid after October 15, 1998, the per-IPT Share amount of such
distribution shall be an amount equal to the otherwise applicable IPT
Distribution Amount, multiplied by the number of days that have elapsed from and
including December 23, 1998 through and including the record date for such
distribution, divided by 91 (rounded up to the next whole cent).
(b) In the event that the Effective Time has not occurred on
or before February 28, 1999, if at any time thereafter AIMCO declares any
distribution on the AIMCO Common Stock other than a regular quarterly
distribution, with a record date for such distribution which is a date prior to
the date of the Effective Time (a "Special AIMCO Distribution"), then IPT shall
promptly declare and pay a corresponding distribution in an amount equal to the
amount of such Special AIMCO Distribution, multiplied by the IPT Exchange Value,
divided by the AIMCO Collar Price.
(c) If and to the extent that IPT reasonably determines that
the distributions paid by IPT pursuant to the foregoing subsections (a) and (b)
of this Section 6.1 are not sufficient for IPT to meet the distribution
requirements applicable to REITs for its taxable year ended on the Closing Date,
including as a result of the AMIT Merger, then IPT shall, prior to the Effective
Time, pay one or more special distributions, in
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respect of the IPT Shares in an aggregate amount equal to amount of such
shortfall (the per-IPT Share aggregate amount of such distributions, if any, is
referred to herein as the "Excess Distribution Amount").
(d) AIMCO covenants and agrees that AIMCO will use its best
efforts to cause IPT to timely declare and pay the distributions it is required
to make pursuant to the foregoing subsections (a), (b) and (c) of this Section
6.1.
Section 6.2 Registration Statement, Information
Statement/Prospectus and Schedule 13E-3. As soon as reasonably practicable after
the date hereof (a) AIMCO shall prepare and file with the SEC a registration
statement (as amended, the "Registration Statement") in connection with the
issuance of AIMCO Common Stock pursuant to the Merger, in which the Information
Statement/Prospectus (as defined below) shall be included as a prospectus, and
(b) the parties shall prepare and file with the SEC a combined information
statement and prospectus to be distributed in connection with the Merger and the
transactions contemplated hereby (as amended, the "Information
Statement/Prospectus") and a transaction statement on Schedule 13E-3 (the
"Schedule 13E-3"). The parties shall use their reasonable best efforts to have
the Registration Statement declared effective under the Securities Act by the
SEC as soon as practicable after such filing and to cause the Information
Statement/Prospectus to be mailed to IPT Shareholders as soon as practicable
after the Registration Statement is declared effective by the SEC. Each party
shall furnish all information concerning itself which is required or customary
for inclusion in the Registration Statement, the Information
Statement/Prospectus or the Schedule 13E-3. The information provided by any
party for use in the Registration Statement, the Information
Statement/Prospectus or the Schedule 13E-3 shall be true and correct in all
material respects without omission of any material fact which is required to
make such information not false or misleading. No representation, covenant or
agreement is made by any party with respect to information supplied by the other
party for inclusion in the Registration Statement, the Information
Statement/Prospectus or the Schedule 13E-3. Each party shall also take such
action as may be reasonably required to cause the shares of AIMCO Common Stock
covered by the Registration Statement to be approved for listing on the NYSE as
of the Effective Time, upon official notice of issuance. Each party shall also
take such action as may be reasonably required to cause the shares of AIMCO
Common Stock issuable in connection with the Merger to be registered or to
obtain an exemption from registration under applicable state "blue sky" or
securities laws; provided, however, that no party shall be required to register
or qualify as a foreign corporation or to take other action which would subject
it to general service of process in any jurisdiction where the Surviving Entity
will not be, following the Merger, so subject.
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Section 6.3 Regulatory Matters. Each party shall cooperate and
use its reasonable best efforts to promptly prepare and file all necessary
documentation and to effect all necessary applications, notices, petitions,
filings and other documents, including, without limitation, the AIMCO Required
Filings.
Section 6.4 Shareholder Approval. IPT shall, as soon as
practicable after the date hereof, (a) take all steps necessary to duly call,
give notice of, convene and hold a meeting of the IPT Shareholders (an "IPT
Meeting") for the purpose of voting on the Merger, which meeting shall be held
on a date (the "IPT Meeting Date") which is a NYSE trading day, provided that
the day immediately preceding such date must also be a NYSE trading day, and (b)
distribute to IPT Shareholders the Information State ment/Prospectus. The IPT
Board, acting upon the recommendation of a majority of the Continuing Trustees
(as defined in the IPT Bylaws), unless otherwise required in accordance with its
fiduciary duties to IPT Shareholders, shall recommend to such shareholders the
approval of the Merger, this Agreement and the transactions contem plated hereby
and cooperate and consult with AIMCO with respect to each of the foregoing
matters. Notwithstanding the foregoing, IPT and the Continuing Trustees may take
and disclose to IPT Shareholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act if required to do so by the Exchange Act,
comply with Rule 14d-9 thereunder and make all other disclosures required by
applicable law.
Section 6.5 Vote of IPT Shares Owned by AIMCO. AIMCO agrees to
vote all IPT Shares owned of record by it, and to cause all IPT Shares owned of
record by its Subsidiaries to be voted, for approval of this Agreement and the
transactions contemplated hereby and has executed a proxy in favor of Messrs.
Aston, Farkas and Garrison (the "Proxyholders") to vote all such IPT Shares held
by AIMCO, directly or indirectly, in favor of the Merger. AIMCO further agrees
that, through the Effective Time, it shall not (i) sell, transfer or otherwise
dispose of any IPT Shares owned by it or any of its Subsidiaries, (ii) cause or
permit IPT to issue additional IPT Shares to any other Person or take any other
action which could have the effect of reducing the proportion of IPT Shares
owned by AIMCO and its Subsidiaries that are entitled to vote on this Agreement
and the transactions contemplated hereby, or (iii) grant any proxies with
respect to such shares; provided, however, that AIMCO may (a) transfer IPT
Shares owned by it to its Subsidiaries so long as such Subsidiary agrees to be
bound by the terms of this Agreement and to execute a proxy to vote such IPT
Shares in favor of the Merger in the form attached as Exhibit 6.5 or (b) pledge
such IPT Shares to a commercial bank or other bona fide financial institution
with capital exceeding $100,000,000 (a "Financial Institution") so long as such
Financial Institution agrees in writing to (1) honor the proxy given by AIMCO to
the Proxyholders with respect to such pledged IPT Shares on the date hereof, (2)
execute a proxy in favor of the Proxyholders or their successors once the
Financial Institution obtains the right to vote such pledged IPT
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Shares and (3) cause any transferee of such IPT Shares from the Financial
Institution to execute a proxy in favor of the Proxyholders or their successors
and to agree to cause any subsequent transferee of the IPT Shares to also agree
to the obligations in subsection (3).
Section 6.6 Public Announcements. Subject to each party's
disclosure obligations imposed by law and the rules of any national securities
exchange or inter-dealer quotation system on or in which the shares of stock,
beneficial interest or other ownership interests of IPT or AIMCO are now or may
later be listed or authorized to be quoted, IPT and AIMCO shall cooperate with
each other in the development and distribution of all news releases and other
public announcements with respect to this Agreement or any of the transactions
contemplated hereby and shall not issue any public announcement or statement
with respect hereto or thereto without the consent of the other party (which
consent shall not be unreasonably withheld).
Section 6.7 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
Section 6.8 Further Assurances. Each party shall, and shall
cause its Subsidiaries to, execute such further documents and instruments and
take such further action, including, without limitation, obtaining any consents,
authorizations, exemptions and approvals, as may be necessary to perform the
obligations and satisfy the conditions to be performed or satisfied by either
party pursuant to this Agreement or as may reasonably be requested by the other
party in order to consummate the Merger in accordance with the terms hereof. In
addition, AIMCO agrees to use its commercially reasonable efforts to retain
counsel within 30 days from the date hereof to provide the form of opinion
required by Section 7.2(g).
Section 6.9 Transfer Taxes. The parties shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding the real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees or similar Taxes ("Transfer Taxes") which become
payable in connection with the transactions contemplated by this Agreement that
are required to be filed on or before the Closing Date.
Section 6.10 IPT Trustees and Officers. No later than promptly
after the execution and delivery of this Agreement by both parties, IPT shall
(a) cause two members of the IPT Board to resign their trusteeships, (b)
increase the size of the IPT Board to eleven and cause each of the trustee
candidates designated by AIMCO listed on Schedule 6.10-1 hereto (together with
their successors, the "AIMCO-nominated
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Trustees") to be elected as a trustee of IPT, (c) cause the officer candidates
designated by AIMCO and listed on Schedule 6.10-2 hereto to be appointed to the
respective positions indicated on such Schedule, (d) establish a committee of
the IPT Board, consisting solely of AIMCO-nominated Trustees, authorized and
empowered to act to the extent set forth in the IPT Bylaws, (e) recognize that
the Continuing Trustees (as defined in the IPT Bylaws) of the IPT Board,
consisting of Andrew L. Farkas, James A. Aston, Warren M. Eckstein, Frank M.
Garrison and Bryan L. Herrmann, are authorized and empowered to act to the
extent set forth in the IPT Bylaws, and (f) establish an executive committee of
the IPT Board, to consist solely of AIMCO-nominated Trustees listed on Schedule
6.10-3, to act to the extent set forth in the IPT Bylaws. The committees
referred to in the preceding sentence shall not be dissolved prior to the
Effective Time or the termination of this Agreement. The powers of the
Continuing Trustees shall not be modified prior to the Effective Time or the
termination of this Agreement without the consent of a majority of the
Continuing Trustees. If, after the date hereof and prior to the Effective Time,
any IPT Shareholder vote is taken for the election of a trustee to any position
on the IPT Board currently occupied by any of the Continuing Trustees or by
their successors duly elected hereunder, AIMCO shall vote its IPT Shares for the
reelection of each such Continuing Trustee or for the election of such
Continuing Trustee's successor designated by a majority of the Continuing
Trustees. If, after the date hereof and prior to the Effective Time, any vacancy
on the IPT Board arises with respect to a trustee position occupied by a
Continuing Trustee, AIMCO shall cause the AIMCO-nominated Trustees to vote to
fill such vacancy by electing a person nominated by a majority of the Continuing
Trustees. After the date hereof and prior to the earlier of the Effective Time
or the termination of this Agreement, without the prior written consent of a
majority of the Continuing Trustees, which shall not be unreasonably withheld,
IPT shall not terminate (x) its independent auditors, (y) Lehman Brothers Inc.
from serving as its financial advisor with respect to the Merger, or (z)
Proskauer Rose LLP, Miles & Stockbridge, Rogers & Wells or Akin, Gump, Strauss,
Hauer & Feld from serving as its legal counsel with respect to the Merger. The
parties agree that Jeffrey P. Cohen shall remain as Secretary of the Company,
and in such capacity shall be invited and entitled to attend all meetings of the
IPT Board and each committee thereof. In the event that Jeffrey P. Cohen shall
cease to serve as Secretary of the Company for any reason, another individual
nominated by a majority of the Continuing Trustees shall be appointed to such
position and be so invited and entitled to attend such meetings. Without the
approval of a majority of the Continuing Trustees, AIMCO shall not, and shall
not permit any AIMCO-nominated Trustee to, remove a Continuing Trustee as a
trustee of the IPT Board or amend the IPT Charter unless such amendment shall
have been approved by a majority of the Continuing Trustees.
Section 6.11 Modification of Form of Transaction. Upon the
earlier to occur of (i) December 31, 2000 or (ii) such time (if ever) as any Law
is adopted or issued
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after the date hereof which has the effect, as supported by the written opinion
of outside counsel for AIMCO, of prohibiting the Merger, or any court of
competent jurisdiction in the United States shall have issued an order, judgment
or decree permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, judgment or decree has become final and nonappealable, IPT,
acting upon the recommendation of the Continuing Trustees, and AIMCO shall use
their best efforts to restructure the form of the transaction to one which has a
materially improved chance of completion and can be accomplished without
materially changing either the consideration to be received by IPT Shareholders
or the tax or other economic consequences of the transaction to AIMCO and its
Subsidiaries. Pending a definitive agreement between IPT and AIMCO providing for
such a restructured transaction, AIMCO and IPT shall continue to be obligated to
diligently pursue the consummation of the Merger on the terms contemplated by
this Agreement until such time, if ever, as this Agreement is terminated
pursuant to Section 8.1.
Section 6.12 Indemnification.
(a) "Losses" shall mean any and all actual costs or expenses
(including, without limitation, attorneys' fees billed at standard hourly rates,
investigation costs and remediation costs, interest, penalties and fines and all
legal and other costs, expenses and disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise), judgments, amounts
paid in settlement, fines, penalties, assessments, Taxes (as defined in the IFG
Agreement, but excluding Taxes arising from amounts paid to an Indemnitee (as
defined in Section 6.12(b)), losses, actions or causes of action, claims,
demands, damages, liabilities, obligations, awards, disbursements or assessments
of every kind, nature and description (including, without limitation, counsel's
fees billed at standard hourly rates and expenses, as and when incurred, in
connection with any action, claim or proceeding relating thereto).
Notwithstanding the foregoing, Losses shall be reduced to reflect any insurance
proceeds actually recovered by the Indemnitee relating to such claim, provided
that this reduction shall not be applied if to do so would excuse any insurer
from any obligation to cover any loss. If the Indemnitee receives insurance
proceeds after it receives indemnity hereunder, then the Indemnitee, within 10
days of receipt of such proceeds, shall pay to AIMCO the amount by which AIMCO's
payment would have been reduced if the insurance proceeds had been received
before the indemnity payments.
(b) AIMCO shall save, defend, indemnify and hold harmless each
person who is a trustee or officer of IPT, any person succeeding to their
position prior to the Closing Date, and their respective successors and heirs
(each, an "Indemnitee") to the fullest extent permitted by applicable law from
and against all Losses, as and when incurred, whether or not involving a third
party, that arise out of or are the result of the
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fact that he is, was, or is to be, either prior to or after the execution of
this Agreement, a trustee, officer or employee of IPT, except that no Indemnitee
shall be entitled to be indemnified hereunder with respect to any Loss
determined to have been incurred (i) by reason of such Indemnitee's wilful
misconduct or (ii) with respect to attorney's fees and expenses which are not
reasonable, in each case in a written factual finding issued in a court
proceeding or other adjudication not subject to further appeal or issued in an
arbitration (as to (ii) only), and, in the event of such a finding, any funds
advanced to such Indemnitee pursuant to Section 6.12(c) and which are not found
to be within the provision of clause (i) or (ii) shall be returned by such
Indemnitee promptly to AIMCO. AIMCO shall make payments under this Section 6.12
within 30 days from the date that an Indemnitee has requested indemnification
hereunder.
(c) If any action, suit, proceeding or investigation is
commenced as to which an Indemnitee proposes to demand indemnification, he shall
notify AIMCO with reasonable promptness; provided, however, that failure to give
reasonably prompt notice to AIMCO shall not affect the indemnification
obligations of AIMCO hereunder except to the extent that the failure to so
notify has led to prejudice against AIMCO in such action, suit, proceeding or
investigation. The Indemnitee shall have the right to retain counsel of its own
choice to represent him; and such counsel shall, to the extent consistent with
its professional responsibilities, cooperate with AIMCO and any counsel
designated by AIMCO. AIMCO shall be liable only for any settlement of any claim
against an Indemnitee made with AIMCO's written consent, which consent shall not
be unreasonably withheld. AIMCO shall not, without the prior written consent of
an Indemnitee, settle or compromise any claim, or permit a default or consent to
the entry of any judgment in respect thereof, unless such settlement, compromise
or consent includes, as an unconditional term thereof, the giving by the
claimant to such Indemnitee of an unconditional release from all liability in
respect of such claim.
(d) Before enforcing his rights under this Section 6.12, an
Indemnitee must first demand indemnification from IPT pursuant to the
indemnification provisions set forth in the IPT Charter, IPT Bylaws and any
contractual arrangement between such Indemnitee and IPT. If, after ten business
days from the date that such Indemnitee had requested indemnification from IPT
pursuant to the indemnification provisions of the IPT Charter, IPT Bylaws and
any contractual arrangement between such Indemnitee and IPT, IPT has not paid
the Indemnitee's claim or satisfactorily responded to such Indemnitee's request,
as reasonably determined by the Indemnitee, the Indemnitee shall be free to
assert a claim for indemnification pursuant to this Section 6.12.
(e) Notwithstanding any other provision of this Agreement to
the contrary, this Section 6.12 and Section 6.13 shall survive the consummation
of the Merger and termination of this Agreement.
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Section 6.13 Insurance. AIMCO and IPT agree that after the
date hereof and until the Effective Time, IPT shall maintain in full force and
effect, and AIMCO shall use its best efforts to cause IPT to maintain in full
force and effect, directors', trustees' and officers' liability insurance
covering the existing and Continuing Trustees, directors and officers of IPT and
its Subsidiaries which is no less favorable than the insurance coverage which is
in effect and covering such trustees, directors and officers on the date hereof.
AIMCO further agrees that following the Effective Time, the Surviving Entity
will maintain such insurance covering such persons, and each such person covered
by such insurance immediately prior to the Effective Time shall be named as
additional insureds.
Section 6.14 Conduct of IPT's Business Pending the Effective
Time.
Each of IPT and AIMCO covenants and agrees that from the date
of this Agreement until the Effective Time:
(a) IPT shall use its best efforts to maintain its listing on
the American Stock Exchange;
(b) none of IPT, IPLP or any Controlled IPT Entity (as defined
in Section 8.2) shall loan money to AIMCO or any Controlled AIMCO Entity (as
defined in Section 8.2);
(c) neither IPT nor IPLP shall reclassify any of their
respective equity securities or other interests or issue or authorize or propose
the issuance of any other securities or interests in respect of, in lieu or, or
in substitution for, their respective equity securities or other interests;
(d) neither IPT nor AIMCO shall cause the IPLP Limited
Partnership Agreement to be amended, except with the prior consent of a majority
of the Continuing Trustees, provided that IPLP may admit Additional Limited
Partners (as defined the IPLP Limited Partnership Agreement) other than AIMCO or
its affiliates to IPLP in accordance with the terms of the IPLP Limited
Partnership Agreement without such consent;
(e) during such time as AIMCO controls (as such term is
defined in the rules and regulations promulgated under Rule 12b-2 of the
Exchange Act) IPT, neither IPT nor AIMCO shall cause IPT to make termination fee
payments to IFG or any of its subsidiaries under sections 7.1(c), 7.2(c) or
7.2(d) of the IPLP Limited Partnership Agreement or benefit from the rights
provided in Section 9.6 thereof;
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(f) IPT shall duly and timely file all reports and other
documents required to be filed pursuant to the Securities Act, the Exchange Act
and the rules and regulations thereunder;
(g) IPT shall follow the same general policy as AIMCO in
releasing and drafting its future press releases and such releases will include
the AIMCO Collar Price (if determinable), the IPT Exchange Value and, if
applicable, the future date through which AIMCO may elect to pay cash;
(h) AIMCO shall not, nor shall AIMCO permit any of its
Subsidiaries to, willfully take any action that would result in a state of facts
which would make the Merger impossible to be consummated or would result in a
material breach of any provision of this Agreement or in any of its material
representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date; provided, however, that AIMCO and its Subsidiaries
(other than IPT) may issue securities, acquire securities or assets and
otherwise act in the ordinary course of their business;
(i) all transactions between IPT, IPLP or any Controlled IPT
Entity, on the one hand, and AIMCO or any Controlled AIMCO Entity, on the other
hand, shall be on arms' length terms;
(j) IPT shall not increase its annual general and
administrative expenses in excess of an annual increase based on the Consumer
Price Index (with the amortization of restricted stock outstanding as of the
date hereof being excluded from the definition of general and administrative
expenses); and
(k) neither AIMCO nor any of its affiliates (as defined in
Rule 12b-2 of the Exchange Act), directly or indirectly, shall bid for, purchase
or attempt to induce any Person to bid for or purchase AIMCO Common Stock except
in compliance with Regulation M and, treating the purchasing entity as the
"issuer," Rule 10b-18 under the Exchange Act (a) from the fifth business day
prior to the first day of the period in which the AIMCO Collar Price is
determined until the last day of the period in which the AIMCO Collar Price is
determined or (b) from the fifth business day prior to the first day of the
period in which the AIMCO Reference Price is determined until the last day of
the period on which the AIMCO Reference Price is determined. AIMCO shall report
the volume, dates and prices of such purchases to IPT's Secretary weekly.
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ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction of the following conditions:
(a) Shareholder Approval. The IPT Shareholders' Approval shall
have been obtained on or prior to the Closing Date.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state court
preventing consummation of the Merger shall have been issued and be continuing
in effect.
(c) No Change in Law. The Merger and the other transactions
contemplated hereby shall not have been prohibited under any applicable federal
or state law or regulation adopted or amended after the date hereof.
(d) Effectiveness of Registration Statement. If the Merger
Consideration to be issued pursuant to Section 2.1 consists of any shares of
AIMCO Common Stock, (i) the Registration Statement shall continue to be
effective under the Securities Act at the Effective Time, and no stop order
suspending such effectiveness shall be in effect, and (ii) all applicable time
periods required under the Exchange Act following the mailing of the Information
Statement/Prospectus to IPT Shareholders shall have elapsed.
Section 7.2 Additional Conditions to Obligation of IPT to
Effect the Merger. The obligation of IPT to effect the Merger shall be further
subject to the satisfaction of the following conditions, unless waived by a
majority of the Continuing Trustees of the IPT Board in writing.
(a) Fairness Opinion. As of the Closing Date, the opinion of
Lehman Brothers Inc. referred to in Section 4.8 shall not have been withdrawn.
(b) Representations and Warranties. If the Merger
Consideration is to be comprised in whole or in part of AIMCO Common Stock, the
representations and warranties of AIMCO contained in Article V which are
qualified as to materiality shall be true and correct, and all other
representations and warranties of AIMCO contained in this Agreement shall be
true and correct, in all material respects, in each case (i) on and as of the
date hereof and (ii) at and as of the Effective Time with the same effect as
though such representations and warranties had been made at and as of the
Effective
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Time (except for representations and warranties that expressly speak only as of
a specific date or time which need only be true and correct as of such date or
time); provided that this condition to the obligation of IPT to consummate the
Merger shall be deemed satisfied if the aggregate losses, costs, damages and
expenses to IPT due to breaches of such representations and warranties (without
giving effect to any materiality qualification or standard contained in any such
representations and warranties), when aggregated with failures to comply with
covenants by AIMCO and AIMCO Material Adverse Effects, does not exceed $50.0
million.
(c) Performance of Obligations of AIMCO. If the Merger
Consideration is to be comprised in whole or in part of AIMCO Common Stock,
each of AIMCO and the AIMCO Subsidiaries shall have performed, in all respects,
all obligations set forth in Sections 6.10, 6.13, 6.14(d) and 6.14(k).
(d) AIMCO Officer's Certificate. If the Merger Consideration
is to be comprised in whole or in part of AIMCO Common Stock, IPT shall have
received a certificate signed by the President of AIMCO, dated as of the Closing
Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Sections 7.2(b) and (c) have been satisfied.
(e) AIMCO REIT Opinion. If the Merger Consideration is to be
comprised in whole or in part of AIMCO Common Stock, IPT shall have received an
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to AIMCO, dated as
of the Closing Date, substantially in the form attached hereto as Exhibit
7.2(e).
(f) AIMCO Reorganization Opinion. If the Merger Consideration
is to be comprised in whole or in part of AIMCO Common Stock, IPT shall have
received an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
AIMCO, dated as of the Closing Date, substantially in the form attached hereto
as Exhibit 7.2(f) or such revised opinion as contemplated by Section 1.1 which
is reasonably satisfactory to a majority of Continuing Trustees and their
counsel; provided, however, that if AIMCO is unable to deliver either opinion,
the Merger Consideration shall include only cash, regardless of any Cash
Election Notice to the contrary.
(g) AIMCO Corporate Law Opinion. IPT shall have received an
opinion, dated as of the Closing Date, substantially in the form attached hereto
as Exhibit 7.2(g) from counsel mutually satisfactory to the parties hereto.
Section 7.3 Additional Conditions to Obligation of AIMCO to
Effect the Merger. The obligation of AIMCO to effect the Merger shall be further
subject to the satisfaction of the following conditions, unless waived by AIMCO
in writing:
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(a) Representations and Warranties. The representations and
warranties of IPT contained in Article IV which are qualified as to materiality
shall be true and correct and all other representations and warranties of IPT
contained in this Agreement shall be true and correct, in all material respects,
on and as of the date hereof; provided that this condition to the obligation of
AIMCO to consummate the Merger shall be deemed satisfied if the aggregate loss,
cost, damage or expense to AIMCO due to breaches of such representations and
warranties (without giving effect to any materiality qualification or standard
contained in any such representations and warranties) does not exceed $50.0
million.
(b) REIT Opinion. The opinion of Akin, Gump, Strauss, Hauer
and Feld, L.L.P., counsel to IPT, dated and delivered to AIMCO on the date
hereof, receipt of which is hereby acknowledged by AIMCO, shall not have been
withdrawn on the basis solely of facts existing as of the date hereof.
(c) Opinion of IPT's Counsel. The opinion of Miles &
Stockbridge, counsel to IPT, dated and delivered to AIMCO on the date hereof,
receipt of which is hereby acknowledged by AIMCO, shall not have been withdrawn
on the basis solely of facts existing as of the date hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of the IPT
Shareholders' Approval contemplated by this Agreement:
(a) by mutual written consent of a majority of the Continuing
Trustees and the AIMCO Board; or
(b) by AIMCO, by written notice to each of the Continuing
Trustees, if the Effective Time shall not have occurred on or before December
31, 2001; or
(c) by a majority of the Continuing Trustees, on behalf of
IPT, by written notice to AIMCO, if:
(i) the Effective Time shall not have occurred on or
before December 31, 2001;
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(ii) a majority of the Continuing Trustees shall
determine in good faith that any proposal by or offer from any Person
relating to any (A) acquisition of a substantial amount of assets of
IPT or IPLP or any of the outstanding IPT Shares or IPLP partnership
interests, (B) offer to purchase outstanding IPT Shares or IPLP
partnership interests or (C) merger, consolidation, business
combination, sale of substantially all assets, recapitalization,
liquidation or similar transaction involving IPT or IPLP, other than
the transactions contemplated by this Agreement (an "Alternative
Proposal"), constitutes a proposal that is reasonably likely to be
consummated and would, if consummated, result in a transaction which is
more favorable, from a financial point of view, to IPT Shareholders
than the transactions contemplated by this Agreement (a "Superior
Proposal"); provided, however, that the Continuing Trustees may not
terminate this Agreement pursuant to this Section 8.1(c)(ii) unless (x)
five days shall have elapsed after delivery to AIMCO of a written
notice of such determination by the Continuing Trustees and at all
reasonable times during such five-day period the Continuing Trustees
shall have cooperated with AIMCO in informing AIMCO of the terms and
conditions of such Alternative Proposal and the identity of the person
or group making such Alternative Proposal, with the objective of
providing AIMCO a reasonable opportunity, during such five-day period,
to propose a modification of the terms and conditions of this Agreement
so that a business combination between IPT and AIMCO may be effected,
(y) during such five-day period, the Continuing Trustees negotiate in
good faith with AIMCO with respect to such proposed modifications, and
(z) at the end of such five-day period, a majority of the Continuing
Trustees continues to believe in good faith that such Alternative
Proposal constitutes a Superior Proposal; or
(iii) AIMCO has taken any action that constitutes an
anticipatory repudiation of this Agreement and has failed to cure such
action within 10 days from receipt of notice (whether written or oral)
from a majority of the Continuing Trustees.
Section 8.2 Effect of Termination. In the event of termination
of this Agreement by either IPT or AIMCO pursuant to Section 8.1, the effects
and consequences of such termination, and relative rights and obligations of
the parties as a result thereof, shall be as set forth in this Section 8.2 and
in the IPT Bylaws.
(a) Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
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"AIMCO Termination Reference Price" means the average price
(computed based on the sum of the high and low sales prices of AIMCO Common
Stock (as reported in the NYSE Composite Transactions reporting system as
published in The Wall Street Journal or, if not published therein, in another
authoritative source) divided by two) of a share of AIMCO Common Stock during
the ten consecutive NYSE trading day period ending on and including the
Termination Date.
"AIMCO Termination Share Value" means (i) the AIMCO
Termination Reference Price, if the Termination Date is on or prior to December
31, 1998, or (ii) the lesser of the AIMCO Collar Price or the AIMCO Termination
Reference Price, if the Termination Date is on or after January 1, 1999.
"Control" has the meaning specified in Rule 12b-2 of the
Exchange Act.
"Controlled AIMCO Entity" means AIMCO and each Person which,
as of or after the date of this Agreement, is or becomes directly or indirectly
Controlled by AIMCO.
"Controlled IPT Entity" means any Person which, as of or after
the date of this Agreement, is or becomes directly or indirectly Controlled by
IPT, other than IPLP and each wholly-owned Subsidiary of IPT or IPLP.
"Covered IPT Assets" means any and all (i) securities, assets
(whether real or personal, tangible or intangible) and other things of value
acquired by any Controlled AIMCO Entity from any of IPT, IPLP or any
wholly-owned Subsidiary of IPT or IPLP at any time prior to the Termination Date
(including prior to the Insignia Merger) and (ii) cash and non-cash
distributions received in respect of the foregoing, together, in the case of
cash distributions, with a return thereon at an annual rate of 10%, compounded
annually, from the date of receipt thereof through the Termination Date;
provided that to the extent any item which would have otherwise constituted a
Covered IPT Asset has been sold or otherwise disposed of, the consideration
received therefor, together with interest on any cash portion thereof on the
same basis, shall be substituted for such item.
"Covered Third-Party Assets" means any and all of the
following acquired by any Controlled AIMCO Entity from any Person other than
IPT, IPLP or a wholly-owned Subsidiary of IPT or IPLP at any time prior to the
Termination Date (including prior to the Insignia Merger): (i) equity securities
or debt securities of, or other ownership interests in or indebtedness of, any
Controlled IPT Entity; (ii) assets, whether real or personal, tangible or
intangible, of any Controlled IPT Entity; (iii) any other thing
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of value acquired from a Controlled IPT Entity; and (iv) cash and non-cash
distributions received in respect of the foregoing, together, in the case of
cash distributions, with a return thereon at an annual rate of 10%, compounded
annually, from the date of receipt thereof through the Termination Date;
provided that to the extent any item which would have otherwise constituted a
Covered Third-Party Asset has been sold or otherwise disposed of, the
consideration received therefor, together with interest on any cash portion
thereof on the same basis, shall be substituted for such item.
"IPT Unwind Consideration" means any and all (i) consideration
delivered to IPT, IPLP and wholly-owned Subsidiaries of IPT and IPLP in exchange
for the Covered IPT Assets, and (ii) cash and non-cash distributions received in
respect of the foregoing, together, in the case of cash distributions, with a
return thereon at an annual rate of 10%, compounded annually, from the date of
receipt thereof through the Termination Date; provided that to the extent any
item which would have otherwise constituted IPT Unwind Consideration has been
sold or otherwise disposed of, the consideration received therefor, together
with interest on any cash portion thereof on the same basis, shall be
substituted for such item.
"IPT Security" means, at the option of the recipients, either
an IPT Share or a Common Partnership Unit (as defined in the IPLP Limited
Partnership Agreement).
"IPT Termination Share Value" means an amount equal to the IPT
Exchange Value, divided by the AIMCO Termination Share Value, multiplied by the
AIMCO Termination Reference Price.
"IPT Unwind Consideration" means the issuance to AIMCO (or its
designee) of a number of fully paid, validly issued and non-assessable IPT
Securities equal to the Termination Purchase Price divided by the IPT
Termination Share Value.
"IPT Unwind Consideration Price" means the consideration
originally paid or delivered by AIMCO or its affiliates to IPT or its affiliate
together with all distributions received with respect thereto together, in the
case of a cash distribution, with interest thereon at an annual rate of 10%,
compounded annually; provided that to the extent any such consideration has been
sold or otherwise disposed of, the consideration received therefor, together
with interest on any cash portion thereof on the same basis, shall be
substituted for such consideration.
"Termination Date" means the date on which this Agreement is
terminated pursuant to Section 8.1.
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"Third-Party Unwind Consideration" means a number of fully
paid, validly issued and non-assessable IPT Securities equal to the Third-Party
Unwind Price divided by the IPT Termination Share Value.
"Third-Party Unwind Price" means the aggregate fair value of
the consideration originally paid or delivered by the applicable Controlled
AIMCO Entity in exchange for the Covered Third-Party Assets, plus interest
thereon at an annual rate of 10%, compounded annually, from the date of
acquisition through the Termination Date, minus the aggregate fair value of all
cash and non-cash distributions received in respect of the Covered Third-Party
Assets, minus interest on the amount of cash distributions at an annual rate of
10%, compounded annually, from the date of receipt through the Termination Date;
provided that to the extent any such consideration has been sold or otherwise
disposed of, the consideration received therefor, together with interest on any
cash portion thereof on the same basis, shall be substituted for such
consideration.
(b) "Third-Party Unwind". As soon as practicable after such
termination, AIMCO shall transfer and assign to IPT or IPLP, as appropriate, all
of the Covered Third-Party Assets, in exchange for which IPT or IPLP, as
appropriate, shall issue to AIMCO (or its designee) the Third-Party Unwind
Consideration, provided that equal cash amounts due from each party may be
netted out.
(c) "IPT Unwind". As soon as practicable after such
termination, AIMCO shall assign and transfer to IPT, IPLP of the wholly-owned
Subsidiary or IPT or IPLP, as applicable, all of the Covered IPT Assets, in
exchange for which IPLP shall return to the applicable Controlled AIMCO Entity
the applicable IPT Unwind Consideration, provided that equal cash amounts due
from each party may be netted out.
(d) Limitation on Liability; Survival. Except as set forth in
this Section 8.2, there shall be no liability on the part of either IPT or AIMCO
or their respective officers, trustees or directors hereunder after a
termination, except that (i) the foregoing limitation on liability shall not
apply with respect to any party whose breach of any representation, warranty,
covenant or agreement is reason for such termination, and (ii) in all events, in
addition to the provisions of Section 9.1, Sections 6.7, 6.10, 6.12, 6.13, 9.10
and this Section 8.2 hereof shall survive such termination.
Section 8.3 Amendment. This Agreement may be amended, at any
time before or after the IPT Shareholders' Approval has been obtained and prior
to the Effective Time, only by a written instrument signed by AIMCO and a
majority of the Continuing Trustees, on behalf of IPT; provided, however, that
after the IPT Shareholders' Approval has been obtained, no such amendment
shall, without the further approval
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<PAGE> 35
of the IPT Shareholders, (a) alter or change the amount or type of Merger
Consideration or any proceedings relating to the treatment of IPT Shares under
Article II hereof or (b) alter or change any of the other terms and conditions
of this Agreement if such alterations or changes, individually or in the
aggregate, would adversely affect the rights of holders of IPT Shares.
Section 8.4 Waiver. At any time prior to the Effective Time,
AIMCO or IPT, acting pursuant to the decision of a majority of the Continuing
Trustees may (a) extend the time for the performance of any of the obligations
or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions of the other party contained herein, to the extent
permitted by applicable law. Any agreement on the part of a party to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party, provided that in order for a waiver by IPT to be
valid and effective, such instrument must be signed by a majority of the
Continuing Trustees.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Survival of Representations and Warranties. In
addition to the provisions of Section 8.2, the representations and warranties
contained in this Agreement shall not survive the Effective Time, except for (i)
Section 5.6, which shall remain in effect until one year after the Effective
Time and shall survive the consummation of the Merger and the termination of
this Agreement (ii) Sections 6.14(e), which shall survive the termination of
this Agreement, indefinitely, and (iii) the third sentence of Section 5.2, which
shall survive the consummation of the Merger indefinitely.
Section 9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when delivered
personally, (b) one business day after delivered to a reputable overnight
courier service or (c) when sent via facsimile (which is confirmed by copy sent
within one business day by a reputable overnight courier service) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to IPT, to:
Insignia Properties Trust
375 Park Avenue, Suite 3401
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<PAGE> 36
New York, New York 10152
Attn: Jeffrey P. Cohen
Facsimile: (212) 980-8544
Telephone: (212) 750-6070
with a copy (which shall not constitute notice) to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attn: Arnold S. Jacobs
Facsimile: (212) 969-2900
Telephone: (212) 969-3210
(b) If to AIMCO, to:
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222
Attn: Peter K. Kompaniez
Facsimile: (303) 757-8735
Telephone: (303) 757-8101
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom, LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attn: Michael V. Gisser
Facsimile: (213) 687-5600
Telephone: (213) 687-5000
Section 9.3 Adjustment for Dilution. All references in this
Agreement to per share amounts and prices shall be equitably adjusted to take
into account any splits, combinations, equity dividends, reclassifications and
similar transactions, such that no party or IPT Shareholder is any better or
worse off than they would have been had such transaction not occurred.
Section 9.4 Entire Agreement. This Agreement and the schedules
hereto constitute the entire agreement, and supersede all other prior agreements
and
35
<PAGE> 37
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
Section 9.5 Assignment. This Agreement may not be assigned by
either party and any attempted assignment shall be void and of no effect.
Section 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND SECTION 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND
RULES, EXCEPT TO THE EXTENT THAT SECTIONS 1.1, 1.2, 1.3, 1.4 AND 2.1(b) AND (c)
ARE EXPRESSLY GOVERNED BY OR DERIVE THEIR AUTHORITY FROM THE MGCL OR MCAA.
Section 9.7 Interpretation. When reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 9.8 Counterparts; Effect. This Agreement may be
executed in counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
Section 9.9 Parties' Interest. This Agreement shall be binding
upon each party hereto and shall inure solely to the benefit of each party
hereto and the IPT Shareholders. Nothing in this Agreement, express or implied,
is intended to confer upon any third party, other than the IPT Shareholders, any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 9.10 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, it is agreed that the parties shall be entitled to an
injunction or injunctions, in addition to any other remedy to which they are
entitled at law or in equity, to prevent breaches of this Agreement and to
specifically enforce the terms and provisions of this Agreement in any federal
or state court located in the County of New York, State of New York. In
addition, each of the parties hereto (a) consents to submit itself to the
personal
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<PAGE> 38
jurisdiction of any federal or state court located in the County of New York in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it shall not attempt to deny
such personal jurisdiction by motion or other request for leave from any such
court and (c) agrees that it shall not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a federal or state court sitting in the County of New York.
Section 9.11 Severability. The provisions of this Agreement
shall be deemed severable, and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
Section 9.12 Letter Agreement. The letter agreement, dated
October 14, 1997, as amended by the letter dated March 2, 1998, between AIMCO
and IFG, if it has been terminated, shall be reinstated each time AIMCO breaches
any of its obligations under Section 6.12, whereupon it shall remain in effect
for a period of two years from the date of breach, insofar as such agreement
applies to Controlled IPT Entities.
Section 9.13 Knowledge. As used herein, the "knowledge"of IPT
or any IPT Subsidiary shall mean the actual knowledge of any of Andrew L.
Farkas, James A. Aston, Frank M. Garrison, Ronald Uretta or Jeffrey P. Cohen,
and the "knowledge" of AIMCO or any AIMCO Subsidiary shall mean the actual
knowledge of any of Terry Considine, Peter Kompaniez, Patrick Foye, Thomas M.
Toomey or (with respect to property-related matters only) Harry G. Alcock.
Section 9.14 Breaches. Notwithstanding any other provision
herein, if at the time of execution of this Agreement AIMCO has actual knowledge
of a breach of any representation or warranty by IPT, or IPT has actual
knowledge of a breach of any representation or warranty by AIMCO, such party
shall be deemed to have waived such breach to the extent of its actual knowledge
of such breach at such time.
* * * * *
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<PAGE> 39
IN WITNESS WHEREOF, AIMCO and IPT have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: /s/ Patrick J. Foye
---------------------------
Name: Patrick J. Foye
Title: Executive Vice President
INSIGNIA PROPERTIES TRUST
By: /s/ Jeffrey P. Cohen
---------------------------
Name: Jeffrey P. Cohen
Title: Senior Vice President
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
(Unsecured Revolver-To-Term Facility)
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as
of October 1, 1998, among AIMCO PROPERTIES, L.P., a Delaware limited partnership
(the "Borrower"), the lenders from time to time party to this Agreement (the
"Lenders"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as
one of the Lenders and as the Issuing Lender, BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent (the "Agent"), and BANKBOSTON, N.A., as one of the
Lenders and the Documentation Agent.
RECITAL
BofA made available to Borrower an unsecured revolver-to-term
credit facility in the aggregate principal amount of up to $155,000,000 pursuant
to that certain Credit Agreement, dated as of January 26, 1998, by and between
BofA, as a lender and the agent, the other lenders party thereto and Borrower as
amended by that certain First Amendment to Credit Agreement dated as of May 8,
1998 and that certain Second Amendment to Credit Agreement dated as of May 21,
1998 (collectively, the "Previous Credit Agreement"). The entire outstanding
principal balance under such Credit Agreement is being refinanced and the
letters of credit issued thereunder in the amount of $8,673,898 will be rolled
into letters of credit hereunder in accordance with Section 2.1(a)(ii).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. In addition to the terms defined elsewhere
in this Agreement, the following terms have the following meanings:
"Adjusted EBITDA" means, for any period of determination, for
any Person, such Person's EBITDA (or as applicable, its pro-rata share of
EBITDA) less the aggregate amount of such Person's Imputed Capital Expenditures.
Adjusted EBITDA
<PAGE> 2
with respect to any Unqualified Property will take into account the Person's
pro-rata share of Imputed Capital Expenditures.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the equity of a Person shall, for the purposes of this
Agreement, be deemed to control the other Person. In no event shall any Lender
be deemed an "Affiliate" of Borrower.
"Agent" means Bank of America National Trust and Savings
Association, in its capacity as Agent, and any successor Agent appointed
hereunder.
"Agent-Related Persons" is defined in Section 9.3.
"Aggregate Commitment" means the combined Commitments of the Lenders. As of the
Closing Date the Aggregate Commitment is $100,000,000.
"Ambassador Pool Portfolio" means the aggregate Indebtedness
in respect of individual Properties in the original principal amount of
$203,580,000 secured by or issued in connection with the following reimbursement
agreements: (a) Amended and Restated Master Reimbursement Agreement, dated as of
December 1, 1996, by and between Federal National Mortgage Association ("Fannie
Mae") and Ambassador VIII, L.P., as amended and assigned; and (b) Master
Reimbursement Agreement (Pool-2 Properties), dated as of December 1, 1996, by
and between Fannie Mae and Ambassador I, L.P., as amended and assigned.
"Agreement" means this Credit Agreement, as amended,
supplemented or modified from time to time.
"Ancillary Services" means asset management, accounting,
ordering and inventory services and other property related.
"Apartment Property Cap Rate" means (a) initially, 9.6% and
(b) on the Revolver Maturity Date and for each year thereafter, as applicable,
shall change to the national average capitalization rate for Class B apartment
properties as published in the
2
<PAGE> 3
then current CB Commercial Investor Survey or if the survey is no longer
published, an equivalent survey selected by Agent.
"Applicable Base Rate Margin" means, with respect to Base Rate
Loans, on any date of determination, the applicable spread set forth below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
< 60% and < 80% and < 100% and
UAP Utilization < 35% > 35% > 60% > 80%
- -------------------------------------------------------------------------------------------------------------
Applicable Base Rate Margin (bps) minus 25 0 plus 25 plus 50
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Any change in the UAP Utilization causing it to move into a different Level on
the table will immediately change the Applicable Base Rate Margin.
"Applicable LC Fee" means, on any date of determination, the
following annual fee, as applicable, which shall be due and payable as provided
in Section 2.10(f):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
< 60% and < 80% and < 100%
UAP Utilization < 35% > 35% > 60% and > 80%
- -------------------------------------------------------------------------------------------------------------
Annual Fee (bps) 125 150 175 200
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Any change in the UAP Utilization causing it to move into a different Level on
the table will immediately change the Applicable LC Fee.
"Applicable LIBOR Margin" means, with respect to LIBOR Loans,
on any date during an Interest Period, the applicable spread set forth below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
< 60% and < 80% and < 100% and
UAP Utilization < 35% > 35% > 60% > 80%
- -------------------------------------------------------------------------------------------------------------
Applicable LIBOR Margin (bps) 125 150 175 200
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Any change in the UAP Utilization causing it to move into a different Level on
the table will immediately change the Applicable LIBOR Margin.
3
<PAGE> 4
"Applicable Margin" means (a), with respect to Base Rate
Loans, the Applicable Base Rate Margin, and (b) with respect to LIBOR Loans, the
Applicable LIBOR Margin.
"Assignee" is defined in Section 10.8(a).
"Assignment and Acceptance" is defined in Section 10.8(a).
"Assumed Interest Rate" means, on any date of determination,
an annual rate equal to the yield on U.S. Treasury obligations having a maturity
of seven (7) years from such date of determination (or the closest maturity date
thereafter), plus two percent (2.00%). For any fiscal quarter, the Assumed
Interest Rate will be based on the yield on such U.S. Treasury obligations as
published for the last Business Day of the preceding fiscal quarter, except on
the Conversion Date, in which case the Assumed Interest Rate will be based on
the yield on such obligations as published for the Business Day prior to the
date Borrower delivers its request for conversion under Section 4.3.
"Attorney Costs" means all reasonable fees and disbursements
of any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (12 U.S.C. ss.101, et. seq.), as amended from time to time.
"Base Rate" means the higher of: (a) the annual rate of
interest publicly announced from time to time by the Reference Lender as its
"reference" rate (the "reference" rate is a rate set based upon various factors,
including the Reference Lender's costs and desired return, general economic
conditions, and other factors, and is used as a reference point for pricing some
loans); any change in the reference rate shall take effect on the day specified
in the public announcement of such change; or (b) one-half of one percent (0.5%)
per annum above the latest Federal Funds Rate.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, other than in its capacity as the Agent hereunder.
4
<PAGE> 5
"Borrowing Notice" means a written notice (including notice
via facsimile confirmed immediately by a telephone call) from Borrower to Agent
in accordance with Section 2.3 and substantially in the form of EXHIBIT B.
"Borrowing Ratio" means the quotient of 1 divided by 1.75
multiplied by 100 and expressed as a percentage.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial lenders are authorized or required by law to close
in New York City or the city in which the Agent's office charged with
administration of the Loans is located; except in cases in which it relates to
any LIBOR Loan, in which cases "Business Day" means such a day on which dealings
are carried on in the London dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central lender or other Governmental Authority having
jurisdiction, or any other law, rule or regulation, whether or not having the
force of law, regarding capital adequacy of any Lender or of any corporation
controlling a Lender.
"Capital Expenditures" means, for any period and with respect
to any Person, the aggregate of all expenditures by such Person for the
acquisition or leasing of fixed or capital assets or additions to equipment
(including replacements, capitalized repairs and improvements during such
period) which should be capitalized under GAAP on a consolidated balance sheet
of such Person. For the purpose of this definition, the purchase price of
equipment which is purchased simultaneously with the trade-in of existing
equipment owned by such Person or with insurance proceeds shall be included in
Capital Expenditures only to the extent of the gross amount of such purchase
price, less the credit granted by the seller of such equipment for such
equipment being traded in at such time, or the amount of such proceeds, as the
case may be.
"Capital Lease" means any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease.
"Capital Lease Obligations" means, with respect to any Person,
the amount at which such Person's obligations under Capital Leases are required
to be carried on the balance sheet of such Person in accordance with GAAP.
"Captiva Club Property" means that certain Qualified Property
comprised of a 376 unit apartment project and related properties, situated in
Tampa, Florida.
5
<PAGE> 6
"Carrying Value" means, with respect to any asset or liability
of any Person, the amount at which such asset or liability has been recorded or,
in accordance with GAAP, should have been recorded, in the books of account of
such Person, as reduced by any reserves or write-downs which have been
announced, set aside or taken or, in accordance with GAAP, should have been set
aside or taken, with respect thereto; provided, however, that, if more than one
method of recording the amount of any asset or liability, or the setting aside
or taking of any reserves or write-downs with respect thereto, is permitted
under GAAP, the permitted method actually used shall be controlling for purposes
of determining Carrying Value, provided that such method is used in a manner
consistent with prior periods.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof and backed by the full faith and
credit of the United States having maturities of not more than six months from
the date of acquisition;
(b) certificates of deposit, time deposits, demand deposits,
eurodollar time deposits, repurchase agreements, reverse repurchase agreements,
or bankers' acceptances, having in each case a tenor of not more than three (3)
months, issued by the Agent, or by any U.S. commercial bank (or any branch or
agency of a non-U.S. bank licensed to conduct business in the U.S.) having
combined capital and surplus of not less than $100,000,000 whose short-term
securities are rated at least A-1 by S&P and P-1 by Moody's; provided, however,
such Investments may not be made in amounts in excess of $1,000,000 with any
lender that is owed Indebtedness in excess of $1,000,000 by Borrower, the REIT
or any Subsidiary (other than the Obligations and funds held by Bank of America
Cash Investments Services, including without, limitation, Pacific Horizon Funds,
FundsSweep and overnight repos) unless such bank waives in writing (in form and
substance satisfactory to the Requisite Lenders) its right to set-off such
Investment against such Indebtedness;
(c) demand deposits on deposit in accounts maintained at
commercial banks having membership in the FDIC and in amounts not exceeding the
maximum amounts of insurance thereunder; and
(d) commercial paper of an issuer rated at least A-1 by S&P or
P-1 by Moody's and in either case having a tenor of not more than three (3)
months.
"CERCLA" is defined in the definition of "Environmental Laws".
6
<PAGE> 7
"Class B" means, with respect to any rental apartment
property, that such apartment property is generally recognized as a Class B
property in accordance with prevailing national real estate industry standards,
pursuant to prevailing appraisal methods and procedures.
"Closing Date" means the date on which all conditions
precedent to the effectiveness of this Agreement in Section 4.1(a) are satisfied
or waived by all Lenders. The Closing Date shall occur no later than
October 1, 1998.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
"Commitment" means, with respect to a Lender, that Lender's
Revolving Commitment (during the term of the Revolver) or Term Commitment
(during the term of the Term Loan), as applicable.
"Commitment Percentage" means, as to any Lender, the
percentage equivalent of such Lender's Commitment divided by the Aggregate
Commitment.
"Compliance Certificate" means a certificate signed by at
least two Responsible Officers and delivered to Agent and each Lender pursuant
to Section 6.2 and substantially in the form of Exhibit J.
"Consolidated EBITDA" means, for any period, and without
double counting any item, the sum of the Adjusted EBITDA for the Borrower, the
REIT and their respective Subsidiaries for such period on a consolidated basis,
plus the Borrower's pro-rata share of aggregate EBITDA for each of the
Management Entities, plus the Borrower's pro-rata share of Adjusted EBITDA in
respect of any unconsolidated Person.
"Consolidated EBITDA-to-Fixed Charges Ratio" means for any
period of determination, the ratio computed as follows:
Consolidated EBITDA-to-Fixed [Consolidated EBITDA]
Charges Ratio= divided by
Consolidated Fixed Charges
"Consolidated EBITDA-to-Interest Ratio" means for any period of
determination, the ratio computed as follows:
Consolidated EBITDA-to-Interest [Consolidated EBITDA]
7
<PAGE> 8
Ratio= divided by
Consolidated Interest Expense
"Consolidated Fixed Charges" means, for any period of
determination, the sum of the Consolidated Interest Expense for such period,
plus Consolidated Scheduled Amortization for such period, plus dividends accrued
(whether or not declared or payable) on the REIT's preferred Stock during such
period plus any cumulative unpaid dividends on such preferred Stock carried over
to such period from a prior period, excluding, however, any cumulative unpaid
dividends from preferred Stock in any of the Management Entities, plus the
aggregate amount of expenses in connection with the issuance of bonds and
related matters, any scheduled principal amortization in respect of any
Indebtedness, plus payments into sinking funds in respect of any Indebtedness.
"Consolidated Interest Expense" means for any period of
determination, and without double counting any item, an amount equal to the sum
of (x) the Interest Expense for the Borrower and the REIT and their
proportionate share of the Interest Expense of their respective Subsidiaries for
such period plus (y) the Borrower's and the REIT's pro-rata share of Interest
Expense in respect of any unconsolidated Person, minus (z) amounts expended for
amortization of loan costs in respect of items in clauses (x) or (y).
"Consolidated Scheduled Amortization" means, for any period of
determination, and without double counting any item, the sum of the Scheduled
Amortization for Borrower, the REIT and their respective Subsidiaries for such
period on a consolidated basis.
"Consolidated Total Indebtedness" means as of any date, and
without double counting any item (a) the aggregate amount of Total Indebtedness
for Borrower, the REIT and their respective Subsidiaries as of such date;
provided, however, that with respect to Indebtedness which is not Recourse and
for which Borrower, the REIT or any of their respective Subsidiaries is not
fully liable, then Total Indebtedness shall only include the pro rata share of
Indebtedness for which such Person is liable, plus (b) the Borrower's, REIT's
and any Subsidiaries' pro-rata share of Total Indebtedness in respect of any
unconsolidated Person; .
"Consolidated Unsecured Interest" means, for any period of
determination, Consolidated Interest Expense incurred in respect of any
Unsecured Debt for such period.
8
<PAGE> 9
"Contingent Obligation" means, as to any Person, (a) any
Guaranty Obligation of that Person, and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person, (i) in respect of any letter
of credit or similar instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings, (ii) as a
partner or joint venturer in any partnership or joint venture, (iii) to purchase
any materials, supplies or other Property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other Property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other Property is ever made or tendered, or such services are ever
performed or tendered, or (iv) incurred pursuant to any Rate Contract. Except as
provided in the definition of "Total Indebted ness" below, the amount of any
Contingent Obligation shall (subject, in the case of Guaranty Obligations, to
the last sentence of the definition of "Guaranty Obligation") be deemed equal to
the maximum reasonably anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, mortgage, deed of trust, indenture, or other instrument, document or
agreement to which such Person is a party or by which it or any of its Property
is bound.
"Controlled Group" means Borrower and all Persons (whether or
not incorporated) under common control or treated as a single employer with
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Conversion/Continuation Notice" means a notice given by
Borrower to the Agent pursuant to Section 2.4, in substantially the form of
Exhibit E.
"Conversion Conditions" is defined in Section 4.3.
"Conversion Date" means the date (a)on which all Conversion
Conditions are satisfied and the Revolver is converted into the Term Loan or
(b)pursuant to Section 2.1(c) Borrower elects the Conversion Option. The
Conversion Date will be set forth in the certificate delivered to and approved
by the Agent pursuant to Section 4.3(e) below.
"Credit Rating" means, with respect to any Person, the lowest
rating assigned by a Rating Agency to the Person's senior unsubordinated,
unsecured and non-credit enhanced long term indebtedness; provided, however,
that in all events, if a Person's senior unsubordinated long term indebtedness
is only rated by one Rating Agency, then it shall be deemed to have a Credit
Rating below Investment Grade.
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"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured) constitute an
Event of Default.
"Designated Entity" means Borrower and any of its Subsidiaries
that owns any Unencumbered Asset Pool Property or is a Management Entity.
"Disposition" means the sale, lease, conveyance, transfer or
other disposition of (whether in one or a series of transactions) any Property,
including accounts and notes receivable (with or without recourse) and
sale-leaseback transactions, but otherwise excluding Permitted Liens.
"Documentation Agent" means, as of the Closing Date,
BankBoston, N.A., an initial Lender. Documentation Agent shall have no
responsibilities or duties in addition to those of a Lender as provided under
this Agreement.
"Domestic Lending Office" means, with respect to each Lender,
the office of that Lender designated as such on the signature pages hereto or
such other office of a Lender as it may from time to time specify in writing to
Borrower and the Agent.
"Due Diligence Package" means, with respect to any Property
added to the Unencumbered Asset Pool after the Closing Date, the due diligence
and underwriting materials customarily prepared by or for Borrower (or its
Subsidiaries) in connection with the acquisition of the Property, which due
diligence and underwriting materials shall be in the same format as prior Due
Diligence Packages previously delivered to Agent.
"D&P" means Duff & Phelps Credit Rating Co.
"EBITDA" means, for any period, the sum determined in
accordance with GAAP, of the following, for any Person (in the case of Borrower
or the REIT, before deducting for minority interests in Borrower) (a) the net
income (or net loss) of such Person during such Period plus (b) all amounts on a
consolidated basis, plus Borrower's and REIT's pro-rata share of unconsolidated
amounts, treated as expenses for depreciation, Interest Expense and the
amortization of intangibles of any kind to the extent included in the
determination of such net income (or loss), plus (c) all accrued taxes on or
measured by income to the extent included in the determination of such net
income (or loss); provided, however, that net income (or loss) shall be computed
for these purposes without giving effect to (i) extraordinary losses or
extraordinary gains (including gains or losses from the sale of Properties) and
(ii) any amortization of capitalized financing expenses or charges related to
restructuring of Indebtedness (excluding such expenses or
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<PAGE> 11
charges in connection with renewals or extensions of existing Indebtedness in
the ordinary course of business).
"Eligible Assignee" means (a) a commercial bank or savings and
loan association or savings bank organized under the laws of the United States,
or any state thereof, and having a combined capital and surplus of at least
$500,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $500,000,000, provided that
such commercial bank is acting through a branch or agency located in the country
in which it is organized or another country which is also a member of the OECD,
(c) any Lender Affiliate, and (d) any other person which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds and lease finance companies in each case with a capital and surplus
of at least $500,000,000; provided, however, that in no event may an Affiliate
of Borrower be an Eligible As signee.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by Borrower, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters; including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Hazardous Material Transportation Act, the
Federal Water Pollution Control Act, the Clean Air Act,
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<PAGE> 12
the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act,
the Federal Resource Conservation and Recovery Act, the Occupational Safety and
Health Act, the Toxic Substances Control Act and the Emergency Planning and
Community Right-to-Know Act, each as amended or supplemented, and any analogous
future or present local, municipal, state or federal statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of any
determination.
"Environmental Permits" is defined in Section 5.11(b).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Section
414(b), 414(c) or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan; (b) a withdrawal by Borrower or any
ERISA Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA); (c) a complete or partial withdrawal by Borrower or any
ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent
to terminate, the treatment of a plan amendment as a termination under Section
4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure by Borrower or any member of the Controlled Group to make required
contributions to a Qualified Plan or Multiemployer Plan when due; (f) an event
or condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Qualified Plan or Multiemployer Plan pursuant to Section 4042 of
ERISA; (g) the imposition of any liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower
or any ERISA Affiliate; (h) an application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code with respect to
any Plan; (i) a non-exempt prohibited transaction occurs with respect to any
Plan for which Borrower or any Subsidiary of Borrower may be directly or
indirectly liable; or (j) a violation of the applicable requirements of Section
404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the
Code by any fiduciary or disqualified person with respect to any Plan for which
Borrower or any member of the Controlled Group may be directly or indirectly
liable.
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"Estimated Remediation Cost" means all costs associated with
performing work to remediate contamination of real property or groundwater,
including engineering and other professional fees and expenses, costs to remove,
transport and dispose of contaminated soil, costs to "cap" or otherwise contain
contaminated soil, and costs to pump and treat water and monitor water quality.
"Event of Default" means any of the events or circumstances
specified in Section 8.1.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended, and regulations promulgated thereunder from time to time.
"FNMA/Washington Mortgage Facility Documents" means all
documents relating to credit facilities in an amount up to $50,000,000 secured
by Properties not in the Unencumbered Asset Pool now or hereafter provided to
Borrower for general partnership purposes including (i) a Master Credit Facility
Agreement, dated as of February 4, 1998, by and among the REIT, the Borrower,
AIMCO/Bluffs, L.L.C., AIMCO Chesapeake, L.P., AIMCO Elm Creek, L.P., AIMCO
Lakehaven, L.P., AIMCO Los Arboles, L.P. and Washington Mortgage Financial
Group, Ltd. and (ii) all amendments, extensions and renewals of any of the
foregoing.
"Federal Funds Rate" means, for any period, the rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three (3) leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereof.
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"Finance Subsidiary" means AIMCO Properties Finance
Partnership, L.P., a Delaware limited partnership.
"Finance Subsidiary Loan" means, collectively, (i) the loan in
the amount of $95,387,690 made by the Finance Subsidiary to the REIT on or
around September 12, 1995, as evidenced by that certain Promissory Note, dated
as of September 12, 1995, executed by the REIT, in favor of the Finance
Subsidiary, which loan has been assumed by Borrower pursuant to that certain
Redemption Agreement, dated as of April 15, 1996, between the REIT and Borrower,
among others, and (ii) the loan in the amount of $3,000,000 made by the Finance
Subsidiary to the REIT on or around September 6, 1995, as evidenced by that
certain Promissory Note, dated as of September 6, 1995, executed by the REIT, in
favor of the Finance Subsidiary.
"Form 10-K filing" means a Form 10-K filing required to be
filed under the applicable rules and regulations of the SEC.
"Form 10-Q filing" means a Form 10-Q filing required to be
filed under the applicable rules and regulations of the SEC.
"Form 1001" is defined in Section 3.1(f)(i).
"Form 4224" is defined in Section 3.1(f)(i).
"Funds From Operations" means, with respect to Borrower, the
REIT, and their Subsidiaries on a consolidated basis, net income calculated in
accordance with GAAP, excluding gains or losses from debt restructuring and
sales of property, plus real estate depreciation and amortization (excluding
amortization of financing costs), plus amortization associated with the purchase
of property management companies, and after adjustments for unconsolidated
partnerships and joint ventures (with adjustments for unconsolidated
partnerships and joint ventures calculated to reflect funds from operations on
the same basis) together with adjustments for the non-cash deferred portion of
any income tax provision for unconsolidated subsidiaries and the payment of
dividends on preferred Stock, as interpreted by the National Association of Real
Estate Investment Trusts in its March, 1995, White Paper on Funds From
Operations.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable
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<PAGE> 15
stature and authority within the accounting profession), or in such other
statements by such other entity as may be in general use by significant segments
of the U.S. accounting profession, which are applicable to the circumstances as
of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"GP Corp" means AIMCO-GP, Inc., a Delaware corporation. GP Corp
is a Wholly-Owned Subsidiary of the REIT and is the general partner of Borrower.
"Gross Asset Value" has the meaning set forth in the Lehman
Unsecured Facility Documents attached hereto as Schedule 1.1C.
"Guarantor Subsidiaries" means the Persons listed on Schedule
1.1E together with such other Persons that execute and deliver to the Agent for
the ratable benefit of the Lenders a guaranty of the Obligations in the form of
Exhibit F1 or Exhibit F2.
"Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any Indebtedness,
lease, dividend, letter of credit or other obligation (the "primary obligation")
of another Person (the "primary obligor"), including any obligation of that
Person, whether or not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligations or any Property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation, or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase securities, other Properties or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof. Except as set forth in the
definition of "Total Indebtedness" below, the amount of any Guaranty Obligation
shall be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof.
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"Hazardous Materials" means (i) all those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special waste,
hazardous substance, hazardous material, or toxic substance, or petroleum or
petroleum-derived substance or waste, (ii) any other materials or pollutants
that (a) pose a hazard to any Property of Borrower or to Persons on or about
such Property or (b) cause such Property to be in violation of any Environmental
Laws, (iii) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million, and (iv) any other chemical, material, substance, or
waste, exposure to which is prohibited, limited, or regulated by any
Governmental Authority or may or could pose a hazard to the health and safety of
the owners, occupants, or any Persons surrounding the relevant Property.
"Historical Value" means the purchase price of any Qualified
Property (including improvements) and ordinary related purchase transaction
costs, plus the cost of subsequent Capital Improvements made by Borrower or any
Wholly Owned Subsidiary, less any provision for losses, all as determined in
accordance with GAAP. If the Qualified Property is purchased as part of a group
of properties, the Historical Value shall be calculated based upon a reasonable
allocation of the aggregate purchase price by Borrower or any Wholly Owned
Subsidiary for all purposes, consistent with GAAP.
"Imputed Capital Expenditures" means, for any four (4)
consecutive quarter period, an amount equal to the average number of apartment
units owned by Borrower or the REIT or their Wholly Owned Subsidiaries during
such period, multiplied by (a) with respect to the units in Class A or B
market-rate apartment projects, an amount equal to $300 per apartment unit, and
(b) with respect to the units in Class C or affordable or rent-restricted
apartment projects, an amount equal to $400 per apartment unit. With respect to
apartment units in any Unqualified Property, the calculation of Imputed Capital
Expenditures shall include the number of such units which is proportionate to
the ownership interest of Borrower or its Wholly Owned Subsidiaries in the
Unqualified Property. For any period of less than four (4) consecutive quarters,
the amount of Imputed Capital Expenditures will be appropriately prorated.
"Indebtedness" of any Person means without duplication, (a) all
indebtedness for borrowed money, (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services, (c) all
reimbursement obligations with respect to surety bonds, letters of credit,
bankers' acceptances and similar instruments (in each case, to the extent
material or noncontingent), (d) all obligations evidenced by notes,
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<PAGE> 17
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of Properties, (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to Properties
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such properties), (f) all Capital Lease Obligations, (g) all net
obligations with respect to Rate Contracts, (h) all obligations (other than, in
the case of the REIT, the obligation to acquire Units in exchange for shares of
common Stock of the REIT) to purchase, redeem, or acquire any Stock of such
Person or its Affiliates that, by its terms or by the terms of any security into
which it is convertible or exchangeable, is, or upon the happening of any event
or the passage of time would be, required to be redeemed or repurchased by such
Person or its Affiliates, including at the option of the holder, in whole or in
part, or has, or upon the happening of an event or passage of time would have, a
redemption or similar payment due, before the date which is the one (1) year
anniversary of the then effective Revolver Maturity Date, (i) all indebtedness
referred to in clauses (a) through (h) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in Properties (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (j) all Guaranty Obligations in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) above. Solely for purposes of determining the ratio of
Consolidated Total Indebtedness to Gross Asset Value, Indebted ness shall
exclude security deposits, accounts payable and accrued liabilities and any
prepaid rent.
"Indemnified Liabilities" is defined in Section 10.5.
"Indemnified Person" is defined in Section 10.5.
"Initial Unencumbered Asset Pool" means the Properties
designated on Exhibit A.
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case as undertaken under U.S. Federal, State or foreign
law.
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"Interest Expense" means, for any period, gross interest
expense incurred for the period (including all commissions, discounts, fees and
other charges in connection with standby letters of credit and similar
instruments), including any amounts as capitalized interest, for Borrower, the
REIT and their respective Subsidiaries and the portion of the upfront costs and
expenses for Rate Contracts entered into by Borrower, the REIT and their
respective Subsidiaries (to the extent not included in gross interest expense)
fairly allocated to such Rate Contracts as expenses for such period, as
determined in accordance with GAAP; provided, that, all interest expense accrued
by Borrower, the REIT and their respective Subsidiaries during such period, even
if not payable on or before the Maturity Date, shall be included within
"Interest Expense." Notwithstanding the foregoing, interest accrued under any
Intra-Company Debt shall not be included within "Interest Expense" for any
purposes hereof.
"Interest Payment Date" means, with respect to any Base Rate
Loan and any LIBOR Loan, the first day of each month.
"Interest Period" means, with respect to any LIBOR Loan, the
period commencing on the Business Day on which the Loan is disbursed or on the
Pricing Conversion Date on which the Loan is continued as or converted to the
LIBO Rate and ending on the date one (1), two (2), three (3) or six (6) months
thereafter, as selected by Borrower in its Borrowing Notice or
Conversion/Continuation Notice; provided that:
(a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond the
Revolver Maturity Date or after the Conversion Date, the Term Loan Maturity
Date.
"Intra-Company Debt" means Indebtedness (whether book-entry or
evidenced by a term, demand or other note or other instrument) owed by Borrower,
the
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REIT or any of their respective Subsidiaries to Borrower, the REIT or any of
their respective Subsidiaries.
"Intra-Company Loan Subordination Agreement" means a
Subordination Agreement, in the form attached hereto as Exhibit L, with respect
to Intra-Company Debt (including the Finance Subsidiary Loan), in favor of the
Agent for the ratable benefit of the Lenders, and entered into by each of the
"Lenders" designated on Schedule 1.1B and Borrower.
"Investment" means (a) any purchase or acquisition of any
capital stock, equity interest, asset, obligation or other security of or any
interest in, any Person, (b) any advance, loan, extension of credit or capital
contribution to any Person, (c) any purchase, lease, or other acquisition of
Property for investment purposes or for the purpose of resale or leasing to
another Person, and (d) any contingent or other agreement to do any of the
foregoing.
"Investment Grade Credit Rating" means that Borrower's Credit
Rating from at least two Rating Agencies is at least BBB- (or its equivalent) or
better.
"IRS" means the Internal Revenue Service.
"Issuing Lender" means BofA, in its capacity as issuer of
Letters of Credit.
"Knowledge of Borrower" means the actual knowledge (after
reasonable inquiry) of any of the officers of Borrower or the REIT and each
other Person with executive responsibility for any aspect of Borrower's or the
REIT's business.
"Lender" means each of the lenders party to this Agreement, and
includes BofA in its individual capacity.
"Lehman Maximum Availability" means, as of any date of
determination, an amount equal to 62.5% of the Lehman Unsecured Asset Value.
"Lehman Unsecured Facility" means that certain unsecured credit
facility in the maximum principal amount of $300,000,000 evidenced by the Lehman
Unsecured Facility Documents.
"Lehman Unsecured Facility Documents" means all documents
relating to the Lehman Unsecured Facility, including that certain Interim Term
Loan Agreement,
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dated as of October 1, 1998, by and among the REIT, the Borrower the several
lenders from time to time party thereto, Lehman Brothers, Inc., as Arranger,
Lehman Commercial Paper, Inc., as Syndication Agent, and Lehman Commercial Paper
Inc., as Administrative Agent, and all documents, instruments and agreements
related thereto all dated as of the date of the Interim Term Loan Agreement.
"Lehman Unencumbered Asset Value" has the same meaning as the
term "Unencumbered Asset Value" defined on Schedule 1.1D.
"Lender Affiliate" means a Person that is engaged primarily in
the business of commercial lending and is a Subsidiary of a Lender or of a
Person of which a Lender is a Subsidiary.
"Lending Office" means, with respect to any Lender, the office
or offices of the Lender specified as its "Lending Office" opposite its name on
the signature pages hereto, or such other office or offices of the Lender as it
may from time to time specify in writing to Borrower and the Agent.
"Letter of Credit" means any letter of credit issued pursuant
hereto by the Issuing Lender for the account of Borrower for general corporate
purposes. Each Letter of Credit shall be for a term of not more than one year
from the date of issuance thereof, but shall in any event expire prior to the
Revolver Maturity Date.
"Letter of Credit Liability" means, as of any date of
determination, all then existing liabilities of Borrower to the Issuing Lender
in respect of Letters of Credit, whether such liability is contingent or fixed,
and shall consist in principal amount of the sum of (a) the available amount
under all Letters of Credit (the determination of such amount to assume
compliance with all conditions for drawing) and (b) the aggregate amount which
has then been paid by, and not been reimbursed by Borrower to, the Issuing
Lender under all Letters of Credit.
"LIBO Rate" means, for each Interest Period for any LIBOR Loan,
an interest rate per annum (rounded upward to the nearest 1/100th of 1%)
determined pursuant to the following formula:
LIBO Rate= LIBOR
-----------------------------------
1.00 - Reserve Percentage
Where,
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(i) "LIBOR" means the per annum rate of interest,
rounded upward, if necessary, to the nearest 1/16th of one percent (0.0625%), at
which the Reference Lender's London branch, London, England, would offer U.S.
dollar deposits in amounts and for periods comparable to those of the applicable
LIBOR Loan and Interest Period to major banks in the London U.S. dollar
inter-bank market at approximately 11:00 a.m., London time, on the first
Business Day after the Borrowing Notice or Conversion/Continuation Notice for
such LIBOR Loan is delivered to the Agent; and
(ii) "Reserve Percentage" means the total of the
maximum reserve percentages from time to time for determining the reserves to be
maintained by member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D, whether or not
applicable to any Lender. The Reserve Percentage shall be expressed in decimal
form and rounded upward, if necessary, to the nearest 1/100th of one percent,
and shall include marginal, emergency, supplemental, special and other reserve
percentages.
"LIBOR Loan" means a Loan that bears interest based on the LIBO
Rate.
"Lien" means any mortgage, deed of trust, security agreement,
pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preference, priority or other security interest or
preferential arrangement of any kind or nature whatsoever (including those
created by, arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital Lease, any
financing lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable law)
and any contingent or other agreement to provide any of the foregoing.
"Loan" or "Loans" means any Revolver, Term Advance or Swing
Line Loan, as applicable.
"Loan Documents" means this Agreement, the Notes, the REIT
Guaranty Documents, and all other documents delivered to the Agent or the
Lenders in connection therewith.
"Management Entity" means any Subsidiary of Borrower or the
REIT which is primarily engaged in the business of managing multifamily
apartment projects or other real estate projects or providing Ancillary
Services, including, without limitation, the Persons listed on Schedule 1.1E.
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"Marketable Securities" means the securities of any Person
which securities are treated by such Person as "marketable securities" in
accordance with GAAP and which are quoted on the New York Stock Exchange,
American Stock Exchange or the Nasdaq National Market System. On any date of
determination, the value of any Marketable Securities shall be determined in
accordance with GAAP.
"Margin Stock" means "margin stock" as such term is defined
from time to time in Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse change in,
or a material adverse effect upon, any of (a) the assets, operations, business,
condition (financial or otherwise), or prospects of Borrower, the REIT and their
respective Subsidiaries, taken as a whole, (b) the ability of Borrower, the
REIT and their respective Subsidiaries to perform under any Loan Document and
avoid any Event of Default, or (c) the ability of the REIT and the Subsidiaries
party thereto to perform under the REIT Guaranty Documents.
"Maximum Unsecured Indebtedness" means, as of any date of
determination, the aggregate amount of Unsecured Debt of Borrower on a
consolidated basis, which amount shall not exceed an amount equal to the sum of
(i) the Total Available Commitments (without taking into account the limitation
in clause (1) of the definition thereof), minus (ii) the Outstanding Amount,
minus (iii) the aggregate amounts outstanding under the Lehman Unsecured
Facility.
"Moody's" means Moody's Investors Service, a Delaware
corporation, and its successors and assigns.
"Multiemployer Plan" means a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and to which any member of the
Controlled Group makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to make,
contributions.
"Net Issuance Proceeds" means, in respect of any issuance of
Stock, Units or Indebtedness by Borrower, the REIT or any of their respective
Subsidiaries, the proceeds in cash or Cash Equivalents (or, for purposes of
Section 7.16(a), in the case of any issuance of Units in exchange for Property,
the fair market value of the Property so acquired) received by Borrower, the
REIT or any of their respective Subsidiaries upon or substantially
simultaneously with such issuance, net of (a) the direct costs of such issuance
then payable by the recipient of such proceeds (excluding amounts payable to
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<PAGE> 23
Borrower, the REIT or any Affiliate of Borrower or the REIT) (b) sales, use and
other taxes paid or payable by such recipient as a result thereof, and (c) in
the case of the issuance of indebtedness secured by any Property the portion of
such proceeds used to repay Indebtedness previously incurred and secured by the
same Property.
"Net Operating Income" means, for any period, as to any
Property (a) all gross revenues received from the operation of such Property
during such period (including, without limitation, payments received from
insurance on account of business or rental interruption and condemnation
proceeds from any temporary use or occupancy, in each case to the extent
attributable to the period for which such Net Operating Income is being
determined, but excluding any proceeds from the sale or other disposition of any
part or all of such Property; or from any financing or refinancing of such
Property; or from any condemnation of any part or all of such Property (except
for temporary use or occupancy); or on account of a casualty to the property
(other than payments from insurance on account of business or rental
interruption); or any security deposits paid under leases of all or a part of
such Property, unless forfeited by tenants; and similar items or transactions
the proceeds of which under GAAP are deemed attributable to capital), minus (b)
all reasonable and customary property maintenance and repair costs, leasing and
administrative costs, management fees assumed to be four percent (4%) of gross
receipts (whether or not actually paid pursuant to a separate management
contract or otherwise) and, without double counting, real estate taxes and
insurance premiums paid or accrued by Borrower (whether by direct payment or by
deposit into reserves for future payment), or, to the extent applicable for
purposes of calculating Net Operating Income, the applicable prior owner of such
Property during such period with respect to such Property (exclusive of Capital
Expenditures). There shall be no deduction for any expense not involving a cash
expenditure, such as depreciation.
"Net Worth" means at any time the Gross Asset Value minus all
liabilities (as determined in accordance with GAAP) of Borrower, the REIT and
their respective Subsidiaries, inclusive of their respective shares of
Indebtedness of any unconsolidated subsidiaries. Notwithstanding the foregoing,
the liabilities of the REIT shall include the redemption amount payable under
any preferred Stock of the REIT which is optionally or mandatorily redeemable at
any time on or prior to one year after the Revolver Maturity Date (or, if
Borrower elects to convert the Revolver into the Term Loan, on or prior to one
year after the Term Loan Maturity Date).
"NHP/Lehman Financing" means those certain 27 mortgage loans in
the aggregate principal amount of approximately $92,000,000 made by Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers
Holdings Inc., to the
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<PAGE> 24
following entities: the Borrower, Castle Rock Joint Venture, a Texas joint
venture; The Crossings II Limited Partnership, a Georgia limited partnership;
National Housing Partnership Realty Fund IV, a Maryland limited partnership;
P.A.C. Land II Limited Partnership, an Ohio limited partnership; SAHF II Limited
Partnership, a Delaware limited partnership; TAHF II Limited Partnership, a
Delaware limited partnership; and West Lake Arms Limited Partnership, a Delaware
limited partnership.
"Non-Guarantor Subsidiaries" is defined in Section 5.26.
"Note" means a promissory note of Borrower payable to the order
of a Lender in substantially the form of Exhibit D-1.
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"NYSE" means the New York Stock Exchange.
"Obligations" means all Loans, and other Indebtedness,
advances, debts, liabilities, obligations, covenants and duties owed by
Borrower, the REIT or any of their respective Subsidiaries to the Agent, any
Lender, or any other Person required to be indemnified under any Loan Document,
of any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement or under any other
Loan Document, whether or not for the payment of money, whether arising by
reason of an extension of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"Ordinary Course of Business" means, in respect of any
transaction involving a Person, the ordinary course of such Person's business,
substantially as intended to be conducted by any such Person as of the Closing
Date, and undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Contractual Obligation of such
Person.
"Organizational Chart" means the list of Subsidiaries attached
as Schedule 5.7 hereto showing the REIT, Borrower, all of their Subsidiaries and
their interests in the Management Entities and any unconsolidated subsidiaries
to the extent such Persons'
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<PAGE> 25
Indebtedness is taken into account in the calculation of Net Worth, as the same
may be modified pursuant hereto.
"Organizational Documents" means: (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any supplementary
articles, certificate of determination or instrument relating to the rights of
preferred shareholders, and all duly adopted resolutions of the board of
directors (or any committee thereof) of such corporation; (b) for any
partnership, the partnership agreement, the certificate and/or statement of
partnership and all duly adopted authorizations of the partners thereof; (c) for
any limited liability company, the articles of organization and operating
agreement therefor and duly adopted authorizations or resolutions of the members
thereof; and (d) for any trust, the declaration or agreement of trust.
"Other Taxes" is defined in Section 3.1(b).
"Outstanding Amount" means, as of any date of determination,
the aggregate principal amount of all outstanding Loans (including, without
limitation, the aggregate Letter of Credit Liability).
"Outside Period Letter of Credit" means any Letter of Credit
having an expiry date which is after the Revolver Maturity Date.
"Owned or Controlled Management Company EBITDA" means EBITDA of
a Qualified Management Entity which is earned pursuant to property management
agreements for Properties (a) in which Borrower has a controlling general
partner or managing member interest in the Person owning the Property coupled
with the sole and absolute discretion to select, appoint and retain the
Management Entity as the property manager and/or provider of Ancillary Services
for the Property or (b) which have an enforceable and collectible termination
penalty in favor of the Qualified Management Entity, in an amount not less than
the aggregate amount of property management fees which would otherwise be paid
to the Qualified Management Entity over the remaining term of the applicable
property management agreements.
"Palencia Bond" means that certain bond titled "State of
Florida Housing Finance Agency Multifamily Housing Revenue Refunding Bond 1994
Series A (Palencia Apartments Project)", dated March 31, 1994 with a maturity of
March 1, 2024 and in the original principal amount of $13,250,000. As of the
date hereof, the registered owner of the Palencia Bond is Ambassador X, L.P., a
Delaware limited partnership.
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"Palencia Bond Documents" means the documents and instruments
evidencing the Palencia Bond, including the following: (1) Loan Agreement, dated
as of March 1, 1994 between the Florida Housing Financing Agency ("AGENCY") and
FPI Palencia, Ltd., ("DEVELOPER"); (2) $13,250,000 Promissory Note, dated March
31, 1994; (3) Amended and Restated Land Use Restriction Agreement, dated as of
March 1, 1994, among the Agency, the Developer and Sun Bank, National
Association ("TRUSTEE"); (4) First Mortgage and Security Agreement, dated as of
March 1, 1994, from the Developer to the Trustee for the benefit of the Agency;
(5) Assignment of Rents and Leases, dated as of March 1, 1994, from the
Developer to the Agency; (6) Environmental Indemnity Agreement, dated as of
March 1, 1994, from the Developer, Avron B. Fogelman and Fogelman Enterprises,
L.P. to the Agency, the Trustee, and General Electric Capital Corporation; and
(7) together with all other related documents and agreements executed in
connection with and evidencing or securing the Palencia Bonds.
"Palencia Bond Value" means, as of any date, if the Palencia
Property is in the Unencumbered Asset Pool, an amount equal to the product of
(X) the Borrowing Ratio times (Y) the outstanding principal amount of the
Palencia Bond as of such date; provided, however, that from and after October 1,
1999, the Palencia Bond Value shall be zero ($0) and in no event shall the
principal amount of the Palencia Bond ever exceed $13,250,000.
"Palencia Property" means the multifamily apartment Property
owned by Ambassador X, L.P. which is located in Hillsborough County, Florida and
commonly known as "Palencia Apartments."
"Participant" is defined in Section 10.8(d).
"Payment Office" means the address for payments set forth on
the signature page hereto in relation to the Agent or such other address as the
Agent may from time to time specify in accordance with Section 10.2.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Indebtedness" is defined in Section 7.2.
"Permitted Liens" is defined in Section 7.1.
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"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, limited liability company,
unincorporated association, joint venture or governmental authority.
"Plan" means an employee benefit plan (defined in Section 3(3)
of ERISA) which Borrower or any member of the Controlled Group sponsors or
maintains or to which Borrower or any member of the Controlled Group makes, is
making or is obligated to make contributions, and includes any Multiemployer
Plan or Qualified Plan.
"Previous Credit Agreement" is defined in the preamble to this
Agreement.
"Pricing Conversion Date" means each date on which Borrower
elects to (a) convert a Base Rate Loan to a LIBOR Loan or a LIBOR Loan to a Base
Rate Loan or (b) continue an existing LIBOR Loan for an additional Interest
Period.
"Pro Forma Revolver Debt Service" means, as of any date of
determination, the sum of annual pro forma payments of principal and interest
which would be due (based on a monthly repayment schedule) on an initial
principal sum equal to the Revolver DSC Principal Limit based on a mortgage
constant calculated upon the Assumed Interest Rate at such time and a
twenty-five (25) year amortization period.
"Property" means any estate or interest in any kind of property
or asset, whether real, personal or mixed, and whether tangible or intangible.
"Property Liability" means, with respect to any Unencumbered
Asset Pool Property, the aggregate amount of the loss, damage or other liability
or reduction in value associated with such Property as a result of any
Environmental Claims or other adverse defect, condition, hazard, condemnation,
violation or other circumstance with respect to such Property which shall be
disclosed in each Compliance Certificate required to be delivered by Borrower
under this Agreement.
"Qualified Management Entity" means, on any date of
determination, a Management Entity (a) in which Borrower, the REIT or their
respective Subsidiaries owns at least a 95% interest in the capital and profits
thereof, (b) which is a Guarantor Subsidiary, (c) which is controlled, directly
or indirectly by (i) Borrower or the REIT, (ii) Peter K. Kompaniez, (iii) Terry
S. Considine, (iv) any Person controlled by Peter K. Kompaniez and Terry S.
Considine, (v) any other Person reasonably satisfactory to the Requisite
Lenders, or (vi) any combination of the foregoing clauses (i)-(v), and (d) which
has no Indebtedness (other than Intra-Company Debt).
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<PAGE> 28
"Qualified Management Entity EBITDA" means, on any date of
determination, Borrower's proportionate share of the aggregate EBITDA from all
Qualified Management Entities for the most recent complete calendar quarter, as
annualized.
"Qualified Plan" means a pension plan (as defined in Section
3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the Code and
which any member of the Controlled Group sponsors, maintains, or to which it
makes, is making or is obligated to make contributions, or in the case of a
multiple employer plan (as de scribed in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding period covering at
least five (5) plan years, but excluding any Multiemployer Plan.
"Qualified Property" means a Property comprising a multifamily
apartment project which is 100% owned in fee simple title directly or indirectly
by Borrower and its Wholly Owned Subsidiaries which is a Guarantor Subsidiary.
"Qualified Wholly-Owned Subsidiary" means any Wholly-Owned
Subsidiary which, immediately prior to the transfer of Property thereto pursuant
to Section 2.13(a)(ii), has no assets and no liabilities, and is, or will
become, a Guarantor Subsidiary.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance, currency
spot and forward contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates.
"Rating Agency" means any of S&P, Moody's or D&P.
"Recourse" means, with respect to any Indebtedness or Guaranty
Obliga tion of any Person, that such Indebtedness or Guaranty Obligation is
recourse to the assets and/or properties of such Person; provided, however, that
with respect to nonrecourse Indebtedness secured by real property which
contains limitations to the nonrecourse nature of the obligation, such limited
nonrecourse obligations shall not be deemed "Recourse" if and to the extent the
nonrecourse exceptions are for liability of such Person for any of the following
under any applicable loan documentation: (a) fraud, waste, material
misrepresentation, or willful misconduct; (b) indemnification with respect to
environmental matters or failure to comply with Hazardous Materials laws; (c)
failure to maintain required insurance policies; (d) misapplication of insurance
proceeds, condem nation awards and tenant security deposits; (e) breach of
covenants relating to
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unpermitted transfers or encumbrances of real property or other collateral; (f)
misappropriation or misapplication of property income; (g) breach of covenants
relating to unpermitted transfers of interests in a Person; (h) failure to
deliver books and records; (i) failure to pay transfer fees or changes; or (j)
other matters substantially the same as those set forth in clauses (a) through
(i) above. An obligation of a Person that is without Recourse to the assets
and/or properties of such Person but becomes Recourse upon the occurrence of the
events or circumstances described in clauses (a) through (i) above shall not be
considered a "Recourse" obligation unless such events or circumstances have
occurred.
"Reference Lender" means BofA.
"REIT" means Apartment Investment and Management Company, a
Maryland corporation.
"REIT Guaranty Documents" means a guaranty of the Obligations,
in the form of Exhibit F1 and Exhibit F2 attached hereto, and any documents
relating to the guaranty as the Agent requires, duly executed by the REIT and
the Guarantor Subsidiaries, together with the guaranties delivered pursuant to
Section 6.13(c) and Section 7.7(c).
"REIT Status" means, with respect to any Person, (a) the
qualification of such Person as a real estate investment trust under Sections
856 through 860 of the Code, and (b) the applicability to such Person and its
shareholders of the method of taxation provided for in Sections 857 et seq. of
the Code.
"Reportable Event" means any of the events set forth in section
4043(b) of ERISA or the regulations thereunder, a withdrawal from a Plan
described in section 4063 of ERISA, a cessation of operations described in
section 4068(f) of ERISA, an amendment to a Plan necessitating the posting of
security under section 401(a)(29) of the Code, or a failure to make when due a
payment required by section 412(m) of the Code and section 302(e) of ERISA.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its Property or to which the Person or any of its
Property is subject.
"Requisite Lenders" means, as of any date of determination, (a)
if there is only one Lender hereunder having a minimum Commitment of $5,000,000,
that Lender,
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and (b) if there are two (2) or more Lenders hereunder each having a minimum
Commitment of $5,000,000, then two (2) or more Lenders (for purposes of
counting Lenders, BofA and all affiliates of BofA collectively count as one
Lender, and in order to qualify as one of the two (2) necessary Lenders, a
Lender must hold a minimum Commitment of $5,000,000), holding at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding balance of the Loans, or,
if there are no Loans outstanding, having at least sixty-six and two-thirds
percent (66-2/3%) of the Aggregate Commitment.
"Responsible Officer" means, in relation to the REIT, the Chief
Executive Officer, or the President or any Executive Vice President or Senior
Vice President of the REIT, and, in relation to Borrower, the Chief Executive
Officer or any Vice President of GP Corp, in its capacity as the general partner
of Borrower, and/or any other officer of the REIT or GP Corp having
substantially the same authority and responsibility, or, with respect to
financial matters, the Chief Financial Officer or the Treasurer of the REIT or
GP Corp, respectively, or any other officer having substantially the same
authority and responsibility.
"Restricted Cash" means any cash pledged by Borrower, the REIT
or any of their respective Subsidiaries to other lenders, as indicated in the
line item for "restricted cash" in the REIT's balance sheet from time to time.
"Revolver" is defined in Section 2.1(a).
"Revolver to Term Certificate" means a certificate signed by at
least two Responsible Officers in connection with the conversion of the Revolver
into the Term Facility, substantially in the form attached hereto as EXHIBIT C.
"Revolving Commitment" means, with respect to any Lender, the
amount set forth opposite a Lender's name in Schedule 2.1(a)(i), which may be
reduced or increased as a result of one or more assignments pursuant to Section
10.8, and which includes a Lender's participation in the Letter of Credit
Liability.
"Revolver DSC Ratio" means the ratio determined for each fiscal
quarter during the term of the Revolver by dividing Unencumbered Asset Pool NOI
for the period from the commencement of the then current year through the end of
the most recent quarter by the aggregate Pro Forma Revolver Debt Service for
such period.
"Revolver DSC Principal Limit" shall mean the principal balance
which, if it were outstanding under the Revolver, would produce a Revolver DSC
Ratio equal to
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1.75 to 1.0., determined for any fiscal quarter based on the Revolver DSC Ratio
for the period from the beginning of the then current year through the end of
the most recent quarter.
"Revolver Maturity Date" means the maturity date of the
Revolver which shall be October 1, 1999, subject, however, to earlier
acceleration pursuant to the provisions of the Loan Documents.
"Revolving Loan" is defined in Section 2.1(a).
"S&P" shall mean Standard & Poor's Ratings Group and its
successors and assigns.
"Scheduled Amortization" means, with respect to any Person, the
sum, as of any date of determination, of the current portion (i.e., such portion
as is scheduled to be paid by the obligor thereof within twelve (12) months from
the date of determination) of all regularly scheduled amortization payments due
on such Person's long-term fully amortizing mortgage Indebtedness (exclusive of
balloon payments).
"SEC" means the Securities and Exchange Commission, or any
successor thereto.
"SEC Report" means all filings on Form 10-K, Form 10-Q or Form
8-K with the SEC made by the REIT pursuant to the Exchange Act and delivered to
Agent prior to the date hereof.
"Senior Unsecured Notes" means any senior unsecured notes
issued by Borrower, the REIT or their respective Subsidiaries, the proceeds of
which shall be used to repay all or any part of the Lehman Unsecured Facility
and which comply with the requirements of Section 7.2(h). The Senior Unsecured
Notes shall not be senior to any of the Borrower's obligations under this
Agreement and the other Loan Documents.
"Solvent" means, as to any Person at any time, that (a) the
fair value of the Property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for
purposes of the Uniform Fraudulent Transfer Act; (b) the present fair saleable
value of the Property of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute
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and matured; (c) such Person is able to realize upon its Property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Stabilized" means, with respect to any Qualified Property and
as of any date of determination, the date on which the occupancy level is at
least eighty-five percent (85%) for the most recent complete quarter.
"Stock" means all shares, options, warrants, interests,
participations or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether voting or nonvoting, including common
stock, preferred stock, perpetual preferred stock or any other "equity security"
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).
"Swing Line Note" means a promissory note of Borrower payable
to the order of BofA in substantially the form of EXHIBIT D-2.
"Swing Line Loan" means an advance under and usage of the Total
Commitment (the aggregate principal amount of which may never exceed the lesser
of (i) $30,000,000 or (ii) the Total Available Commitments minus the Outstanding
Amount), as described in, and subject to Section 2.1(d).
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture, trust or other business entity of which more than
fifty percent (50%) of the Stock or other equity or beneficial interests (in the
case of Persons other than corporations) is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof (regardless of whether such Stock or other interests are
entitled to voting rights). As of the date hereof, the Organizational Chart
lists all of the Subsidiaries of the REIT and Borrower.
"Taxes" is defined in Section 3.1(a).
"Term Advance" is defined in Section 2.1(c).
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"Term Commitment" means, with respect to any Lender, the amount
set forth opposite the Lenders name in Schedule 2.1(a)(i), which amount may be
reduced or increased as a result of one or more assignments pursuant to Section
10.8.
"Term Loan" is defined in Section 2.1(c).
"Term Loan Maturity Date" means the date which is three (3)
years after the Conversion Date, unless earlier accelerated as provided in the
Loan Documents.
"Total Available Commitments" means an amount which shall not
exceed the lesser of (1) the Aggregate Commitment or (2) an amount determined as
follows,
for any period of determination, an amount equal to the lesser
of (a) the sum of:
(W) the lesser of
(A) the aggregate principal amount of Loans
that could have been outstanding during the most recent prior four quarters, as
to which a Compliance Certificate has been delivered, in order for the ratio of
Unencumbered Asset Pool Value to Unsecured Debt for such period to equal 1.75:1,
and
(B) the Revolver DSC Principal Limit for the
period in question;
LESS (X) the aggregate amount of all Property Liabilities
(without double counting any Property Liabilities which have previously been
taken into account in calculating Unencumbered Asset Pool Value) and subject to
the provisions of Section 2.13(a)(i));
LESS (Y) the aggregate amount of all Unsecured Debt of Borrower
(on a consolidated basis);
PLUS (Z) an amount equal to the Unencumbered Management Entity
Value;
PLUS (AA) an amount equal to the Palencia Bond Value;
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and (b), while any amount is outstanding under the Lehman Unsecured
Facility, the Lehman Maximum Availability.
Notwithstanding anything to the contrary herein, on and after the Conversion
Date, the Aggregate Commitments shall not exceed an amount equal to the
outstanding balance of the Revolver on the Conversion Date (as reduced by the
aggregate amount of applicable amortization payments required under Section
2.6(b)).
"Total Indebtedness" means, as of any date of determination and
in respect of any Person, all outstanding Indebtedness, and in the case of
clause (iii) below, Indebtedness available to be drawn, of a Person, and shall
include, without limitation: (i) such Person's share of the Indebtedness of any
partnership or joint venture in which such Person directly or indirectly holds
any interest; (ii) any Recourse or contingent obligations, directly or
indirectly, of such Person with respect to any Indebtedness of such partnership
or joint venture in excess of its proportionate share and (iii) such Person's
liability in respect of letters of credit, whether such liability is contingent
or fixed (such liability to be determined on the assumption that all conditions
for drawing upon such letters of credit have been complied with).
Notwithstanding the foregoing, Intra-Company Debt shall be excluded from the
calculation of "Total Indebtedness" but shall not otherwise be excluded as
Indebtedness for any other purpose hereof.
"Total Obligations" mean, as of any date, the sum of
Consolidated Total Indebtedness plus the aggregate amount of any outstanding
preferred Stock issued by the REIT or any Subsidiary.
"UAP Utilization" means, on any date of determination, the
ratio of the aggregate amount of Consolidated Unsecured Indebtedness outstanding
to the Unencumbered Asset Pool Value, expressed as a percentage. UAP
Utilization shall be determined as of any date of a borrowing under this
Agreement or any prepayment of the Lehman Unsecured Facility and shall take into
account any changes to Consolidated Unsecured Indebtedness and/or Unsecured
Asset Pool Value caused by any such borrowing or prepayment. The UAP Utilization
shall be evidenced by pro-forma Compliance Certificate delivered with any
Borrowing Notice and/or paydown of the Lehman Unsecured Facility as provided in
Section 6.2(h).
"UCC" means the Uniform Commercial Code as in effect in any
relevant jurisdiction.
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"Unencumbered Asset Pool" means the Initial Unencumbered Asset
Pool which are not subject to or affected by any Liens, Indebtedness, negative
pledges (other than the negative pledge given under Section 7.1 of this
Agreement) or Liens on any partnership or ownership interests in Borrower or its
Wholly Owned Subsidiaries, including such other Property as may be included
within the Unencumbered Asset Pool in accordance with Section 2.13 and excluding
any Property which is no longer included in the Unencumbered Asset Pool in
accordance with Section 2.13 and the other terms of this Agreement.
"Unencumbered Asset Pool NOI" means, for any period, with
respect to the Unencumbered Asset Pool, the sum of (X) (1) aggregate Net
Operating Income during the preceding four calendar quarters (or, if such
Properties were Stabilized, Qualified Properties for at least one calendar
quarter but less than four calendar quarters, the annualized aggregate Net
Operating Income from the date such Properties became Stabilized, Qualified
Properties), plus (2), in the case of Properties which have been Qualified
Properties for less than one calendar quarter, the annualized aggregate Net
Operating Income for the calendar quarter immediately preceding the quarter in
which it became a Qualified Property, plus (3), in the case of the Captiva Club
Property, until such time as it becomes a Stabilized Property for at least one
calendar quarter, the annualized aggregate Net Operating Income during the
calendar quarter ending August 31, 1998, minus (Y) the aggregate amount of
Capital Expenditures for all such Properties for the corresponding periods in an
amount equal to $300 per apartment unit per annum in each of such Properties,
during such period, or annualized period, as applicable.
"Unencumbered Asset Pool Value" means, for any period of
determination, with respect to the Properties in the Unencumbered Asset Pool, an
amount equal to the sum of (i) Unencumbered Asset Pool NOI (less amounts
included pursuant to clause (2) of the definition thereof), divided by the
Apartment Cap Rate, plus (ii) the Historical Value of any Qualified Properties
which have not been owned for a full calendar quarter; provided, however, that
in no event may more than twenty-five percent (25%) of Unencumbered Asset Pool
Value be attributed to Historical Value.
"Unencumbered Borrowing Pool Cashflow" means, as of any date of
determination, the sum of Unencumbered Asset Pool NOI plus Qualified Management
Entity EBITDA.
"Unencumbered Borrowing Pool Cashflow to Unsecured Interest
Ratio" means, for any period of determination, the ratio computed as follows:
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<TABLE>
<S> <C>
Unencumbered Borrowing Pool Cashflow [Unencumbered Asset Pool NOI + Qualified Management
Unsecured Interest Ratio = Entity EBITDA]
divided by
Consolidated Unsecured Interest
</TABLE>
"Unencumbered Management Entity Value" means, as of any date of
determination, an amount equal to the sum of (a) (W) Borrower's proportionate
share of the aggregate Owned or Controlled Management Entity EBITDA from all
Qualified Management Entities for the most recent complete calendar quarter, as
annualized, multiplied by (X) 3.5 plus (b) (Z) Borrower's proportionate share of
the aggregate EBITDA (other than Owned or Controlled Management Company EBITDA)
from all Qualified Management Entities for the most recent complete calendar
quarter, as annualized, multiplied by (Z) 2.0. EBITDA earned pursuant to
management agreements (A) which are cancelled or transferred to a Person which
is not a Qualified Management Entity or (B) for which Borrower has received
notice that any such agreement is to be terminated within 12 months shall be
excluded from the calculation of Unencumbered Management Entity Value for the
quarter in which such cancellation, transfer or notice occurs and thereafter.
"Unfunded Pension Liabilities" means the excess of a Plan's
benefit liabilities under section 4001 (a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used by the
Plan's actuaries for funding the Plan pursuant to section 412 for the applicable
plan year.
"United States" and "U.S." each mean the United States of
America.
"Units" means the units of limited partnership interest in
Borrower issued and outstanding from time to time.
"Unsecured Debt" means Indebtedness (other than the Loans)
which is not secured by any Lien.
"Unqualified Property" means the Property comprising a
multifamily apartment project the fee simple interest in which is not 100%
owned, directly or indirectly, by Borrower and/or its Wholly Owned Subsidiaries.
"Wholly-Owned Subsidiary" means a Subsidiary of Borrower or the
REIT one hundred percent (100%) of the Stock or other equity or other beneficial
interests (in the case of Persons other than corporations) is owned directly or
indirectly by (A) Borrower and/or (B) the REIT; provided, however, that where
such term is qualified
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with respect to a specific Person (e.g., "Wholly Owned Subsidiary of the REIT")
such term means a Subsidiary one hundred percent (100%) of the Stock or other
equity or other beneficial interests (in the case of Persons other than
corporations) is owned directly or indirectly by the specified Person.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto. The meaning of defined terms shall be equally applicable to the singular
and plural forms of the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein but defined in the UCC shall have the meanings set
forth therein.
(b) The Agreement. The words "hereof", "herein", "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section, schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) The term "ratably" means, at any time that Loans may
be outstanding, in accordance with the amount of the outstanding Loans of the
respective Lenders; and, at any time that no Loans are outstanding, in
accordance with the outstanding Commitments of the respective Lenders.
(d) Performance; Time. Whenever any performance obligation
hereunder (other than a payment obligation) is stated to be due or required to
be satisfied on a day other than a Business Day, such performance shall be made
or satisfied on the next succeeding Business Day. In the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and
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<PAGE> 38
including". If any provision of this Agreement refers to any action taken or to
be taken by any Person, or which such Person is prohibited from taking, such
provision shall be interpreted to encompass any and all means, direct or
indirect, of taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that
this Agreement and other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(i) Sophisticated Parties. The parties acknowledge that
each of them has been represented by counsel in the preparation and negotiation
of this Agreement, that each of them is sophisticated in the transactions
described herein and that there shall be no presumption against any party
drafting this Agreement or the Loan Documents in the interpretation or
construction of any of the terms thereof.
1.3 ACCOUNTING PRINCIPLES.
(a) GAAP. Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied. Notwithstanding anything to the
contrary contained herein, all financial covenants applicable to Borrower and
the REIT hereunder shall be calculated based upon the EBITDA, Interest Expense,
Scheduled Amortization, Net Worth, Total Indebtedness, Gross Asset Value, and
other accounting items of the REIT, before any adjustment for the minority
interest attributable to the holders of limited partner interests in Borrower.
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<PAGE> 39
(b) Fiscal Year; Quarter. References herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of Borrower.
ARTICLE II
THE FACILITY
2.1 AMOUNTS AND TERMS OF COMMITMENTS.
(a) Revolving Loans.
(i) Revolving Loans. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make loans to Borrower other
than Swing Line Loans (each such loan, a "Revolving Loan" and all such loans
collectively, the "Revolver") from time to time on any Business Day during the
period from the Closing Date to the earlier of the Conversion Date or the
Revolver Maturity Date. The aggregate amount of the Revolver will not exceed the
lesser of the Lender's Revolving Commitment or such Lender's Commitment
Percentage of the Total Available Commitment.
(ii) Letters of Credit. If Borrower is in compliance
with the conditions for the making of Revolving Loans, Borrower may request on
or before the Revolver Maturity Date, through a Borrowing Notice, the Issuing
Lender to deliver from time to time Letters of Credit. Upon such request, the
Issuing Lender shall promptly issue the requested Letter of Credit in a form
approved by the Issuing Lender; provided that the maximum Letter of Credit
Liability at any one time outstanding may not exceed $25,000,000. Each Letter of
Credit must have an expiry date not later than the one year anniversary of its
issuance, unless otherwise agreed on by Issuing Lender, but in no event shall
the expiry date be later than one year after the Revolver Maturity Date. Each
drawing under a Letter of Credit is payable in full upon the date thereof by
Borrower, without notice or demand of any kind. Except with respect to an
Outside Period Letter of Credit which is drawn upon after the Revolver Maturity
Date, Borrower may obtain, in accordance with the conditions applicable to
advances of the Revolving Loans, a Revolving Loan in the amount drawn on a
Letter of Credit to reimburse BofA as the Issuing Lender for such amount. Other
than draws on an Outside Period Letter of Credit after the Revolver Maturity
Date, Borrower's liability to reimburse Issuing Lender for amounts drawn under
Letters of Credit is included within the terms "Revolving Loan" and "Loan" for
all purposes of this Agreement, and any amounts drawn shall bear interest
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<PAGE> 40
until paid in full (whether out of the proceeds of a Revolving Loan otherwise
permitted hereunder or otherwise) at the Base Rate plus the Applicable Base Rate
Margin, subject to Section 2.9(c). Amounts drawn on an Outside Period Letter of
Credit after the Revolver Maturity Date are due and payable by Borrower to Agent
immediately and shall accrue interest until paid at the Base Rate plus three
percent (3%). Borrower's obligations to repay drawings under any Letter of
Credit and all other amounts payable to Issuing Lender, Agent or any other
Lender hereunder shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and irrespective of any set-off, counterclaim or
defense to payment which Borrower may have or have had against Issuing Lender,
Agent or any other Lender (except such as may arise out of Issuing Lender's,
Agent's or any other Lender's gross negligence or willful misconduct hereunder)
or any other Person, including, without limitation, any setoff, counterclaim or
defense based upon or arising out of:
(A) Any lack of validity or enforceability of this
Agreement or any of the other Loan Documents or such Letter of Credit;
(B) Any amendment or waiver of or any consent to or
departure from the terms of such Letter of Credit or the Loan Documents;
(C) The existence of any claim, setoff, defense or
other right which Borrower or any other Person may have at any time against, any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), Issuing Lender,
Agent or any other Lender or any other Person, whether in connection with such
Letter of Credit, the Loan Documents or any unrelated transaction;
(D) Any demand, statement or any other document
presented under such 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 whatsoever or any variations in punctuation,
capitalization, spelling or format of the drafts or any statements presented in
connection with any drawing under such Letter of Credit;
(E) The surrender or impairment of any security for
the performance or observance of any of the terms of such Letter of Credit or
the Loan Documents; and
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<PAGE> 41
(F) The failure, for any reason, of any Lender
to fund advances to Borrower hereunder for any purpose.
Nothing contained herein shall constitute a waiver of any rights or remedies of
Borrower against Issuing Lender, Agent or any other Lender arising out of the
gross negligence or willful misconduct of Issuing Lender, Agent or any such
other Lender.
(iii) Limits on Revolving Loans and Letters of
Credit. Notwithstanding anything to the contrary set forth herein, after giving
effect to any Revolving Loan and after the issuance of any Letter of Credit, in
no event shall the Outstanding Amount exceed the Total Available Commitment.
Within the limitations set forth in this Section 2.1(a), and subject to the
other terms and conditions hereof, Borrower may borrow or request Letters of
Credit to be issued under this Section 2.1(a), repay or prepay pursuant to
Section 2.5 or otherwise cause Letters of Credit to be cancelled or to expire
undrawn and reborrow (subject to the limitations set forth hereinbelow) or
request additional Letters of Credit to be issued pursuant to this Section 2.1.
(iv) [Intentionally Omitted]
(b) Revolving Credit Usage. Borrower shall use the proceeds of
all Revolving Loans and all Letters of Credit for general partnership purposes,
including, without limitation, acquisitions of multi-family apartment projects
and other real estate assets, Investments in Persons engaged primarily in the
business of owning or managing real estate assets and other Investments
permitted hereunder, Capital Expenditures and redevelopment projects.
(c) Amounts and Terms of Term Loan; Conversion. On or before
the Revolver Maturity Date, if (x) no Default has then occurred and is
continuing, provided that if the Agent shall have actual notice of such Default,
it shall have provided notice thereof to Borrower and (y) no Event of Default
has then occurred and is continuing, Borrower may notify Agent that it elects
both to terminate the Revolver as of the Revolver Maturity Date then in effect
and effective as of the Conversion Date to maintain its Loans then outstanding
as Term Loans pursuant to Section 2.1(c) (the "Conversion Option"); provided,
further, however, that Borrower shall have delivered to Agent a Revolver to Term
Certificate as a condition precedent to the Conversion Option and paid to Agent,
for the ratable benefit of the Lender, the conversion fee as provided in Section
2.10(d). Each Lender severally agrees, on the terms and conditions hereinafter
set forth, and provided all Conversion Conditions have been satisfied, to
continue or convert loans to Borrower (each such loan, a "Term Advance" and all
such loans collectively the "Term
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<PAGE> 42
Loan") from time to time on any Business Day from the Conversion Date to the
Term Loan Maturity Date, in an aggregate amount not to exceed at any time the
Term Commitment; provided, however, that after giving effect to any Term
Advance, the Outstanding Amount shall not exceed the then applicable Total
Available Commitment. Once repaid or prepaid, Borrower may not reborrow any Term
Advance.
(d) Swing Line Loans.
(i) Subject to the terms and conditions hereof, if
necessary to meet Borrower's funding deadlines, BofA agrees to make Swing Line
Loans to Borrower at any time prior to the Revolver Maturity Date, not to exceed
an amount at any one time outstanding equal to the lesser of (A) $30,000,000,
and (B) the Total Available Commitments. Swing Line Loans shall constitute
Loans for all purposes hereunder.
(ii) Each request for a Swing Line Loan shall be in an
amount
equal to $1,000,000 or a greater integral multiple of $50,000. Borrower may
request a Swing Line Loan by submitting a Borrowing Notice to Agent and BofA.
Such Borrowing Notice must be received by Agent and BofA no later than 2:00
p.m. on the specified borrowing date for such Swing Line Loan. Provided that
Borrower shall have given telephonic notice to Agent and BofA no later than 2:00
p.m. on the specified borrowing date for such Swing Line Loan BofA shall make
such Swing Line Loan available to Borrower by deposit in such of Borrower's
accounts with BofA in Los Angeles, California, as Borrower designates in
writing, on or before at 3:00 p.m. on such borrowing date.
(iii) If necessary to meet Borrower's funding
deadlines, Agent
may treat any Borrowing Notice as a request for a Swing Line Loan from Borrower
and BofA may fund it as a Swing Line Loan. Within 2 Business Days after each
Swing Line Loan is funded, BofA and Agent shall request that each Lender, and
each Lender shall, on the first (1st) Business Day after such request is made,
prepay one or more Swing Line Loans in an amount equal to such Lender's
Commitment Percentage of such Swing Line Loans by funding under such Lender's
Note, such purchase to be made in accordance with the terms of Section 2.3 of
this Agreement just as if such Lender were funding a Base Rate Loan directly to
Borrower under its Note (such that all Lenders other than BofA shall fund only
under their respective Notes and not under the Swing Line Loan Note). Unless
BofA had actual knowledge when BofA funded a Swing Line Loan that Borrower had
not satisfied the conditions in this Agreement to obtain a borrowing, each
Lender's obligation to prepay the Swing Line Loans shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation (i) any set-off, counterclaim, recoupment, defense, or other right
which such Lender or any other
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Person may have against BofA or any other Person for any reason whatsoever, (ii)
the occurrence or continuance of a Default or the termination of any Lender's
Commitment, (iii) the occurrence of any Material Adverse Effect, (iv) any breach
of this Agreement or any other Loan Document by Borrower, any of its Affiliates,
Agent, or any other Lender, or (v) any other circumstance, happening, or event
whatsoever, whether or not similar to any of the foregoing. Any portion of a
Swing Line Loan not so prepaid may be treated by BofA as a Loan which was not
funded by the non-purchasing Lenders as contemplated in Section 2.14 of this
Agreement, and as a funding by BofA under the Aggregate Commitment in excess of
BofA's Commitment. Each Swing Line Loan, once so prepaid, shall cease to be a
Swing Line Loan for the purposes of this Agreement, but shall be deemed a
borrowing made under the Aggregate Commitment and each Lender's Commitment.
Each Swing Line Loan shall be a Base Rate Loan.
2.2 NOTE. Each Loan (other than a Swing Line Loan) will be
evidenced by a Note dated the Closing Date payable to the order of the
applicable Lender in the amount of its Commitment and each Swing Line Loan will
be evidenced by a Swing Line Note dated the Closing Date and payable to BofA in
the amount of $30,000,000. The date, amount and maturity of each Loan and the
amount of each principal payment will be endorsed by the applicable Lender on
the schedules annexed to the Note. Borrower irrevocably authorizes each Lender
to endorse its Note (including authorizing BofA to endorse the Swing Line Note),
and each Lender's record will be conclusive absent manifest error; provided,
however, that a Lender's failure to make, or an error in making, a notation
thereon shall not affect Borrower's obligations under this Agreement or under
any Note.
2.3 PROCEDURE FOR BORROWING.
(a) Borrowing Notice. Each Loan shall be made in accordance
with the terms of a Borrowing Notice delivered by Borrower to Agent, as follows:
(i) Designation of Interest Rate. Borrower may elect
that a Loan be made as a LIBOR Loan or a Base Rate Loan; provided that, unless
the Agent otherwise agrees in writing, Borrower may not elect that a Loan be
made as a LIBOR Loan, if in addition to such Loan there will be more than five
(5) LIBOR Loans outstanding.
(ii) Timing of Notice. Each Borrowing Notice must be
submitted to and received by Agent before 9:00 a.m. (California time) as
follows: (A) for LIBOR Loans, at least three (3) Business Days before a
specified borrowing date; (B) for
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Base Rate Loans, at least one (1) Business Day before a specified borrowing
date; and (C) for a Letter of Credit, at least five (5) Business Days before the
proposed issuance date.
(iii) Contents of Notice. Each Borrowing Notice must
include the following information:
(A) an exact amount for the Loan (LIBOR Loans
must be in a minimum amount of $1,000,000 with additional increments of $100,000
and there are no restrictions on the amount of Base Rate Loans);
(B) if the Loan is a LIBOR Loan, the
applicable Interest Period (if no Interest Period is specified for a requested
LIBOR Loan, the Loan will be made as a Base Rate Loan); and
(C) in the case of a proposed Letter of
Credit, a completed letter of credit application on the Issuing Lender's
standard form substantially in the form of Exhibit G.
(b) Notice to Lenders. When Agent receives a Borrowing Notice
in conformity with Section 2.3(a), it shall promptly notify each Lender thereof
and of the amount of such Lender's Commitment Percentage of the requested Loan
and in the case of a Letter of Credit it shall notify each Lender promptly upon
the issuance together with such Lender's participation in the requested Letter
of Credit.
(c) Funding of Commitment. Each Lender shall fund the amount of
its Commitment Percentage of the requested Loan to Agent, for Borrower's
account, at the Payment Office by 9:00 a.m. (California time) on the specified
borrowing date in funds immediately available to Agent. Unless any applicable
condition in Article IV is not satisfied, Agent will then make the amounts
received from the Lenders available to Borrower as directed in written payment
instructions from Borrower.
(d) Frequency of Borrowings. No more than four (4) Borrowing
Notices may be given in any calendar month except with respect to Swing Line
Loans for which there shall be no such limitation.
2.4 CONVERSION AND CONTINUATION ELECTIONS.
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(a) Conversion/Continuation Notice. Each conversion or
continuation of an outstanding Base Rate Loan or LIBOR Loan shall be made upon
the irrevocable written notice (including notice via facsimile confirmed
immediately by a telephone call) of Borrower in the form of a
Conversion/Continuation Notice, as follows:
(i) Designation of Interest Rate. Borrower shall have
the right to make the following elections with respect to the conversion or
continuation of any outstanding Base Rate Loan or LIBOR Loan: (A) to convert, on
any Business Day, any Base Rate Loan, in a minimum principal amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof, into a LIBOR
Loan; or (B) to convert, on the last day of any Interest Period with respect to
a LIBOR Loan (or, on any other day of any Interest Period, upon payment of any
loss or expense incurred or sustained by any Lender with respect to the early
termination of such LIBOR Loan prior to the last day of the Interest Period as
provided in Section 3.4), such LIBOR Loan into a Base Rate Loan; or (C) to
continue, on the last day of any Interest Period with respect to a LIBOR Loan
(or, on any other day of any Interest Period, upon payment any loss or expense
incurred or sustained by any Lender with respect to the early termination of
such LIBOR Loan prior to the last day of the Interest Period as provided in
Section 3.4), such LIBOR Loan (or any part thereof in a minimum principal amount
of $1,000,000 or an integral multiple of $100,000 in excess thereof) for a
subsequent Interest Period; provided, that unless the Agent shall otherwise
agree in writing, Borrower may not elect to have any outstanding LIBOR Loan or
Base Rate Loan (or any portion thereof) continued as or converted into a LIBOR
Loan if (A) a Default or Event of Default shall exist, (B) after giving effect
to such continuation or conversion there shall be more than five different LIBOR
Loans outstanding or the outstanding principal amount of any LIBOR Loans shall
have been reduced, by payment, prepayment, or partial conversion to less than
$1,000,000.
(ii) Timing of Notice. Each Conversion/Continuation
Notice shall be submitted to and received by the Agent prior to 9:00 a.m.
(California time): (A) at least three (3) Business Days prior to the Pricing
Conversion Date of any outstanding Loan to be converted into or continued as a
LIBOR Loan; and (B) at least one (1) Business Day prior to the Pricing
Conversion Date of any outstanding Loan to be converted into or continued as a
Base Rate Loan.
(iii) Contents of Notice. The Conversion/Continuation
Notice shall set forth the following information with respect to the Loan
subject thereto: (A) the Pricing Conversion Date, which shall be a Business Day;
(B) the amount of the LIBOR Loan or Base Rate Loan to be converted or continued;
(C) whether such Loan is to be converted into/continued as a LIBOR Loan or a
Base Rate Loan; and (D) if such Loan (or
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any portion thereof) is to be converted into/continued as a LIBOR Loan, the
applicable Interest Period.
(b) Automatic Conversions. Any outstanding LIBOR Loan shall
automatically convert to a Base Rate Loan, effective on the last day of the
applicable Interest Period, if as of such date:
(i) Default; Event of Default. A Default or Event of
Default shall exist;
(ii) Failure to Provide Notice. Borrower shall have
failed to submit a Conversion/Continuation Notice for such Loan in compliance
with the terms of Section 2.4(a); or
(iii) Failure to Maintain Minimum Loans. If the
aggregate outstanding principal amount of LIBOR Loans having the same Interest
Period shall have been reduced, by payment, prepayment, or partial conversion to
be less than $1,000,000.
(c) Notice to Lenders. Upon receipt of a
Conversion/Continuation Notice conforming with the terms of Section 2.4(a), or
an automatic conversion pursuant to Section 2.4(b), the Agent shall promptly
notify each Lender thereof. All conversions and continuations shall be made pro
rata according to the respective outstanding principal amounts of the Loans
converted or continued.
2.5 OPTIONAL PREPAYMENTS; OPTIONAL REDUCTIONS OF THE REVOLVING
COMMITMENT.
(a) Subject to Section 3.4, Borrower may, at any time and from
time to time, ratably prepay Loans in whole or in part, in an aggregate minimum
amount of $1,000,000 or an integral multiple of $100,000 in excess thereof, upon
(a) at least three (3) Business Days' prior notice, if the Loans to be prepaid
are LIBOR Loans, and (b) at least one Business Day's prior notice, if the Loans
to be prepaid are Base Rate Loans. Such notice of prepayment shall specify (i)
the amount of such prepayment, (ii) the date of such prepayment, which shall be
a Business Day, and (iii) whether such prepayment is of LIBOR Loans, Base Rate
Loans, or any combination thereof. Such notice shall not thereafter be revocable
by Borrower and the Agent shall promptly notify each Lender thereof and of such
Lender's Commitment Percentage of such prepayment. If a prepayment notice is
given, the payment amount specified therein shall be due and payable on
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the date specified therein, together with accrued interest to such date on the
amount prepaid and any amounts required to be paid pursuant to Section 3.4.
(b) At any time prior to the Conversion Date, Borrower may,
upon not less than five (5) Business Days' prior notice to Agent, terminate the
aggregate Revolving Commitment of all Lenders or permanently reduce the
aggregate Revolving Commitment of all Lenders by an aggregate minimum amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof; provided that
no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date thereof,
the Outstanding Amount would exceed the amount of the Total Available Commitment
and, provided, further, that once reduced in accordance with this Section
2.5(b), the aggregate Revolving Commitment of all Lenders may not be increased.
Any reduction of the aggregate Revolving Commitment of all Lenders shall be
applied to each Lender's Revolving Commitment in accordance with such Lender's
Revolving Commitment Percentage. If the Revolving Commitments are terminated in
their entirety, all accrued commitment fees under Section 2.10(c) to, but not
including, the effective date of such termination shall be payable on the
effective date of such termination.
2.6 MANDATORY PREPAYMENTS OF LOANS; MANDATORY AMORTIZATION
AND REDUCTIONS.
(a) Total Available Commitment. If at any time the Outstanding
Amount exceeds the then applicable Total Available Commitment, Borrower shall
immediately prepay Loans (or cause Letters of Credit to be cancelled) in an
amount sufficient to reduce the Outstanding Amount to the then applicable Total
Available Commitment.
(b) Amortization. On the last Business Day of each March, June,
September and December following the Conversion Date, Borrower shall repay or
prepay Loans in an aggregate amount equal to one twelfth (1/12th) of the initial
outstanding balance of the Term Loan as of the Conversion Date.
2.7 APPLICATION OF PROCEEDS. Unless otherwise instructed by
Borrower, any prepayments pursuant to Section 2.5 or Section 2.6 made (i) on a
day other than the last day of an Interest Period for any Loan shall be applied
first to any Base Rate Loans then outstanding and then to any LIBOR Loans then
outstanding, in the inverse order of such LIBOR Loans' stated maturities and
(ii) on the last day of an Interest Period for any LIBOR Loan shall be applied
first to such maturing LIBOR Loan, then to any
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Base Rate Loans outstanding, and then to any other LIBOR Loans then outstanding,
in the inverse order of such LIBOR Loans' stated maturities.
2.8 REPAYMENT. Subject to Section 2.6, unless the Revolver has
been converted into the Term Loan, Borrower shall repay all Obligations on the
Revolver Maturity Date and, if the Revolver has been converted into the Term
Loan, shall repay all Obligations on the Term Loan Maturity Date.
2.9 INTEREST.
(a) Rates. Subject to Section 2.9(c), each Loan shall bear
interest on the outstanding principal amount thereof from the date such Loan is
made until the date such Loan becomes due, at a rate per annum equal to the LIBO
Rate or the Base Rate, as the case may be, plus the Applicable Margin.
(b) Payment Dates. Interest on each Loan shall be payable in
arrears on each Interest Payment Date and the Revolver Maturity Date or, if the
Revolver has been converted into the Term Loan, the Term Loan Maturity Date.
Interest shall also be payable on the date of any prepayment of Loans pursuant
to Section 2.5 or Section 2.6 for the portion of the Loans so prepaid. During
the existence of any Event of Default, interest shall be payable on demand.
(c) Default Rates. While any Event of Default exists or after
acceleration and during the continuation thereof, and after as well as before
any entry of judgment thereon, Borrower shall pay interest (after as well as
before judgment to the extent permitted by law) on all outstanding Obligations
at a rate per annum which is determined by increasing the Applicable Margin then
in effect by three percent (3%) per annum; provided, however, that, on and after
the expiration of the Interest Period applicable to any LIBOR Loan outstanding
on the date of occurrence of such Event of Default or acceleration, the
outstanding Obligations shall, during the continuation of such Event of Default
or after acceleration and during the continuation thereof, bear interest at a
fluctuating rate per annum equal to the Base Rate plus three percent (3%).
(d) Limitations for Applicable Law. Anything herein to the
contrary notwithstanding, payments of interest shall not be required for any
period for which interest is computed hereunder, to the extent (but only to the
extent) that contracting for or receiving such payments by the respective Lender
would be contrary to the provisions of any law applicable to such Lender
limiting the highest rate of interest which may be
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lawfully contracted for, charged or received by such Lender, and in such event
Borrower shall pay such Lender interest at the highest rate permitted by
applicable law.
2.10 FEES.
(a) Arrangement Fee. Upon the due execution and delivery of
this Agreement by Borrower, the Agent and each of the Lenders which are the
initial Lenders party to this Agreement, Borrower shall pay to BofA an
arrangement fee as set forth in a separate letter agreement between Borrower and
BofA.
(b) Administrative Agency Fees. Borrower shall pay to BofA such
administrative agency fees as are set forth in a separate letter agreement
between Borrower and BofA.
(c) Commitment Fees. Commencing on the date hereof and up to
the Conversion Date, Borrower shall pay to the Agent for the account of each
Lender ratably a commitment fee on the average daily unused portion of such
Lender's Commitment Percentage of the Aggregate Commitment (exclusive of the
average daily undrawn available amount of all Letters of Credit outstanding and
the balance of any outstanding Swing Line Loans), regardless of whether or not
such Aggregate Commitment is available to be advanced hereunder, equal to
0.1875% per annum. Such commitment fee shall accrue from the Closing Date to the
earlier of the Conversion Date or the Revolver Maturity Date and shall be due
and payable in arrears quarterly on the first Business Day of each April, July,
October and January with respect to the prior calendar quarter, commencing on
the first Business Day of April, 1998, on the Revolver Maturity Date, and on any
other date on which the Revolver is paid in full and the Commitment permanently
terminated.
(d) Conversion Fee. On the Conversion Date, Borrower shall pay
to the Agent for the account of each Lender then a party to this Agreement
ratably a conversion fee equal to 0.50% of the original balance of the Term Loan
as of the Conversion Date.
(e) Unencumbered Asset Pool Adjustment Fee. Without limiting
Borrower's obligations to pay costs and expenses under Section 2.13 and 10.4,
upon the addition of a project to the Unencumbered Asset Pool on or after the
date hereof, Borrower shall pay to the Agent for the ratable benefit of the
Lenders an Unencumbered Asset Pool Property adjustment fee in the amount of
$2,000 per property for each such
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Property added to the Unencumbered Asset Pool on or after the date hereof after
the first five (5) approved Properties.
(f) Letter of Credit Fees.
(i) Borrower shall pay to Agent for the Issuing
Lender's sole benefit an issuance fee in the amount of 0.25% of the initial face
amount of each Letter of Credit, before issuance thereof.
(ii) Borrower shall pay to Agent for the ratable
benefit of the Lenders an annual fee in an amount equal to the Applicable LC Fee
which fee shall be determined on the first Business Day of each April, July,
October and January for the prior calendar quarter.
(iii) The Applicable LC Fee will accrue when each
Letter of Credit is issued until the expiration or cancellation thereof, and
shall be due and payable in arrears quarterly on the first Business Day of each
April, July, October and January, on the Revolver Maturity Date, and on any
other date on which the Revolver is paid in full and the Revolving Commitment
permanently terminated.
(g) Accrued Fees. Borrower ratifies and confirms its agreement
to pay all accrued but unpaid fees under the Previous Credit Agreement, which
obligation shall be paid promptly upon demand by the Agent and shall not be
superseded by this Agreement.
2.11 COMPUTATION OF FEES AND INTEREST.
(a) Computation Period. All computations of fees and interest
under this Agreement shall be made on the basis of a 360-day year and actual
days elapsed. Interest and fees shall accrue during each period for which
interest or fees are computed from the first day thereof to the last day
thereof.
(b) Notice. The Agent shall, with reasonable promptness, notify
Borrower and the Lenders of each determination of a LIBO Rate, provided that no
failure to do so shall relieve Borrower of any obligation hereunder. Any change
in the interest rate on a Loan resulting from a change in the Reserve Percentage
(as defined in the definition of "LIBO Rate") shall become effective as of the
opening of business on the day on which such change becomes effective. The Agent
shall with reasonable promptness notify Borrower and the Lenders of the
effective date and the amount of each such
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change, provided that no failure to do so shall relieve Borrower of any
obligation hereunder. Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
Borrower and the Lenders in the absence of manifest error.
(c) Detail of Calculation. The Agent shall, at the request of
Borrower or any Lender, deliver to Borrower or such Lender, as the case may be,
a statement showing the quotations used by the Agent in determining any interest
rate.
2.12 PAYMENTS BY BORROWER.
(a) Terms of Payments. All payments (including prepayments) to
be made by Borrower on account of principal, interest, fees and other amounts
required hereunder shall be made without setoff or counterclaim and shall,
except as otherwise expressly provided herein, be made to the Agent for the
ratable account of the Lenders at the Payment Office, in dollars and in
immediately available funds, no later than 9:00 a.m. (California time) on the
date specified herein. The Agent shall promptly distribute to each Lender such
Lender's Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts (in like funds as
received). Any payment which is received by the Agent later than 9:00 a.m.
(California time) shall be deemed to have been received on the immediately
succeeding Business Day, and any applicable interest or fee shall continue to
accrue.
(b) Business Days. Whenever any payment under this Agreement
becomes due on a day other than a Business Day, the payment will be made on the
next succeeding Business Day, and the extension of time included in the
computation of interest or fees, as applicable; subject to the provisions set
forth in the defined term Interest Period.
(c) Reliance of Agent on Payments by Borrower. Unless the Agent
shall have received notice from Borrower prior to the date on which any payment
is due to the Lenders hereunder that Borrower will not make such payment in
full, the Agent may assume that Borrower has made such payment in full to the
Agent on such date, and the Agent may (but shall not be required to), in
reliance upon such assumption, cause to be distributed to each Lender on such
due date the amount then due such Lender. If and to the extent Borrower shall
not have made such payment in full to the Agent, each Lender shall repay to the
Agent on demand such amount distributed to such Lender, together with interest
thereon for each day from the date such amount is distributed to
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such Lender until the date such Lender repays such amount to the Agent, at the
Federal Funds Rate as in effect for each such day.
2.13 UNENCUMBERED ASSET POOL; ADDITIONS AND EXCLUSIONS OF
PROPERTIES.
(a) Unencumbered Asset Pool. As of the Closing Date, the
Unencumbered Asset Pool consists of the Initial Unencumbered Asset Pool and
each Property therein is a Class B or better apartment project. Additional
Properties, which in all cases must be Class B or better apartment projects, may
be offered by Borrower and shall be included in the Unencumbered Asset Pool only
in accordance with the following (and any other applicable terms and conditions
contained in this Agreement):
(i) Request for Total Available Commitment Increase.
Borrower from time to time may request that Qualified Properties that have been
Stabilized be included in the Unencumbered Asset Pool by written request to the
Agent.
(ii) Acceptance of Qualified Properties. The Lenders
may in their sole discretion, and after performing such due diligence as the
Lenders desire in their sole discretion, accept or reject any Qualified Property
which is Stabilized offered as an addition to the Unencumbered Asset Pool,
unless the Qualified Property is a Class B or better apartment project, in which
case the Lenders must be reasonable in their acceptance or rejection of such
Qualified Property; provided, however that if Borrower then has an Investment
Grade Credit Rating and no Default or Event of Default has occurred and is
continuing, then the Lenders shall accept any Qualified Property which is a
Class B or better apartment project and Stabilized as an addition to the
Unencumbered Asset Pool unless Agent or any Lender reasonably determines that
the Property is in violation of applicable Environmental Laws. Borrower shall at
its expense provide the Agent and the Lenders with the following due diligence
materials and information with respect to any project offered as an addition to
the Unencumbered Asset Pool, at least thirty (30) days prior to the delivery by
Borrower of a Borrowing Notice relating to the project:
(A) the Due Diligence Package;
(B) written advice relating to such lien and
judgment searches as the Agent shall have requested of Borrower with respect to
such Property;
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(C) an environmental site assessment with
respect to such Property, dated as of a recent date, prepared by a qualified
firm acceptable to the Agent, identifying any conditions or operations on such
property that are not in compliance with any Environmental Laws and any
Hazardous Materials located thereon, showing Estimated Remediation Costs, if
any, and stating that there are no conditions on such property or other items
requiring further investigation or remediation, and any follow-on or
supplemental report required by the Agent, together with the Agent's standard
form Environmental Questionnaire and Disclosure Statement completed by Borrower;
(D) if required by the Agent, a report
regarding structural, siding, engineering, seismic and code/legal compliance
(including compliance with the Americans With Disabilities Act) matters;
(E) current, certified rent roll and other
reports of the financial and operating results (for the most recent 12-month
period) and projections for the property setting forth in such format as the
Agent may require the information relevant to such property necessary to
calculate the Revolver DSC Principal Limit;
(F) if required by Agent, copies of the
standard lease form and the property management agreement and other material
operating agreements or contracts relating to the property;
(G) if required by the Agent, evidence of the
zoning, subdivision and entitlements status of the property, including, without
limitation, copies of the certificate of occupancy and any other material
permits, licenses or approvals required for the property;
(H) a copy of the purchase and sale
agreement(s) by which Borrower or such Wholly-Owned Subsidiary has acquired the
property;
(I) such other items as the Agent may
reasonably request.
Borrower acknowledges that the review of the due diligence materials described
in this Section 2.13(a)(ii) will require advance notice to the Agent and the
Lenders, and Borrower agrees to provide as much advance notice as possible to
achieve timely review of such materials.
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(iii) Conditions to Inclusion of Proposed Properties
in Unencumbered Asset Pool. Each of the following conditions must be satisfied
(or waived by the Agent in writing) prior to the Lenders' acceptance of any
Qualified Property into the Unencumbered Asset Pool:
(A) Acceptances. The Lenders shall have agreed
to accept the apartment project offered by Borrower for inclusion into the
Unencumbered Asset Pool as provided in Section 2.13(a)(ii), and Agent shall have
so notified Borrower in writing. Any such acceptance shall be subject to the
satisfaction of the other conditions set forth in this Section 2.13(a)(iii).
(B) Officers' Certificate. Borrower shall have
delivered to the Agent a certificate of two Responsible Officers substantially
in the form of Exhibit H confirming (i) that all conditions precedent set forth
in this Section 2.13(a)(iii) (other than those based solely upon the approval of
the Agent or the Lenders) have been satisfied with respect to such project; (ii)
that all financial and operating information delivered to the Agent pursuant to
Section 2.13(a)(ii), subject to audit, is complete and correct to the knowledge
of Borrower and setting forth in detail the calculation of the Revolver DSC
Principal Limit; (iii) Borrower's purchase price for the property, upon which
the Agent and the Lenders are entitled to rely; and (iv) that the Person owning
the proposed project has incurred no Indebtedness other than as permitted under
Sections 7.2(a) through (h) inclusive.
(iv) Palencia Property. The Palencia Property is
hereby added to the Unencumbered Asset Pool for purposes of compliance with
Articles V, VI and VII of the Credit Agreement, notwithstanding the Liens
encumbering such Property, which Liens shall constitute Permitted Liens;
provided, however, that it shall be excluded from the Unencumbered Asset Pool
upon the occurrence of (i) any event described in Section 2.13(b) or (ii) any
pledge, transfer, sale, exchange, remarketing or refunding of the Palencia Bond.
Any calculations in respect of Unencumbered Asset Pool Value shall not take into
account any amount whatsoever in respect of the Palencia Property, other than
the Palencia Bond Value.
(v) Captiva Club Property. Notwithstanding any
contrary provision of this Section 2.13, if the Captiva Club Property is a
Qualified Property it shall be added to the Unencumbered Asset Pool,
notwithstanding that it is not a Stabilized Property; provided, however, that if
the Captiva Club Property fails to achieve an 85% occupancy level by March 1,
1999, then thereafter it shall be excluded from the Unencumbered Asset Pool.
(b) Exclusion of Property From the Unencumbered Asset Pool. Any
Property will automatically have a value of zero for purposes of calculating the
Total
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Available Commitment and will be excluded from the Unencumbered Asset Pool if,
after the date the Property enters the Unencumbered Asset Pool,
(i) a material adverse change in the environmental
condition of the Property from that described in the materials described in
Section 2.13(a)(ii) occurs that is not adequately remediated in accordance with
all applicable Environmental Laws within thirty (30) days after demand from
Agent to Borrower, or such Property shall incur Property Liabilities in excess
of 10% of the value of such Property; and
(ii) immediately upon any sale, transfer or
encumbrance of such Property (or of the beneficial, stock, equity, membership or
partnership interest in the owner of such Property, other than to Borrower or
one of its Qualified Wholly Owned Subsidiaries; provided, however, that prior to
any transfer to any Qualified Wholly-Owned Subsidiary, Borrower shall have
received the prior written consent of the Agent, which consent shall not be
unreasonably withheld or delayed); and
(iii) at the end of the calendar quarter in which any
such Property ceases to be Stabilized, as set forth in the Compliance
Certificate for such calendar quarter.
2.14 PAYMENTS BY LENDERS TO AGENT.
(a) Reliance of Agent on Payments by the Lenders. Unless Agent
has received notice from a Lender on the Closing Date or, with respect to each
borrowing after the Closing Date, at least one Business Day prior to the date of
any proposed borrowing, that such Lender will not make available to the Agent
for the account of the Company the amount of that Lender's Commitment Percentage
of the Loan to be funded on such date, Agent may assume that each Lender has
made such amount available to the Agent on the borrowing date, and Agent may
(but shall not be required to), in reliance upon such assumption, make available
to the Company a corresponding amount on such date. If and to the extent any
Lender shall not have made its full amount available to Agent and Agent in such
circumstances has made available to the Company such amount, that Lender shall
on the next Business Day following the date of such borrowing make such amount
available to the Agent, together with interest at the Federal Funds Rate for and
determined as of each day during such period. A certificate of Agent submitted
to any Lender with respect to amounts owing under this Section 2.14(a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Lender's Loan (as of the date of the
borrowing) for all purposes of this Agreement. If such amount is not made
available to the Agent on the next Business Day following the borrowing date,
the Agent shall notify Borrower of such failure to fund and, upon demand by the
Agent, Borrower shall
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pay such amount to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Loans comprising
such borrowing, and Borrower may exercise any rights and remedies it may have
against the Lender that so failed to fund.
(b) Obligations of Agent; Lender. The failure of any Lender to
make any Loan on any date of borrowing shall not relieve any other Lender of any
obligation hereunder to make a Loan on the date of such borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any borrowing.
2.15 SHARING OF PAYMENTS, ETC. If, other than as expressly
contemplated elsewhere herein, any Lender shall obtain on account of the Loans
made by it any payment (whether voluntary, involuntary, through exercise of any
right of setoff, or otherwise) in excess of its Commitment Percentage of
payments on account of the Loans obtained by all the Lenders, such Lender shall
forthwith (a) notify the Agent of such fact, and (b) purchase from the other
Lenders such participations in the Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid thereto together with a percentage (calculated by
dividing (i) the amount of such paying Lender's required repayment by (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.15 may, to the fullest extent
permitted by law, exercise all of such purchasing Lender's rights of payment
(including the right of setoff, but subject to Section 10.9) with respect to
such participation as fully as if such purchasing Lender were the direct
creditor of Borrower in the amount of such participation. The Agent shall keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased pursuant to this Section 2.15 and shall in each case
notify the Lenders following any such purchases.
2.16 PARTICIPATION PURCHASED BY LENDERS IN THE LETTER OF
CREDIT LIABILITY.
(a) On the date of the issuance of each Letter of Credit (and
with respect to the letters of credit previously issued under the Credit
Agreement described in Recital A, on the Closing Date), the Issuing Lender shall
be deemed irrevocably and unconditionally
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to have sold and transferred to each Lender (other than the Issuing Lender) and
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from the Issuing Lender, an undivided interest and participation,
to the extent of such Lender's Commitment Percentage in effect from time to
time, in such Letter of Credit and all Letter of Credit Liability with respect
thereto. The Revolving Commitment of each Lender hereunder shall include that
Lender's share of the Letter of Credit Liability.
(b) In the event that any reimbursement obligation under this
Agreement is not paid when due to the Issuing Lender with respect to any Letter
of Credit, the Issuing Lender shall promptly notify the Agent to that effect,
and the Agent shall promptly notify each Lender (other than the Issuing Lender)
of the amount of such reimbursement obligation and each Lender other than the
Issuing Lender shall immediately pay to the Agent for distribution to the
Issuing Lender, in lawful money of the United States and in same day funds, an
amount equal to such Lender's Commitment Percentage then in effect of the amount
of such unpaid reimbursement obligation.
(c) The obligation of each Lender other than the Issuing Lender
to make payments under subsection (b) above shall be unconditional and
irrevocable and shall be made under all circumstances, including, without
limitation, following the occurrence of any Default or any Event of Default or
any of the circumstances referred to in Section 2.1(a)(ii) hereof.
(d) Prior to the occurrence of any Event of Default, the Agent
shall promptly distribute to each Lender its Commitment Percentage (or other
applicable share as expressly provided herein) of all amounts received on
account of the obligations of Borrower to repay amounts drawn under any Letter
of Credit (in like funds as received). Following the occurrence of an Event of
Default, all amounts received by the Agent on account of such obligations shall
be disbursed by the Agent as follows:
(i) First, to the payment of expenses incurred by the
Agent in the performance of its duties and enforcement of its rights under the
Loan Documents, including, without limitation, all costs and expenses of
collection, attorneys' fees, court costs and foreclosure expenses;
(ii) Then, to the Lenders, pro rata in accordance with
their respective Commitment Percentages until all outstanding reimbursement
obligations for drawings on such Letter of Credit and interest accrued thereon
have been paid in full; and
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(iii) Then, and if but only if there remains any
available amount which has not been drawn under such Letter of Credit, to the
Agent to hold as cash collateral for the obligation of Borrower to reimburse any
future drawings on such Letter of Credit, Borrower hereby granting to the Agent,
for the pro rata, pari passu benefit of the Lenders, a security interest therein
which will be of first priority and hereby irrevocably agreeing that amounts so
held may be applied from time to time in reimbursement of drawings on such
Letter of Credit as the same may occur, until the expiration of such Letter of
Credit and payment in full of all amounts due with respect to any drawing
thereon.
(e) If any payment received from Borrower on account of any
reimbursement obligation with respect to any Letter of Credit and distributed
to a Lender under Section 2.16(d) hereof is thereafter recovered from the
Issuing Lender, each Lender which received such distribution shall, upon demand
by the Agent, repay to the Issuing Lender such Lender's ratable share of the
amount so recovered together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered) of any interest of other amount
paid or payable by the Issuing Lender in respect of the total amount so
recovered.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 TAXES.
(a) Subject to Section 3.1(g), all payments by Borrower to
Agent or the Lenders under this Agreement will be made free and clear of the
following (collectively, "Taxes"), and without deduction or withholding for, any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding such taxes
(including income taxes or franchise taxes) as are imposed on or measured by the
recipient's net income by the jurisdiction under the laws of which the recipient
is organized or maintains a Lending Office, or otherwise does business, or any
political subdivision thereof.
(b) In addition, Borrower shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery,
recordation or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents (collectively, "Other Taxes").
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(c) Borrower shall indemnify and hold harmless the Agent and
each Lender for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
3.1) paid by the Agent or such Lender and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted unless and except to the extent any such Taxes or Other Taxes were
imposed solely as a result of the gross negligence or willful misconduct of
Agent or such Lender. Payment under this indemnification shall be made within
thirty (30) days from the date the Agent or any Lender makes written demand
therefor.
(d) If Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to the
Agent or any Lender, then, subject to Section 3.1(g):
(i) the sum payable shall be increased as necessary so
that, after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.1) the Agent or such Lender, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions been made;
(ii) Borrower shall make such deductions; and
(iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(e) Within 30 days after the date of any payment by Borrower of
Taxes or Other Taxes, Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Lender which is a foreign Person (i.e., a Person other
than a United States Person for United States Federal income tax purposes)
agrees that:
(i) such Lender shall, no later than the Closing Date
(or, in the case of a Lender which becomes a party hereto pursuant to Section
10.8 after the Closing Date, the date upon which such Lender becomes a party
hereto), deliver to Borrower through the Agent two (2) accurate and complete
signed originals of Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"), or two (2) accurate and complete signed originals of Internal
Revenue Service Form 1001 or any successor thereto ("Form 1001"), as
appropriate, in each case indicating that the Lender is on the date of delivery
thereof
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entitled to receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender makes any changes
necessitating a new form, such Lender shall with reasonable promptness deliver
to Borrower through the Agent in replacement for, or in addition to, the forms
previously delivered by such Lender hereunder, two (2) accurate and complete
signed originals of Form 4224, or two (2) accurate and complete signed originals
of Form 1001, as appropriate, in each case indicating that such Lender is on the
date of delivery thereof entitled to receive payments of principal, interest and
fees under this Agreement free from withholding of United States Federal income
tax;
(iii) such Lender shall, before or promptly after the
occurrence of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in or renewal of the most recent
Form 4224 or Form 1001 previously delivered by such Lender, deliver to Borrower
through the Agent two (2) accurate and complete original signed copies of Form
4224 or Form 1001, as appropriate, in replacement of the forms previously
delivered by such Lender; and
(iv) such Lender shall, promptly upon Borrower's
reasonable request to that effect, deliver to Borrower such other forms or
similar documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's tax status
for withholding purposes.
(g) Borrower shall not be required to pay any additional
amounts in respect of United States Federal or state income tax pursuant to
Section 3.1(d) to any Lender or any duly appointed assignee for the account of
any Lending Office of such Lender or assignee:
(i) if the obligation to pay such additional amounts
arises as a result of a failure by such Lender or assignee to comply with its
obligations under Section 3.1(f) in respect of such Lending Office;
(ii) if such Lender or assignee shall have delivered
to Borrower a Form 4224 in respect of such Lending Office pursuant to Section
3.1(f), and such Lender or assignee shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income tax in
respect of payments by Borrower hereunder for any reason other than a change in
United States law or regulations or in the official interpretation of such law
or regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Form 4224; or
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(iii) if such Lender or assignee shall have delivered
to Borrower a Form 1001 in respect of such Lending Office pursuant to Section
3.1(f), and such Lender or assignee shall not at any time be entitled to
reduction, partial exemption or exemption from deduction or withholding of
United States federal income tax in respect of payments by Borrower hereunder
for the account of such Lending Office for any reason other than a change in
United States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such Form
1001.
(h) If, at any time, Borrower requests any Lender to deliver
any forms or other documentation pursuant to Section 3.1(f)(iv), then Borrower
shall, on demand of such Lender, through the Agent reimburse such Lender for any
costs and expenses (including Attorney Costs) reasonably incurred by such Lender
in the preparation or delivery of such forms or other documentation.
(i) If Borrower is required to pay additional amounts to the
Agent or any Lender pursuant to Section 3.1(d), then such Lender shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by Borrower which may thereafter accrue if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender.
3.2 ILLEGALITY.
(a) If any Lender shall determine that the introduction of any
Requirement of Law or any change therein or in the interpretation or
administration thereof has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for such Lender or its
Lending Office to make LIBOR Loans, then, on notice thereof by such Lender to
Borrower through the Agent, the obligation of such Lender to make LIBOR Loans
shall be suspended until such Lender shall have notified the Agent and Borrower
that the circumstances giving rise to such determination no longer exist.
(b) If any Lender shall reasonably determine that it is
unlawful to maintain any LIBOR Loan, Borrower shall notify Lender that Borrower
shall either (i) prepay in full all LIBOR Loans of such lender then outstanding,
together with interest accrued thereon, or (ii) elect to convert in accordance
with Section 2.4 all LIBOR Loans then outstanding, after payment to such Lender
of all interest accrued thereon, into Base Rate Loans, either on the
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last day of the Interest Period thereof if such Lender may lawfully continue to
maintain such LIBOR Loans to such day, or immediately if such Lender may not
lawfully continue to maintain such LIBOR Loans, together with any amounts
required to be paid in connection therewith pursuant to Section 3.4.
(c) If the obligation of any Lender to make or maintain LIBOR
Loans has been terminated, Borrower may elect, by giving notice to such Lender
through the Agent, that all Loans which would otherwise be made by such Lender
as LIBOR Loans shall instead be made as Base Rate Loans.
3.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender shall determine that, due to either (i) the
introduction of or any change in or in the interpretation of any Requirement of
Law or (ii) the compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or of
making, funding or maintaining any LIBOR Loans hereunder, then Borrower shall be
liable for, and shall from time to time, upon written demand therefor by such
Lender (with a copy of such demand to the Agent), which demand shall set forth
the basis of such increased cost in reasonable detail, pay to the Agent for the
account of such Lender, such additional amounts as are sufficient to compensate
such Lender for such increased costs.
(b) If any Lender shall have reasonably determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance with any Capital Adequacy Regulation by such Lender (or its Lending
Office) or any corporation controlling such Lender, effects or would effect an
increase in the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy
and such Lender's desired return on capital), then, upon written demand of such
Lender (with a copy to the Agent), which demand shall set forth in reasonable
detail the basis for any such increase in required capital, Borrower shall
immediately pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender for such increase.
(c) If any Lender shall have determined that any of the events
described in Section 3.3(a) or Section 3.3(b) effects or would effect an
increase in cost or reduction of
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return resulting in additional Obligations hereunder, such Lender shall, with
reasonable promptness, notify Borrower and the Agent of such determination,
provided that no failure to do so shall relieve Borrower of any Obligation
hereunder.
3.4 FUNDING LOSSES. Borrower agrees to reimburse each Lender
for, and to hold each Lender harmless from, any loss or expense that such Lender
sustains or incurs as a consequence of:
(a) the failure of Borrower to make any required payment or
prepayment of principal of any LIBOR Loan or Base Rate Loan (including payments
to be made after any acceleration thereof);
(b) the failure of Borrower to borrow, continue or convert a
Loan after Borrower has given (or is deemed to have given) a Borrowing Notice or
a Conversion/Continuation Notice;
(c) the failure of Borrower to make any prepayment after
Borrower has given a notice in accordance with Section 2.5;
(d) the prepayment of a LIBOR Loan on a day which is not the
last day of the Interest Period with respect thereto; or
(e) the conversion of any LIBOR Loan to a Base Rate Loan on a
day that is not the last day of the Interest Period with respect thereto;
such amount or amounts to include an amount equal to the excess, if any, of (a)
the amount of interest that would have accrued on the amount not paid, not
borrowed, not prepaid, prepaid, or converted for the period from the date of
such failure to pay, failure to borrow, failure to prepay, prepayment, or
conversion to the last day of then current Interest Period (or in the case of a
failure to borrow, the Interest Period which would have commenced on the date of
such failure) at the interest rate applicable to that LIBOR Loan, over (b) the
amount of interest that would accrue to the Lender on such amount at the LIBO
Rate in effect on such date by placing such amount on deposit for a comparable
period with leading lenders in the London interbank market.
3.5 INABILITY TO DETERMINE RATES. If the Agent shall have
determined that for any reason adequate and reasonable means do not exist for
ascertaining the LIBO Rate for any requested Interest Period with respect to a
proposed LIBOR Loan or that the LIBO Rate applicable pursuant to Section 2.9(a)
for any requested Interest Period with respect to
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a proposed LIBOR Loan does not adequately and fairly reflect the cost to Lenders
of funding such Loan, the Agent will forthwith give notice of such determination
to Borrower and each Lender. Thereafter, the obligation of the Lenders to make
or maintain LIBOR Loans hereunder shall be suspended until the Agent revokes
such notice in writing. Upon receipt of such notice, Borrower may revoke any
Borrowing Notice or Conversion/Continuation Notice then submitted by it. If
Borrower does not revoke such notice, the Lenders shall make, convert or
continue the Loans, as proposed by Borrower, in the amount specified in the
applicable notice submitted by Borrower, but such Loans shall be made, converted
or continued as Base Rate Loans instead of LIBOR Loans.
3.6 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement
or compensation pursuant to this Article III shall deliver to Borrower (with a
copy to the Agent) a certificate setting forth in reasonable detail a summary of
the basis of such demand and the amount payable to such Lender hereunder.
3.7 SURVIVAL. The agreements and obligations of Borrower in
this Article III shall survive the payment of all other obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS OF EFFECTIVENESS.
(a) Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the condition that the Agent shall have received, on or
before the Closing Date, the following, in the case of agreements, documents and
other instruments, in form and substance satisfactory to the Agent in its sole
discretion, and with respect to legal opinions satisfactory to each Lender and
their respective counsel in their sole discretion and in sufficient copies for
each Lender:
(i) Credit Agreement and Notes. This Agreement
executed by Borrower, the Agent and each of the Lenders, and a Note executed by
Borrower in favor of each of the Lenders; the Notes shall be dated the Closing
Date;
(ii) REIT Guaranty Documents. The REIT Guaranty
Documents executed by the REIT and the Guarantor Subsidiaries;
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(iii) Subordination Agreements. Such subordination
agreements relating to the Intra-Company Debt and the Finance Subsidiary Loan as
the Requisite Lenders may require, in form and substance satisfactory to the
Requisite Lenders.
(iv) Resolutions; Incumbency.
(A) Certified copies of the resolutions of the
boards of directors of the REIT, Borrower, GP Corp and, if required by Agent,
the other corporations party (whether directly or as general partners) to the
Loan Documents, their execution, delivery and performance thereof, including, in
the case of GP Corp, a resolution approving and authorizing in its capacity as
the general partner of Borrower the execution, delivery and performance by
Borrower of this Agreement and the other Loan Documents to be delivered
hereunder and the borrowing of the Loans;
(B) A certificate of the Secretary or
Assistant Secretary of the REIT, Borrower, GP Corp and, if required by Agent,
the other corporations party (whether directly or as general partners) to the
Loan Documents certifying the names and true signatures of the officers of such
Persons authorized to execute and deliver, as applicable, this Agreement and all
other Loan Documents to be delivered hereunder;
(v) Organization Documents. Each of the following
documents:
(A) certified copies of the Organizational
Documents of the REIT, Borrower and, if requested by the initial Lender, any
Subsidiary thereof as in effect on the Closing Date, and, in the case of
corporate or limited liability company articles or a certificate of limited
partnership, certified as of a recent date by the secretary of state of the
state of organization; and
(B) a good-standing certificate for the REIT,
Borrower and, if requested by Agent, any Subsidiary thereof, from the secretary
of state of the state of organization of the same as of a recent date;
(vi) Certificate. A certificate signed by a duly
authorized Responsible Officer, dated as of the Closing Date, stating that:
(A) the representations and warranties of
Borrower and the REIT contained in Article V hereof and of Borrower, the REIT
and their Subsidiaries contained in the Loan Documents are true and correct on
and as of such date, as though made on and as of such date;
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(B) no Default or Event of Default exists or
would result from the initial borrowing;
(C) since June 30, 1998, no act, omission,
change or occurrence which would have a Material Adverse Effect shall have
occurred; and
(D) all conditions precedent set forth in this
Section 4.1 have been satisfied (other than those based solely on the approval
of the Agent, the Lenders, or the Requisite Lenders);
(vii) Legal Opinions. The Agent shall have received
favorable opinions of counsel to Borrower and the parties signatory to the REIT
Guaranty Documents, and addressed to the Agent and the Lenders which complies
with the opinion requirements set forth on Exhibit I in a form approved by
Agent;
(viii) Costs; Expenses; Fees. To the extent demand has
been made therefor, payment of all costs, expenses, and accrued and unpaid fees
(including legal fees and expenses) to the extent then due and payable on the
Closing Date, including any arising under Sections 2.10, 3.1, 10.4 and under the
Previous Credit Agreement; and
(ix) Intercreditor Agreement. Such intercreditor
agreement(s) relating to the Lehman Unsecured Facility as the Requisite Lenders
may require, in form and substance satisfactory to the Requisite Lenders.
(x) Insignia Acquisition. Borrower has provided Agent
with all of the material documents and agreements in connection with the
acquisition by merger of the REIT with Insignia Financial Group, Inc., pursuant
to that certain Amended and Restated Agreement and Plan of Merger by and among
the REIT, Borrower, Insignia Financial Group, Inc. and Insignia/ESG Holdings,
Inc. dated as of May 26, 1998 and the merger transaction contemplated therein
has been fully and finally consummated.
(xi) Lehman Unsecured Facility. The loan transactions
contemplated in the Lehman Unsecured Facility Documents shall have been, or
concurrently therewith shall be, consummated and Agent shall have received a
fully executed set of the Lehman Unsecured Facility Documents together with a
copy of the compliance certificate provided in connection with the closing of
the Lehman Unsecured Facility.
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(xii) Compliance Certificate. A fully executed and
complete Compliance Certificate which reflects the amount of any requested
borrowings under this Agreement and the Lehman Unsecured Facility.
(xiii) Other Documents. Such other approvals,
opinions, or documents as the Agent or the Requisite Lenders may reasonably
request.
(b) Deferred Conditions. Any agreement by the Lenders to defer
the delivery of any of the items described in Section 4.1 above because a
particular item to be delivered is not available on the Closing Date shall not
be deemed an election by the Lenders to waive the delivery of such items; to the
contrary, all parties agree that Borrower shall be responsible, and Borrower
hereby covenants, to deliver to the Lenders no later than ten (10) Business Days
after the date this Agreement becomes effective, all of the items to be
delivered by Borrower as described in Section 4.1 which were not delivered to
the Agent or the Lenders on or prior to the Closing Date.
4.2 CONDITIONS TO EACH LOAN. The obligation of each Lender to
make any Loan (including its first Loan) is subject to the satisfaction of the
following conditions precedent:
(a) Borrowing Notice. The Agent shall have received in the case
of a Loan (with, in the case of the first Loan only, a copy for each Lender) a
Borrowing Notice or Conversion/Continuation Notice in compliance with the terms
of Section 2.3 or Section 2.4, as applicable;
(b) Other Documents. The Agent shall have received such other
approvals, opinions and documents as the Agent or any Lender may reasonably
request;
(c) Total Available Commitment. The Outstanding Amount shall
not, as a result of the making, continuation or conversion of such Loan, exceed
the Total Available Commitment;
(d) Representations and Warranties. The representations and
warranties made by Borrower, the REIT and their respective Subsidiaries
contained in the Loan Documents, including Article V of this Agreement, shall be
true and correct on and as of the date such Loan is made, with the same effect
as if made on and as of such date;
(e) No Existing Default. No Default or Event of Default shall
exist or shall result from the making, continuation or conversion of such Loan;
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(f) No Material Adverse Effect. No act, omission, change,
occurrence or event which has a Material Adverse Effect shall have occurred
since the Closing Date; and
(g) No Future Advance Notice. Neither the Agent nor any Lender
shall have received from Borrower, the REIT or any Subsidiary thereof, any
notice that the REIT Guaranty Documents will no longer guaranty future Loans to
be made under this Agreement.
(h) Continuing Representations. Each Borrowing Notice and
Conversion/Continuation Notice submitted by Borrower hereunder shall constitute
a representation and warranty by Borrower hereunder, as of the date of such
notice and as of the date of the making, continuation or conversion of the
corresponding Loan, that the applicable conditions in this Section 4.2 have been
satisfied.
4.3 CONVERSION CONDITIONS. Borrower may convert the Revolver
into the Term Loan on the Revolver Maturity Date upon at least 90 days prior
written notice to Agent. Before any conversion of the Revolver is effective, the
following conditions (collectively, the "Conversion Conditions") must be
satisfied:
(a) Representations and Warranties. All representations,
warranties and certifications of Borrower, the REIT and their respective
Subsidiaries in the Loan Documents or delivered pursuant thereto shall be true
and correct on and as of the Conversion Date, before and after giving effect to
the conversion, as though made on such date;
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing as of the date such notice is given or as of the
Conversion Date or would result from such conversion;
(c) Outstanding Amount. The Outstanding Amount of the Term Loan
upon the Conversion Date shall not exceed the Total Available Commitment and the
only Letters of Credit outstanding shall be Outside Period Letters of Credit
with an expiry date not later than one year from the Revolver Maturity Date;
(d) No Material Adverse Effect. No act, omission, change,
occurrence or event which has a Material Adverse Effect shall have occurred
since the Closing Date;
(e) Certificate. Agent shall have received and approved the
Revolver to Term Certificate.
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(f) Evidence regarding Total Available Commitment. Borrower
shall have delivered to the Agent, and the Agent and the Requisite Lenders shall
have approved such rent rolls, operating statements and other financial
materials relating to the Unencumbered Asset Pool and Unencumbered Management
Entity Value as may be necessary to determine the Total Available Commitment;
and
(g) Conversion Fee. Borrower shall have paid, on or prior to
the Conversion Date, to the Agent for the ratable benefit of the Lenders then
party hereto the conversion fee set forth in Section 2.10(d) above.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Agent and each Lender
that:
5.1 EXISTENCE AND POWER. Borrower is a Delaware limited
partnership, the REIT is a Maryland corporation, and each of Borrower, the REIT
and each Management Entity and Subsidiary:
(a) Organization. Is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization;
(b) Power and Authority. Has the power and authority and all
governmental licenses, authorizations, consents and approvals to own its
Properties, to carry on its business and to execute, deliver, and perform its
obligations under, the Loan Documents to which it is a party;
(c) Due Qualification. Is duly qualified as a foreign
corporation, partnership, trust or other organization, and licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of its Properties or the conduct of its business requires such
qualification, except, with respect to Persons that are not Designated Entities,
where a failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect; and
(d) Compliance with Legal Requirements. Is in substantial
compliance with all material Requirements of Law applicable to it.
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5.2 AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by Borrower, the REIT and any of their Subsidiaries of this
Agreement, and any other Loan Document to which such Person is party, have been
duly authorized by all necessary partnership, corporate or other organizational
action, and do not and will not:
(a) Organization Documents. Contravene the terms of any of such
Person's Organizational Documents;
(b) Contractual Obligations. Conflict with, or result in any
breach or contravention of, or the creation of any Lien (other than pursuant to
Section 2.16(d)(iii)) under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its Properties are subject; or
(c) Requirements of Law. Violate any material Requirement of
Law applicable to it.
5.3 GOVERNMENTAL AUTHORIZATION. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, Borrower, the
REIT, or any of their Subsidiaries of this Agreement or any other Loan Document.
5.4 BINDING EFFECT. This Agreement and each other Loan Document
to which Borrower, the REIT, or any of their Subsidiaries is a party constitute
the legal, valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
5.5 LITIGATION. Except as disclosed in Schedule 5.5, there are
no actions, suits, proceedings, claims or disputes pending, or to the Knowledge
of Borrower, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against Borrower, the REIT, any Management
Entity, any of their Subsidiaries or any of their respective Properties, which
(a) purport to affect or pertain to this Agreement, or any other Loan Document,
or any of the transactions contemplated hereby or thereby, or (b) if determined
adversely to any such Person, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or any other
order of any nature has been issued by any court or other Governmental Authority
purporting to enjoin
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or restrain the execution, delivery and performance of this Agreement or any
other Loan Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.
5.6 TITLE TO PROPERTIES. Borrower, the REIT and each of their
Subsidiaries have good record and marketable title in fee simple to or a valid
leasehold interest in all Unencumbered Asset Pool Properties, subject to no
Liens. Borrower, the REIT and their Subsidiaries have good record and marketable
title to, or a valid leasehold interest in, all of their other Properties and
all other real property necessary or used in the ordinary conduct of their
business, taken as a whole, subject to no Liens, other than Permitted Liens,
except for such defects in title as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
5.7 SUBSIDIARIES; INTERESTS IN OTHER ENTITIES; CHANGES IN
ORGANIZATIONAL STRUCTURE. Neither Borrower, nor the REIT, nor any of their
respective Subsidiaries has any interest in any corporation, partnership or
other entity, except as disclosed in the Organizational Chart and except for
interests acquired after the date of this Agreement in compliance with Sections
7.6, 7.7 and 7.8 hereof.
5.8 FINANCIAL CONDITION. All financial statements of the REIT
delivered by Borrower or the REIT hereunder: (a) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (b) are complete, accurate and fairly
present the financial condition of the REIT as of the dates thereof and results
of operations for the periods covered thereby. All Form 10-K filings and Form
10-Q filings delivered by Borrower or the REIT show all material indebtedness
and other liabilities, direct or contingent, of Borrower and its Subsidiaries,
including liabilities for taxes, material commitments and Contingent Obligations
which are required to be disclosed therein under the SEC rules and regulations.
Since June 30, 1998, there has been no act, omission, change or event which has
had a Material Adverse Effect.
5.9 TAXES. Borrower and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed. Except as
disclosed in the SEC Report, (i) all tax returns filed by Borrower and its
Subsidiaries are complete and correct in all material respects; (ii) Borrower
and its Subsidiaries have paid all Federal and other material taxes,
assessments, fees and other governmental charges for which they are liable and
that are due and payable and have fully satisfied any taxes, assessments, fees,
and other governmental charges levied or imposed upon them or their Properties,
income or assets or otherwise due and payable, except those which are being
contested in good faith by
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appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP and no Notice of Lien has been filed or recorded; (iii)
there is no proposed tax assessment against Borrower or any of its Subsidiaries
which would, if the assessment were made, have a Material Adverse Effect; and
(iv) Borrower and its Subsidiaries have no primary, secondary or other liability
for taxes of any kind arising with respect to any individual, trust,
corporation, partnership or other entity as to which Borrower or any of its
Subsidiaries is directly or indirectly liable for taxes of any kind incurred by
such individual or entity either as a transferee, or pursuant to Treasury
Regulations section 1.1502-6, or pursuant to any other Requirement of Law.
Neither Borrower nor any of its Affiliates is (nor has it ever been) a party to
any tax sharing agreement other than as disclosed on Schedule 5.9.
5.10 ERISA COMPLIANCE.
(a) Schedule 5.10 lists all Plans and separately identifies
Plans intended to be Qualified Plans and Multiemployer Plans. All written
descriptions thereof provided to the Agent and the Lenders are true and complete
in all material respects.
(b) Each Qualified Plan, and to the best knowledge of Borrower
each Multiemployer Plan, is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state law,
including all requirements under the Code or ERISA for filing reports (which are
true and correct in all material respects as of the date filed), and benefits
have been paid in accordance with the provisions of the Plan.
(c) Each Qualified Plan and, and to the best knowledge of
Borrower, Multiemployer Plan has been determined by the IRS to qualify under
Section 401 of the Code, and the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the Code, and to
the best knowledge of Borrower nothing has occurred which would cause the loss
of such qualification or tax-exempt status.
(d) Except as disclosed in Schedule 5.10, neither Borrower nor
any ERISA Affiliate has any outstanding liability under Title IV of ERISA with
respect to any Qualified Plan maintained or sponsored by Borrower or any ERISA
Affiliate, nor to the best knowledge of Borrower, with respect to any
Multiemployer Plan to which Borrower or any ERISA Affiliate contributes or is
obligated to contribute.
(e) Except as disclosed in Schedule 5.10, no Qualified Plan
subject to Title IV of ERISA, and to the best knowledge of Borrower, no
Multiemployer Plan has any Unfunded Pension Liability.
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(f) Except as disclosed in Schedule 5.10, no member of the
Controlled Group has ever represented, promised or contracted (whether in oral
or written form) to any current or former employee (either individually or to
employees as a group) that such current or former employee(s) would be provided,
at any cost to any member of the Controlled Group, with life insurance or
employee welfare plan benefits (within the meaning of section 3(1) of ERISA)
following retirement or termination of employment. To the extent that any member
of the Controlled Group has made any such representation, promise or contract,
such member has expressly reserved the right to amend or terminate such life
insurance or employee welfare plan benefits with respect to claims not yet
incurred.
(g) Members of the Controlled Group have complied in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the Code.
(h) Except as disclosed in Schedule 5.10, no ERISA Event has
occurred or is reasonably expected to occur with respect to any Qualified Plan,
or, to the best knowledge of Borrower, any Multiemployer Plan.
(i) There are no pending or, to the Knowledge of Borrower,
threatened claims, actions or lawsuits, other than routine claims for benefits
in the usual and ordinary course, asserted or instituted against (i) any Plan
maintained or sponsored by Borrower or its assets, (ii) any member of the
Controlled Group with respect to any Qualified Plan, or (iii) any fiduciary with
respect to any Plan for which Borrower may be directly or indirectly liable,
through indemnification obligations or otherwise.
(j) Except as disclosed in Schedule 5.10, neither Borrower nor
any ERISA Affiliate has incurred nor reasonably expects to incur (i) any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan or (ii) any liability under
Title IV of ERISA (other than premiums due and not delinquent under Section 4007
of ERISA) with respect to a Plan.
(k) Except as disclosed in Schedule 5.10, neither Borrower nor
any ERISA Affiliate has transferred any Unfunded Pension Liability to a Person
other than Borrower or an ERISA Affiliate or otherwise engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
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(l) No member of the Controlled Group has engaged, directly or
indirectly, in a non-exempt prohibited transaction (as defined in Section 4975
of the Code or Section 406 of ERISA) in connection with any Plan which could
reasonably be expected to have a Material Adverse Effect.
5.11 ENVIRONMENTAL MATTERS.
(a) Environmental Laws. Except as disclosed in Schedule 5.11 or
in the SEC Report, the operations and Properties of Borrower, the REIT, the
Management Entities and their Subsidiaries comply in all respects with all
Environmental Laws, except such non-compliance affecting (i) any Property in the
Unencumbered Asset Pool as would not (if enforced in accordance with
Environmental Laws) result in liability in excess of 10% of the value of such
Property or (ii) all other Properties as would not result in liability which
could reasonably be expected to result in a Material Adverse Effect.
(b) Environmental Permits. Except as described in Schedule 5.11
or in the SEC Report, Borrower, the REIT, the Management Entities and their
Subsidiaries have obtained and maintained all material licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits"). All such Environmental Permits are in good standing,
and each such Person is in compliance with all terms and conditions thereof,
except, with respect to Persons that are not Designated Entities, where the
failure to be in compliance could reasonably be expected to have a Material
Adverse Effect.
(c) Orders. Except as specifically disclosed in Schedule 5.11
or in the SEC Report, there are no outstanding written orders from or agreements
with any Governmental Authority nor any judicial or docketed administrative
proceedings respecting any Environmental Law, Environmental Claim or Hazardous
Material to which Borrower, the REIT, any Management Entity, any of their
Subsidiaries, or any of such Person's Properties or operations, is subject with
respect to any Unencumbered Asset Pool Property, or with respect to any other
Property that could reasonably be expected to have a Material Adverse Effect.
(d) Hazardous Materials. Except as disclosed in Schedule 5.11
or in the SEC Report, there are no Hazardous Materials or other conditions or
circumstances existing with respect to any Property, or arising from operations
prior to the Closing Date, that would reasonably be expected to give rise to
Environmental Claims for any such condition, circumstance or Property with
respect to any Unencumbered Asset Pool Property, or with respect to any other
Property, that could reasonably be expected to have a Material Adverse
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Effect. In addition, (i) there are not located on the Properties underground
storage tanks (x) that are not properly registered or permitted under applicable
Environmental Laws, or (y) that are leaking or emitting Hazardous Materials
whether on-or off-site, and (ii) Borrower, the REIT, the Management Entities and
their Subsidiaries have notified all of their employees of the existence, if
any, of any health hazard arising from the conditions of their employment to the
extent required under any Environmental Laws and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws, in each
case with respect to any Unencumbered Asset Pool Property, or with respect to
any other Property that could reasonably be expected to have a Material Adverse
Effect.
5.12 REGULATED ENTITIES. None of Borrower, the REIT, any
Management Entity, or any of their Subsidiaries is (a) an "investment company"
within the meaning of the Investment Company Act of 1940; or (b) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.13 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the
Loans are intended to be and shall be used solely for the purposes set forth in
and permitted by Sections 2.1(b) and Section 6.10, and are intended to be and
shall be used in compliance with Section 7.12.
5.14 REIT AND TAX STATUS; STOCK EXCHANGE LISTING. The REIT
currently has REIT Status and has maintained REIT Status on a continuous basis
since its formation. Borrower is not an association taxable as a corporation
under the Code. The shares of common Stock of the REIT are listed on the NYSE.
5.15 INSURANCE. Borrower, the REIT, the Management Entities,
their Subsidiaries and the Properties are insured with financially sound and
reputable insurance companies, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar Properties in localities where Borrower and the
Management Entities operate.
5.16 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by Borrower. Neither Borrower, nor
the REIT, nor any Management Entity, nor any of their Subsidiaries is in default
under or with respect to any Contractual Obligation in any respect which,
individually or together with all such other defaults, would reasonably be
expected to have a Material Adverse Effect.
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5.17 FULL DISCLOSURE. None of the representations or warranties
made by Borrower, the REIT, the Management Entity or any Subsidiary in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in each exhibit, report, statement or
certificate furnished by or on behalf of any such Person in connection with the
Loan Documents, contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading. There is no fact, to the Knowledge of Borrower, which materially and
adversely affects the business, operations, properties, assets or condition
(financial or otherwise) of Borrower, the REIT, the Management Entities, and the
Subsidiaries, taken as a whole, that has not been disclosed herein, in the SEC
Reports, or in other documents, certificates and statements furnished to the
Agent and each Lender hereunder or pursuant hereto. The copies of all documents
delivered to the Agent and/or the Lenders from time to time in connection with
this Agreement are and shall be true and complete copies of the originals
thereof and have not been or shall not be amended except as disclosed to the
Agent and/or the Lenders, as applicable.
5.18 NOT A "FOREIGN PERSON." Neither Borrower nor any
Wholly-Owned Subsidiary which owns a Property in the Unencumbered Asset Pool is
a "foreign person" within the meaning of Section 1445(f)(3) of the Code.
5.19 DEFECTS. Except as disclosed to and approved in writing by
the Requisite Lenders, to the Knowledge of Borrower, there exist no material
defects that would make any Property in the Unencumbered Asset Pool unsuitable
for the present or contemplated use thereof. Except as disclosed to and approved
in writing by the Requisite Lenders, to the Knowledge of Borrower, there are no
abnormal hazards, including but not limited to earth movement or slippage,
affecting any Property in the Unencumbered Asset Pool.
5.20 PROPERTY DOCUMENTS. Prior to including any Property in the
Unencumbered Asset Pool, Borrower has delivered to the Agent, copies of all
easement agreements, reciprocal easement agreements, management agreements,
service contracts, and other agreements, instruments and documents and all
amendments thereof (whether or not recorded) which affect in any material
respect such Property (except apartment leases).
5.21 CONDEMNATION. No condemnation proceeding involving any
Property in the Unencumbered Asset Pool or any portion thereof or parking
facility used in connection therewith has been commenced or, to the Knowledge of
Borrower, is contemplated by any Governmental Authority, nor has any portion of
any Property in the Unencumbered Asset
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Pool or any parking facility used in connection therewith been damaged due to
fire or other casualty.
5.22 VIOLATION OF LAWS; PERMITS. None of the Properties in the
Unencumbered Asset Pool are being operated in violation of (a) any Requirements
of Law or (b) any building permits, restrictions of record, or any agreement
affecting any such property or part thereof, or (c) any judgment, decree or
order applicable to such property. To the Knowledge of Borrower, all
governmental permits (including, without limitation, building permits and
certificates of occupancy) necessary under applicable Requirements of Law to
lawfully construct, own, lease, occupy, use and operate each Property in the
Unencumbered Asset Pool and the improvements thereon, including, but not limited
to, all applicable zoning laws, ordinances and regulations, have been obtained.
5.23 UTILITIES. Each Property in the Unencumbered Asset Pool
has adequate water, gas, telephone, electrical supply, storm and sanitary
sewerage facilities and means of access to and from public streets or highways.
5.24 LEASES. Except for apartment leases and other Permitted
Exceptions, there are no leases affecting any Property in the Unencumbered Asset
Pool. No rent has been collected more than one month in advance under any such
apartment lease for a Property in the Unencumbered Asset Pool other than in the
Ordinary Course of Business. No such lease or any interest therein is subject to
any present assignment or pledge. All rent due to date under each such lease has
been collected in the Ordinary Course of Business and no concession has been
granted to any lessee in the form of a waiver, release, reduction, discount or
other alteration of rent due or to become due, other than in the Ordinary Course
of Business. The interest of the lessee under each such lease is as lessee only,
with no options to purchase or rights of first refusal.
5.25 YEAR 2000 COMPLIANCE. Borrower has conducted a
comprehensive review and assessment of its computers systems and applications
and made inquiry of Borrower's key suppliers and vendors with respect to the
so-called "year 2000 problem" (the risk that computer applications may not be
able to properly perform date-sensitive functions after December 31, 1999) and,
based on that review and inquiry, Borrower does not believe that the "year 2000
problem" will result in a material adverse change in the ability of Borrower and
its Subsidiaries to manage and operate their properties and pay and perform
their obligations hereunder.
5.26 NON-GUARANTOR SUBSIDIARIES. All of the Wholly-Owned
Subsidiaries of the REIT, other than those listed on Schedule 5.26 and their
non-corporate Subsidiaries
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(each a "Non-Guarantor Subsidiary," and collectively, the "Non-Guarantor
Subsidiaries"), are Guarantor Subsidiaries. The Non-Guarantor Subsidiaries
collectively have a net worth, calculated in accordance with GAAP (which may be
less than fair market value), that is less than $10,000,000. The Borrower
currently expects that the assets of the Non-Guarantor Subsidiaries shall be
transferred from the REIT to the Borrower as soon as practicable, consistent
with relevant legal requirements, with prudent business practices and with
Contractual Obligations, and that the Non-Guarantor Subsidiaries may be
dissolved and liquidated.
5.27 PALENCIA BOND. Ambassador X, L.P. is the sole owner of the
Palencia Bond. The Palencia Bond is not encumbered by any Liens other than the
Lien of that certain Pledge and Security Agreement dated as of April 16, 1998 by
and between Ambassador X, L.P. and Borrower, as in effect on the date hereof.
Notwithstanding Section 5.6, the Liens on the Palencia Property existing on the
date hereof constitute Permitted Liens.
5.28 LEHMAN UNSECURED FACILITY. The Lehman Unsecured Facility
Documents are true, correct and complete in all respects and represent all of
the agreements and documents entered into by the parties in connection with the
Lehman Unsecured Facility. The Lehman Unsecured Facility Documents have not been
amended, modified or otherwise altered.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other obligation shall remain
unpaid or unsatisfied, unless the Requisite Lenders waive compliance in writing:
6.1 FINANCIAL INFORMATION. Borrower shall deliver to the Agent
and to each Lender, in form and detail satisfactory to the Agent and the
Lenders:
(a) Annual Financial Statements. As soon as available, but not
later than ninety (90) days after the end of each fiscal year, a copy of the
audited consolidated balance sheet of the REIT as of the end of such year and
the related consolidated statements of operations, stockholders' equity (where
applicable) and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous year, including the REIT's SEC
Form 10-K for such period, and accompanied by the unqualified opinion of a
nationally-recognized independent public accounting firm stating that such
consolidated
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financial statements present fairly the financial position for the periods
indicated, in conformity with GAAP, and applied on a basis consistent with prior
years;
(b) Quarterly Financial Statements. As soon as available, but
not later than forty-five (45) days after the end of each of the first three (3)
fiscal quarters of each year, a copy of the unaudited consolidated balance sheet
of the REIT as of the end of such quarter and the related consolidated
statements of operations, stockholders' equity (where applicable) and cash flows
for the period commencing on the first day and ending on the last day of such
quarter, including the REIT's SEC Form 10-Q for such period, and accompanied by
a certificate signed by at least two (2) Responsible Officers stating that such
financial statements are complete and correct and present fairly the financial
position for the periods indicated, in conformity with GAAP for interim
financial statements, and applied on a basis consistent with prior quarters;
(c) Quarterly Operating Statements for Unencumbered Asset Pool;
Management Entities. As soon as available, but not later than forty-five (45)
days after the end of each calendar quarter, a quarterly operating statement for
each Property in the Unencumbered Asset Pool and a consolidated quarterly
operating statement for each Management Entity including, without limitation, a
schedule of all property management agreements generating Owned or Controlled
Management Company EBITDA and (ii) any other property management generating
EBITDA and the revenues generated by each such contract (in a format and with
such detail as the Agent reasonably requires and, unless otherwise required by
Agent, in a format and with such detail as previously delivered to Agent by
Borrower); and
(d) Borrower Plans and Projections. Not less than ninety (90)
days after the beginning of each fiscal year, copies of (A) Borrower's business
plan for the current and the succeeding two (2) fiscal years, (B) Borrower's
annual budgets (including capital expenditure budgets) and projections for each
Property in the Unencumbered Asset Pool; and (C) Borrower's financial
projections for the current and the succeeding two (2) fiscal years, as prepared
by Borrower's Chief Financial Officer and in a format and with such detail as
the Agent may require.
6.2 CERTIFICATES; OTHER INFORMATION. Borrower shall furnish to
the Agent with sufficient copies for each Lender:
(a) Accounting Certificates. Concurrently with the delivery of
the financial statements referred to in Section 6.1(a), a certificate of the
independent certified public accountants reporting on such financial statements
stating that, in making the
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examination necessary therefor, no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) Officers' Certificates. Concurrently with the delivery of
the financial statements referred to in Sections 6.1(a) and 6.1(b) above, a
Compliance Certificate (i) stating that, to the best of such officers'
knowledge, each of Borrower, the REIT and their respective Subsidiaries, during
such period, has observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
officers have no knowledge of any Default or Event of Default except as
specified in such certificate; (ii) showing in detail the calculations
supporting such statement for such period in respect of the covenants in Section
7.9 and 7.16; (iii) showing in detail the calculation of the Total Available
Commitments for such period on an asset-by-asset basis (including appropriate
detail with respect to Unencumbered Management Entity Value);
(c) Periodic Reports and Filings; Press Releases. Promptly
after the same are sent or released, copies of all reports, proxy statements and
financial statements which the REIT sends to its shareholders and copies of all
press releases made by Borrower and the REIT, promptly after the same are filed,
copies of all financial statements and regular, periodical or special reports
which the REIT may make to, or file with, the SEC or any successor or similar
Governmental Authority and promptly after the same are received, copies of any
reports prepared by analysts for or with respect to Borrower or the REIT,
(d) Accountants' Reports. Promptly after the same are received,
copies of all reports which the independent certified public accountants of
Borrower or the REIT deliver to Borrower or the REIT; and
(e) Other Information. Promptly, such additional financial and
other information as the Agent may from time to time reasonably request.
(f) Organizational Chart. Upon the request of Agent, any
subsequent revisions to the Organizational Chart.
(g) Lehman Compliance Certificates. Concurrently with the
delivery of all compliance certificates, calculations in respect of borrowing
base or borrowing availability under the Lehman Unsecured Facility, true,
correct and complete copies thereof together with all accompanying submissions.
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(h) Supplemental Compliance Certificates. As a condition
precedent to any mandatory prepayment of the Lehman Unsecured Facility from the
proceeds of any sale of any Property or other asset of the Borrower, REIT or any
Subsidiary, a Compliance Certificate (i) certifying that each of Borrower, the
REIT and their respective Subsidiaries, prior to and after giving effect to any
such mandatory prepayment, has observed or performed all of its covenants and
other agreements, and satisfied every condition contained in this Agreement and
the other Loan Documents to be observed, performed or satisfied by it, and that
no Default or Event of Default has occurred and is continuing; (ii) showing in
detail satisfactory to Agent the calculations supporting such present and
prospective statements for such period in respect of the covenants in Section
7.9 and 7.16; (iii) showing in detail satisfactory to Agent the calculation of
the Total Available Commitments for such period on an asset-by-asset basis
(including appropriate detail with respect to Unencumbered Management Entity
Value) and the support for the Owned or Controlled Management Company EBITDA;
6.3 NOTICES. Borrower shall promptly (and in no event later
than ten (10) days after Borrower has reason to know of the same) notify the
Agent and each Lender of:
(a) Default; Event of Default. The occurrence of any Default or
Event of Default, and of the occurrence or existence of any event or
circumstance that is likely to become a Default or Event of Default. Each notice
under this Section 6.3(a) shall describe with particularity the clause or
provision of this Agreement or other Loan Documents that have been breached or
violated.
(b) Litigation. The commencement of, or any material
development in, any litigation, arbitration or proceeding affecting Borrower,
the REIT, any Management Entity or any Subsidiary (i) in which the amount of
damages claimed is $2,000,000 or more, (ii) in which injunctive or similar
relief is sought and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect, (iii) in which the relief sought is
an injunction or other stay of the performance of any Loan Document or (iv)
required to be reported to the SEC pursuant to the Exchange Act;
(c) Environmental Matters. (i) Any and all material
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against Borrower, the REIT, any Management
Entity or any of their Subsidiaries or any of their Properties pursuant to any
Environmental Laws, (ii) all other material Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the Properties of Borrower, the REIT, any Management Entity or any
of their Subsidiaries that could reasonably be anticipated to cause such
Properties (or any
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portion thereof) to be subject to any material restrictions on ownership,
occupancy, transferability or use under any Environmental Laws; provided,
however, that with respect to any Property which is not in the Unencumbered
Asset Pool, only to the extent any of the foregoing could reasonably be expected
to have a Material Adverse Effect.
(d) ERISA. The occurrence of any of the following ERISA events
affecting Borrower or any member of its Controlled Group, together with a copy
of any notice with respect to such event that may be required to be filed with
any Governmental Authority and any notice delivered by a Governmental Authority
to Borrower or any member of its Controlled Group with respect to such event:
(i) an ERISA Event where the aggregate liability is
likely to exceed $1,000,000;
(ii) the adoption of any new Plan that is subject to
Title IV of ERISA or Section 412 of the Code by any member of the Controlled
Group;
(iii) the adoption of any amendment to a Plan that is
subject to Title IV of ERISA or Section 412 of the Code, if such amendment
results in a material increase in benefits or unfunded liabilities; or
(iv) the commencement of contributions by any member
of the Controlled Group to any Plan that is subject to Title IV of ERISA or
Section 412 of the Code;
(e) Material Adverse Effects. The occurrence of any act,
omission, change or event which has a Material Adverse Effect subsequent to the
date of the most recent audited financial statements of Borrower and the REIT
delivered to the Agent pursuant to Section 6.1(a);
(f) Excluded Properties. The occurrence of any event or
circumstance that causes, or is likely to cause, any Qualified Property to be
excluded from the Unencumbered Asset Pool pursuant to Section 2.13(b) above;
(g) Material Transactions or Occurrences. The consummation of
any material Investment or Disposition, of any material issuance of Stock of the
REIT (other than upon the tender of any Units for redemption or upon the
conversion of any shares of the REIT's Class B Common Stock into shares of the
REIT's Class A Common Stock) or Units, of any incurrence of material
Indebtedness or of any other material transaction entered into,
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by Borrower, the REIT, any Management Entity or any of their Subsidiaries; and
change in any executive officer of the REIT;
(h) Failure to Qualify as a REIT. The failure of the REIT to
maintain REIT Status or of any existing Subsidiary of the REIT to maintain its
status as a qualified REIT subsidiary under the Code, if and to the extent
required by applicable law;
(i) Accounting Changes. Any material change in Borrower's or
the REIT's accounting policies or financial reporting practices;
- - (j) Legal Compliance. Any material notice received from any
Govern mental Authority asserting that any Property in the Unencumbered Asset
Pool is not in compliance with any Requirements of Law; and
(k) Cross-Default. Any notice received by Borrower, the REIT,
any Management Entity or any of their Subsidiaries of any default under any
Indebtedness or Guaranty Obligation described in Section 8.1(e). Each notice
pursuant to this section shall be accompanied by a written statement, signed by
at least two (2) Responsible Officers of Borrower or the REIT, setting forth
details of the occurrence referred to therein and the provisions of this
Agreement affected, and stating what action Borrower or the REIT proposes to
take with respect thereto.
6.4 PRESERVATION OF EXISTENCE, ETC. Borrower shall, and shall
cause the REIT, the Management Entities and each of their Subsidiaries to, (a)
preserve and maintain in full force and effect its partnership, corporate or
other organizational existence and good standing under the laws of its state or
jurisdiction of organization, and (b) preserve and maintain in full force and
effect all rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its business; provided, however,
with respect to any Person that is not a Designated Entity, then only to the
extent that the failure to do any of the foregoing could reasonably be expected
to have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY. Borrower shall maintain, and shall
cause the REIT, the Management Entities and each of their Subsidiaries to
maintain, and preserve all of their Properties, including Properties in the
Unencumbered Asset Pool, in good working order and condition in accordance with
Borrower's past practices, ordinary wear and tear excepted.
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6.6 INSURANCE. Borrower shall maintain, and shall cause the
REIT, the Management Entities and each of their Subsidiaries to maintain, with
financially sound and reputable independent insurers, insurance with respect to
their Properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or a similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons; including liability insurance specifically insuring
Borrower and its Wholly Owned Subsidiaries from any tort, legal or other
liability resulting from their participation as general partners in partnerships
which own Property; workers' compensation insurance, public liability and
property and casualty insurance (which amount shall not be reduced in the
absence of 30 days' prior notice to the Agent). Upon the request of the Agent,
Borrower shall furnish such Agent, with sufficient copies for each Lender, at
reasonable intervals (but not more than the twice per calendar year) a
certificate signed by at least two (2) Responsible Officers of Borrower (and, if
requested by such Agent, any insurance broker of Borrower or the REIT) setting
forth the nature and extent of all insurance maintained by Borrower, the REIT,
the Management Entities and each of their Subsidiaries in accordance with this
Section 6.6 (and which, in the case of a certificate of a broker, was placed
through such broker).
6.7 PAYMENT OF OBLIGATIONS. Borrower shall, and shall cause the
REIT, the Management Entities and each of their Subsidiaries to, pay and
discharge as the same shall become due and payable and otherwise comply with,
all their respective obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
Properties, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by Borrower or such Person, (b) all lawful claims which, if unpaid, would by law
become a Lien upon its Properties, including Properties constituting the
Unencumbered Asset Pool, (c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, and (d) payment and/or performance of all
Contractual Obligations (including any payments of preferred stock dividends);
provided, however, with respect to any Person that is not a Designated Entity,
then only to the extent the failure to do any of the foregoing could reasonably
be expected to have a Material Adverse Effect.
6.8 COMPLIANCE WITH LAWS. Borrower shall comply, and shall
cause the REIT, the Management Entities and each of their Subsidiaries to
comply, in all material respects, with all Requirements of Law of any
Governmental Authority having jurisdiction over it or its business, including,
without limitation, all securities laws and regulations.
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6.9 ENVIRONMENTAL LAWS. Borrower shall, and shall cause the
REIT, the Management Entities and each of their Subsidiaries to, conduct its
operations and keep and maintain its Properties in compliance in all material
respects with all Environmental Laws. Upon the written request of the Agent or
any Lender, Borrower shall submit, and cause the REIT, the Management Entities
and each of their Subsidiaries to submit, to the Agent and the Lenders, at
Borrower's sole cost and expense, at reasonable intervals, a report providing an
update of the status of any environmental, health or safety compliance, hazard
or liability issue identified in any notice or report required pursuant to
Section 6.3(c) that could, individually or in the aggregate, result in liability
in excess of (a) $1,000,000 with respect to any Property in the Unencumbered
Asset Pool or (b) $10,000,000 with respect to any other Properties.
6.10 USE OF PROCEEDS. Borrower shall use the proceeds of the
Revolving Loans solely in accordance with Section 2.1(b) above.
6.11 MAINTENANCE OF REIT STATUS; STOCK EXCHANGE LISTING.
Borrower shall cause the REIT at all times to maintain its REIT Status and to
maintain its common Stock listing on the NYSE, the American Stock Exchange, or
Nasdaq Stock Exchange.
6.12 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. Borrower
shall maintain, and shall cause the REIT, the Management Entities and each of
their Subsidiaries to maintain, proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the Properties
and business of Borrower, the REIT, the Management Entities and each of their
Subsidiaries. Borrower shall permit, and shall cause the REIT, the Management
Entities and each of their Subsidiaries to permit, representatives of the Agent
or any Lender to visit and inspect any of their respective Properties, to
conduct audits of the Unencumbered Asset Pool, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of Borrower and at any time during normal business hours and as
often as may be reasonably desired, upon no less than forty-eight (48) hours
advance notice to Borrower; provided, however, when an Event of Default exists,
the Agent or any Lender may visit and inspect at the expense of Borrower such
Properties at any time during business hours and without advance notice.
6.13 FURTHER ASSURANCES.
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(a) Full Disclosure. Borrower will ensure that all other
written information, exhibits and reports furnished to any Agent or Lender by
Borrower, the REIT, any Management Entity or any of their Subsidiaries do not
contain any untrue statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and the Lenders and correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgment or recordation thereof.
(b) Further Acts. Promptly upon request by the Agent or the
Requisite Lenders, Borrower shall (and shall cause the REIT, each Management
Entity and each of their Subsidiaries to) do, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register, any and all such
further acts, deeds, conveyances, security agreements, mortgages, deeds of
trust, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments that the Agent or such Lenders,
as the case may be, may reasonably require from time to time in order (i) to
carry out more effectively the purposes of this Agreement or any other Loan
Document, and (ii) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Agent and Lenders the rights granted or now or
hereafter intended to be granted under any Loan Document, or any other document
executed in connection herewith or therewith.
(c) Additional Guaranties. Promptly upon the formation by the
REIT of any Wholly-Owned Subsidiary of the REIT which is a qualified REIT
subsidiary under the Code, the REIT shall cause such Wholly-Owned Subsidiary to
deliver to the Agent for the ratable benefit of the Lenders a guaranty of the
Obligations in the form attached hereto as Exhibit F1; provided, however, solely
with respect to any such Wholly-Owned Subsidiary that does not own a Property in
the Unencumbered Asset Pool, such guaranty will not be required only if such
Wholly-Owned Subsidiary is prohibited from issuing such guaranty under its
then-current financing arrangements. Prior to or concurrently with any EBITDA of
a Management Entity being included in Unencumbered Management Entity Value,
Borrower shall cause each such Management Entity to deliver to the Agent for the
ratable benefit of the Lenders a guaranty of the Obligations in the form
attached hereto as Exhibit F2.
6.14 COMMUNICATION WITH ACCOUNTANTS. While any Event of Default
is continuing, Borrower authorizes the Agent and any Lender to communicate
directly with Borrower's independent accountants and authorizes such accountants
to disclose to such Persons any and all financial statements and other
information of any kind, including the
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substance of any oral information or conversation that such accountants may have
with respect to the business, financial condition and other affairs of Borrower.
6.15 SOLVENCY. Borrower shall at all times be, and shall cause
the REIT, each Management Entity and each of their Subsidiaries to be, Solvent.
6.16 COVENANTS RELATING TO UNENCUMBERED ASSET POOL PROPERTIES.
Borrower hereby agrees as follows:
(a) Maintenance. Borrower shall maintain each Unencumbered
Asset Pool Property in good order and condition in accordance with Borrower's
past practices.
(b) Leases. Borrower shall not enter into any lease of any
Unencumbered Asset Pool Property other than apartment leases or other ordinary
course leases consistent with past practice and having terms of less than one
(1) year on market terms. Borrower shall deliver to the Agent a copy of the
standard lease forms utilized for the Unencumbered Asset Pool Properties from
time to time.
(c) Material Agreements. Borrower shall obtain the prior
written approval of the Agent and the Requisite Lenders prior to entering into
any reciprocal easement or similar agreement, ground lease or any other material
agreement affecting any Unencumbered Asset Pool Property.
(d) Management Contracts. Borrower shall obtain and shall cause
its Affiliates to obtain the prior written approval of the Agent and the
Requisite Lenders prior to entering into any property management agreement with
a Person other than Borrower, one of the Management Entities, or any of their
Subsidiaries, or replacing the property manager for any Unencumbered Asset Pool
Property with a Person other than Borrower, one of the Management Entities, or
any of their Subsidiaries. Borrower shall cause all property management
contracts affecting Unencumbered Asset Pool Properties to permit termination of
the manager (unless such manager is one of the Management Entities) by the owner
within thirty days' written notice, without penalty and Borrower shall not
permit the management fee payable under any such property management agreement
to exceed four percent (4%) of gross receipts from such property per fiscal
year.
(e) Construction. Borrower shall obtain the prior written
approval of the Agent and the Requisite Lenders prior to entering into any major
construction or renovation affecting a Unencumbered Asset Pool Property and
shall discharge all mechanic's liens resulting from any such construction or
renovation.
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(f) Liens. Borrower shall keep each Unencumbered Asset Pool
Property at all times free and clear of all Liens (unless such Liens are bonded
and thereby released of record in a manner satisfactory to the Agent), except
for Permitted Exceptions or other matters approved by the Agent and the
Requisite Lenders.
(g) Refinance of Ambassador Pool Portfolio. Borrower shall
refinance not less than 50% of the aggregate outstanding Indebtedness in respect
of the Ambassador Pool Portfolio on or before May 1, 1999. The refinancing of
the applicable Properties shall comply with all of the applicable covenants and
provisions of the Credit Agreement and, in all events, such Properties
(including cashflow therefrom) shall not be cross-collateralized to or
cross-defaulted to each other or to any other Properties in connection with all
or any portion of such refinancing.
ARTICLE VII
NEGATIVE COVENANTS
Borrower hereby covenants and agrees that, so long as any
Lender shall have any Commitment hereunder, or any Loan or other Obligation
shall remain unpaid or unsatisfied, unless the Requisite Lenders waive
compliance in writing:
7.1 LIENS. Neither Borrower, nor the REIT, nor any Management
Entity, nor any of their Subsidiaries shall, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its Property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) Existing Liens. Liens on the Borrower's Properties or its
Subsidiaries securing Indebtedness described in Schedule 7.2 or any renewal,
extension or refinancing thereof permitted under Section 7.2(a) below;
(b) Certain Liens. Liens created under any Loan Documents;
(c) Tax Liens. Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without penalty,
or to the extent that non-payment thereof is permitted by Section 6.7, provided
that no Notice of Lien has been filed or recorded;
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(d) Bankers Liens. Liens arising solely by virtue of any
statutory or common-law provision relating to banker's liens, rights of setoff
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit account
is not a dedicated cash collateral account and is not subject to restrictions
against access by the depositor in excess of those set forth by regulations
promulgated by the Federal Reserve Board, and (ii) such deposit account is not
intended by the depositor to provide collateral to the depository institution;
(e) Other Statutory Liens. Carriers', warehousemen's,
mechanics', landlords', materialmen's, repairmen's or other similar Liens
arising in the Ordinary Course of Business, against Properties other than the
Unencumbered Asset Pool Properties, which are not delinquent or remain payable
without penalty or which are being contested in good faith and by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the Property subject thereto;
(f) Employment-Related Liens. Liens (other than any Lien
imposed by ERISA) consisting of pledges or deposits required in the Ordinary
Course of Business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(g) Judgment Liens. Liens against Properties other than the
Unencumbered Asset Pool Properties consisting of judgment or judicial
attachment liens, provided that the enforcement of such Liens is effectively
stayed or bonded;
(h) Easements, Etc. Liens against Properties other than the
Unencumbered Asset Pool Properties consisting of easements, rights-of-way,
restrictions and other similar title exceptions incurred in the Ordinary Course
of Business which do not in any case materially detract from the value of the
Property subject thereto or interfere with the ordinary conduct of the
businesses of Borrower, the REIT and the Subsidiaries; and
(i) Liens Securing Financing. Liens securing Indebtedness
permitted under Section 7.2(f) or (g) on real and personal properties not a part
of the Unencumbered Asset Pool and not constituting ownership interests in
Borrower or any of the Subsidiaries of Borrower or the REIT;
(j) Palencia Bond. Any Lien pursuant to the Palencia Bond
Documents existing on the date hereof, together with the Lien created and
evidenced by the Pledge and Security Agreement dated as of April 14, 1998 and as
in effect on the date hereof by and between Borrower, as lender, and Ambassador
X, L.P., as pledgor; and
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(k) Lehman Unsecured Facility. Any Lien pursuant to the Lehman
Unsecured Facility Documents; provided, however, that in all events any such
Liens if any, shall expressly provide that they are and will remain pari passu
with any and all Liens pursuant to this Agreement and the other Loan Documents.
Except with respect to specific property encumbered to secure
payment of particular Permitted Indebtedness neither Borrower nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its Properties included in the Unencumbered
Asset Pool or any stock or assets, whether now owned or hereafter acquired;
provided however, that the foregoing prohibition shall not apply to such
provisions in the Lehman Unsecured Facility Documents and in connection with any
Senior Unsecured Notes. Except as provided in this Agreement or with respect to
particular Permitted Indebtedness and acquisition agreements, Borrower will not,
and will not permit any of its Subsidiaries to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any such Subsidiary to (A) pay dividends or make any
other distributions on any of such Subsidiary's capital stock owned by Borrower
or any other Subsidiary of Borrower, (B) repay or prepay any Indebtedness owed
by such Subsidiary to Borrower or any other Subsidiary of Borrower, (C) make
loans or advances to Borrower or any other Subsidiary of Borrower, or (D)
transfer any of its property or assets to Borrower or any other Subsidiary of
Borrower; provided however, that the foregoing prohibition shall not apply to
such provisions in the Lehman Unsecured Facility Documents and in connection
with any Senior Unsecured Notes.
7.2 INDEBTEDNESS. Neither Borrower, nor the REIT, nor any
Management Entity, nor any of their Subsidiaries shall create, incur, assume,
suffer to exist, or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness whether Unsecured Debt or otherwise, except
the following ("Permitted Indebtedness"):
(a) Existing or Contemplated Indebtedness. Indebtedness of
Borrower and its Subsidiaries outstanding on the Closing Date and described in
Schedule 7.2 and Schedule 7.2(a), including the Indebtedness evidenced by the
FNMA/Washington Mortgage Facility Documents, the NHP/Lehman Financing and the
Lehman Unsecured Facility or any renewal, refinancing or extension thereof;
provided, however, that any such renewal, refinancing or extension (i) shall not
increase the principal balance thereof or otherwise materially modify the terms
thereof, (ii) shall not cause the financial or other material covenants, when
taken as a whole, to be significantly more restrictive than (A) those existing
in the applicable credit documentation prior to such renewal, refinancing or
extension or (B) the comparable covenants in this Agreement, and (iii) other
than with respect to Indebtedness evidenced by
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the FNMA/Washington Mortgage Facility Documents, shall have a maturity or
weighted-average life not prior to the maturity of Borrower's obligations under
this Agreement;
(b) Certain Indebtedness. Indebtedness incurred under this
Agreement;
(c) Accounts Payable. Accounts payable to trade creditors for
goods and services and current operating liabilities (not the result of the
borrowing of money) incurred in the Ordinary Course of Business in accordance
with customary terms and paid within the specified time, unless contested in
good faith by appropriate proceedings and reserved for in accordance with GAAP;
(d) Contingent Obligations. Indebtedness consisting of
Contingent Obligations permitted by Section 7.3;
(e) Intra-Company Debt. Intra-Company Debt, provided that, if
the Borrower, the REIT, or a Guarantor Subsidiary is the obligor thereunder, the
obligor thereof shall have subordinated the repayment of such Intra-Company Debt
to the repayment of the Obligations pursuant to a subordination agreement in
form and substance approved by the Requisite Lenders;
(f) Additional Indebtedness. Indebtedness of Borrower or a
Subsidiary of Borrower that does not own any Unencumbered Asset Pool Property
for borrowed money owed to a non-Affiliate of Borrower which is not Unsecured
Debt, is not otherwise Recourse to any Borrower or any Subsidiary of Borrower
and is otherwise on such terms and in such amount that, upon incurring such
Indebtedness, Borrower will be in compliance with the terms of Section 7.16
below;
(g) REIT Indebtedness. Indebtedness of the REIT which is on
such terms and in such amount that, upon the incurrence of such Indebtedness,
Borrower will be in compliance with the terms of Section 7.16 below;
(h) Other Unsecured Indebtedness. Unsecured Debt of Borrower,
the REIT and any of their Subsidiaries (other than the Management Entities)
which may include offerings of senior unsecured notes; provided, however, that
any Unsecured Debt must, (i) in all events, be on terms and conditions which are
not more restrictive or stringent than those contained in this Agreement and the
other Loan Documents (including financial covenants) and (ii) in no events have
a maturity date prior to the maturity of the Borrower's
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obligations under this Agreement and (iii) be in an aggregate principal amount
which does not exceed the Maximum Unsecured Indebtedness; and
(i) Palencia Bond. The Indebtedness evidenced by the Palencia
Bond and the obligation to repay the Palencia Bonds.
Nothing contained in this Section 7.2 shall be deemed to excuse any lack of
compliance by Borrower, the REIT, or any Subsidiary with the terms of Section
7.16 below.
7.3 CONTINGENT OBLIGATIONS. Neither Borrower, nor the REIT, nor
any of their Subsidiaries shall create, incur, assume or suffer to exist any
Contingent Obligations except Contingent Obligations set forth in Schedule 7.3
and the following :
(a) Ordinary Course Endorsements. Endorsements for
collection or deposit in the Ordinary Course of Business;
(b) Rate Contracts. Unsecured Rate Contracts entered into
by Borrower with respect to variable rate Indebtedness permitted hereunder;
(c) Letter of Credit Reimbursement Obligations. Reimbursement
obligations of Borrower or of Subsidiaries that do not own Unencumbered Asset
Pool Properties under letters of credit provided that such obligations are on
such terms and in such amounts that, upon incurring such obligations and
assuming that all conditions for drawing on such letters of credit have been
complied with, Borrower will be in compliance with the terms of Section 7.16
below;
(d) Exceptions to Nonrecourse Guaranties. Contingent
Obligations of the REIT, Borrower and their Subsidiaries consisting of
"exceptions to nonrecourse" guaranties of nonrecourse Indebtedness otherwise
permitted under Section 7.2 or of other Indebtedness permitted under Section
7.2;
(e) Permitted Contingent Obligations. Contingent
Obligations specifically described on Schedule 7.3; and
(f) Guaranty of Permitted Indebtedness. Any Contingent
Obligation in respect of Unsecured Debt which constitutes Permitted
Indebtedness.
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7.4 LEASE OBLIGATIONS. Neither Borrower, nor the REIT, nor any
of their Subsidiaries shall create or suffer to exist any obligations for the
payment of rent for any Property under a lease or agreement to lease that is not
a Capital Lease, except for:
(a) Existing Leases. Leases in existence on the Closing
Date (and any renewal, extension or refinancing thereof); or
(b) Ordinary Course Leases. Leases entered into after the
Closing Date in the Ordinary Course of Business and at market rates and terms.
7.5 DISPOSITION OF PROPERTIES. Neither Borrower, nor the REIT,
nor any of their Subsidiaries shall, directly or indirectly:
(a) make any Disposition of any Unencumbered Asset Pool
Property or enter into any agreement to do so, provided, however, so long as no
Default or Event of Default is then continuing, Borrower may (i) sell or
refinance a Property in the Unencumbered Asset Pool or (ii) make a Disposition
of the Palencia Bonds, in either case by paying to the Agent for distribution to
the Lenders an amount equal to the amount which would be required to be paid to
the Lenders so that the sum of the Outstanding Amount plus the amount
outstanding under the Lehman Unsecured Facility immediately after such
Disposition would not exceed the Total Available Commitment (calculated without
including the Property so sold or refinanced or the Palencia Bond Value, as
applicable);
(b) make any Disposition of its interest in any Management
Entity, or enter into any agreement to do so; or
(c) make any Disposition of any Unencumbered Asset Pool
Property, or enter into any agreement to do so, unless in the case of this
clause (c) such Disposition is at fair market value, and at the time of the
Disposition no Event of Default exists.
7.6 CONSOLIDATIONS AND MERGERS. Neither Borrower, nor the REIT,
nor any of their Subsidiaries shall merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its Properties (whether
now owned or hereafter acquired) to or in favor of, any Person, except as
follows:
(a) Subsidiaries of Borrower or of the REIT may merge or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of any of their Properties (whether now
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owned or hereafter acquired) to or in favor of, Borrower or another Subsidiary
of Borrower or of the REIT;
(b) Subsidiaries of the REIT may merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of any of
their Properties (whether now owned or hereafter acquired) to or in favor of the
REIT; and
(c) Borrower, the REIT or any Subsidiary may merge, or
consolidate with another Person provided that no Default or Event of Default has
occurred and is continuing and each of the following conditions are satisfied:
(i) at the inception of the transaction, Borrower, the REIT or Subsidiary are
intended to be and will be the surviving Person after the consummation of the
contemplated transaction; (ii) to the best of Borrower's knowledge, prior to the
consummation of the transaction, the transaction will not cause Borrower to be
in breach of the representations and warranties of this Agreement and the other
Loan Documents; (iii) the transaction will not cause Borrower to be in breach of
the covenants of this Agreement and the other Loan Documents, including
financial covenants after the consummation thereof; and (iv) Borrower provides
Agent with a pro-forma Compliance Certificate which demonstrates that after the
consummation of the proposed transaction the Borrower will be in compliance with
the financial covenants of this Agreement.
Notwithstanding the foregoing, no Subsidiary shall merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its Properties (whether now owned or hereafter acquired) to or in favor
of another Subsidiary if such transaction would result in a violation of any
covenant in this Agreement.
7.7 LIQUIDATIONS; MATERIAL ORGANIZATION CHANGES; NEW
SUBSIDIARIES.
(a) Neither Borrower, nor the REIT, nor any Designated Entity
or Guarantor Subsidiary, shall liquidate, wind-up or dissolve, or amend its
Organizational Documents in any respect which is, in the opinion of the
Requisite Lenders, materially adverse to the interests of the Lenders. Without
limiting the foregoing, under no circumstances (i) shall the Organizational
Documents of the REIT and Borrower be changed so as to eliminate the
transferability of Units of Borrower for common Stock in the REIT on a
one-to-one basis (subject to adjustment as provided in the Organizational
Documents of the Borrower) or (ii) shall the Organizational Documents of a
Qualified Management Entity be changed so as to eliminate or reduce any
obligation to pay preferred stock dividends, without the prior consent of the
Requisite Lenders.
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(b) Neither the REIT nor any Subsidiary shall issue any
preferred Stock; provided however, the REIT or any Subsidiary may issue
preferred Stock provided that: (i) if such Stock has any mandatory redemption
feature or has a redemption feature which is exercisable at the option of the
holder thereof, then the face amount of such Stock shall be deemed Unsecured
Debt for all purposes of this Agreement; and (ii) any distributions with respect
thereto shall comply with the provisions of this Agreement (including, without
limitation, Section 7.9).
(c) No Subsidiary shall own or acquire an Unencumbered Asset
Pool Property unless such Subsidiary is a Wholly-Owned Subsidiary in which
Borrower owns at least a 98% interest (either directly or indirectly) and in
which the REIT owns not more than a 2% interest (either directly or indirectly
other than through its interest in Borrower and its Subsidiaries) and such
Subsidiary shall have delivered a guaranty of the Obligations to the Agent in
form and substance acceptable to the Agent.
(d) In no event shall Borrower cause or permit any change in
the organizational structure of Borrower, the REIT or any of their respective
Subsidiaries from that which is reflected in the Organizational Chart which is,
in the reasonable opinion of the Requisite Lenders, adverse to any Designated
Entity, without the prior written consent of the Lenders, except for mergers
permitted under Section 7.6, and changes in the equity structure of Subsidiaries
and the formation or acquisition of Subsidiaries in accordance with this Section
7.7 and Section 7.8.
7.8 INVESTMENTS. Neither Borrower, nor the REIT, nor any
Management Entity, nor any of their Subsidiaries shall directly or indirectly
own or acquire any assets or make any Investments (or incur any Contractual
Obligation or enter into any letter of intent to make any Investments) other
than:
(i) cash and Cash Equivalents and the Palencia
Bond;
(ii) multi-family apartment projects in fee simple or
leasehold interests therein or partnership, joint venture interests or other
Investments (including capital contributions or partner loans) in Persons that
own multi-family apartment projects;
(iii) ownership interests in Management Entities,
provided in each case the same are engaged in managing multi-family apartment
projects;
(iv) Indebtedness listed on Schedule 7.2;
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(v) other assets not described elsewhere in this
Section 7.8, including any Investments consisting of Intra-Company Debt not
otherwise permitted herein, provided that the aggregate Carrying Value of such
interests shall not at any time exceed fifteen percent (15%) of the Carrying
Value of the total assets owned by Borrower, the REIT, and their Subsidiaries.
7.9 RESTRICTED PAYMENTS AND DEMANDS.
(a) Neither Borrower nor the REIT shall declare or make, or
permit any of their respective Subsidiaries to declare or make, any distribution
of any Properties, including cash, rights, obligations, or partnership interests
or units, on account of any partnership interests, Units or Stock, or purchase,
redeem or otherwise acquire for value any of its partnership interests, Units or
Stock, now or hereafter outstanding to any Person other than Borrower, the REIT
or a Wholly-Owned Subsidiary (all of the foregoing, collectively,
"distributions"), except (a) for the exchange of common Stock of the REIT for
Units; (b) that if no Default or Event of Default exists under Section 8.1(a) or
under Section 8.1(c) as a result of a breach of Section 7.16, the REIT, Borrower
and all such Subsidiaries may make distributions during any twelve (12) month
period in an amount in the aggregate which does not exceed the greater of 80% of
Funds From Operations for such period or such amount as may be necessary to
maintain REIT Status.
(b) Under no circumstances shall the REIT or Borrower (i)
permit any Subsidiary to make a demand under any Intra-Company Debt which is
payable upon demand at any time after the Conversion Date, or (ii) permit any
payment to be made with respect to Intra-Company Debt while any Event of Default
is continuing.
7.10 TRANSACTIONS WITH AFFILIATES. Neither Borrower, nor the
REIT, nor any Management Entity, nor any of their Subsidiaries shall enter into
any transaction with any Affiliate of Borrower or of any such Person (other than
a Wholly-Owned Subsidiary or a Management Entity), except (a) as expressly
permitted by this Agreement or (b) in the Ordinary Course of Business and
pursuant to the reasonable requirements of the business of Borrower or such
Person; in each case (a) and (b), upon fair and reasonable terms no less
favorable to such Person than would obtain in a comparable arm's-length
transaction with a Person not such an Affiliate.
7.11 SPECIAL COVENANTS RELATING TO THE REIT. The REIT shall
not, nor shall Borrower cause or permit the REIT to:
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(a) Make any disposition of or encumber, pledge or hypothecate,
whether directly or indirectly, all or any portion of its interest in Borrower
or any Subsidiary which owns an Unencumbered Asset Pool Property at any time or
any rights to distributions or dividends therefrom other than to Borrower or a
Wholly-Owned Subsidiary;
(b) At any time and for any reason, fail to own, either
directly or through one or more Wholly-Owned Subsidiaries of the REIT, more than
50% of the aggregate outstanding partnership interests in Borrower;
(c) Fail for any reason whatsoever, whether voluntarily or
involuntarily, either directly or through one or more Wholly-Owned Subsidiaries
of the REIT, to be the sole general partner of Borrower at any time;
(d) Use Net Issuance Proceeds for any purpose other than to
make capital contributions to GP Corp and LP Corp immediately upon the receipt
thereof by the REIT for immediate contribution thereof to Borrower;
(e) Cease to have its Common Stock listed on the NYSE, the
American Stock Exchange, or the Nasdaq Stock Exchange; or
(f) Cease to have REIT Status or fail to comply with the
requirements of the Code relating to qualified REIT subsidiaries in respect of
its ownership of any Subsidiary of the REIT to the extent required under the
Code and applicable law.
7.12 USE OF PROCEEDS. Borrower shall not use any portion of the
Loan proceeds, directly or indirectly, (a) to purchase or carry Margin Stock,
(b) to repay or otherwise refinance indebtedness of Borrower or others incurred
to purchase or carry Margin Stock, (c) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (d) for any purpose other than those
permitted by Section 6.10, or (e) to finance all or any portion of the costs of
acquiring any Person in a transaction which is considered "hostile" by Agent or
generally prevailing investment banking standards.
7.13 TAXATION OF BORROWER. Borrower shall at all times be taxed
as a partnership under the Code and not as an association taxable as a
corporation.
7.14 ERISA. Borrower shall not and shall not permit the REIT,
or any of their Subsidiaries to, (a) terminate any Plan subject to Title IV of
ERISA so as to result in any material (in the opinion of the Agent) liability to
Borrower or any ERISA Affiliate (i.e., $1,000,000 or more), (b) permit to exist
any ERISA Event or any other event or condition,
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which presents the risk of a material (in the opinion of the Agent) liability to
any member of the Controlled Group, (c) make a complete or partial withdrawal
(within the meaning of ERISA Section 4201 ) from any Multiemployer Plan so as to
result in any material (in the opinion of the Agent) liability to Borrower or
any ERISA Affiliate, (d) enter into any new Plan or modify any existing Plan so
as to increase its obligations thereunder which could result in any material (in
the opinion of the Agent) liability to any member of the Controlled Group, or
(e) permit the present value of all nonforfeitable accrued benefits under any
Plan (using the actuarial assumptions utilized by the PBGC upon termination of a
Plan) materially (in the opinion of the Agent) to exceed the fair market value
of Plan assets allocable to such benefits, all determined as of the most recent
valuation date for each such Plan.
7.15 EBITDA OF MANAGEMENT COMPANIES. Borrower shall not permit
Owned or Controlled Management Company EBITDA to be less than 80% of all EBITDA
attributable to Management Company activity.
7.16 FINANCIAL COVENANTS.
(a) Borrower shall not permit the Net Worth of the REIT and its
Subsidiaries on a consolidated basis to be less at any time than an amount equal
to (X) $1,464,721,000 plus (Y) 75% of the Net Issuance Proceeds of all issuances
of Stock or Units after the Closing Date.
(b) Borrower shall not permit the ratio of Consolidated Total
Indebtedness to Gross Asset Value to exceed 0.55-to-1.00 at any time.
(c) Borrower shall not permit the Consolidated
EBITDA-to-Interest Ratio computed for any fiscal quarter or year to be less than
2.25-to-1.00.
(d) Borrower shall not permit the Consolidated EBITDA-to-Fixed
Charges Ratio computed for any fiscal quarter or year occurring during any
period set forth below to be less than the following ratios during the
applicable periods:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
APPLICABLE PERIOD RATIO
- --------------------------------------------------------------------------------
<S> <C> <C>
Closing Date to and including December 31, 1998 1.60 to 1.00
- --------------------------------------------------------------------------------
January 1, 1999 to and including June 30, 1999 1.70 to 1.00
- --------------------------------------------------------------------------------
July 1, 1999 and thereafter 1.80 to 1.00
- --------------------------------------------------------------------------------
</TABLE>
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(e) Borrower shall not permit the Unencumbered Borrowing Pool
Cashflow to Unsecured Interest Ratio computed for any fiscal quarter or year to
be less than 2.50-to-1.00.
(f) Borrower shall not permit Total Obligations at any time to
exceed an amount equal to 65% of Gross Asset Value.
7.17 ACCOUNTING CHANGES. Neither Borrower nor the REIT shall
make any significant change in accounting treatment or reporting practices,
except as required by GAAP, or change its fiscal year.
7.18 TRANSFERS OF NON-OWNED INTERESTS IN THE MANAGEMENT
ENTITIES. In no event shall all or any portion of the interests in the
Management Entities or any rights therein that are not held directly or
indirectly by Borrower be sold, transferred, encumbered, hypothecated,
voluntarily or involuntarily, without the prior written consent of the Requisite
Lenders, except for transfers by Executive Officers resulting from the death or
disability of any such Executive Officer or occurring after such Executive
Officer is no longer an employee of Borrower, the REIT, or any of their
Subsidiaries.
7.19 CHANGES TO LEHMAN UNSECURED FACILITY DOCUMENTS. Borrower
shall not modify, amend or alter any of the Lehman Unsecured Facility Documents
or permit any modifications, amendments or alterations to any of the Lehman
Unsecured Facility Documents or permit the waiver or change of any of the terms
and conditions of the Lehman Unsecured Facility Documents, in each case, without
the prior consent of the Requisite Lenders.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 EVENT OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. Borrower, the REIT, or any Subsidiary shall
fail to pay, (i) when and as required to be paid herein, any amount of principal
of any Loan, or (ii) within five days after the same shall become due, any
amount of interest on any Loan or any fee or other amount payable hereunder or
pursuant to any other Loan Document; or
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(b) Representation or Warranty. Any representation or warranty
by Borrower, the REIT, any Management Entity or any Subsidiary made or deemed
made herein, in any Loan Document, or in any certificate, document or financial
or other statement by Borrower, the REIT, any Management Entity or any
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any Loan Document, shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. Borrower, the REIT, any of their
Subsidiaries or any Management Entity shall fail to perform or observe any term,
covenant or agreement contained in Section 6.6, Section 6.10, Section 6.11
and/or in Article VII; or
(d) Other Defaults. Borrower, the REIT, any of their
Subsidiaries or any Management Entity shall fail to perform or observe any other
term or covenant contained in this Agreement or any Loan Document, and such
default shall continue uncured for a period of 20 days after the earlier of (i)
the date upon which a Responsible Officer knew or received written notice of
such failure or (ii) the date upon which written notice thereof is given to
Borrower by Agent or any Lender; or
(e) Cross-Default.
(i) Borrower, the REIT, any of their Subsidiaries
or any Management Entity or shall fail, after any applicable cure period:
(A) to make any payment when due (and
which failure is continuing) in respect of any Indebtedness or Guaranty
Obligation (1) which is Recourse to the assets of Borrower or any Designated
Entity, or (2) (X) which is Recourse to the assets of any Person which is not a
Designated Entity or (Y) which is not Recourse to the assets of Borrower or its
Subsidiaries and, in either case, which exceeds $15,000,000 individually or in
the aggregate (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) (other than a payment with respect to Intra-Company Debt
where the obligee has not commenced pursuing its remedies); or
(B) to perform or observe any other
condition or covenant, or any other event shall occur or condition exist, under
any agreement or instrument relating to any such Indebtedness or Guaranty
Obligation, if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness
to be declared
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to be due and payable prior to its stated maturity, or such Guaranty Obligation
to become payable or cash collateral in respect thereof to be demanded; or
(C) to perform or observe any condition
or covenant of the Intra-Company Loan Subordination Agreement;
(D) to perform or observe any condition
or covenant under any Indebtedness which is Recourse to the assets of any
Designated Entity within any applicable cure or grace periods, or
(E) to perform or observe any other
condition or covenant, or any other event shall occur or condition exist, under
any agreement or instrument relating to the Lehman Unsecured Facility, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be
due and payable prior to its stated maturity; or
(It is being understood that, for purposes of clauses (A) and (B) above, no
failure by the REIT to pay or perform any obligation with respect to an
Intra-Company Loan shall be deemed a breach or default hereunder if such failure
to pay or perform is in compliance with the Intra-Company Loan Subordination
Agreement); or
(ii) an "Event of Default" as such term is defined in
the FNMA/Washington Mortgage Facility Documents occurs and is continuing; or
(f) Bankruptcy or Insolvency. Borrower, the REIT, any of their
Subsidiaries or any Management Entity shall (i) become insolvent, or generally
fail to pay, or admit in writing its inability to pay, its debts as they become
due, subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily cease to conduct its business in the ordinary
course; (iii) commence any Insolvency Proceeding with respect to itself; or (iv)
take any action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any Insolvency Proceeding
shall be commenced or filed against Borrower, the REIT, any of their
Subsidiaries, or any Management Entity or any writ, judgment, warrant of
attachment, execution or similar process, shall be issued or levied against a
substantial part of such Person's Properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within
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sixty (60) days after commencement, filing or levy; (ii) Borrower, the REIT or
any of their Subsidiaries shall admit the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii)
Borrower, the REIT, any of their Subsidiaries or any Management Entity shall
acquiesce in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other similar Person
for itself or a substantial portion of its Property or business; or
(h) ERISA. (i) A member of the Controlled Group shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under a
Multiemployer Plan; (ii) Borrower or an ERISA Affiliate shall fail to satisfy
its contribution requirements under Section 412(c)(11) of the Code, whether or
not it has sought a waiver under Section 412(d) of the Code; (iii) in the case
of an ERISA Event involving the withdrawal from a Plan of Borrower or any ERISA
Affiliate which is a "substantial employer" (as defined in Section 4001 (a)(2)
or Section 4062(e) of ERISA), the withdrawing employer's proportionate share of
that Plan's Unfunded Pension Liabilities is more than $5,000,000; (iv) in the
case of an ERISA Event involving the complete or partial withdrawal of Borrower
or an ERISA Affiliate from a Multiemployer Plan, the withdrawing employer has
incurred a withdrawal liability in an aggregate amount exceeding $5,000,000; (v)
in the case of an ERISA Event not described in clause (iii) or (iv), the
Unfunded Pension Liabilities of the relevant Plan or Plans exceed $5,000,000;
(vi) a Plan that is intended to be qualified under Section 401 (a) of the Code
shall lose its qualification, and the loss can reasonably be expected to impose
on members of the Controlled Group liability (for additional taxes, to Plan
participants, or otherwise) in the aggregate amount of $5,000,000 or more; (vii)
the commencement or increase of contributions to, or the adoption of or the
amendment of a Plan by, a member of the Controlled Group shall result in a net
increase in unfunded liabilities to the Controlled Group in excess of
$5,000,000; (viii) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction and the initial tax or
additional tax under section 4975 of the Code relating thereto might reasonably
be expected to exceed $5,000,000; (ix) a violation of section 404 or 405 of
ERISA or the exclusive benefit rule under section 401 (a) of the Code if such
violation might reasonably be expected to expose a member or members of the
Controlled Group to monetary liability in excess of $5,000,000; (x) any member
of the Controlled Group is assessed a tax under section 4980B of the Code in
excess of $5,000,000; or (xi) the occurrence of any combination of events listed
in clauses (iii) through (x) that involves a potential liability, net increase
in aggregate Unfunded Pension Liabilities, unfunded liabilities, or any
combination thereof, in excess of $5,000,000.
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(i) Monetary Judgments. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against Borrower, the REIT, any of
their Subsidiaries or any Management Entity involving individually or in the
aggregate a liability (not fully covered by insurance) of $5,000,000 or more,
and the same shall remain unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof; or
(j) Non-monetary Judgments. Any non-monetary judgment, order or
decree shall be rendered against Borrower, the REIT, any of their Subsidiaries
or any Management Entity that has or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of ten (10) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(k) Guaranty Documents.
(i) Any provision of any Guaranty Document shall
for any reason (other than pursuant to the terms thereof) cease to be valid and
binding on or enforceable against Borrower or other Person party thereto (except
to the extent that the same results solely from an act or omission of the Agent
or the Lenders), or Borrower or such Person shall so state in writing or bring
an action to limit its obligations or liabilities thereunder; or
(ii) Any party to a Guaranty Document (other than the
Agent or Lenders) shall fail to perform or observe any term or covenant
contained in such Guaranty Document, and such failure shall continue uncured for
a period of 20 days after the earlier of (A) the date upon which a Responsible
Officer of Borrower knew or received written notice of such failure or (B) the
date upon which written notice thereof is given to Borrower by the Agent, or any
other event or condition shall occur or exist under a Guaranty Document that
constitutes an "Event of Default" as defined therein; or
(iii) The REIT or any Guarantor Subsidiary shall fail
to perform or observe (A) any term, covenant or agreement in Section 1, 9, or
12(a) through (g), inclusive, of the guaranty in the REIT Guaranty Documents or
incorporated from Sections 6.6, 6.10 and 6.11 and Article VII of the Credit
Agreement into Section 12(h) of such guaranty, or (B) any other term, covenant
or agreement in the REIT Guaranty Documents, and such failure shall continue
unremedied for a period of 20 days after the earlier of (I) the date upon which
a Responsible Officer knew or received written notice of such failure or (II)
the date upon which written notice thereof is given to Borrower or the REIT (or
any Subsidiary party thereto) by the Agent; or the REIT Guaranty Documents shall
for any reason be partially (including with respect to future advances) or
wholly revoked or invalidated, or otherwise
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cease to be in full force and effect; or the REIT (or any Subsidiary party
thereto) shall contest in any manner the validity or enforceability thereof or
deny that the REIT (or any Subsidiary party thereto) has any further liability
or obligation thereunder.
(l) Material Adverse Effect. There shall occur any act,
omission, change, occurrence or event which has a Material Adverse Effect; or
(m) Ownership. (i) Any Person, or a group of related Persons,
shall acquire (a) beneficial ownership of in excess of 50% of the outstanding
voting Stock of the REIT or other voting interest having ordinary voting power
to elect a majority of the directors, managers or trustees of the REIT
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
or (b) all or substantially all of the Properties of Borrower or the REIT, or
(ii) a majority of the Board of Directors of the REIT, at any time, shall be
composed of Persons other than (a) Persons who were members of the Board of
Directors on the date of this Agreement, or (b) Persons who subsequently become
members of the Board of Directors and who either (x) are appointed or
recommended for election with the affirmative vote of a majority of the
directors in office as of the date of this Agreement or (y) are appointed or
recommended for election with the affirmative vote of a majority of the Board of
Directors of the REIT then in office; or
(n) Material Licenses or Permits. Borrower, the REIT, or any of
their Subsidiaries shall lose, through suspension, termination, impoundment,
revocation, failure to renew or otherwise, any license or permit material, in
each case, to the Designated Entities, taken as a whole; or
(o) Environmental Liens. Borrower, the REIT, or any of their
Subsidiaries or any of their respective properties shall become subject to one
or more Liens for costs or damages in excess of (i) with respect to any Property
in the Unencumbered Asset Pool, $1,000,000 individually or in the aggregate or
(ii) with respect to any other Property, $5,000,000, individually or in the
aggregate, and in each case under any Environmental Law and such Liens shall
remain in place for thirty (30) days after the creation thereof, or any
Unencumbered Asset Pool Property shall become subject to one or more Liens in
any amount under any Environmental Law and such Liens shall remain in place for
thirty (30) days after the creation thereof; or
(p) Intra-Company Debt. If at any time after the incurrence of
any Intra-Company Debt, Borrower, the REIT, or any Wholly-Owned Subsidiary is
not the holder of such Intra-Company Debt; or if any modification or amendment
with respect to the
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payment terms of any Intra-Company Debt is entered into without the prior
written consent of the Requisite Lenders; or if, at any time after the
Conversion Date, the holder of any Intra-Company Debt demands any payment
whatsoever thereon; or
(q) Preferred Stock. If at any time there shall occur any event
which would permit the holders of any class of preferred Stock of the REIT to
elect more than one director to the Board of Directors of the REIT.
8.2 REMEDIES.
If any Event of Default occurs, the Agent shall, at the request
of, or may, with the consent of, the Requisite Lenders:
(a) Termination of Commitment. Declare the Commitment of
each Lender to make Loans to be terminated, whereupon such Commitments shall
forthwith be terminated;
(b) Acceleration. Declare (i) the unpaid principal amount of
all outstanding Loans and all interest accrued and unpaid thereon, and (ii) all
other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived;
(c) Obligations under Letters of Credit. Declare forthwith due
and payable all obligations of Borrower with respect to the Letters of Credit,
including, without limitation, all unreimbursed drawings under the Letters of
Credit and the aggregate contingent obligation of Borrower to reimburse Agent
and Lenders for the available amount which could at any time be drawn under the
Letters of Credit (even if such amount is not then able to be drawn pursuant to
the terms of the Letters of Credit), without presentment, demand, protest,
notice of dishonor, notice of intent to demand or to accelerate payment, notice
of acceleration or notice of any other kind, all of which are hereby expressly
waived, and upon such declaration the same shall become immediately due and
payable, and Agent (upon the request or with the consent of Requisite Lenders)
may enforce all obligations of Borrower with respect to the Letters of Credit to
Agent and the Lenders under the Loan Documents and exercise any and all other
remedies granted to Agent and the Lenders at law, in equity or otherwise. In
addition, Agent (upon the request or with the consent of Requisite Lenders) may:
(i) exercise any remedy available to Agent or the Lenders under any Loan
Document; and/or (ii) take whatever action at law or in equity may appear
necessary or appropriate to collect any amount due or thereafter to become due
or to enforce performance
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and observance of all Obligations of Borrower with respect to the Letters of
Credit. Any amounts delivered by Borrower on account of the aggregate contingent
obligation of Account Party to reimburse Lenders for the available amount which
could at any time be drawn under the Letters of Credit shall be held by the
Agent as cash collateral for the Obligations with respect to the Letters of
Credit; and
(d) Other Remedies. Exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law; provided, however, that upon the occurrence of any
event specified in Section 8.1(f) or 8.1(g) (in the case of clause (i) of
Section 8.1 (g) upon the expiration of the sixty (60)-day period mentioned
therein), the Commitment of each Lender to make Loans shall automatically
terminate, and the unpaid principal amount of all outstanding Loans and interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder as
aforesaid shall automatically become due and payable without further act of any
Agent or Lender.
8.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE IX
THE AGENT
9.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby
irrevocably appoints, designates and authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duties or responsibilities except those
expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist on the part of Agent.
Notwithstanding anything to the contrary herein, Issuing Lender shall act on
behalf of the Lenders with respect to the Letters of Credit (and all conditions
precedent applicable to the issuance or extension thereof), until such time and
except for so long as the Agent may elect to act for the Issuing Lender with
respect thereto; provided, however, that the Issuing Lender shall have all of
the benefits and immunities (i)
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for acts taken or omissions suffered by the Issuing Lender in connection with
Letters of Credit as fully as if the term "Agent", as used in this Article IX,
included the Issuing Lender with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Lender.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.3 LIABILITY OF AGENT. The Agent, its respective Affiliates,
or their respective officers, directors, employees, agents, or attorneys-in-fact
(all of the foregoing being collectively referred to as the "Agent-Related
Persons") shall not (a) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document (except for its own gross negligence or willful misconduct), or (b) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by Borrower, the REIT, any Management Entity or
Subsidiary or any Affiliate of any such Person, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or for the value of any property in the Unencumbered Asset
Pool or the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, any other Loan Document, or for any failure of Borrower, the
REIT or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Properties, books or records of Borrower,
the REIT, any Management Entity or Subsidiary or Affiliates thereof.
9.4 RELIANCE BY AGENT.
(a) Generally. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, telecopy, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrower), independent accountants and other experts selected by the Agent.
The Agent
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shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Requisite Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refinancing from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Requisite Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
9.5 CONDITIONS PRECEDENT. For purposes of determining
compliance with the conditions specified in Sections 4.1 and 4.2 (as to the
initial borrowing hereunder), each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to such Lender, unless an officer of the Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the initial borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or such Lender shall not have made available
to the Agent the Lender's ratable portion of such borrowing.
9.6 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or Borrower referring to this
Agreement, describing 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, the Agent shall give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
requested by the Requisite Lenders in accordance with Article VIII; provided,
however, that unless and until the Agent shall have received any such request,
it 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 or in the best interest of the Lenders.
9.7 CREDIT DECISION. Each Lender expressly acknowledges that
none of the Agent-Related Persons has made any representation or warranty to
such Lender and that no act by the Agent hereinafter taken, including any review
of the affairs of Borrower, the REIT, any Management Entity or Subsidiary, shall
be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that such
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Lender has, independently and without reliance upon the Agent and based on such
documents and information as such Lender has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
Properties, financial and other condition and creditworthiness of Borrower, the
REIT, any Management Entity or Subsidiary, and all applicable lender regulatory
laws relating to the transactions contemplated thereby, and made its own
decision to enter into this Agreement and extend credit to Borrower hereunder.
Each Lender also represents that it will, independently and without reliance
upon the Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, Properties, financial and
other condition and creditworthiness of Borrower, the REIT, the Management
Entities and the Subsidiaries. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Agent, Agent
shall have no duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, Properties,
financial and other condition or creditworthiness of Borrower, the REIT, the
Management Entities and the Subsidiaries which may come into the possession of
any of the Agent-Related Persons.
9.8 INDEMNIFICATION. The Lenders shall indemnify upon demand
the Agent Related Persons (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so) ratably from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans) be imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; provided, however, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand (to the extent the
Agent is not reimbursed upon demand by Borrower, unless the Agent is legally
restricted from making such demand upon Borrower, in which case demand need not
be made upon Borrower) for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
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any other Loan Document, or any document contemplated by or referred to herein
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of Borrower. Without limiting the generality of the foregoing, if the IRS or any
authority of the United States or other jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered or was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section 9.7,
together with all costs, expenses and attorneys' fees (including allocated costs
for in-house legal services). The obligation of the Lenders in this Section
shall survive the payment of all Obligations.
9.9 AGENT IN INDIVIDUAL CAPACITY. BofA (and any other Lender
that may hereafter serve as Agent) and each of their respective Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with, Borrower, the REIT, the Management
Entities and the Subsidiaries and Affiliates as though BofA (or any other such
Lender) were not the agent hereunder and without notice to the Lenders. With
respect to its Loans, BofA (and any other Lender that may hereafter serve as
Agent), shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though each of them were not an agent, and
the terms "Lender" and "Lenders" shall include BofA (and any other Lender that
may hereafter serve as Agent), in its individual capacity.
9.10 SUCCESSOR AGENTS. The Agent may resign as Agent upon 30
days' notice to the Lenders. The Requisite Lenders may at any time remove the
Agent by written notice to that effect to be effective on such date as the
Requisite Lenders designate. If the Agent shall resign or be removed under this
Agreement, the Requisite Lenders shall appoint from among the Lenders a
successor Agent for the Lenders, which successor Agent shall, if no Default or
Event of Default exists hereunder, be subject to the approval of Borrower, which
approval shall not be unreasonably withheld. If no successor Agent is appointed
prior to the effective date of the resignation of the retiring Agent, the
retiring Agent shall appoint, after consulting with the Lenders and Borrower, a
successor Agent. Upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent, and the term "Agent" shall mean such successor
Agent, and the retiring Agent's rights, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this
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Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement.
ARTICLE X
MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS.
(a) Generally. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by the Requisite Lenders, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) Matters Requiring Unanimous Consent. Notwithstanding the
terms of Section 10.1(a), no amendment or waiver of any provision of this
Agreement or any other Loan Document, no agreement to forebear from acting upon
any departure by Borrower therefrom, and no consent with respect to any
departure by Borrower therefrom, shall be effective to do any of the following,
unless the same is in writing and signed by all the Lenders:
(i) change the Commitment of any Lender (other
than ratable changes as contemplated by this Agreement;
(ii) postpone or delay any date fixed for any
payment of principal, interest, fees or other amounts due hereunder or under
any Loan Document whether by acceleration or otherwise;
(iii) reduce the principal of, or the rate of
interest specified herein on, any Loan, or any fees or other amounts payable
hereunder or under any Loan Document;
(iv) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Loans required for the Lenders or
any of them to take any action hereunder;
(v) amend or waive Section 2.1(a)(iv) (Extension
of Revolver Maturity Date; Conversion), Section 2.13 (Unencumbered Asset Pool;
Additions, Substitutions and Exclusions of Properties), Section 2.15 (Sharing of
Payments, Etc.),
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Section 3.1 (Taxes), Section 3.2 (Illegality), Section 3.3 (Increased Costs and
Reduction of Return), Section 4.3 (Conversion Conditions), Section 6.10 (Use of
Proceeds), Section 7.16 (Financial Covenants), Section 8.2 (Remedies), Section
10.15 (Governing Law and Jurisdiction) or this Section 10.1 (or the related
definitions thereto);
(vi) release any guarantor from liability under the
REIT Guaranty Documents.
(c) Matters Requiring Agents' Consent. Notwithstanding the
terms of Section 10.1(a), no amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective to affect the rights or
duties of the Agent under this Agreement or any other Loan Document, unless the
same is in writing and signed by the Agent.
10.2 NOTICES.
(a) Delivery. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered, (i) if to
Borrower, to its address specified on the signature pages hereof, (ii) if to any
Lender, to its Domestic Lending Office, and (iii) if to Agent, to its address
specified on the signature pages hereof; or, as to Borrower or the Agent, to
such other address as shall be designated by such party in a written notice to
the other parties, and as to each other party, at such other address as shall be
designated by such party in a written notice to Borrower and the Agent.
(b) Receipt. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if delivered, upon delivery,
except that notices pursuant to Article II or VIII shall not be effective until
actually received by the Agent.
(c) Reliance. Borrower acknowledges and agrees that any
agreement of the Agent and the Lenders under Article II to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of Borrower. The Agent and the Lenders shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by Borrower to give
such notice, and the Agent and the Lenders shall not have any liability to
Borrower or any other Person on account of any action taken or not taken by
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the Agent and the Lenders in reliance upon such telephonic or facsimile notice.
The obligation of Borrower to repay the Loans shall not be affected in any way
or to any extent by any failure by the Agent and the Lenders to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Lenders of a confirmation which is at variance with the terms understood
by the Agent and the Lenders to be contained in the telephonic or facsimile
notice.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of any Agent or Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
10.4 COSTS AND EXPENSES. Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) Facility Expenses. Pay or reimburse the Agent on demand for
all costs and expenses incurred in connection with the development, preparation
or delivery of, and any amendment, supplement, waiver or modification to, this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, the consummation of the transactions contemplated hereby
and thereby, and any proposal for additions to the Unencumbered Asset Pool
Properties, and the syndication of this Agreement to other Lenders, as well as
all costs of the Agent and the Issuing Lender in connection with the issuance of
Letters of Credit (including, without limitation, title insurance premiums and
charges, survey costs, recording costs and taxes, travel and due diligence
expenses incurred by representatives of the Agent, and the reasonable Attorney
Costs incurred by the Agent with respect thereto, and with respect to the
Letters of Credit, amendment fees, drawing fees, check fees, foreign currency
fees, and other fees and costs the Issuing Lender normally charges in connection
therewith);
(b) Enforcement Expenses. Pay or reimburse the Agent and
Lenders on demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies (including in connection with any "workout" or restructuring
regarding the Loans) under this Agreement, any other Loan Document, and any such
other documents, including reasonable Attorney Costs incurred by the Agent and
Lender; and
(c) Property Diligence Expenses. Pay or reimburse the Agent
on demand for all audits, environmental inspections and reviews (including
the allocated costs of such
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internal services), search and filing costs, fees and expenses, incurred or
sustained by the Agent in connection with the matters referred to under
paragraphs (a) and (b) of this Section.
10.5 INDEMNITY. Borrower shall indemnify and hold harmless the
Agent, each Lender and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") from and
against and pay them for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including Attorney Costs) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement and any other Loan Documents, or the transactions contemplated hereby
and thereby, and with respect to any investigation, litigation or proceeding
related to this Agreement or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities'); provided, that Borrower shall have
no obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section 10.5 shall survive payment of
all other Obligations.
10.6 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor any
Lender shall be under any obligation to marshal any assets in favor of Borrower
or any other Person or against or in payment of any or all of the Obligations.
To the extent that Borrower makes a payment or payments to the Agent or any
Lender, or the Agent or any Lender enforces its Liens or exercises its rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party in connection with any Insolvency Pending, or
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
10.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Lender, which may be withheld in their
sole and absolute discretion.
10.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
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(a) Assignments. Subject to the further provisions of this
Section 10.8(a), any Lender may, with the written consent of the Agent, which
consent shall not be unreasonably withheld, at any time assign and delegate to
one or more Eligible Assignees (provided that no written consent of the Agent
shall be required in connection with any assignment and delegation by a Lender
to a Lender Affiliate of such Lender) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Letter of Credit Liability, the Commitments and
the other rights and obligations of such Lender hereunder, in a minimum amount
of $5,000,000 and in additional increments of $250,000; provided, however, that
Borrower and the Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until (A) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to
Borrower and the Agent by such Lender and the Assignee; (B) such Lender and its
Assignee shall have delivered to Borrower and the Agent an Assignment and
Acceptance in the form of EXHIBIT K ("Assignment and Acceptance") together with
any Note or Notes subject to such assignment; (C) such Lender shall have paid to
the Agent, for its own account, an assignment fee in the amount of $1500, if the
Assignee is a Lender (without giving effect to the Assignment), and $3000 in all
other cases; and (D) such Lender shall have delivered to the Agent such
documents as may be required by Section 3.1(f). Any such assignment requiring
the approval of the Agent shall also require the approval of Borrower (such
approval not to be unreasonably withheld or delayed), provided that Borrower's
failure to approve or disapprove such assignment within five days' after
receiving written notice thereof shall be deemed approval by Borrower of such
assignment, and provided further, that no such approval from Borrower shall be
required during the continuation of a Default or Event of Default.
(b) Rights of Assignee. From and after the date that the Agent
notifies the assignor Lender that the Agent has received an executed Assignment
and Acceptance and payment of the assignment fee specified in Section 10.8(a),
(i) the Assignee thereunder shall, subject to Section 10.8(a), be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor Lender
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Replacement Notes. Within thirty (30) Business Days after
its receipt of notice by the Agent that the Agent has received an executed
Assignment and Acceptance and payment of the processing fee, Borrower shall
execute and deliver to the Agent, new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor
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Lender has retained a portion of its Loans and its Commitment, replacement Notes
in the principal amount of the Loan retained by the assignor Lender (such Notes
to be in exchange for, but not in payment of, the Notes held by such Lender).
Immediately upon each Assignee's making its payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitment of the assigning Lender,
pro tanto.
(d) Participations. Any Lender may at any time sell to one or
more commercial lenders (a "Participant") participating interests in any Loans,
Letter of Credit Liability and Commitment of that Lender and the other interests
of that Lender (the "originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's obligations
under this Agreement shall remain unchanged, (ii) the originating Lender shall
remain solely responsible for the performance of such obligations, (iii)
Borrower and the Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
shall have rights to approve any amendment to, or any consent or waiver with
respect to, this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent as described in the
first proviso to Section 10.1; and (v) Borrower shall have approved the transfer
or grant of any participating interest in any Loan, Letter of Credit Liability
and Commitment of the originating Lender to a Participant that has not
theretofore previously held a participating interest therein (such approval not
to be unreasonably withheld or delayed), provided that Borrower's failure to
approve or disapprove in writing such Participant within five days' after
receiving written notice thereof shall be deemed approval by Borrower of such
transfer or grant to such Participant, and provided further, that no such
approval from Borrower shall be required during the continuation of a Default or
Event of Default. In the case of any such participation, the Participant shall
not have any rights under this Agreement, or any of the other Loan Documents,
and all amounts payable by Borrower hereunder shall be determined as if such
Lender had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
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(e) Assignments to Federal Reserve Bank. Notwithstanding any
other provision contained in this Agreement or any other Loan Document to the
contrary, any Lender may assign all or any portion of the Loans or Notes held by
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 or Notes made by
Borrower to or for the account of the assigning and/or pledging Lender in
accordance with the terms of this Agreement shall satisfy Borrower's obligations
hereunder in respect of such assigned Loans or Notes to the extent of such
payment. No such assignment shall release the assigning Lender from its
obligations hereunder.
10.9 SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists, each Lender is
authorized at any time and from time to time, without prior notice to Borrower,
any such notice being waived by Borrower to the fullest extent permitted by law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing to, such Lender to or for the credit or the account of Borrower against
any and all obligations owing to such Lender, now or hereafter existing,
irrespective of whether the Agent or such Lender shall have made demand under
this Agreement or any Loan Document and whether such obligations may be
contingent or unmatured. Each Lender agrees to promptly notify Borrower and the
Agent after any such setoff and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section 10.9
are in addition to the other rights and remedies (including other rights of
setoff) that such Lender may have. NOTWITHSTANDING THE FOREGOING, NO LENDER
SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SETOFF, BANKER'S LIEN, OR
THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF BORROWER, THE REIT, ANY
MANAGEMENT ENTITY OR ANY SUBSIDIARY HELD OR MAINTAINED BY ANY LENDER, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE REQUISITE LENDERS.
10.10 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each
Lender shall notify the Agent in writing of any changes in the address to which
notices to such Lender should be directed, of addresses of its Offshore Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
10.11 COUNTERPARTS. This Agreement may be executed by one or
more of the parties to this Agreement in any number of separate counterparts,
each of which, when
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so executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with
Borrower and the Agent.
10.12 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 NO THIRD PARTIES BENEFITED. This Agreement is made and
entered into for the sole protection and legal benefit of Borrower, the Agent
and the Lenders, and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. No Agent or Lender shall have any obligation to any
Person not a party to this Agreement or the other Loan Documents.
10.14 TIME. Time is of the essence of each term and provision
of this Agreement and each of the other Loan Documents.
10.15 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
10.16 WAIVER OF JURY TRIAL. BORROWER, THE AGENT, AND THE
LENDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. SUBJECT TO SECTION 10.17 BELOW, BORROWER, THE AGENT,
AND THE LENDERS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR
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THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.17 ARBITRATION.
(a) Mandatory Arbitration. Any controversy or claim between or
among the parties arising out of or relating to this Agreement, the Loan
Documents, and any claim based on or arising from an alleged tort, shall at the
request of any party be determined by arbitration. The arbitration shall be
conducted in Los Angeles, California, in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association (the "AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) Provisional Remedies, Self-Help and Foreclosure. No
provision of this Section 10.17 shall limit the right of any party to this
Agreement to exercise self-help remedies such as setoff, foreclosure against or
sale of any real or personal property collateral or security, or to obtain
provisional or ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding. The
exercise of a remedy does not waive the right of either party to resort to
arbitration.
10.18 NOTICE OF CLAIMS; CLAIMS BAR. BORROWER HEREBY AGREES THAT
IT SHALL GIVE PROMPT WRITTEN NOTICE TO THE AGENT OF ANY CLAIM OR CAUSE OF ACTION
IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE AGAINST THE AGENT OR ANY
LENDER, WHETHER SUCH CLAIM IS BASED IN LAW OR EQUITY, ARISING UNDER OR RELATED
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR TO THE LOANS, OR ANY
ACT OR OMISSION TO ACT BY THE AGENT OR ANY LENDER WITH RESPECT HERETO OR
THERETO, AND THAT IF BORROWER SHALL FAIL TO GIVE SUCH PROMPT NOTICE TO THE AGENT
WITH REGARD TO ANY SUCH CLAIM OR CAUSE OF ACTION, BORROWER SHALL BE DEEMED TO
HAVE WAIVED, AND SHALL BE FOREVER BARRED FROM BRINGING OR ASSERTING,
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SUCH CLAIM OR CAUSE OF ACTION IN ANY ARBITRATION OR ANY SUIT, ACTION OR
PROCEEDING IN ANY COURT OR BEFORE ANY GOVERNMENTAL AGENCY.
10.19 ENTIRE AGREEMENT. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding between
Borrower, the Agent and the Lenders. Accordingly, this Agreement, together with
the other Loan Documents, supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for any prior arrangements made with respect
to the payment by Borrower of (or any indemnification for) any fees, costs,
expenses, liabilities, damages or claims payable to or incurred (or to be
incurred) by or on behalf of the Agent or the Lenders.
10.20 INTERPRETATION. This Agreement, together with the other
Loan Documents, is the result of negotiations between and has been reviewed by
counsel to the Agent, the Lenders and Borrower and other parties, and is the
product of all parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against the Lenders or the Agent merely because
of the Agent's or Lender's involvement in the preparation of such documents and
agreements.
10.21 EXCULPATION OF LENDERS. No Lender undertakes or assumes
any responsibility or duty to Borrower or any third party to select, review,
inspect, examine, supervise, pass judgment upon or inform Borrower or any third
party of the existence, quality, adequacy or suitability of: (a) any
environmental report, or (b) any other matters or items, including, but not
limited to, engineering, soils and seismic reports which are contemplated in the
Loan Documents. Any such selection, review, inspection, examination and the like
is solely for the purpose of protecting the Lenders' security and preserving the
Lenders' rights under the Loan Documents, and shall not render any Lender liable
to Borrower or any third party for the existence, sufficiency, accuracy,
completeness or legality thereof. No Lender owes any duty of care to protect or
inform Borrower or any third party against negligent, faulty, inadequate or
defective building or construction or the existence of any environmentally
hazardous condition affecting any Property.
10.22 RELATIONSHIP. Nothing herein contained shall in any
manner be construed as creating any relationship between the Agent and the
Lenders, on the one hand, and Borrower, on the other hand, other than as
creditor and debtor. Borrower agrees to indemnify, protect, defend and hold the
Agent and each Lender harmless from and against any and all losses, liabilities,
damages, and costs and expenses (including, but not limited to,
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reasonable attorneys' fees and disbursements, including reasonably allocated
costs of in-house counsel) resulting from any other construction of the parties'
relationship.
10.23 CONFIDENTIALITY. Agent and each Lender shall keep all
information delivered under Section 6.1(d) confidential in accordance with this
Section 10.23 and shall hold all other non-public information obtained pursuant
to the requirements of this Agreement which has been identified as confidential
by Borrower in accordance with Agent's and such Lender's customary procedures
for handling confidential information of this nature and in accordance with safe
and sound banking practices, it being understood and agreed by Borrower that in
any event Agent or a Lender may make disclosures reasonably required by any bona
fide assignee, transferee or participant in connection with the contemplated
assignment or transfer by Agent or such Lender of any Loans or any participation
therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process.
10.24 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
CALIFORNIA, COUNTY OF LOS ANGELES. BY EXECUTING AND DELIVERING THIS AGREEMENT,
BORROWER, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO COMPANY
AT ITS ADDRESS SET FORTH HERE;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE
IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER
BORROWER IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT;
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(V) AGREES THAT AGENT RETAINS THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.24
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER
APPLICABLE LAW OR OTHERWISE.
[SIGNATURE PAGES S-1 THROUGH S-5 ATTACHED]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first written
above.
BORROWER
AIMCO PROPERTIES, L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: AIMCO-GP, INC., A DELAWARE
CORPORATION, ITS GENERAL PARTNER
BY:
------------------------------------
PETER K. KOMPANIEZ PRESIDENT
NOTICES TO BE SENT TO:
1873 SOUTH BELLAIRE STREET
17TH FLOOR
DENVER, COLORADO 80222
ATTENTION: PETER K. KOMPANIEZ,
PRESIDENT
FACSIMILE: (303) 757-8735
S-1
<PAGE> 124
B OF A
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS A LENDER AND AS THE ISSUING LENDER
BY:
-------------------------------------
NAME:
-----------------------------------
TITLE:
----------------------------------
NOTICES TO BE SENT TO:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
CRES #1357
555 SOUTH FLOWER STREET, 6TH FLOOR
LOS ANGELES, CA 90071
ATTENTION: M. HARVEY
TELEPHONE: 213/228-4013
FACSIMILE: 213/228-5389
PAYMENTS TO BE MADE TO:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
333 S. BEAUDRY AVE.
LOAN ACCOUNTING DEPT #1503
LOS ANGELES, CA 90017
ABA #: 121 000 358
CREDIT ACCOUNT #: 15031-00407
ATTENTION: UNIT REPRESENTATIVE
REF: AIMCO UNSECURED REVOLVER
S-2
<PAGE> 125
AGENT
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT
BY:
-------------------------------------
NAME:
-----------------------------------
TITLE:
----------------------------------
NOTICES TO BE SENT TO:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
CRES #1357
555 SOUTH FLOWER STREET, 6TH FLOOR
LOS ANGELES, CA 90071
ATTENTION: M. HARVEY
TELEPHONE: 213/228-4013
FACSIMILE: 213/228-5389
PAYMENTS TO BE MADE TO:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
ABA #: 121 000 358
CREDIT ACCOUNT #: 15031-00407
ATTENTION: UNIT REPRESENTATIVE
REF: AIMCO UNSECURED REVOLVER
S-3
<PAGE> 126
BANKBOSTON, N.A.
BANKBOSTON, N.A.
AS A LENDER
BY:
-------------------------------------
NAME: KATHLEEN M. AHERN
TITLE: VICE PRESIDENT
NOTICES TO BE SENT TO:
BANKBOSTON, N.A.
100 FEDERAL STREET
MAIL STOP 01-32-04
BOSTON, MA 02110
ATTENTION: ANDREA MARTIGNETTI
TELEPHONE: (617) 434-2835
FACSIMILE: (617) 434-0645
PAYMENTS TO BE MADE TO:
BANKBOSTON, N.A.
ABA #: 011-000-390
CREDIT ACCOUNT #: N/A
ATTENTION: LINDA WHEELER/CLS
REF: AIMCO UNSECURED REVOLVER
S-4
<PAGE> 127
DOCUMENTATION AGENT
BANKBOSTON, N.A.
AS DOCUMENTATION AGENT
BY:
-------------------------------------
NAME: KATHLEEN M. AHERN
TITLE: VICE PRESIDENT
NOTICES TO BE SENT TO:
BANKBOSTON, N.A.
100 FEDERAL STREET
MAIL STOP 01-32-04
BOSTON, MA 02110
ATTENTION: DEBORAH WASHBURN
TELEPHONE: (617) 434-3188
FACSIMILE: (617) 434-0645
PAYMENTS TO BE MADE TO:
BANKBOSTON, N.A.
ABA #: 011-000-390
CREDIT ACCOUNT #: N/A
ATTENTION: LINDA WHEELER/CLS
REF: AIMCO UNSECURED REVOLVER
S-5
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
October 1, 1998
$65,000,000
Los Angeles, California
FOR VALUE RECEIVED, AIMCO Properties, L.P., a Delaware limited
partnership (the "Borrower"), promises to pay to the order of BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("Lender") the principal amount of SIXTY
FIVE MILLION AND NO/100 DOLLARS ($65,000,000) or, if less, the aggregate amount
of Loans (as such term and all other capitalized terms used but not defined
herein are defined in the Credit Agreement referred to below) made by the Lender
to the Borrower pursuant to the Credit Agreement referred to below, outstanding
on the Revolving Facility Maturity Date or, if the Borrower duly converts the
Revolving Facility to the Term Loan pursuant to the Credit Agreement, on the
Term Loan Maturity Date.
The Borrower also promises to make principal payments and
interest on the unpaid principal amount hereof from the date hereof until paid
at the rates and at the times which shall be determined in accordance with the
provisions of the Credit Agreement.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the Payment Office. Until notified of the transfer of this Note, the Borrower
shall be entitled to deem the Lender or such person who has been so identified
by the transferor in writing to the Borrower as the holder of this Note, as the
owner and holder of this Note. The Lender and any subsequent holder of this Note
agrees that before disposing of this Note, or any part hereof, it will make a
notation hereon of all principal payments previously made hereunder of the date
to which interest hereon has been paid on the schedule attached hereto, if any;
provided, however, that the failure to make notation of any payment made on this
Note shall not limit or otherwise affect the obligation of the Borrower
hereunder with respect to payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits
of, the Amended and Restated Credit Agreement (Unsecured Revolver-to-Term
Facility) dated as of the even date herewith, (the "Credit Agreement"), among
the Borrower, the lenders from time to time party thereto, Bank of America
National Trust and Savings Association, as Agent, and BankBoston N.A., as
Documentation Agent. The Credit Agreement, among other things, (i) provides for
the making of loans (the "Loans") by the Lender to the Borrower from time to
time in an aggregate amount first above mentioned, the indebtedness of the
Borrower resulting from each such Loan being evidenced by this Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for mandatory and optional prepayments on
account of principal hereof and certain principal payments prior to the maturity
hereof upon the terms and conditions therein specified.
The terms of this Note are subject to amendment only in the
manner provided in the Credit Agreement.
Execution Copy Promissory Note
<PAGE> 2
No reference herein to the Credit Agreement and no provision
of this Note or the Credit Agreement shall alter or impair the obligation of the
Borrower, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note. The Borrower hereby waives diligence, presentment, and protest, and except
as provided in the Credit Agreement, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
This Note shall be governed by, and construed in accordance
with, the laws of the state of California without giving effect to its choice of
law doctrine.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed and delivered by its duly authorized officer, as of the date and place
first above written.
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, INC.,
a Delaware corporation,
its general partner
By:
------------------------------
Peter K. Kompaniez
Vice President
2 Promissory Note
<PAGE> 3
TRANSACTIONS ON NOTE
<TABLE>
<CAPTION>
=====================================================================================================================
Date Amount of Amount of Principal Interest Paid Interest Paid Notation
Loan Made Principal Balance Through Made By
Paid
=====================================================================================================================
<S> <C>
</TABLE>
3 Promissory Note
<PAGE> 1
EXHIBIT 10.3
October 1, 1998
$35,000,000
Los Angeles, California
FOR VALUE RECEIVED, AIMCO Properties, L.P., a Delaware limited
partnership (the "Borrower"), promises to pay to the order of BANKBOSTON, N.A.
("Lender") the principal amount of THIRTY FIVE MILLION AND NO/100 DOLLARS
($35,000,000) or, if less, the aggregate amount of Loans (as such term and all
other capitalized terms used but not defined herein are defined in the Credit
Agreement referred to below) made by the Lender to the Borrower pursuant to the
Credit Agreement referred to below, outstanding on the Revolving Facility
Maturity Date or, if the Borrower duly converts the Revolving Facility to the
Term Loan pursuant to the Credit Agreement, on the Term Loan Maturity Date.
The Borrower also promises to make principal payments and interest on
the unpaid principal amount hereof from the date hereof until paid at the rates
and at the times which shall be determined in accordance with the provisions of
the Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Payment Office. Until notified of the transfer of this Note, the Borrower shall
be entitled to deem the Lender or such person who has been so identified by the
transferor in writing to the Borrower as the holder of this Note, as the owner
and holder of this Note. The Lender and any subsequent holder of this Note
agrees that before disposing of this Note, or any part hereof, it will make a
notation hereon of all principal payments previously made hereunder of the date
to which interest hereon has been paid on the schedule attached hereto, if any;
provided, however, that the failure to make notation of any payment made on this
Note shall not limit or otherwise affect the obligation of the Borrower
hereunder with respect to payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, the
Amended and Restated Credit Agreement (Unsecured Revolver-to-Term Facility)
dated as of the even date herewith, (the "Credit Agreement"), among the
Borrower, the lenders from time to time party thereto, Bank of America National
Trust and Savings Association, as Agent, and BankBoston N.A., as Documentation
Agent. The Credit Agreement, among other things, (i) provides for the making of
loans (the "Loans") by the Lender to the Borrower from time to time in an
aggregate amount first above mentioned, the indebtedness of the Borrower
resulting from each such Loan being evidenced by this Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for mandatory and optional prepayments on account of
principal hereof and certain principal payments prior to the maturity hereof
upon the terms and conditions therein specified.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
Execution Copy Promissory Note
<PAGE> 2
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Borrower, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred in the collection and enforcement of this
Note. The Borrower hereby waives diligence, presentment, and protest, and except
as provided in the Credit Agreement, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
This Note shall be governed by, and construed in accordance with, the
laws of the state of California without giving effect to its choice of law
doctrine.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer, as of the date and place first
above written.
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, INC.,
a Delaware corporation,
its general partner
By:
-----------------------------
Peter K. Kompaniez
Vice President
<PAGE> 3
TRANSACTIONS ON NOTE
<TABLE>
<CAPTION>
==========================================================================================================================
Date Amount of Amount of Principal Interest Paid Interest Paid Notation
Loan Made Principal Balance Through Made By
Paid
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Promissory Note
<PAGE> 1
EXHIBIT 10.4
SWING LINE PROMISSORY NOTE
October 1, 1998
$30,000,000
Los Angeles, California
FOR VALUE RECEIVED, AIMCO Properties, L.P., a Delaware limited partnership
(the "Borrower"), promises to pay to the order of BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION ("Lender") the principal amount of THIRTY MILLION AND
NO/100 DOLLARS ($30,000,000) or, if less, the aggregate amount of the Swing Line
Loans (as such term and all other capitalized terms used but not defined herein
are defined in the Credit Agreement referred to below) made by the Lender to the
Borrower in accordance with the provisions of the Credit Agreement referred to
below.
The Borrower also promises to make principal payments and interest on the
unpaid principal amount hereof from the date hereof until paid at the rates and
at the times which shall be determined in accordance with the provisions of the
Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Payment Office. Until notified of the transfer of this Note, the Borrower shall
be entitled to deem the Lender or such person who has been so identified by the
transferor in writing to the Borrower as the holder of this Note, as the owner
and holder of this Note. The Lender and any subsequent holder of this Note
agrees that before disposing of this Note, or any part hereof, it will make a
notation hereon of all principal payments previously made hereunder of the date
to which interest hereon has been paid on the schedule attached hereto, if any;
provided, however, that the failure to make notation of any payment made on this
Note shall not limit or otherwise affect the obligation of the Borrower
hereunder with respect to payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, the
Amended and Restated Credit Agreement (Unsecured Revolver-to-Term Facility)
dated as of the even date herewith, (the "Credit Agreement"), among the
Borrower, the lenders from time to time party thereto, Bank of America National
Trust and Savings Association, as Agent, and BankBoston N.A., as Documentation
Agent. The Credit Agreement, among other things, (i) provides for the making of
loans (the "Loans") by the Lender to the Borrower from time to time in an
aggregate amount first above mentioned, the indebtedness of the Borrower
resulting from each such Loan being evidenced by this Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for mandatory and optional prepayments on account of
principal hereof and certain principal payments prior to the maturity hereof
upon the terms and conditions therein specified.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
Execution Copy Swing Line Promissory Note
<PAGE> 2
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
The Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note. The
Borrower hereby waives diligence, presentment, and protest, and except as
provided in the Credit Agreement, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
This Note shall be governed by, and construed in accordance with, the laws
of the state of Colorado without giving effect to its choice of law doctrine.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and place first above
written.
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, INC.,
a Delaware corporation,
its general partner
By:
-----------------------
Peter K. Kompaniez
Vice President
2 Swing Line Promissory Note
<PAGE> 3
TRANSACTIONS ON NOTE
<TABLE>
<CAPTION>
===================================================================================================
Date Amount of Amount of Principal Interest Paid Interest Paid Notation
Loan Made Principal Balance Through Made By
Paid
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
3 Swing Line Promissory Note
<PAGE> 1
EXHIBIT 99.1
APARTMENT INVESTMENT AND MANAGEMENT COMPANY AND INSIGNIA FINANCIAL GROUP, INC.
COMPLETE MERGER
DENVER, and GREENVILLE, S.C., Oct. 2 /PRNewswire/ -- Apartment Investment and
Management Company (NYSE: AIV "AIMCO") and Insignia Financial Group, Inc. (NYSE:
IFS "Insignia") announced the completion of the merger of Insignia, which holds
a multifamily business, including a majority interest in Insignia Properties
Trust ("IPT"), into AIMCO on October 1, 1998. AIMCO is now the largest private
provider of rental housing in the world, operating more than 2,000 properties,
including nearly 400,000 apartment units or one-third of all apartment units
owned by the 23 publicly-traded multifamily REITs, and serving approximately one
million residents.
In the merger, AIMCO will issue approximately $310 million of equity by
exchanging each outstanding share of Insignia common stock for 0.262 shares of
AIMCO Series E Cumulative Convertible Preferred Stock ("Series E Preferred
Stock"), or an aggregate of approximately 8.9 million shares. The Series E
Preferred Stock will be automatically converted into AIMCO common stock
following payment of a special dividend of approximately $50 million payable to
Series E Preferred stockholders prior to January 15, 1999. The special dividend
is equivalent to $1.4626 per share of Insignia common stock. The Series E
Preferred Stock will begin trading on October 2, 1998 on the New York Stock
Exchange under the symbol "AIVPrE". In addition, AIMCO has repaid approximately
$325 million of Insignia indebtedness with the proceeds from loans from
financial institutions and assumed approximately $149 million of 6-1/2%
preferred convertible securities issued by an Insignia subsidiary.
On September 21, 1998, Insignia shareholders also received a distribution of the
common stock of Insignia/ESG Holdings, Inc. [NYSE: IEG], the owner of Insignia's
U.S. and international commercial real estate services business, single family
residential brokerage business, New York cooperative and condominium housing
management business and certain other businesses, which trades on the New York
Stock Exchange under the symbol "IEG".
"We are pleased that AIMCO and Insignia have completed their merger. AIMCO is
gratified that Moody's yesterday confirmed its ratings on AIMCO's outstanding
senior debt and preferred stock, albeit with a revision of its ratings outlook
from stable to negative because of general capital market conditions. Our
shareholders will benefit from the combined strengths of Insignia's multifamily
business and the people who have been working with our AIMCO team on an
integration program that will be operational on day one of the merger. We wish
Andrew Farkas and his team continued success with Insignia/ESG Holdings, Inc.
and we look forward to his continuing support as a significant AIMCO
shareholder. For the many Insignia employees who will join our AIMCO team, we
welcome you and look forward to a long and profitable relationship," commented
Terry Considine, Chairman and CEO of AIMCO.
"Insignia is extremely pleased to see the transaction with AIMCO come to a
successful conclusion. The merger between Insignia and AIMCO -- as well as the
spin-off of Insignia/ESG Holdings -- allows Insignia shareholders to
participate, in a meaningful way, in the creation of the largest apartment
company in the U.S., and the continued development of an international real
estate service provider through Insignia/ESG Holdings," said Andrew L. Farkas,
Chairman and Chief Executive Officer of Insignia/ESG Holdings, Inc. "We wish
the very best to Terry Considine and his most capable management team, as well
as to the many Insignia employees who will be joining AIMCO."
AIMCO is a real estate investment trust with headquarters in Denver, Colorado
and 33 regional operating centers, which holds a geographically diversified
portfolio of apartment communities. Upon completion of the Merger, AIMCO,
through its subsidiaries, becomes the largest private provider of rental housing
in the world operating more than 2,000 properties, including nearly 400,000
apartment units or one-third of all apartment units owned by the 23
publicly-traded multifamily REITs, and serving approximately one million
residents. The properties are located in 49 states, the District of Columbia and
Puerto Rico.
<PAGE> 1
EXHIBIT 99.2
APARTMENT INVESTMENT AND MANAGEMENT COMPANY AND INSIGNIA PROPERTIES TRUST
EXECUTE MERGER AGREEMENT
DENVER, COLORADO and GREENVILLE, SOUTH CAROLINA
October 5, 1998 (NYSE: AIV and AMEX: FFO)
Apartment Investment and Management Company ("AIMCO") and Insignia
Properties Trust ("IPT") announced today that on Friday, October 2, 1998, they
executed a definitive merger agreement providing for the acquisition by AIMCO
of the outstanding shares of IPT not owned by AIMCO at a price of approximately
$13.25 per share ($13.28 per share if AIMCO issues its common stock in the
merger) or approximately $151 million in the aggregate. At AIMCO's option, the
$151 million will be paid in either AIMCO common stock or cash (or any
combination thereof).
As previously announced, AIMCO completed its merger with Insignia
Financial Group, Inc. ("Insignia") on October 1, 1998. In that merger, AIMCO
succeeded to Insignia's controlling interest in IPT. The AIMCO/IPT merger was
unanimously approved by the trustees of IPT prior to the closing of the
AIMCO/Insignia merger. Lehman Brothers rendered its opinion to the Board of
Trustees of IPT that the merger consideration is fair from a financial point of
view to the holders of IPT shares, other than AIMCO.
"When completed, the IPT acquisition will continue AIMCO's growth strategy
of increasing its investment in real estate through the acquisitions of general
and limited partnership interests in real estate limited partnerships, the
primary assets owned by IPT," commented Peter Kompaniez, AIMCO's President.
AIMCO is a real estate investment trust with headquarters in Denver,
Colorado and 33 regional operating centers, which holds a geographically
diversified portfolio of apartment communities. AIMCO, through its
subsidiaries, is the largest private provider of rental housing in the world
operating more than 2,000 properties, including nearly 400,000 apartment units
or one-third of all apartment units owned by the 23 publicly-traded multifamily
REITs, and serving approximately one million residents. The properties are
located in 49 states, the District of Columbia and Puerto Rico.
Contact: Peter Kompaniez, President (714) 593-1723
Toni Smith, Investor Services (303) 757-8101
E-Mail: [email protected]
Web Site: http://www.aimco.com
